GATS Commitments and Liberalization of the Sports Service Industry: WTO Compliance and Policy Challenges

Differences of opinion are stark regarding the implications of the General Agreement on Trade in Services (GATS) for public services like health and education in developing countries. Some believe that GATS poses no threat at all to these essential services and, in some circumstances, may contribute to their more effective delivery and regulation. Others are vehemently opposed to trade liberalization commitments of any kind in these areas and view GATS as a significant threat to the effectiveness and even the viability of national health and education systems. The reality for developing countries is much more complex than either of these polar positions suggests. Before deciding on what GATS commitments to undertake in health and education, developing countries must make prior policy choices regarding how much private sector participation to permit in the delivery of these services. Developing country governments must measure the costs and benefits of privatization and commercialization in health and education services against the achievement of their development objectives. The desirability and impact of privatization and commercialization on development in each country will depend very much on local conditions including the state's capacity for effective domestic regulation of private sector suppliers. One question for developing countries in this regard is whether there would be benefits resulting from permitting foreign firms to provide privatized or commercialized services, such as more money flowing to improving health and education facilities and better access to desperately needed health and education services. For developing countries that have decided to liberalize access to their markets for health and education services, a secondary question is whether GATS commitments in health and education services will assist them to obtain the net benefits of trade liberalization. Many states are successfully liberalizing their regimes relating to health and education services without making GATS commitments to do so. In the current round of GATS negotiations there is little pressure on developing countries to adopt stronger commitments in these areas from WTO Members. At the same time, there is some uncertainty regarding both the scope and nature of GATS obligations and the trade benefits associated with making specific GATS commitments in these sectors. In this context, many developing countries are understandably reluctant to undertake commitments that would limit their future policy options. This paper sketches the outlines of the debate on the liberalization of public services in developing countries focusing on health and education. It then provides a brief overview of the relatively limited existing GATS commitments in these sectors and the low priority attached to improving commitments in the current negotiations. The final sections of the paper look at why there is so little interest in GATS commitments among WTO Members and suggest some possible strategies for making the GATS more relevant to improving the regulation and delivery of health and education services in developing countries.

The authors analyze the extent to which the EU-15 and 16 transition economies used the WTO General Agreement on Trade in Services (GATS) to commit to service sector policy reforms. They compare GATS commitments with the evolution of actual policy stances over time. While there is substantial variance across transition economies on both actual policies and GATS commitments, the authors find an inverse relationship between the depth of GATS commitments and the quality of actual services policies as assessed by the private sector. In part this can be explained by the fact that the prospect of EU accession makes GATS less relevant as a commitment device for a subset of transition economies. But for many of the non-EU accession candidates, the WTO seems to be a weak commitment device. One explanation is that the small size of the markets concerned generates weak external enforcement incentives. The authors' findings suggest greater collective investment by WTO members in monitoring and the need for transparency to increase the benefits of WTO membership to small countries.

Foreign banks and the Chinese Government have different dreams about the business opportunities and obligations that arise under China's World Trade Organization (WTO) commitments on financial services. This article provides an overview of China's banking sector reforms and its gradual opening to foreign participation in the context of General Agreement on Trade in Services (GATS) rules governing international trade in financial services and the obligations that apply since China's WTO accession in December 2001. The article highlights the contradictory interpretations that China and other Members have issued regarding China's GATS commitments and provides a framework for assessing the WTO consistency of China's banking measures. An analysis is conducted under this framework to evaluate whether China has fully implemented its GATS commitments on (i) the acquisition of Chinese banks by foreign financial institutions, (ii) legitimate prudential regulation in the banking sector, and (iii) full market access for credit card and electronic payment services. Notwithstanding the apparent complexity of GATS rules, the article concludes that the WTO legal framework supports the case for increased access to China's financial services market consistent with its GATS commitments, and fully consistent with China's plans for continuing domestic growth and its medium-term financial services export interests.

