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General Agreement on Trade in
Services (GATS)
Presented By:
mANISHA sHUKLA
sAUD iMTIAZ
nEHA jOSHI
pALLAVI aRUN
pAWAN gUPTA
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General Agreement on Trade in
Services (GATS)
Reasons for establishment:-
Due to huge growth of services economy
Services account for two third of global output
Services Contribute in global employment
Contribution of services in global trade
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Services: Economic importance
Share in Production and Employment:
depending on resource structure and level of
development of an economy
Share in TotalWorld Trade:
more rapid expansion than merchandise trade
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Chart I: Share of services in
production (GDP, 2000)
0%10%20%30%40%50%60%70%80%90%
100%
Unite
dStat
es*
France
Unite
dKing
dom
Polan
d
Argentina
Colom
bia Peru
Philip
pines
India
Mala
ysia
Uganda
Came
roon
Angola
Services Industry Agriculture
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Services exports by economic
groups
26%
74%
DEVELOPING
COUNTRIES
Developed
countries
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Application of trade theory6
Trade in services, in general, display the samecharacteristics
as trade in goods
The theory of comparative advantage does apply
to services trade Given high levels of regulation (protection)
in the
service sector, economic factors alone cannotexplain the pattern
of trade in services
The removal or reduction of barriers to trade inservices would
contribute to major increases inglobal welfare
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Developingcountries7
50% of GDP
Fourfold increase in trade over last 15 years
Important contributor to economy-wide efficiency
and development
Labour intensive
More dependent on trade in services than
industrialised countries
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What is GATS?8
Implemented January 1995
140 member countries
All sectors (except government and air traffic rights)
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GATS: Modes of supply9
Mode 1: Cross border supply
relatively few bound commitments
Mode 2: Consumption abroad
relatively open
Mode 3: Commercialpresence
market access restrictions prevail
Mode 4: Movement of naturalpersons
most restrictive
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MODEMODE MEANINGMEANING EXAMPLEEXAMPLE
Mode 1Mode 1CrossCross--border tradeborder trade
Trade takes place from theTrade takes place from theterritory of
country A into that of Bterritory of country A into that of B
-- TelehealthTelehealth-- Passing of informationPassing of
information
by means of fax or emailby means of fax or email
Mode 2Mode 2ConsumptionConsumption
abroadabroad
Services consumed by nationalsServices consumed by nationalsof
country A in territory of countryof country A in territory of
country
BB
-- TourismTourism-- Consumers who crossConsumers who cross
borders to obtain medicalborders to obtain
medicaltreatmenttreatment
Mode 3Mode 3CommercialCommercial
presencepresence
A service supplier of country AA service supplier of country
Acrosses the border to establishcrosses the border to establish
and provide a service in country Band provide a service in
country B
-- Establishment of aEstablishment of aprivate hospital by
aprivate hospital by a
European company inEuropean company inEcuadorEcuador
Mode 4Mode 4Movement ofMovement of
natural personsnatural persons
Temporary movement fromTemporary movement fromcountry A to B to
supply a servicecountry A to B to supply a service
-- Doctors moving toDoctors moving toanother country toanother
country to
temporarily provide theirtemporarily provide
theirservicesservices
Modes of tradeModes of trade
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GATS: Obligations12
General
MFN treatment
Transparency
Specific
Market access
National treatment
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Most-favoured-nation (MFN)
treatment
MFN means treating ones trading partners equally
on the principle of non-discrimination. Under GATS,
if a country allows foreign competition in a sector,
equal opportunities in that sector should be given toservice
providers from all other WTO members.(This
applies even if the country has made no specific
commitment to provide foreign companies access to
its markets under the WTO.)
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Transparency
Publish all relevant laws and regulations, and set up
enquiry points within their bureaucracies.
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Commitments on market access and
national treatment
Individual country's commitments to open markets
in specific sectors and how open those markets
will be are the outcome of negotiations.
Market access commitment.
market-access limitation.
exception to the national treatment
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GATS commitments:
16
Guarantee the conditions of operation offoreign services
suppliers at a certain
negotiated level of market access andnational treatment
Ensure that this level cannot be deteriorated
Make this level available as a minimum to all
WTO Members Are subject to periodic negotiations with a
view to improve them
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GATS: Objectives
Expansion of services trade
Progressive liberalization through
successive rounds of negotiations as a means
of promoting growth and development
Transparency of rules and regulations
Increasing participation of developing
countries
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GATSclassifies trade in services
into four modes of supply:
Mode 1: Cross-border supply
Mode 2: Consumption abroad
Mode 3: Commercial presence
Mode 4: Presence of natural persons
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Special Provisions For Developing
Countries
In particular, the objective of facilitating the
increasingparticipation of developingcountries in services tradehas
been enshrined in the Preamble to the Agreementand underlies the
provisions of Article IV.
This Article requires Members, inter alia, to
negotiatespecificcommitments relating to the strengthening
ofdevelopingcountries' domestic services capacity; theimprovement
of developingcountries' access to
distribution channels and information networks; and
theliberalization of market access in areas of exportinterest to
these countries.
