Features Of General Agreement On Trade In Services

Like the General Agreement on Tariffs and Trade (GATT), which deals with trade in goods, the GATS has two main objectives: first, to ensure that all signatories are treated fairly in terms of access to foreign markets; and second, the promotion of a gradual liberalisation of trade in services (over time, removal of trade barriers, in order to allow greater participation in the markets of the other). The General Agreement on Trade in Services (GATS) is a World Trade Organization (WTO) treaty that came into force in January 1995 following the Uruguay Round negotiations. The treaty was created to extend the multilateral trading system to the services sector, just as the General Agreement on Tariffs and Trade (GATT) provides such a system for trade in goods. The commitments contained in the GATS can be divided into two broad groups: general commitments that apply to all members and service sectors and commitments that apply only to sectors in a member`s commitment plan. These obligations are defined in individual timetables, the scope of which can vary considerably from one Member State to another. The relevant terms and concepts are similar, but not necessarily identical to those of the GATT; Domestic processing is, for example, a general obligation in trade in goods and non-negotiable as in the GATS. While the overall goal of the GATS is to remove barriers to trade, members are free to decide which sectors will be progressively “liberalized” (i.e. commercialized and privatized); What type of delivery would apply to a particular sector and to what extent this “liberalisation” will take place over a fixed period of time. Members` obligations are governed by a ratchet effect: obligations are unilateral and cannot be terminated after resolution.

The reason for the rule is to create a stable business climate (i.e. a market). However, Article XXI allows members to withdraw their commitments and, so far, two members have made use of this option (the United States and the EU). In November 2008, Bolivia announced that it was withdrawing its health commitments. OECD countries have taken the initiative to include services in Uruguay`s cycle. Given the growing importance of trade in services in global economic relations, it became clear that a rules-based framework was involved, in particular, by the most advanced non-members of the OECD.