Trade in Services Negotiations and Agreements: An Overview
Trade is not only about goods; it also encompasses services. In fact, the service sector has grown significantly over the years and now accounts for a significant portion of global trade. To facilitate this type of trade, countries engage in negotiations to establish agreements that govern the exchange of services between them. These negotiations are known as Trade in Services negotiations.
The primary objective of Trade in Services negotiations is to promote greater access to foreign markets for service providers while ensuring that governments retain their ability to regulate these services. The World Trade Organization (WTO) oversees these negotiations, and its members participate in these talks. The General Agreement on Trade in Services (GATS), which came into effect in 1995, is the principal agreement governing trade-in services under the WTO.
Under GATS, countries agree to remove barriers to trade by granting each other’s service providers “most-favored-nation” status. This means that once a country grants a concession or favorable treatment to one member state’s service provider, it must extend that same treatment automatically and unconditionally to all other GATS members’ service providers.
The GATS covers four modes of supply for services:
1. Cross-border supply: where the supplier provides his or her services from another territory without physically entering that territory;
2. Consumption abroad: where consumers go across borders to consume specific types of services;
3. Commercial presence: where suppliers establish an office or subsidiary within another country’s market; and
4. Movement of natural persons: where individuals travel from their home country temporarily for business purposes such as consulting with clients abroad.
Negotiations under GATS take place through “requests” made by interested parties seeking improved market access commitments from trading partners regarding specific sectors or modes of delivery within those sectors.
In conclusion, negotiating agreements for trades-in-services can be challenging due to different regulations and policies adopted by various countries. However, it is crucial to establish and maintain these agreements as the service sector continues to play a significant role in global trade. These negotiations must ensure that countries retain their right to regulate their services while also promoting access for foreign service providers. The GATS provides a framework for these negotiations, which are ongoing in various forms across the globe, with several regional Trade Agreements being signed between parties.