DR.
RAM MANOHAR LOHIYA
NATIONAL LAW UNIVERSITY,
LUCKNOW
International Trade Law
TOPIC- GENERAL AGREEMENT
ON TRADE IN SERVICES (GATS)
(An Analysis)
Submitted to- Ms. Priya Anuragini
Submitted by- Shobhit Pratap Singh
Enroll- 150101126
Section - B
Roll No- 129
GATS in Brief
The GATS applies in principle to all service sectors except “services supplied in
the exercise of governmental authority”. These are services that are supplied
neither on a commercial basis nor in competition with other suppliers’ viz social
security schemes and central banking.
Modes of supply
The GATS sets out four modes of supplying services:
Mode1: Cross-border trade
Mode2: Consumption abroad
Mode3: Commercial presence
Mode4: Presence of natural persons
Mode1
Cross-border trade corresponds with the normal form of trade in goods and
maintains a clear geographical separation between seller and buyer. In this case
services flow from the territory of one member into the territory of another
member crossing national frontiers. (E.g. banking or architectural services
transmitted via telecommunications or mail).
Mode2
Consumption abroad refers to situations where a service consumer moves into
another Member's territory to obtain a service (e.g. consumer travelling for
tourism, medical treatment, to attend educational establishment).
Mode3
Commercial presence is the supply of a service through the commercial presence
of the foreign supplier in the territory of another WTO member. In this case a
service supplier of one member
establishes a territorial presence, including through ownership or lease of premises,
in another member's territory to provide a service. (E.g. the establishment of
branch offices or agencies to deliver such services as banking, legal advice or
communications)
Mode4
Presence of natural persons involves the admission of foreign nationals to another
country to provide services there. An Annex to the GATS makes it clear, however,
that the agreement has nothing to do with individuals looking for employment in
another country, or with citizenship, residence or employment requirements. The
members still has a right to regulate the entry and stay of the persons concerned,
for instance by requiring visas.
General Principles
These are basic rules that apply to all members and to all services.
MFN Treatment
Under Article II of the GATS, “each Member shall accord immediately and
unconditionally to services and service suppliers of any other Member treatment
no less favourable than it accords to like services and service suppliers of any other
country". However, a member is permitted to maintain a measure inconsistent with
the general MFN requirement if it has established an exception.
However, all exemptions are subject to review and they should in principle, not last
longer than 10 years.
Transparency
The GATS requires each member to publish promptly "all relevant measures of
general application" that affect operation of the agreement. Members must also
notify the Council for Trade in Services of new or changed laws, regulations or
administrative guidelines that affect trade in services covered by their specific
commitments under the agreement. Each member is required to
establish an enquiry point, to respond to requests from other members for
information.
Specific Obligations
Obligations, which apply on the basis of commitments, laid down in individual
country schedules concerning market access and national treatment in specifically
designated sectors. These requirements apply only to scheduled sectors.
Market Access
Market access is a negotiated commitment in specified sectors. The GATS also
sets out different forms of measure affecting free market access that should not be
applied to the foreign service or its supplier unless their use is clearly provided for
in the schedule. They are:
Limitations on the number of service suppliers
Limitations on the total value of services transactions or assets
Limitations on the total number of service operations or the quantity of
service output.
Limitations on the number of persons that may be employed in particular
sector or by a particular supplier
Measures that restrict or require supply of the service specific types of legal
entity or joint venture
Percentage limitations on the participation of foreign or limitations on
the total value of foreign investment.
National Treatment
A commitment to national treatment means that in the sectors covered by its
schedule, subjected to any conditions and qualifications set out in the schedule,
each member shall give treatment to foreign services and service suppliers
treatment, in measures affecting supply of services, no less favourable than it gives
to its own services and suppliers. Again, the extension of national treatment in any
particular sector may be made
subject to conditions and qualifications. Members are free to tailor the sector
coverage and substantive content of such commitments as they see fit. The
commitments thus tend to reflect national policy objectives and constraints, overall
and in individual sectors. While some Members have scheduled less than a handful
of services, others have assumed market access and national treatment disciplines
in over 120 out of a total of 160- odd services.
Exemptions
Members in specified circumstances are allowed to introduce or maintain measures
in contravention of their obligations under the Agreement, including the MFN
requirement or specific commitments. These circumstance cover measures
necessary to protect public morals or maintain public order, protect human, animal
or plant life or health or secure compliance with laws or regulations not
inconsistent with the - Agreement including, among others, measures necessary to
prevent deceptive or fraudulent practices.
Also, in the event of serious balance-of-payments difficulties, members are
allowed to temporarily restrict trade, on a non-discriminatory basis, despite the
existence of specific commitments.
Current Status of Services Negotiations:
The first and second rounds of meetings of all plurilateral groups were held from
28th March to 6th April 2006 and 15th -24th May 2006 respectively. India is the
coordinator of Mode-1 (Cross Border Supply) and Mode-4 (Temporary Movement
of Natural Persons) plurilateral groups. India has also participated as a requesting
member in the Computer and Related Services (CRS) group and Architecture,
Engineering and Integrated Engineering Services (AEI) group. As a part of the
plurilateral process, India has also received a number of plurilateral requests in all
the sectors/areas listed in para 4.2 above except for the Horizontal Request in
Mode 3 (Commercial presence), MFN Exemptions (General) and MFN
Exemptions (Financial Services). India has therefore received requests in
14 sectors/areas, excluding those sectors/areas in which India is a requesting
member and therefore a deemed recipient.
All Members, including India, are expected to respond to the plurilateral requests
and bilateral requests placed on them by making improved Offers in the second
round.
Along with the Mini –Ministerial a Services Singnaling Conference was held on 26
July, 2008 at the WTO. In this Conference, India has indicated that it may improve
its Revised Offer in some of the services sectors of interest to the member
countries subject to the conditions that the Member countries should also respond
positively to India’s interest n Modes 4 & 1 and for the disciplining of Domestic
Regulations.
Unlike agriculture and NAMA where modalities are yet to be finalized, in Services
the modalities have been agreed upon. Members need to finalize their schedule of
commitments, which are linked to the outcome of Agriculture and NAMA
negotiations. As and when these are finalized, the process of services negotiations
would also move for conclusion under the current round.
