Trade in Services

Ranging from communications to transport, finance, education, tourism and

environmental services, the services sector has become the backbone of the
global economy and the most dynamic component of international trade.
Recent technological advances have made it easier to supply services across
borders, thereby opening new opportunities for national economies and
individuals.
• Services trade policies are an important determinant of foreign direct
investment, participation in global value chains, productivity and exports of
manufactured products.  Policies in relation to services trade also
contribute to a wide range of national objectives, including the
achievement of Sustainable Development Goals.
• The creation of the General Agreement on Trade in Services (GATS) was
one of the landmark achievements of the Uruguay Round of trade
negotiations
 Objectives of the GATS  
The GATS was inspired by essentially the same objectives as its
counterpart in merchandise trade, the General Agreement on Tariffs
and Trade (GATT)
• creating a credible and reliable system of international trade rules
• ensuring fair and equitable treatment of all participants (principle of
non-discrimination)
• stimulating economic activity
• promoting trade and development through progressive liberalization

While services currently account for over two-thirds of global production

and employment, they represent no more than 25 per cent of total
trade, when measured on a balance-of-payments basis
 Services covered
The GATS applies in principle to all service sectors, with two
exception

• 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. Cases in point are
social security schemes and any other public service, such as health or
education, that is provided at non-market conditions

• The Annex on Air Transport Services exempts from coverage

measures affecting air traffic rights and services directly related
to the exercise of such rights.
 Basic obligations under the GATS...Contd
(a) General obligations
• MFN treatment:This amounts to a prohibition, in principle, of preferential
arrangements among groups of members in individual sectors or of
reciprocity provisions which confine access benefits to trading partners
granting similar treatment
• Members were allowed to seek such exemptions before the Agreement
entered into force. New exemptions can only be granted to new members at
the time of accession or, in the case of current members, by way of a waiver
• GATS allows groups of members to enter into economic integration
agreements or to mutually recognize regulatory standards, certificates
• Transparency: GATS members are required, among other things, to publish
all measures of general application and establish national enquiry points
mandated to respond to other members' information requests.
(b) Specific commitments
• Market access: Market access is a negotiated commitment in specified sectors. It
may be made subject to various types of limitations. For example, limitations may
be imposed on the number of services suppliers, service operations or employees
in the sector; the value of transactions; the legal form of the service supplier; or
the participation of foreign capital.
• National treatment: A commitment to national treatment implies that the
member concerned does not operate discriminatory measures benefiting
domestic services or service suppliers. The key requirement is not to modify, in
law or in fact, the conditions of competition in favour of the member's own
service industry. 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.
 Some Sevices topics contd..
Tourism... Tourism and travel-related services include services provided
by hotels and restaurants (including catering), travel agencies and tour
operator services, tourist guide services and other related services.
• A crucial aspect of trade in tourism services is the cross-border
movement of consumers
• This permits a variety of workers, including those in remote areas, to
become services exporters — for instance, by guiding tourists,
performing in local events, or working in tourist accommodation
• While digitalisation offers great potential for many aspects of tourism
services, the sector continues to depend highly on the cross-border
movement of both customers and employees, and remains strongly
linked to transport services.
Current commitments and exemptions
• Tourism commitments have been undertaken by over 133 WTO
members, more than in any other service sector
• This indicates the desire of most members to expand their
tourism sectors and to increase inward foreign direct investment
(FDI) as part of their efforts to promote economic growth.
• The level of commitments by sub-sector varies widely for tourism
and travel-related services
• Commitments on services provided by hotels and restaurants are
the most frequent, with a significantly smaller number of WTO
members making commitments on travel agencies and tour
operator services
 Distribution services contd...
• In all countries, distribution represents a large share of
domestic economic activity and employment
• The sector is highly dynamic and changing rapidly, with a
trend towards the rapid development of new forms of
supply — for example, through electronic commerce.
• The distribution sector provides the necessary link
between producers and consumers, within and across
borders
• The efficiency of the sector is crucial to ensuring that
consumers have extensive access to a wide variety of goods
at competitive prices
• Distribution services include wholesale trade services, retailing
services, franchising and commission agents' services
• The sector is diverse, covering various formats ...
• (fixed location stores, electronic commerce, door-to-door
sales, markets etc.),
• outlets (hypermarkets, supermarkets, department stores,
convenience stores, small shops),
• product offerings (food vs. non-food, multi-product vs.
specialized goods, etc.) and
• legal structures (e.g. independent, integrated groups,
franchises).
 Transport Services
Air transport services are governed by a
specific annex of the General Agreement on
Trade in Services (GATS)
Maritime transport
Land transport