Foreign banks and the Chinese Government have different dreams about the business opportunities and obligations that arise under China's World Trade Organization (WTO) commitments on financial services. This article provides an overview of China's banking sector reforms and its gradual opening to foreign participation in the context of General Agreement on Trade in Services (GATS) rules governing international trade in financial services and the obligations that apply since China's WTO accession in December 2001. The article highlights the contradictory interpretations that China and other Members have issued regarding China's GATS commitments and provides a framework for assessing the WTO consistency of China's banking measures. An analysis is conducted under this framework to evaluate whether China has fully implemented its GATS commitments on (i) the acquisition of Chinese banks by foreign financial institutions, (ii) legitimate ‘prudential regulation’ in the banking sector, and (iii) full market access for credit card and electronic payment services. Notwithstanding the apparent complexity of GATS rules, the article concludes that the WTO legal framework supports the case for increased access to China's financial services market consistent with its GATS commitments, and fully consistent with China's plans for continuing domestic growth and its medium-term financial services export interests.

We analyze the extent to which the EU-15 and 16 transition economies used the WTO General Agreement on Trade in Services (GATS) to commit to service sector policy reforms. GATS commitments are compared with the evolution of actual policy stances over time. While there is substantial variance across transition economies on both actual policies and GATS commitments, we find an inverse relationship between the depth of GATS commitments and the ‘quality’ of actual services policies as assessed by the private sector. In part this can be explained by the fact that the prospect of EU accession makes GATS less relevant as a commitment device for a subset of transition economies. However, for many of the non-EU accession candidates the WTO seems to be a weak commitment device. One explanation is that the small size of the markets concerned generates weak external enforcement incentives. Our findings suggest greater collective investment by WTO members in monitoring and transparency is needed to increase the benefits of WTO membership to small countries.

This paper addresses two questions: (1) does unilateral liberalization in the telecommunications sector promote a country's commitments in the World Trade Organization (WTO) and (2) what are the possible reasons for a disconnection between unilateral liberalized measures and General Agreement on Trade in Services (GATS) commitments? On the basis of interviews with trade and WTO experts and a closer comparison between the GATS commitments and actual policies of the selected WTO members in the telecommunications sector, we argue that unilateral liberalization, in most cases, acts as a push factor and provides the grounds for making multilateral WTO commitments. Apart from unilateral liberalization, a country also requires the achievement of ‘sufficient conditions’ before agreeing to undertake liberalization commitments under GATS. Furthermore, the study suggests that the desire to attract Foreign Direct Investment (FDI) and also to overcome domestic resistance to reform may encourage each WTO member to make higher commitments. Conversely, a countries’ intention to remain unconstrained by WTO commitments may induce them to commit at a lower level than their actual level of openness.

The creation of the General Agreement on Trade in Services (GATS), in the Uruguay Round, and its entry into force in 1995 marked a new stage in the history of the multilateral system. It was motivated essentially by the rapid expansion of international services trade within an increasingly open environment in many countries. Given the peculiarities of services trade, including the intangible nature of the products concerned and the need for direct contact between supplier and user in many cases, the Agreement contains a variety of conceptual innovations, including its extension to modes of supply beyond conventional cross-border trade (consumption abroad, commercial presence, and presence of natural persons) and its coverage, and legitimization, of various types of non-tariff restrictions. In turn, the new concepts needed time to be absorbed by the ministries and agencies involved in services trade. Further, the positive-list, or bottom-up, approach to scheduling trade commitments under the GATS meant that great flexibility was given to Members in selecting the sectors concerned and specifying the levels of access provided under individual modes. Thus, not surprisingly, the schedules that emerged from the Uruguay Round, which still account for the majority of current commitments, contain a variety of unclear or superfluous entries that may cause interpretation problems. Their solution could contribute significantly to the clarity and comparability of access obligations across sectors and WTO Members. The scheduling conventions agreed for the Doha Round thus provide specifically for the possibility of technical refinements that leave the substance of commitments unchanged. However, not only was this possibility used more sparingly to date than might have been expected, but additional flaws would be introduced if some current offers were to enter into effect. The following discussion, with a focus on a particular group of entries (market access via commercial presence), tries to explain the scope for such refinements and develop a clearer picture of the areas where further action might be needed.

