General Agreement on Trade in Services (GATS)
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| General Agreement on Trade in Services (GATS) | |
|---|---|
| Name | General Agreement on Trade in Services |
| Signed | 15 April 1994 |
| Location signed | Marrakesh Agreement |
| Effective | 1 January 1995 |
| Parties | Member states of the World Trade Organization |
| Depositor | World Trade Organization |
General Agreement on Trade in Services (GATS) The General Agreement on Trade in Services (GATS) is a multilateral treaty established during the Uruguay Round and administered by the World Trade Organization to extend multilateralism in trade to the services sector, complementing the General Agreement on Tariffs and Trade 1947 and the Marrakesh Agreement. It provides a legal and institutional framework for progressive liberalization of international services trade, balancing market access commitments with regulatory autonomy recognized in instruments such as the Agreement on Trade-Related Investment Measures and the Agreement on Subsidies and Countervailing Measures.
Background and Negotiation
Negotiations that produced the Agreement took place in the context of the Uruguay Round under the aegis of the General Agreement on Tariffs and Trade 1947 and were concluded at the Marrakesh Agreement, involving delegations from United States, European Union, Japan, Brazil, India, China, Australia, Canada, Mexico, South Africa, Switzerland, Russia, New Zealand, Norway, Argentina, Chile, Singapore, Malaysia, Thailand, Philippines, Indonesia, Egypt, Turkey, Pakistan, Poland, Czech Republic, Hungary, Slovakia, Romania, Bulgaria, Croatia, Slovenia, Israel, Saudi Arabia, United Arab Emirates, Qatar, Kuwait, Jordan, Lebanon, Kenya, Nigeria, Ethiopia, Ghana, Morocco, Algeria, Tunisia, Iceland, Liechtenstein, Luxembourg, Belgium, Netherlands, Portugal, Spain, Italy, Greece, Ireland, Denmark, Sweden, Finland, Estonia, Latvia, Lithuania, Slovenia and many other participants. Key influences included precedents from the General Agreement on Tariffs and Trade 1947 negotiations, technical work by the Organisation for Economic Co-operation and Development, policy positions of the World Bank and the International Monetary Fund, and regional trade experiences such as the European Economic Community and the North American Free Trade Agreement.
Structure and Principles
The Agreement is organized into a preamble, general obligations, and sectoral annexes mirroring frameworks seen in the General Agreement on Tariffs and Trade 1947, with institutional oversight by the World Trade Organization's Council for Trade in Services and coordination with bodies like the WTO Dispute Settlement Body and the WTO Ministerial Conference. Core principles include Most-Favoured-Nation treatment and transparency, reflecting doctrines advanced by John Maynard Keynes scholars and implemented in instruments such as the Agreement on Trade-Related Aspects of Intellectual Property Rights. The legal text interacts with commitments made by members including United States, European Union, Japan, Brazil, India, China and Canada and respects regulatory objectives evident in jurisdictional frameworks of United Kingdom courts and European Court of Justice jurisprudence.
Modes of Supply and Coverage
GATS classifies cross-border services trade into four modes of supply that echo concepts debated at United Nations Conference on Trade and Development and within the Organisation for Economic Co-operation and Development: (1) cross-border supply between United States and European Union banks, (2) consumption abroad exemplified by tourists in France and Spain, (3) commercial presence such as subsidiaries in China and Brazil, and (4) presence of natural persons illustrated by professionals moving between India and United Kingdom. Coverage spans sectors including financial services shaped by the Basel Committee on Banking Supervision, telecommunications influenced by liberalization in Mexico and New Zealand, transportation interfaces with the International Civil Aviation Organization, professional services linked to accreditation regimes in Australia and Germany, and distribution services observed in Japan and South Korea.
Commitments and Scheduling
Members inscribe specific market access and national treatment commitments in schedules submitted to the World Trade Organization Secretariat, a practice analogous to tariff bindings in the General Agreement on Tariffs and Trade 1947 schedules, and recorded in contemporaneous commitments by United States, European Union, Japan, Brazil, India, China, Canada and Australia. Scheduling practices reflect negotiation dynamics seen in the Doha Development Round and involve legal instruments similar to accession protocols used by Russia and China during their WTO accession processes. Commitments may be progressive, temporary, or subject to qualifications, with annexes dedicated to sectors like financial services and telecommunications that reference standards developed by the International Telecommunication Union and the Basel Committee on Banking Supervision.
Exceptions and General Provisions
The Agreement contains general exceptions permitting measures for public policy objectives, drawing doctrinal parallels with exceptions in the General Agreement on Tariffs and Trade 1947 and safeguards referenced in the Agreement on Safeguards, and engaging regulatory concerns of bodies such as the World Health Organization and the International Labour Organization on public health and labor standards. National security, prudential measures in banking overseen by the Bank for International Settlements, and cultural exceptions asserted by Canada and France are among recognized grounds for deviation from commitments, subject to transparency and non-arbitrariness enforced through World Trade Organization procedures.
Dispute Settlement and Compliance
Disputes under the Agreement are adjudicated through the WTO Dispute Settlement Body which draws on precedents from cases involving United States, European Union, Japan, Canada, Brazil, Mexico and Australia and on interpretative principles established in the Tokyo Round and Uruguay Round. Remedies include recommendations, compensation, and authorized retaliation; compliance processes mirror enforcement mechanisms employed in prior World Trade Organization litigation, and panels may consult technical bodies like the International Maritime Organization or the International Civil Aviation Organization when sector-specific expertise is relevant.
Impact and Criticism
GATS has contributed to liberalization in sectors such as telecommunications in Mexico and Chile, financial services in United Kingdom and United States, and tourism in Spain and Thailand, while influencing domestic regulatory reform in India and China. Critics from advocacy groups like Greenpeace advocates and policy scholars associated with Harvard University, London School of Economics, Massachusetts Institute of Technology, University of California, Berkeley, Oxford University and Yale University argue that GATS may constrain public policy space, affect labor mobility between Philippines and Canada, and privilege multinational corporations headquartered in United States and European Union. Proponents represented by trade ministries of United States, European Union, Japan, Australia and Canada highlight enhanced market access and stability for investors, while development-focused institutions such as the World Bank and the International Monetary Fund emphasize potential growth gains for developing members like Bangladesh and Cambodia contingent on complementary domestic reforms.