Presentation on theme: "GATS Structure and Main Elements WTO Trade in Services Division"— Presentation transcript:
1 GATS Structure and Main Elements WTO Trade in Services Division
2 GATS WTO Fundamentals Transparency Non- of laws and discrimination regulationsNon-discriminationNon-discrimination: Most favoured nation and national treatmentTransparency: Public availability of measures affecting tradeRegulation: Reasonable, objective, impartial, transparent and not more burdensome than necessaryCompetition safeguards: Aimed at the realization of obligations & commitmentsProgressiveliberalizationof tradeReasonableregulation
3 SERVICES NOT “TRADABLE” AND NOT STORABLE STRONG GOVERNMENT INVOLVEMENT Perceived FeaturesNOT “TRADABLE” AND NOT STORABLESimultaneity of production and consumptionRole of local establishmentSTRONG GOVERNMENT INVOLVEMENTMonopolies, public service traditions, universal service obligationsInfrastructural importance (transport, telecom, banking,etc.)Role of non-economic objectives (social, cultural, safety)INTANGIBLEQuality criteria for services providers rather than for productsNO TARIFFSAccess conditions determined by regulation, quotas etc.
4 SERVICES. . . but:Certain services - international transport and communication - have been traded for centuriesServices are supplied in conjunction with goods (finance, insurance, marketing, etc.)Services have become tradable as a result of:technical progress (e-banking, tele-medicine, distance learning)government “downsizing”market liberalization and regulatory reform
5 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 economyShare in Total World TradeSome 20 percent, on a BOP-basis (does not count the full value of trade through commercially present foreign suppliers)
6 What is GATS? Individual Schedules of Commitments Common to all Short text of Articles - the “Framework”Annexes (including on Telecom)IndividualSchedules of CommitmentsMFN Exemptions (only at outset & if needed)
7 The Framework of Articles STRUCTUREThe Framework of ArticlesScope and definition - Part IGeneral obligations & disciplines - Part IISpecific commitments - Part IIIProgressive Liberalization - Part IVInstitutional Provisions - Part VFinal provisions - Part VI
8 Universal Coverage Scope and Definition 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 suppliersCovers all measuresincluding those of local and regional governments and non-governmental bodies exercising delegated authoritySectors:Business and professionalCommunications, all typesConstructionDistributionEducationEnvironmentInsurance and financialHealth and socialTourismRecreation & culturalTransport, all typesOther
9 Trade = Modes of Supply Scope and Definition Defined Examples Cross borderService supplier not present in the territory where services are deliveredDelivery of any services via telephone, fax, Internet, or the postConsumption abroadConsumers purchase services outside their country of residenceTourism, Repair of a ship in another country, Going to a hospital abroad for surgeryCommercial presenceService supplying entities present in the territory to deliver servicesEstablishing a bank branch or subsidiaryAny foreign direct investmentPresence of natural personsEntry and temporary stay of individual persons to supply services1. Consultant services, Professional or business travel2. Also, foreign employees of a firm supplying services
10 The different types Obligations General Obligations & DisciplinesThe different typesObligationsApplying generally to all services, whether or not scheduledApplicable only to services listed in schedulesExceptionsContaining relevant disciplines to ensure that they are not abused
11 Across the Board General Obligations & Disciplines 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)
12 General Obligations & Disciplines Most-Favoured-Nation Treatment MFN is critical - it is what makes the WTO truly multilateral“… 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)
13 General Obligations & Disciplines TransparencyApplies to all services, whether or not listed in schedulesMake publicly available all measures affecting trade in servicesIncludes all relevant laws, regulations, licensing procedures & criteria, technical requirements, etc.
14 Applied to committed services General Obligations & DisciplinesApplied to committed servicesTransparency (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)
15 General Obligations & Disciplines Domestic regulationReasonable, objective and impartial implementation of all measures related to committed servicesLicensing procedures and criteria, technical standards and qualification requirements should be objective, transparent and not more burdensome than necessarySubject to ongoing negotiations to develop specific disciplinesLee, question… would the term technical standard include any regulation that indicates how a services should be provided in general. E.g. in terms of prices?
