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WTO GATS and Modes of Supply |How to read a Schedule ? | How commitments are recorded in schedules | What is a MFN exemption?
The General Agreement on Trade in Services (GATS) is the first multilateral trade agreement to cover trade in services. Its creation was one of the major achievements of the Uruguay Round of trade negotiations, from 1986 to 1993. This was almost half a century after the entry into force of the General Agreement on Tariffs and Trade (GATT) of 1947, the GATS' counterpart in merchandise trade. As stressed in GATS, international trade in services can take place through four modes of supply:
The pillars of GATS are a set of general obligations, applying to all WTO members and all services, such as the Most- Favoured -Nation treatment (MFN) ensuring non-discrimination between trading partners; countries schedules of specific commitments resulting from negotiations for specific sectors and modes; and several sectoral annexes as well as an annex on the movement of natural persons.
For purposes of structuring their commitments, WTO Members have generally used a classification system comprised of 12 core service sectors namely:
Business services (including professional services and computer services)
Communication services
Construction and related engineering services
Distribution services
Educational services
Environmental services
Financial services (including insurance and banking)
Health-related and social services
Tourism and travel-related services
Recreational, cultural and sporting services
Transport services
Other services not included elsewhere
These sectors are further subdivided into a total of some 160 sub-sectors. Furthermore the sectoral entries are accompanied by numerical references to the Central Product Classification system of the United Nations which gives a detailed explanation of the services activities covered by each listed sector or subsector.
Under this classification system, any service sector, or segments thereof, may be included in a Member's schedule of commitments with specific market access and national treatment obligations. Each WTO Member has submitted such a schedule as required by the Agreement (Article XX:1).
At the level of the WTO, Mauritius has filed commitments in Tourism, Telecommunications and Financial Services, three important services sectors for Mauritius. The commitments guarantee the access of foreign service suppliers and specify any existing limitations affecting both foreign and domestic service suppliers.
Mauritius Schedule of commitment is available here: download
A specific commitment in a services schedule is an undertaking to provide market access and national treatment for the service activity in question on the terms and conditions specified in the schedule. When making a commitment a government therefore binds the specified level of market access and national treatment and undertakes not to impose any new measures that would restrict entry into the market or the operation of the service.
Specific commitments thus have an effect similar to a tariff binding they are a guarantee to economic operators in other countries that the conditions of entry and operation in the market will not be changed to their disadvantage. Commitments can only be withdrawn or modified after the agreement of compensatory adjustments with affected countries, and no withdrawals or modifications may be made until three years after entry into force of the Agreement. Such modifications of commitments may not affect the application of most-favoured-nation (MFN) treatment. Commitments can however be added or improved at any time.
The national schedules all conform to a standard format which is intended to facilitate comparative analysis. For each service sector or sub-sector that is offered, the schedule must indicate, with respect to each of the four modes of supply, any limitations on market access or national treatment which are to be maintained. A commitment therefore consists of eight entries which indicate the presence or absence of market access or national treatment limitations with respect to each mode of supply. The first column in the standard format contains the sector or subsector which is the subject of the commitment; the second column contains limitations on market access; the third column contains limitations on national treatment. In the fourth column governments may enter any additional commitments which are not subject to scheduling under market access or national treatment.
In nearly all schedules, commitments are split into two sections:
First, horizontal commitments which stipulate limitations that apply to all of the sectors included in the schedule; these often refer to a particular mode of supply, notably commercial presence and the presence of natural persons. Any evaluation of sector-specific commitments must therefore take the horizontal entries into account.
Applies to trade in services in all scheduled services sectors unless otherwise specified.
May contain limitations and maintain certain sectors exclusively reserved for local service suppliers.
Reservations on measures government may take in future to support local service suppliers, especially in new sectors of activities.
Second is the sector or sub-sector specific section of the schedule which contains commitments that apply to trade in services in a particular sector or subsector are listed. Sector or sub-sector column contains a clear definition of the sector, subsector or activity that is the subject of the specific commitment. Members are free, subject to the results of their negotiations with other participants, to identify which sectors, subsectors or activities they will list in their schedules, and it is only to these that the commitments apply.
Market access column : When a Member undertakes a commitment in a sector or subsector it must indicate for each mode of supply what limitations, if any, it maintains on market access. Article XVI:2 of the GATS lists six categories of restriction which may not be adopted or maintained unless they are specified in the schedule. All limitations in schedules therefore fall into one of these categories. They comprise four types of quantitative restriction plus limitations on types of legal entity and on foreign equity participation.
National treatment column : The national treatment obligation under Article XVII of the GATS is to accord to the services and service suppliers of any other Member treatment no less favourable than is accorded to domestic services and service suppliers. A Member wishing to maintain any limitations on national treatment that is any measures which result in less-favourable treatment of foreign services or service suppliers must indicate these limitations in the third column of its schedule.
| Market Access | National Treatment |
|
Limitations on number of service suppliers Service transactions Service operations Natural persons Equity participation |
Members can provide more favorable treatment to national service suppliers. |
Additional commitments column: Entries in this column are not obligatory but a Member may decide in a given sector to make additional commitments relating to measures other than those subject to scheduling under Articles XVI and XVII, for example qualifications, standards and licensing matters. This column is to be used to indicate positive undertakings, not the listing of additional limitations or restrictions
Where there are no limitations on market access or national treatment in a given sector and mode of supply, the entry reads NONE. However, it should be noted that when the term NONE is used in the second or sector-specific part of the schedule it means that there no limitations specific to this sector: it must be borne in mind that, as noted above, there may be relevant horizontal limitations in the first part of the schedule.
All commitments in a schedule are bound unless otherwise specified. In such a case, where a Member wishes to remain free in a given sector and mode of supply to introduce or maintain measures inconsistent with market access or national treatment, the Member has entered in the appropriate space the term UNBOUND.
In some situations, a particular mode of supply such as the cross-border supply of bridge-building services may not be technically possible or feasible. In such cases the term UNBOUND* has been used, usually in conjunction with an explanatory footnote stating "Unbound due to lack of technical feasibility".
