The Time Factor in the MFN Obligation in Services Trade: Will the Lion Ever Roar?

Abstract

Trade disciplines under the General Agreement on Trade in Services (GATS) apply to the treatment of products (i.e., services) and to that of producers (i.e., service suppliers). Unlike rules on merchandise trade, the GATS thus covers the conditions governing a producer’s commercial establishment and, hence, its competitive position. That raises the question whether Members are free to modify these conditions over time or, instead, whether they are required under the GATS Most-Favoured-Nation (MFN) obligation to provide newly arriving producers with the most attractive conditions they accorded in the past. In the latter case, Members might shy away from launching trade-promoting initiatives beyond their existing GATS commitments, which have remained quite modest overall. As a way forward, Members could consider an informal understanding, possibly inspired by recent regional trade agreements (RTAs), to clarify the application of the GATS MFN obligation over time. services, trade in services, GATS, RTAs, most-favoured nation, MFN, discrimination, time factor, temporal effect