Main Building Blocks: Agreement, Annexes, and Schedules

2.5 Specific Commitments

In addition to respecting the general obligations referred to above, each Member is required to assume specific commitments relating to market access (Article XVI) and national treatment (Article  XVII) in designated sectors. The relevant sectors as well as any departures from the relevant obligations of Articles XVI and XVII are to be specified in the country’s Schedule of Commitments.

Article XVI (Market Access) and XVII (National Treatment) commit Members to giving no less favourable treatment to foreign services and service suppliers than provided for in the relevant columns of their Schedule. Commitments thus guarantee minimum levels of treatment, but do not prevent Members from being more open (or less discriminatory) in practice.

At first sight, it may be difficult to understand why the national treatment principle under the GATS is far more limited in scope — confined to scheduled services and subject to possible limitations — than under the GATT where it applies across the board. The reason lies in the particular nature of services trade. Universal national treatment for goods does not necessarily imply free trade. Imports can still be controlled by tariffs which, in turn, may be bound in the country’s tariff schedule. By contrast, given the impossibility of operating tariff-type measures across large segments of services trade, the general extension of national treatment in services could in practice be tantamount to guaranteeing free access.

Additional Commitments

Members may also undertake additional commitments with respect to measures not falling under the market access and national treatment provisions of the Agreement. Such commitments may relate to the use of standards, qualifications or licenses (Article XVIII). Additional commitments are particularly frequent in the telecommunications sector where they have been used by some 60 Members to incorporate into their schedules certain competition and regulatory (self-)disciplines. These disciplines are laid out in a so-called Reference Paper, which an informal grouping of Members had developed during the extended negotiations in this sector.

Content of Schedules

Article XX requires each Member to submit a schedule of commitments, but does not prescribe the sector scope or level of liberalization. Thus, while some Members have limited their commitments to less than a handful of sectors, others have listed several dozens.

Further, the Article specifies some core elements to be covered in each Member’s schedule. It also provides that the schedules form “an integral part” of the GATS itself.

Modification of Schedules

Article XXI provides a framework of rules for modifying or withdrawing specific commitments. The relevant provisions may be invoked at any time after three years have lapsed from the date of entry into force of a commitment. (In the absence of emergency safeguard measures, which are still under negotiation, this waiting period is reduced to one year under certain conditions.) It is thus possible for Members, subject to compensation, to adjust their commitments to new circumstances or policy considerations. At least three months’ notice must be given of the proposed change. The compensation to be negotiated with affected Members consists of more liberal bindings elsewhere that “endeavour to maintain a general level of mutually advantageous commitments not less favourable to trade” than what existed before.

Application must be on an MFN basis. If the negotiations fail, Article XXI allows for arbitration. If the arbitrator finds that compensation is due, the proposed changes in commitments must not be put into effect until the compensatory adjustments are made. Should the modifying country ignore the arbitrator’s findings, affected countries have the right to retaliate by withdrawing commitments.

In 1999, the Council for Trade in Services enacted detailed procedures for the modification of schedules pursuant to Article XXI (document S/L/80, (4 pages, 180KB)). Improvements to schedules, i.e. inscription of new sectors or removal of existing limitations, are subject to more streamlined procedures, laid down in document S/L/84, (1 page, 32KB).