Issues covered by the WTO’s committees and agreements

Structure of the GATS

The GATS is the first and only set of multilateral rules and commitments covering Government measures which affect trade in services. It has two parts—the framework agreement containing the rules, and the national schedules of commitments in which each Member specifies the degree of access it is prepared to guarantee for foreign service suppliers.

The GATS covers  all services with two exceptions—i.e. services provided in the exercise of governmental authority and, in the air transport sector, air traffic rights and all services directly related to the exercise of traffic rights. Notwithstanding this very broad scope, the Agreement and the negotiations taking place under it are one of the least controversial areas of current work in the WTO. This is because of its remarkable flexibility, which allows Governments, to a very great extent, to determine the level of obligations they will assume. There are four main elements of flexibility:

  • Member Governments choose those service sectors or subsectors on which they will make commitments guaranteeing the right of foreign suppliers to provide the service. Each Member must have a schedule of commitments, but there is no minimum requirement as to its coverage—some cover only a small part of one sector;

  • For those services that are committed, Governments may set limitations specifying the level of market access and the degree of national treatment they are prepared to guarantee;

  • Governments were able to limit commitments to one or more of the four recognized "modes of supply" through which services are traded. They may also withdraw and renegotiate commitments;

  • In order to provide more favourable treatment to certain trading partners, Governments may take exemptions, in principle limited to 10 years’ duration, from the MFN principle, which is otherwise applicable to all services, whether scheduled or not.

The Agreement contains a number of general obligations applicable to all services, the most important of which is the MFN rule. But apart from these each Member defines its own obligations through the commitments undertaken in its schedule. Because it is a basic principle of the Agreement that developing countries are expected to liberalize fewer sectors and types of transactions, in line with their development situation, the commitments of developing countries are in general less extensive than those of more industrialized countries. It was this flexibility in the scheduling of commitments which put an end to the north-south controversy over services which marked the early years of the Uruguay Round.

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Most-favoured-nation (MFN) treatment 
MFN—the non-discrimination principle—means treating one’s trading partners equally. It guarantees equal opportunities for suppliers from all WTO Members. However, it does not require any degree of market openness. The MFN principle applies to non-scheduled as well as to scheduled services. At the entry into force of the GATS Members were able to take exemptions, in principle limited to 10 years' duration, allowing them to grant differential treatment to certain trading partners. Newly acceding countries have the same right.