General Agreement on Trade in Services - GATS Structure and Main Elements WTO

1. General Agreement on Trade in Services - GATS Structure and Main Elements WTO Trade in Services Division http://www.wto.org

2. Economic Importance SERVICES • Share in Production and Employment Between less than 30 to over 70 per cent, depending on resource structure and level of development of an economy • Share in Total World Trade Some 20 percent, on a BOP-basis (does not count the full value of trade through commercially present foreign suppliers)

3. Common to all Short text of Articles - the “Framework” Annexes(including on Telecom) Individual Schedules of Commitments MFN Exemptions(only at outset & if needed) What is GATS?

4. Scope and Definition Universal Coverage of Services • Includes all services except: • Services supplied in the exercise of government authority. • But only if these are not supplied on a commercial basis or in competition with other service suppliers • Covers all measures • including those of local and regional governments and non-governmental bodies exercising delegated authority Sectors: • Business and professional • Communications, all types • Construction • Distribution • Education • Environment • Insurance and financial • Health and social • Tourism • Recreation & cultural • Transport, all types • Other

5. Scope and Definition Defined Examples Trade = Modes of Supply Cross border Service supplier not present in the territory where services are delivered Delivery of any services via telephone, fax, Internet, or the post Consumption abroad Consumers purchase services outside their country of residence Tourism, Repair of a ship in another country, Going to a hospital abroad for surgery Commercial presence Service supplying entities present in the territory to deliver services Establishing a bank branch or subsidiary Any foreign direct investment Presence of natural persons Entry and temporary stay of individual persons to supply services 1. Consultant services, Professional or business travel 2. Also, foreign employees of a firm supplying services

6. General Obligations & Disciplines The different types • Obligations • Applying generally to all services, whether or not scheduled • Applicable only to services listed in schedules • Exceptions • Containing relevant disciplines to ensure that they are not abused

7. General Obligations & Disciplines Across the Board • Most Favoured Nation Treatment(no discrimination among Members or preferences to non Members) • Transparency (publication of measures) • Domestic Regulation(mechanisms for appeal of administrative decisions) • Recognition (of licenses and certifications and licensing and qualification criteria) • Monopolies & exclusive providers (prevent actions affecting MFN obligation) • Business Practices(consultations on anti-competitive practices of companies)

8. Most-Favoured-Nation TreatmentMFN is critical - it is what makes the WTO truly multilateral General Obligations & Disciplines “… each Member shall accord immediately and unconditionally to services and service suppliers of any other Member treatment no less favourable than that it accords to like services and service suppliers of any other country” (Article II:1)

9. General Obligations & Disciplines Transparency Applies to all services, whether or not listed in schedules Make publicly available all measures affecting trade in services • Includes all relevant laws, regulations, licensing procedures & criteria, technical requirements, etc.

10. General Obligations & Disciplines Applied to committed services • Transparency (notification of new or revised measures to WTO) • Domestic Regulation(requirements, criteria & standards to be objective, publicly known and not unnecessarily onerous, procedures not restrictive, implement measures impartially, promptly inform applicants for licenses or other authorizations) • Monopolies & exclusive providers (prevent actions adversely affecting commitments) • Payments & Transfers(no restrictions affecting commitments)

11. General Obligations & Disciplines Domestic regulation • Reasonable, objective and impartial implementation of all measures related to committed services • Licensing procedures and criteria, technical standards and qualification requirements should be objective, transparent and not more burdensome than necessary • Subject to ongoing negotiations to develop specific disciplines

12. General Obligations & Disciplines Exceptions • Regional or Bilateral economic integration & labour market integration agreements • Restrictions on the balance of payments • General & security exceptions • Financial services: prudential measures (Annex)

13. General Obligations & Disciplines Example: General Exceptions GATS permits measures • to achieve policy objectives such as protection of public morals and the maintenance of public order • to protect privacy of personal data, confidentiality of individual records, and to prevent fraud The measures must not be more restrictive than necessary, applied in an arbitrary way, discriminate unjustifiably or be used as a disguised restriction

14. General Obligations & Disciplines To be negotiated • Disciplines on domestic regulation • Emergency Safeguard Measures • Government Procurement • Subsidies

15. Specific Commitments Listed in Schedules Defined in GATS Part III (Arts. XVI, VXII & XVIII • Market Access • National Treatment • Additional Commitments • Listed in Schedules by service and modes of supply • Indicates each Member’s legally bound guarantee of specified minimum levels of access or national treatment • Schedules do not bind laws or regulations as such

16. GATS Annexes Types of Annexes • On provisions • Article II (MFN Exemptions) • Movement of Natural Persons • On sectors • Air Transport • Telecommunications • Financial Services • On the extended negotiations • Basic Telecommunications • Second Annex on Financial Services • Maritime Transport

17. GATS Annexes Annex on Telecom • Applies to measures affecting access to and use of public basic telecom networks and services • General obligation to ensure that suppliers of scheduled services are guaranteed reasonable and non-discriminatory access to and use • Allows reasonable conditions on access and use, in order to meet specified public policy objectives • Permits developing countries to depart from the obligations by indicating such in the schedule of commitments

18. Increasing Participation ofDeveloping Countries • General requirement: Increasing participation of developing countries in world trade through specific commitments that: • strengthen services capacity and efficiency, • improve access to distribution channels, • liberalize markets of export interest • Contact points to facilitate information access • Special priority for least developed countries

19. What has been Achieved to date? • GATS is considered a reliable and predictable framework for facilitating trade andforeign investment in services • It has been widely perceived by developing countries as a positive development in the multilateral trade framework • Many commitments have been overtaken by further reforms and liberalization in both developed and developing countries