Question

Give GATS framwork agreement examples.

Answer 1

The General Agreement on Trade in Services (GATS) is the first set of multilateral rules covering international trade in services. It came into effect in 1995 and is being negotiated under the auspices of World Trade Organization (WTO).

GATS has three main parts: the main text with general principles and obligations; annexes with rules for specific sectors; and Member countries' specific commitments to provide access to their markets. The WTO provides links to the GATS text.

The GATS consists of: 1. a framework agreement - which lays out the general obligations for trade in services in much the same way that the General Agreement on Tariffs and Trade (GATT) does for trade in goods (most-favored-nation treatment, market access and national treatment are three of the important principles included in the general framework of the GATS), 2. annexes on specific services sectors (movement of natural persons, air transport, financial services, maritime, and telecommunications), and 3. schedules of commitments for each signatory.

Examples

Obligations contained in the GATS may be categorized into two broad groups: General obligations, which apply directly and automatically to all Members and services sectors, as well as commitments concerning market access and national treatment in specifically designated sectors. Such commitments are laid down in individual country schedules whose scope may vary widely between Members. The relevant terms and concepts are similar, but not necessarily identical to those used in the GATT; for example, national treatment is a general obligation in goods trade and not negotiable as under the GATS.

Market access is a negotiated commitment in specified sectors.For example, limitations may be imposed on the number of services suppliers, service operations or employees in the sector; the value of transactions; the legal form of the service supplier; or the participation of foreign capital.

Each WTO Member lists in its national schedule those services for which it wishes to guarantee access to foreign suppliers. All commitments apply on a non-discriminatory basis to all other Members. There is complete freedom to choose which services to commit. In addition to the services committed, the schedules limit the degree to which foreign services providers can operate in the market. For example, a country making a commitment to allow foreign banks to operate in its territory may limit the number of banking licenses to be granted (a market access limitation). It might also fix a limit on the number of branches a foreign bank may open (a national treatment limitation).

The scope of the GATS with respect to public services depends on an understanding of the notions “supplied on a commercial basis” and “supplied in competition with one or more service suppliers” . There is a great deal of ambiguity regarding these notions in WTO documents and discussions and between Members themselves17. For example, in the background note on health and social services, the Secretariat observes that “the institutional arrangements governing the provision of health, medical and social services may vary widely, from complete government ownership and control to full market orientation.