16 Exceptions General Obligations & Disciplines Economic integration & labour market integration agreementsRestrictions on the balance of paymentsGeneral & security exceptionsFinancial services: prudential measures (Annex)
17 Example: General Exceptions General Obligations & DisciplinesExample: General ExceptionsGATS permits measuresto achieve policy objectives such as protection of public morals and the maintenance of public orderto protect privacy of personal data, confidentiality of individual records, and to prevent fraudThe measures must not be more restrictive than necessary, applied in an arbitrary way, discriminate unjustifiably or be used as a disguised restriction
18 To be negotiated General Obligations & Disciplines Disciplines on domestic regulationEmergency Safeguard MeasuresGovernment ProcurementSubsidies
19 Listed in Schedules Market Access National Treatment Specific CommitmentsListed in SchedulesDefined in GATS Part III (Arts. XVI, VXII & XVIIIMarket AccessNational TreatmentAdditional CommitmentsListed in Schedules by service and modes of supplyIndicates each Member’s legally bound guarantee of specified minimum levels of access or national treatmentSchedules do not bind laws or regulations as such
20 Format of SchedulesOrganized into columns that specify the extent of liberalization in listed sectors for each type of obligation and mode of supply.
21 “Horizontal” Measures The Schedules“Horizontal” MeasuresTo avoid repetition, limitations applied to a number of sectors are listed at the front of the schedule. Like sector-specific entries, they are legally binding. Listed by column & modeSome may relate to only one mode of supply:Example: Overall limitations on foreign investment, formation of corporate entity or land acquisition (market access/commercial presence)Others affect more than one mode of supply:Example: Tax measures contrary to national treatment
22 Market Access & National Treatment Using Modes of SupplyRelevant measures to listCross borderMeasures affecting the treatment of the service -- supplier not physically presentConsumption abroadMeasures relating the the consumer’s ability to secure the service abroadLee, as a way to identify the type of measure this slide is quite good. However, is it also a way to explain the distinction between modes 1 and 2? If so, is it still relevant or safe to use? I have in mind the discussion in e-commerce paper and reply by Members that applying the measures to the consumer only would identifyCommercial presenceMeasures relating to the supplier’s ability to provide the service by means of a corporate presence, e.g. investment laws, company lawsPresence of natural personsMeasures related to the ability of individuals (rather than corporate persons) to do business within the country,e.g. rules on business travellers, work permits
23 Definition: Article XVI Market Access ColumnDefinition: Article XVIMeasures a Member shall not maintain or adopt unless specified in its Schedule are:. limits on number of suppliers*. limits on value of transactions or assets*. limits on number of operations or the quantity of output*. limits on number of persons that may be employed in a sector or by a supplier*. measures that restrict or require specific types of legal entity or joint venture. limits on the participation of foreign capital*or an economic needs test having the same effectIs considered a complete or “closed end” definition
24 Definition: Article XVII National Treatment ColumnDefinition: Article XVIIUnless relevant limitations are specified in the schedule:Each Member shall accord to services and services suppliers of any other Member treatment no less favorable than that it accords to its own like services and service suppliersNo discrimination in favour of national suppliers on a de jure or de facto basisApplies to all discriminatory measuresThis is considered an “open ended” definitionDo you make the point of De facto non-discrimination? And if so… Have you heard anything about de fecto MFN? I was told that the Banana report introduced something on this…
25 Listing discriminatory measures Market Access & National TreatmentListing discriminatory measuresNationalTreatmentAll otherdiscriminatorymeasures belong inthis columnMarket AccessDiscriminatory andnondiscriminatory measuresfitting the Art. XVI definition of market access must belisted in this column
26 Market Access & National Treatment Terminology used in entriesTermDefinition of Entry“None”Binding to apply no limitations (within the meaning of Articles XVI and XVII). Also means “none other than those listed in the horizontal section”, if any, so need to specify if horizontal limits not applicable“Unbound”“Unbound*”No commitment, no binding (usually entered for a particular mode of supply wherein other modes DO contain commitments) *Not technically feasibleLee, as a way to identify the type of measure this slide is quite good. However, is it also a way to explain the distinction between modes 1 and 2? If so, is it still relevant or safe to use? I have in mind the discussion in e-commerce paper and reply by Members that applying the measures to the consumer only would identifyLimitation(s) specifiedBinding where the relevant limitation(s) is specified Is understood to mean “none, except” i.e. that ONLY said limitation(s) will be applied (in addition to relevant horizontal limits, if any)“Unbound except …. “Limits the scope of binding within a mode. Differs from limiting the type of services covered (which is noted in sector/sub-sector column) Limitations applied to the “bound” segment must also be listed
27 Structure of Schedules A Sample Commitment Schedules are organized into four columns that specify the extent of liberalization in listed sectors for each type of obligation and mode of supply.
