Basic Purpose and Concepts

1.4 Scope and Application

Article I:1 stipulates that the GATS applies to measures by Members affecting trade in services. It does not matter in this context whether a measure is taken at central, regional or local government level, or by non-governmental bodies exercising delegated powers. The relevant definition covers any measure, “whether in the form of a law, regulation, rule, procedure, decision, administrative action, or any other form, ... in respect of:

• the purchase, payment or use of a service;
   
• the access to and use of, in connection with the supply of a service, services which are required by those Members to be offered to the public generally;
   
• the presence, including commercial presence, of persons of a Member for the supply of a service in the territory of another Member”.
   

This definition is significantly broader than what governmental officials in trade-related areas may expect. It is thus important to familiarize staff at all levels with basic concepts of the GATS to prevent them from acting, unintentionally, in contravention of obligations under the Agreement and enable them to negotiate effectively with trading partners.

For purposes of structuring their commitments, WTO Member have generally used a classification system comprised of 12 core service sectors (document MTN.GNS/W/120 (7 pages, 47KB)):

• 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.  Under this classification system, any service sector 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 under the GATS.

There is only one sector-specific exception to the Agreement’s otherwise comprehensive coverage. Under the GATS Annex on Air Transport Services, only measures affecting aircraft repair and maintenance services, the selling and marketing of air transport services, and computer reservation system (CRS) services have been included. Measures affecting air traffic rights and directly-related services are excluded. This exclusion is subject to periodic review.

Another blanket exemption applies to “services supplied in the exercise of governmental authority” (Article I:3b). The relevant definition specifies that these services are “supplied neither on a commercial basis, nor in competition with one or more service suppliers” (Article I:3c). Typical examples may include police, fire protection, monetary policy operations, mandatory social security, and tax and customs administration.

Despite its broad coverage, the GATS does not compromise Members’ ability to regulate for national policy purposes.  Issues related to domestic regulation will be further discussed in Chapter 3.