Misconceptions about the GATS

8.2 ... and the Facts

First and foremost, it may be worth reiterating one of the core concepts of the Agreement, the distinction between services liberalization and deregulation. Domestic regulations are not considered as barriers to market access and national treatment under the GATS and, therefore, not subjected to trade negotiations. No WTO Member has ever questioned this basic tenet. Moreover, there are various exemption clauses in the Agreement, including Articles XII, XIV and XIVbis, that allow governments to ignore their obligations in specified circumstances with a view, for example, to protecting public security or life and health. The Secretariat is not aware of any cases to date where these provisions proved insufficient to address legitimate policy interests.

Should a Member feel the need to withdraw or modify its market access and national treatment obligations in a given sector, procedures are available under Article XXI. At the request of affected trading partners, the modifying Member is required to negotiate any necessary compensatory adjustment and, if unsuccessful, to accept arbitration. These procedures have been invoked only recently, more than eight years after the Agreement’s entry into force. In turn, this testifies to the continued scope for political flexibility, despite the existence of scheduled commitments, in critical circumstances.

Services provided in the exercise of governmental authority are fully exempt from coverage. No changes are envisaged in the new round; the Negotiating Guidelines and Procedures, in document S/L/93 (2 pages, 32KB), explicitly provide that the existing structure and principles of the GATS shall be respected. Moreover, there is no evidence to date that the coexistence of public and private supplies within the same sector could have undermined the “governmental service carve-out” under Article I:3. Members have not apparently encountered any problems in this regard.

Consensus is the basic decision-making principle in the WTO. Like the GATT or the TRIPS Agreement, the GATS thus poses no risk to national sovereignty. It is simply not possible in negotiations within the purview of WTO to outvote a Member and/or subject it to disciplines it is not prepared to accept. Moreover, it is worth bearing in mind that, as a last resort, nothing would prevent a frustrated government from quitting the Organization altogether. However, this has not happened to date. Contrarily, GATT/WTO membership has continued to prove highly attractive. Since the conclusion of the Tokyo Round in 1979, it has increased by about one half to close to 150 Members at present, and many more governments have applied for accession.