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TRADE NEGOTIATIONS
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For information from the WTO about the
General Agreement on Trade in Services (GATS) and for further information on services trade liberalization:
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What is the GATS? |
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The General Agreement on Trade in Services
(GATS)
a trade agreement that establishes a multilateral framework of
principles and rules for trade in services. It is the companion piece
within the World Trade Organization (WTO)
of the goods-specific Multilateral Agreements on Trade in Goods. It
covers all services except those provided in the exercise of
governmental authority, is a framework for multilateral obligations
as well as commitments to continuous liberalization in the trade in
services. Its objectives are:
- To expand services trade under conditions of transparency and
progressive liberalization
- To promote the economic growth of its trading partners. In addition
to a general framework of principles
The GATS requires its Members to set out a specific schedule of
commitments defining how much market access service providers are
allowed for specific service sectors, and under what national
treatment conditions. The obligations and commitments that Members of
the GATS make are subject to enforcement through the WTO. Once
commitments on specific services have been undertaken, they cannot be
withdrawn without compensating the other members.
However, the fact that a country is a signatory to the GATS does not
guarantee that it has made far-reaching commitments to open its
markets in all sectors and/or for all measures affecting the supply
of services. The level of commitments vary significantly among WTO
Members.
Text of the AgreementResources from ITC for additional
information: A Business Guide to the General Agreement on Trade in
Services, 2001 (Section A).
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What is the World Trade Organization? |
The World Trade Organization (WTO) is a intergovernmental treaty
that entered into effect on 1 January 1995. Its Secretariat in
Geneva administers a basic framework of rules for international
trade in goods and services. The WTO Agreement contains in its
annexes, three major multilateral accords which incorporate the
contractual agreements negotiated by its Members: the General
Agreement on Tariffs and Trade (GATT), the General Agreement on
Trade in Services (GATS), and the Agreement on Trade-Related Aspects
of Intellectual Property (TRIPs).
Through this framework and agreements, the WTO provides a clear set
of trade obligations for each of its 132 Member countries and a
legal structure for ensuring that those obligations are observed.
Information on the WTO and its programs can be found on its website:
www.wto.org
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Impact of the GATS on domestic firms |
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While the GATS focuses on the trading environment, any
liberalization initiatives in services will have an impact on both
traders and non-traders as they of necessity involve the domestic
regulatory regime.
In the developing economies, service firms should begin to benefit
from access to more competitive service inputs. Further negotiations
have already created additional liberalization commitments in the
financial and telecommunication services areas, where increased
competition should result in more efficient and less costly inputs
for service firms. The strengthened protection afforded to
intellectual property rights under the WTO Agreement on Trade-Related
Intellectual Property Rights (TRIPS) should benefit local as well as
exporting service firms.
On the other hand, liberalization also brings with it increased
competition for domestic service firms. The very informatics
technology that allows developing country firms to deliver services
to distant export markets will also enable distant providers to
deliver services to local economies. So even domestic service firms
will need to begin formulating strategies in a global context.
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Commercial implications for service exporters |
The clearest benefit to be gained from the GATS is increased
predictability in the services trading and investment environment.
While more work on liberalization remains to be done, the initial
set of binding commitments and the commitments that have been or are
being negotiated under the periodic negotiations provided for by the
GATS itself are steps towards ensuring that governments will not
make arbitrary changes in regulations to the detriment of foreign
service suppliers.
A second benefit for service exporters is easier access to
information about national regulations and restrictions in other
markets. While barriers to market access will remain for some time,
developed market economies in particular are under obligation to
provide transparency through an identified inquiry point.
An area of particular interest to professional service providers is
the matter of mutual recognition of professional credentials. On 29
May 1997, the WTO Council for Trade in Services adopted guidelines
for mutual recognition in the accountancy sector.
One should note that all of the trade liberalization commitments
under the GATS have been made by mode of delivery, meaning that not
all of the four modes are necessarily open to foreign service
providers at the present time.
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Ensuring benefits from services trade liberalization |
Of immediate benefit to service exporters are commitments to provide
technical assistance to developing countries in the matter of
services trade. The World Bank, for instance, has announced that it
will make every effort to include developing country experts and
firms on short lists for tenders and to encourage contract winners
to partner with local service firms.
One of the areas of concern to be monitored is the impact of
increased privatization and/or deregulation of core infrastructure
services on economic development. In order to respond to competitive
pressures, such privatization or deregulation can lead to a
concentration of service provision in the most lucrative urban areas
and a withdrawal of services from outlying areas. To be successful,
the GATS should bring increased rather than decreased access to
country-wide efficient and cost-effective
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How do trade agreements (like GATS) help me as an exporter? |
The primary benefit for service exporter is increased
transparency and predictability in international markets.
Agreements like the GATS also incorporate provisions to prevent
further trade restrictions, and establish requirements for their
Members to engage in ongoing rounds of negotiations for
progressive liberalization.
In terms of accessing foreign markets, the GATS ensures, as a
basic principle, that firms are treated the same way as any of
their foreign counterparts. The GATS also contains rules designed
to eliminate discrimination between foreign service providers and
their domestic counterparts. If unfair discrimination does exist
in the regulation of a market which results in less favourable
treatment or access for foreign service suppliers, the onus is on
Members to declare this discrimination openly in their schedule
of specific commitments so that it is clearly visible to
exporters.
Resources from ITC for additional information: A Business Guide
to the General Agreement on Trade in Services, 2001 (Sections B
and D).
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Where can I get information on liberalization commitments in
my service sector? |
Each Member of the GATS is required to submit a schedule of
commitments for specific service sectors. If you are planning to
export your services to a new market, you should review the schedule
of commitments for your target market(s) to determine what access
and national treatment conditions prevail.
The
WTO maintains a website which provides legal texts,
sector-specific reports on trade liberalization agreements, new
developments, and government procurement opportunities.
For more information
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What should I do if I feel unfairly blocked from exporting my
service? |
You should report the situation to your government ministry or
agency responsible for international trade in services under the
GATS. Though there is no direct access for private sector firms to
the WTO, Member governments who feel that their firms are being
treated unfairly or discriminated against by other Members can bring
these cases before the WTO dispute settlement mechanism.
The dispute-settlement mechanism provides a forum for discussions
between the members to reach a mutually-satisfactory solution. If no
satisfactory solution is reached through bilateral discussions, your
government can request that an independent panel be established to
review the case and impose a binding ruling. Members who are found
to be violating their obligations are required to bring their
measures into compliance with their obligations under the GATS or
provide compensation to the offended Member.
Resources from ITC for additional information: A Business Guide
to the General Agreement on Trade in Services, 2001 (Section B).
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Trade Negotiations