The creation of the General Agreement on Trade in Services (GATS), in the Uruguay Round, and its entry into force in 1995 marked a new stage in the history of the multilateral system. It was motivated essentially by the rapid expansion of international services trade within an increasingly open environment in many countries. Given the peculiarities of services trade, including the intangible nature of the products concerned and the need for direct contact between supplier and user in many cases, the Agreement contains a variety of conceptual innovations, including its extension to modes of supply beyond conventional cross-border trade (consumption abroad, commercial presence, and presence of natural persons) and its coverage, and legitimization, of various types of non-tariff restrictions. In turn, the new concepts needed time to be absorbed by the ministries and agencies involved in services trade. Further, the positive-list, or bottom-up, approach to scheduling trade commitments under the GATS meant that great flexibility was given to Members in selecting the sectors concerned and specifying the levels of access provided under individual modes. Thus, not surprisingly, the schedules that emerged from the Uruguay Round, which still account for the majority of current commitments, contain a variety of unclear or superfluous entries that may cause interpretation problems. Their solution could contribute significantly to the clarity and comparability of access obligations across sectors and WTO Members. The scheduling conventions agreed for the Doha Round thus provide specifically for the possibility of technical refinements that leave the substance of commitments unchanged. However, not only was this possibility used more sparingly to date than might have been expected, but additional flaws would be introduced if some current offers were to enter into effect. The following discussion, with a focus on a particular group of entries (market access via commercial presence), tries to explain the scope for such refinements and develop a clearer picture of the areas where further action might be needed.

Regional trade agreements in services are a relatively recent, but rapidly expanding phenomenon. Their relationship with commitments undertaken under the General Agreement on Trade in Services (GATS) or offered in the Doha Round has attracted some attention in the literature. Relevant publications tend to focus on the 'value added' that such agreements might generate through broader sectoral coverage or deeper levels of liberalization. This article takes a different perspective, however, and focuses on provisions that fall short of the same countries' GATS commitments. Such 'negative preferences' are more than an isolated occurrence: they can be found in most recent agreements, including agreements involving some of the largest World Trade Organization (WTO) Members. The existence of 'negative preferences' or 'GATS-minus commitments' may prove relevant for several reasons: in particular, they could impinge on an agreement's legal status under the GATS and help create a trading system beyond the WTO. It is conceivable that such minus-commitments are mutually conceded in 'sensitive' sectors or tacitly accepted in view of 'side-payments' in non-WTO currency (including development finance). Those who subscribe to Bhagwati's comparison of PTAs with termites might thus have additional reason to be alarmed: the bugs' unconventional table manners. Oxford University Press 2010, all rights reserved, Oxford University Press.

The General Agreement on Trade in Services (GATS) has been at the epicenter of public discussions due to its possibly adverse effects on the domestic regulation of public services. While the GATS has an admittedly broad scope, its ‘bite’ largely depends on commitments undertaken by WTO Members. The paper critically reviews the current legal framework affecting trade in services and identifies its weaknesses, most notably caused by the various built-in negotiating mandates in the GATS. To date, commitments in health services are fairly modest and the prospects for bolder commitments in the current round of negotiations are weak. The paper argues that there is a variety of reasons for this, including the outdated services sectoral classification system used in the GATS; the uncertainty about the scope of various GATS provisions; and intensive lobbying against liberalization. Meanwhile, global trade in health services grows apace irrespective of the GATS current impasse. Developing countries do play an active role in this equation, but in an unbalanced and uncoordinated manner. Drawing from the EU experience, the paper predicts that, when it comes to health issues, adjudication at the global level will exercise deference. This confirms that the health sector belongs to the very core of those sensitive services in which even successful preferential trade agreements failed to bring about considerable openness.

