General Agreement on Trade in Services

General Agreement on Trade in Services
Name	General Agreement on Trade in Services
Type	Multilateral treaty
Date signed	15 April 1994
Location signed	Marrakesh, Morocco
Date effective	1 January 1995
Condition effective	Ratification by WTO members
Signatories	All World Trade Organization members
Depositor	Director-General of the World Trade Organization
Languages	English, French, Spanish

General Agreement on Trade in Services is a foundational treaty of the World Trade Organization that establishes a multilateral framework of rules and disciplines for international trade in services. Negotiated during the Uruguay Round and entering into force with the establishment of the WTO in 1995, it aims to promote economic growth and development through the progressive liberalization of service sectors. The agreement covers a vast array of service industries, from financial services and telecommunications to tourism and professional services, and is structured around core principles such as most-favored-nation treatment and transparency.

Overview

The agreement represents the first and only set of multilateral rules governing international trade in services, a rapidly growing segment of the global economy. It operates under the institutional umbrella of the World Trade Organization, alongside its sister agreements like the General Agreement on Tariffs and Trade for goods. Its primary objective is to remove barriers to trade in services, thereby increasing efficiency, fostering competition, and providing a predictable legal framework for service suppliers and consumers. The framework is inherently flexible, allowing members to choose which sectors to open and to what degree, with commitments inscribed in national schedules.

History and negotiation

The push for multilateral rules for services trade gained momentum in the 1980s, championed by major economies like the United States and the European Communities. Formal negotiations commenced as part of the Uruguay Round of multilateral trade talks launched in Punta del Este in 1986. The negotiations were complex and contentious, facing resistance from many developing countries concerned about sovereignty and the competitiveness of their domestic service industries. Key drafts and compromises were shaped in meetings in Geneva and Brussels, culminating in the final text being adopted at the Marrakesh Agreement signing ceremony in April 1994.

Main provisions and principles

The cornerstone obligations include the most-favored-nation principle, requiring members to extend any favorable treatment granted to one member to all others immediately and unconditionally. The transparency obligation mandates the publication of all relevant laws and regulations. Specific provisions address domestic regulation, requiring measures to be administered in a reasonable, objective, and impartial manner. Other articles cover issues such as monopolies and exclusive service suppliers, payments and transfers, and exceptions for reasons of public order or balance-of-payments difficulties.

Schedules of specific commitments

Each member's specific market access and national treatment obligations are not uniform but are individually negotiated and listed in detailed national schedules. These schedules, which are an integral part of the agreement, specify the service sectors and sub-sectors where the member guarantees access to foreign suppliers and the conditions or limitations attached. The scheduling approach allows for significant flexibility, meaning the level of liberalization varies widely between members and across sectors like banking, insurance, or audio-visual services.

Sectoral coverage and modes of supply

The agreement defines trade in services through four distinct modes of supply: cross-border supply, consumption abroad, commercial presence, and presence of natural persons. It covers a wide spectrum of sectors, which are often referenced using the Services Sectoral Classification List developed during the Uruguay Round. Major sectors include business services, communication services, construction and related engineering services, distribution services, educational services, environmental services, health related and social services, and transport services.

Relationship with other WTO agreements

It is one of the multilateral agreements on trade in goods annexed to the Marrakesh Agreement Establishing the World Trade Organization. It operates in parallel with the General Agreement on Tariffs and Trade 1994 and the Agreement on Trade-Related Aspects of Intellectual Property Rights, together forming the three pillars of the WTO. Disputes arising under it are subject to the integrated Dispute Settlement Understanding of the WTO. Its provisions also interact with several plurilateral agreements, such as the Agreement on Government Procurement.

Criticism and ongoing debates

Criticism has come from various quarters, including civil society groups and some developing country governments. Critics argue it can constrain domestic policy space for vital public services like water supply, healthcare, and education, and favor large multinational corporations from developed nations. Ongoing debates within the World Trade Organization focus on issues like the liberalization of mode 4 (movement of natural persons), the development of necessary domestic regulations, and the pursuit of further negotiations in sectors like financial services and telecommunications services.

Category:World Trade Organization agreements Category:Treaties established in 1995 Category:Trade in services