28 Additional Commitments Column What can be listed? The definition of possible undertakings is open-endedThey can be unique to a particular Member or Members can agree to a common set of additional commitmentsThe Telecom Reference Paper is the first example of plurilatural negotiation of a common set of such undertakings
29 Regulations not listed in Schedules General Obligations vs. SchedulesExample:Regulations not listed in SchedulesRequirements for obtaining a licenseThe applicant must demonstrate an adequate financial base and the technical capability to supply the services subject to the licenseCriteria relating to financial baseminimum capital requirement of £50,000presentation of a business planCriteria relating to technical capacityAt least 2 staff must be certified engineers with 5 or more years of experienceImplication: A license can be denied if the applicant does not satisfy the criteria, even if commitments with no limitations are scheduled on that service
30 Other scheduling techniques Telecom “technology neutral” approachUnderstanding on Financial ServicesMaritime transportAir transportOther: Check-list approach... Tourism? Energy?
31 Types of Annexes On provisions On sectors On the extended negotiations GATS AnnexesTypes of AnnexesOn provisionsArticle II (MFN Exemptions)Movement of Natural PersonsOn sectorsAir TransportTelecommunicationsFinancial ServicesOn the extended negotiationsBasic TelecommunicationsSecond Annex on Financial ServicesMaritime Transport
32 Annex on MFN Exemptions GATS AnnexesAnnex on MFN ExemptionsAllows derogation from MFN obligation for sectors & measures specified in Member’s listOften cover bilateral/ regional agreements or “reciprocity” requirements in national lawsExcept for acceding countries, exemptions now possible only under waiver procedures of WTOIntended to be a temporary… Review after 5 years. Ten year maximum duration, in principle.
33 Annex on Movement of Natural Persons GATS AnnexesAnnex on Movement of Natural PersonsGATS covers only temporary entry and stay in a Member's territory to supply servicesGATS does not cover immigration policies or non-trade visa policies so these would NOT be addressed in schedulesSpecific commitments relevant to GATS coverage are as negotiated in schedules under the relevant mode of supply
34 Annex on Air Transport GATS Annexes Excludes all traffic (landing) rights and services related to traffic rights at present, so these are not to be committed in schedulesAgrees to coverage only of:Aircraft repair and maintenanceSelling and marketing servicesComputer reservation systems
35 Annex on Telecom - obligations? GATS AnnexesAnnex on Telecom - obligations?Applies to measures affecting access to and use of public basic telecom networks and servicesGeneral obligation to ensure that suppliers of scheduled services are guaranteed reasonable and non-discriminatory access to and useAllows reasonable conditions on access and use, in order to meet specified public policy objectivesPermits developing countries to depart from the obligations by indicating such in the schedule of commitments
36 Annex on Financial Services - scope ? GATS AnnexesAnnex on Financial Services - scope ?Excludes from the GATS definition of services:Activities of Central Banks or monetary authorities in pursuit of monetary or exchange rate policiesActivities under statutory systems of social security or public pension funds or of other public entities using government financial resourcesExcludes from GATS coverage any measures affecting the sector taken for prudential reasonsSo obligations and commitments are normally not applicable to these activities or measures
37 Increasing Participation of Developing Countries (Art. IV) 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 interestContact points to facilitate information accessSpecial priority for least developed countries
38 What has been Achieved to date? GATS is considered a reliable and predictable framework for facilitating trade and foreign investment in servicesIt has been widely perceived by developing countries as a positive development in the multilateral trade frameworkMany commitments have been overtaken by further reforms and liberalization in both developed and developing countries