Multidisciplinary Practice (MDP) may be defined as joint professional practice by two or more professionals at least one of whom is a lawyer, where such professional practice involves the offer of legal services to the public. MDP is currently banned in the United States by the Model Rules of Professional Conduct as adopted in various states of the Union. This article isolates and addresses a key argument made in support of lifting this ban. This is the argument that United States obligations under the World Trade Organization's (WTO) General Agreement on Trade in Services (GATS) constrain the capacity of the US authorities to regulate MDP domestically, especially when such regulation takes the form of a general ban on MDP. Constraints on the US regulatory capacity over MDP have been stated to take the form of the several restrictions that GATS places on domestic rules that impede trade in legal services between the US and other WTO members: GATS, it is argued, effectively precludes domestic rules that have the effect of impeding trade in legal services, and the lawyers' rules of professional conduct that prohibit MDP are examples of such domestic rules. This article challenges this view of the US rules, i.e. the Model Rules of Professional Conduct as adopted by the several states. It does so through an analysis of the structure of the GATS, the contours of US treaty obligations under the GATS and the jurisprudence of the WTO Appellate Body on the subject. It reaches the conclusion that GATS obligations leave the US largely unfettered in its capacity to regulate or prohibit MDP.

The General Agreement on Trade in Services (GATS) under the WTO is a newly-born and the first ever multilateral agreement on trade in services. Despite of potential development and welfare prospects abound in the services sector, only moderate liberalization has been achieved under the GATS and negotiations have been lagging behind. On the contrast, newly acceded members including China have made extensive and ambitious commitments under the GATS. With its eight years’ membership, China might be the only place where GATS rules have been extensively practiced and testified and thus provides valuable lessons for the GATS itself and other WTO members. The transitional review provided under China's Accession Protocol and conducted under the Council for Trade in Services and the Committee on Trade in Financial Services serves as an effective forum for members to discuss China’s implementation of its commitments under the GATS. With a survey of the comments and questions made at the latest transitional review, I highlight a few outstanding issues which I regard of systemic importance for the development of services disciplines, including: the relationship between obligations under market access (Article XVI), national treatment (Article XVII) and domestic regulation (Article VI); implications of cross-sector and cross-modes of supply (e.g. distribution of a service); regulation of investment vs. services liberalization; and liberalization against broader regulatory framework. The overall picture suggests that the supply of services can be affected by measures stemming from different regulatory domain (from macroeconomic policy to sector-specific regulation) at different levels of governance and in different forms. The GATS’s rules on market access, national treatment and domestic regulation could well serve as powerful tools to deal with this complicated regulatory network should they be further clarified with due consideration being given to the real world’s complexity and diversity. Luckily with China’s experience, we already felt the “stone in the river”.Presented at the SIEL 2010 Conference in Barcelona.

