Main Building Blocks: Agreement, Annexes, and Schedules

2.3 Conditional General Obligations

A second type of general obligations applies only to sectors listed in a Member’s schedule of commitments.

Domestic Regulation

Pursuant to Article VI:1, measures of general application are to be administered “in a reasonable, objective and impartial manner”. If the supply of a scheduled service is subject to authorization, Members are required to decide on applications within a reasonable period of time (Article VI:3).

Article VI:5 seeks to ensure that specific commitments are not nullified or impaired through regulatory requirements (licensing and qualification requirements, and technical standards) that are not based on objective and transparent criteria or are more burdensome than necessary to ensure quality. The scope of these provisions is limited, however, to the protection of reasonable expectations at the time of the commitment. Article  VI:4 mandates negotiations to be conducted on any necessary disciplines that, taking account the above considerations, would prevent domestic regulations from constituting unnecessary barriers to trade.

Article VI:6 requires Members that have undertaken commitments on professional services to establish procedures to verify the competence of professionals of other Members.

Monopolies

The GATS does not forbid the existence of monopolies or exclusive service suppliers per se (Article  VIII) but, as noted above, subjects them to the unconditional MFN obligation. Moreover, under Article VIII:2, Members are held to prevent such suppliers, if these are also active in sectors that are beyond the scope of their monopoly rights and covered by specific commitments, from abusing their position and act inconsistently with these commitments.

In addition, Article  VIII:4 requires Members to report the formation of new monopolies to the Council for Trade in Services if the relevant sector is subject to specific commitments. The provisions of Article XXI (Modification of Schedules, see following section) apply.

Payments and Transfers

GATS Article XI requires that Members allow international transfers and payments for current transactions relating to specific commitments. It also provides that the rights and obligations of IMF Members, under the Articles of Agreement of the Fund, shall not be affected. This is subject to the proviso that capital transactions are not restricted inconsistently with specific commitments, except under Article XII or at the request of the Fund. Footnote 8 to Article XVI further circumscribes Members’ ability to restrict capital movements in sectors where they have undertaken specific commitments on cross-border trade and commercial presence.