 The creation of the GATS was one of the

landmark achievements of the Uruguay

Round, whose results entered into force in
January 1995.
 GATS is the first and only set of multilateral
rules covering international trade in services.
 It has been negotiated by government
themselves, and it sets the framework within
which firms and individuals can operate.
 The GATS has two parts; the framework
agreement containing the general rules and
disciplines and the national ‘schedules’ which
list individual countries specific commitments on
access to their domestic markets by foreign
suppliers.
 The GATS Agreement specifically states that the
negotiations “shall take place with a view to
promoting the interests of all participants on
mutually advantageous basis and with due
respect for national policy objectives and the
level of development of individual members”.
 All WTO Members, some 140 economies at
present, are at the same time Members of the
GATS and, to varying degrees, have assumed
commitments in individual service sectors.
 GATS consist of 29 Articles (32, if three bis articles are
counted separately). The Agreement contains five
components:
1. concepts (Part I) and general obligations and disciplines
(Part II) that apply across the board to measures affecting
trade in services.
2. specific commitments (Part III) on market access and
national treatment that apply only to sectors inscribed in a
member’s schedule.
3. a commitment by member to enter into successive round of
negotiations aimed at progressive liberalization (Part IV).
4. institutional provisions (Part V) and final provisions (Part VI).
5. various attachments, mainly in the form of sectoral Annexes
and Ministerial Declarations.
 Part I, which consists of a sole article i.e. Article
1, defines the scope and coverage of the GATS.
 The Agreements “applies to measures by
members affecting trade in services”.
 Services includes any service in any sector
except service supplied in the exercise of
governmental authority.
 These are services that are supplies neither on a
commercial basis nor in competition with other
suppliers.
 Four modes of Supply:-
1. Cross-border supply is defined to cover services
flows from the territory of one Member into
the territory of another Member (e.g. banking
or architectural services transmitted via
telecommunications or mail)
2. Consumption abroad refers to situations where
a service consumer (e.g. tourist or patient)
moves into another Member's territory to
obtain a service.
 Commercial presence implies that a service
supplier of one Member establishes a territorial
presence, including through ownership or lease
of premises, in another Member's territory to
provide a service (e.g. domestic subsidiaries of
foreign insurance companies or hotel chains).
Presence of natural persons consists of persons
of one Member entering the territory of
another Member to supply a service (e.g.
accountants, doctors or teachers).
 Obligation contained in the GATS may be
categorized into two groups; general
obligations and specific commitments.
 General obligations, which apply directly and
automatically to all members and service
sectors and commitments concerning market
access and national treatment in specifically
designated sectors.
 The second part of the GATS lays down the
Agreement's general obligations and disciplines.
These constitute basic rules that apply to all members
and to all services.
a) Most-Favored-Nation (MFN) Treatment
Article II of GATS provides the MFN clause. Under the
MFN obligations, all countries whether they have
state owned or privatized infrastructures, should
allow to access to their market on a non-
discriminatory basis between service providers from
different countries.
b) Transparency and Fair Procedures
Article III of the GATS contain a number of
obligations aimed at ensuring a certain level
of transparency with regard to member’s
measures. The transparency obligation
operates on three level in GATS.
 It obligates each WTO member to promptly
publish all relevant measures e.g. laws and
regulations.
 WTO members must also inform the Council
for Trade in Services of the introduction of
any new laws, or any changes to existing
laws, regulation or administrative guidelines.
 GATS further provides for the establishment
of enquiry points by members for the purpose
of responding to requests for information on
the measures of general application. WTO
members must respond to any request by the
other members.
 Part III lays down specific commitments, sets out the
obligation relating to market access and national
treatment. These obligations apply only where a
member has taken specific commitments in a given
service sectors.
a) Market Access
Market access is a negotiated commitment in
specified sectors. It may be made subject to various
types of limitations. For example, limitations may be
imposed on the number of services suppliers, service
operations or employees in the sector; the value of
transactions; the legal form of the service supplier;
or the participation of foreign capital.
b) National Treatment
A commitment to national treatment implies
that the Member concerned does not operate
discriminatory measures benefiting domestic
services or service suppliers.
It is an obligation in the sense that members
must accord national treatment in respect of
all members affecting the supply of services
in the sectors.
WTO members are obliged to meet the
requirement of national treatment norms by
according to foreign service and service
suppliers either formally identical or formally
different treatment which it accords to its
own like services or service suppliers.
 Effective dispute resolution — from the stage of
friction to consultation, complaint, adjudication
and implementation — is critical to the effective
functioning of the WTO Agreements. In the
event of problems related to the operation of
the GATS, Articles XXII and XXIII provide the
framework for consultations and, if need be,
dispute settlement and enforcement among
Members. The relevant provisions of the Dispute
Settlement Understanding (DSU) apply.
 Step 1: A Member requests consultations with another
Member which it considers to have breached its
obligations or otherwise impaired benefits under the
GATS.
 Step 2: Consultations between the two Members are held
to reach a mutually satisfactory solution.
 Step 3: If the consultations fail to resolve the issue, the
complaining Member may request the establishment of a
panel of three independent experts. These are generally
chosen from an existing roster of qualified panellists.
 Step 4: The panel examines the complaint in the light of
the relevant legal obligations, and has six months to issue
a report with binding recommendations for adoption by
the dispute-settlement body (DSB).
 Step 5: Any party to the dispute may appeal the panel
ruling before the WTO Appellate Body.
 Step 6: The Appellate Body examines the appeal, and has
up to 90 days to deliver its report.
 Step 7: The panel ruling is adopted by the DSB (including
any modifications decided by the Appellate Body), unless
there is consensus not to adopt.
 Step 8: The Member concerned has time for
implementation.
 Step 9: In the absence of full implementation within the
specified period, a party to the dispute may request
permission from the DSB to suspend equivalent
commitments with respect to this Member.
 The Council for Trade in Services has been
established under the GATS to further the
objectives of the Agreement.
 The council has been empowered to establish
such subsidiary bodies as it thinks
appropriate for effective discharge of its
functions. The Council as well as the
subsidiary bodies are open to all members.
 The Council has established many subsidiary
bodies for proper and effective working of
the GATS, i.e. Committee on Trade in
Financial Services, Working Party on
Professional Services as well as Domestic
Regulations.
 The council has also been empowered to
provide technical assistance to developing
countries.