The multilateral trading system embodied in the World Trade Organization has contributed significantly to economic growth, development and employment throughout the past fifty years. We are determined, particularly in the light of the global economic slowdown, to maintain the process of reform and liberalization of trade policies, thus ensuring that the system plays its full part in promoting recovery, growth, and development.The negotiations on trade in services shall be conducted with a view to promoting the economic growth of all trading partners and the development of developing and least-developed countries.The General Agreement on Trade in Services (GATS) is among the World Trade Organization's most important agreements. The accord, which came into force in January 1995, is the first and only set of multilateral rules covering international trade in services. Ig has been negotiated by the Governments themselves, and it sets the framework within which firms and individuals can operate. The GATS has two part: the framework agreement containing the general rules and disciplines ; and the notional "schedules" which list individual countries' specific commitments on access to their domestic markets by foreign suppliers.Each WTO Member lists in its national schedule those services for which it wishes to guarantee access to foreign suppliers. All commitments apply on a non-discriminatory basis to all other Members. There is complete freedom to choose which services to commit. In addition to the services committed, the schedules limit the degree to which foreign services providers can operate in the market. For example, a country making a commitment to allow foreign banks to operate in its territory may limit the number of banking licenses to be granted (a market access limitation). It might also fix a limit on the number of branches a foreign bank may open (a national treatment limitation).The GATS covers all internationally-traded services with two exception : services provided to the public in the exercise of governmental authority, and , in the air transport sector, traffic rights and all services directly related to the exercise of traffic rights and all services directly related to the exercise of traffic rights. The GATS also defines four ways in which a service can be traded, known as "modes of supply" Services supplied from one country to another (e.g international telephone calls), officially known as "cross-border supply"; Consumers from one country making use of a service in another country(e.g tourism), officially known as "consumption abroad"; A company from ton country setting up subsidiaries or branches to provide services in another country (e.g a bank from one country setting up operations in another country), officially known as "commercial presence" ; and Individuals travelling from their own country to supply services in another (e.g an actress or construction worker), officially known as "movement of natural persons". Trade liberalization, and even economic growth, are not the ends in themselves. The ultimate aim of Government is to promote human welfare in the broadest sense, and trade policy is only one of many instruments Governments use in pursuing this goal. But trade policy is nevertheless very important, both in promoting growth and in preventing conflict. The building of the multilateral trading system over teh past 50 years has been one of the most remarkable achievements of international cooperation in history. The system is certainly imperfect, which is one of the reasons why periodic negotiations are necessary, but the world would be a far poorer and more dangerous place without it.In January 2000, WTO Member Governments started a new round of negotiations to promote the progressive liberalization of trade in services. The GATS agreement specifically states that the negotiations "shall take place with a view to promoting the interests of all participants on a mutually advantageous basis" and "with due respect for national policy objectives and the level of development of individual Members". The pace and extent of these negotiations are set by the WTO's 140 Member Goverments themselves according to their different national policy priorities.Recently, however, the negotiations and the GATS itself have become the subject of ill-informed and hostile criticism. Scare stories are invented and unquestioningly repeated, however implausible. It is claimed for example that the right to maintain public services and the power to enforce health and safty standards are under threat, though both are explicitly safeguarded under the GATS. How have serious people come to believe what is, on the face of it, out of the question? Why should any Government, let alone 140 Governments, agrees to allow themselves to be forced, or force each toher, to surrender of compromise powers which are important to them, and to all of us?Decision-making in open societies presupposes informed public discussion. It must be based on fact rather than fiction. The purpose of this booklet is to contribute to this discussion and to a greater public understanding of the GATS by correcting statements made in some recent publication which we believe are misleading the public and undermining support for international economic cooperation. It must not be assumed that becuase we have disputed some allegations we accept that others are well-founded: these are merely examples.

This paper addresses some of the public policy controversies surrounding the treatment of education services under the World Trade Organisation's General Agreement on Trade in Services (GATS). The rapid rise in cross-border trade and investment in education services observed in recent years has given new prominence to the role the GATS might play as a force for progressive liberalisation in the sector. The paper provides a synthetic description of the core features of the GATS, highlighting in particular how the four modes of supplying services subject to the Agreement's disciplines relate to trade in education services. The paper recalls the policy flexibility WTO members retain under the GATS as regards the nature, extent and pace of possible progressive liberalisation. It describes a number of key misunderstandings and fallacies that have tended to cloud a rational discussion of the possible effects of the GATS on trade in education services. The paper also depicts the key elements found in the negotiating proposals on education services put forward to date by the governments of Australia, New Zealand, Japan and the United States, recalling their circumscribed nature and the acute awareness WTO members are showing about the policy sensitivities arising in the sector. The paper concludes with a discussion of the limited role the GATS can be expected to play as a force for change in the education field. The paper argues that many of the impediments that stand in the way of greater cross-border exchanges of education services may be more appropriately pursued outside a trade policy setting.

The World Trade Organization (WTO) General Agreement on Trade in Services (GATS) and its Annex on Financial Services provide the international legal framework for the regulation of cross-border trade in financial services. This paper analyses the main provisions of the GATS that relate to regulatory transparency of trade in financial services. The GATS generally provides a flexible framework for states to negotiate liberalisation commitments while providing WTO members with autonomy to promote their regulatory objectives. The extent to which states, however, must adhere to GATS disciplines regarding transparent regulatory practices has become a source of policy debate. Although the WTO has played no role in setting financial regulatory standards, the transparency obligations of the GATS have important implications for how financial regulators can achieve their objectives. Moreover, GATS transparency obligations can potentially create disproportionate administrative costs for developing countries and thus undermine their financial sector development. The paper argues that the principles of regulatory transparency in the GATS should be interpreted in a way that favours regulatory discretion to achieve financial stability and other prudential objectives. In the post-Doha era, WTO members should attempt to clarify GATS transparency obligations in a way that promotes financial development and regulatory autonomy.