The General Agreement on Trade in Services (GATS) is a legally binding agreement under the World Trade Organization (WTO) that governs international trade in services. Its primary objective is to promote free trade in services between WTO member countries by removing trade barriers such as quotas and tariffs. This agreement covers a wide range of services, including financial, telecommunications, transportation, business, and professional services.
Under the GATS agreement, each member country is required to provide a list of its service sectors that will be liberalized for foreign investment and trade. This list is known as the country`s „schedule of commitments” and outlines the specific conditions, limitations, and regulatory measures that apply to each sector. These commitments can take various forms, such as market access commitments, national treatment commitments, and additional commitments.
Market access commitments refer to the degree of market access that a WTO member country is willing to grant to foreign service providers in its domestic market. This can include measures such as allowing foreign companies to set up subsidiaries, joint ventures, or branch offices in the country, or removing restrictions on the number of service providers that can operate in a particular sector.
National treatment commitments refer to the assurance that foreign service providers will be treated no less favorably than domestic service providers in the host country. This ensures that foreign service providers will not face discriminatory measures such as higher taxes, fees, or regulations compared to domestic service providers.
Additional commitments refer to any other measures that a WTO member country agrees to undertake to liberalize trade in services. These can include measures such as improving transparency in regulations, harmonizing standards, or enhancing cooperation on regulatory matters.
The GATS agreement provides a framework for countries to negotiate and liberalize their trade in services in a progressive and mutually beneficial manner. It has played a significant role in promoting international trade in services over the past two decades. However, challenges remain in areas such as regulatory cooperation, data privacy, and digital trade, which require further attention and cooperation among WTO member countries.
In conclusion, the GATS agreement is a crucial instrument in facilitating international trade in services by removing barriers and ensuring fair treatment of foreign service providers. By promoting liberalization and cooperation, it helps to foster economic growth, create jobs, and improve the welfare of consumers and businesses.