Services
The GATS Turns Ten: A Preliminary Stocktaking
The paper discusses the experience to date with the implementation and application of the General Agreement on Trade in Services (GATS) some ten years after its entry into force. One striking observation is the smooth functioning of the Agreement which has created far less tensions and frictions including at Ministerial Meetings than its difficult negotiating history might have suggested. This is due in large part to a high degree of flexibility at several levels: Members have more scope than under the GATT to depart from common horizontal obligations in particular the MFN principle; they are able to adjust the breadth and depth of their trade commitments (market access and national treatment) to particular sector conditions; and they face less constraints if any in the use of trade-related policies such as subsidies export restrictions or domestic regulatory interventions. An additional source of flexibility is the uncertainty still surrounding a few core concepts of the Agreement and their sometimes daring application in individual schedules. While the ongoing negotiations also provide an opportunity for technical corrections of scheduling problems the basic (built-in) flexibility elements of the Agreement - including the bottom-up approach of undertaking sector commitments and the possibility of inscribing limitations under individual modes - will of course persist. (Their actual relevance may nevertheless differ significantly between 'old' Members and countries negotiating their accession to the WTO.) Given the broad reach of of the Agreement in terms of membership sector application and modal coverage flexibility may be considered a conditio sine qua non. There is little reason to believe that a more rigid structure would have been acceptable to Uruguay Round participants and even if so that it would have proven stable and resilient over time. However flexibility may come at a cost: lack of meaningful obligations across a reasonably broad range of service sectors. Vested interests may find it far easier than under the GATT to defend their privileges and defy more rational and harmonized trading conditions. While the paper discusses formula-based approaches that have been proposed to improve the quantity and/or quality of sector commitments within the existing framework of GATS there should be no illusion about the scope for technical solutions to what constitutes a political and institutional challenge.
Mexico - Measures Affecting Telecommunications Services
On 17 August 2000 the US requested consultations with Mexico in respect of Mexico’s commitments and obligations under the GATS with respect to basic and value-added telecommunications services. According to the United States since the entry into force of the GATS Mexico has adopted or maintained anti-competitive and discriminatory regulatory measures tolerated certain privately-established market access barriers and failed to take needed regulatory action in Mexico’s basic and value-added telecommunications sectors.
ICT, Access to Services and Wage Inequality
This paper discusses how information and communication technology (ICT) affects the quality and reach of consumer services. These services need to be provided locally but consist of several components some of which can be digitised and transmitted over long distances. A general equilibrium model is developed and numerical simulations in a stylised two-factor two-region centre-periphery setting are presented. Trade in intermediate services improves the quality of consumer services enormously in the periphery but may reduce the quality at the centre. Trade in intermediate services also has a dramatic impact on skilled workers’ wages in the periphery both relative to unskilled workers in their own region and relative to skilled workers at the centre and leads to a more equal distribution of income both between the centre and the periphery and within the periphery.
Canada - Certain Measures Affecting the Automotive Industry
On 3 July 1998 Japan requested consultations with Canada in respect of measures being taken by Canada in the automotive industry. Japan contended that under Canadian legislation implementing an automotive products agreement (Auto Pact) between the US and Canada only a limited number of motor vehicle manufacturers are eligible to import vehicles into Canada duty free and to distribute the motor vehicles in Canada at the wholesale and retail distribution levels. Japan further contended that this duty-free treatment is contingent on two requirements: Canadian value-added (CVA) content requirement that applies to both goods and services; and manufacturing and sales requirement. Japan alleges that these measures are inconsistent with Articles I:1 III:4 and XXIV of GATT 1994 Article 2 of the TRIMs Agreement Article 3 of the SCM Agreement and Articles II VI and XVII of GATS.
Whether and When to Liberalize Capital Account and Financial Services
Discussions about international capital movements raise extremely important and controversial questions. Why should countries open up their capital accounts especially considering that unrestricted international capital movement is a relatively new phenomenon? For example many OECD countries have not eliminated their foreign exchange restrictions only until the 1980's. If the answer is unequivocally affirmative does it matter how fast should countries do so? Should they wait until "all essential pieces" of the policy package are in place before they eliminate all restrictions? How are international capital movements related to domestic financial sectors? Is there a difference between opening to competition an industry such as car manufacturing as compared to the banking sector? Should the opening of the banking sector be governed by different rules? Rules about foreign exchange restrictions are already in place in the IMF Articles. Until recently the IMF Articles only called for the elimination of foreign exchange restrictions on the current account. The ongoing discussion and the controversy about globalization that calls for the capital account liberalization introduces therefore a relatively new element into the whole discussion. These questions have also implications for the World Trade Organization. It is well known that the Uruguay Round Agreements have already provided a coverage for a number of aspects that are directly related to foreign investment. Rules established elsewhere such as in the context of changes to the IMF Articles will obviously have an important bearing for the implementation of rules agreed in the Uruguay Round. This raises a variety of other questions in the mind of some observers. Who should decide about the rules on capital account liberalization? What rules? IMF? What is the role of the WTO? How does one link the two? All of the questions raised above are clearly extremely important and most of them are discussed in the following paper by John Williamson. Mr. Williamson's presentation is based on his lecture and discussion which was delivered on 17 June 1999 at the WTO. The actual text that follows is a transcript of that lecture.
Financial Services Trade, Capital Flows, and Financial Stability
This study argues that trade policies regarding financial services are an important—but often neglected—determinant of capital flows and financial sector stability. Financial services trade liberalisation which promotes the use of a broad spectrum of financial instruments and allows the presence of foreign financial institutions whilst not unduly restricting their business practices results in less distorted and less volatile capital flows and promotes financial sector stability. The study finds significant evidence in favour of this claim through an empirical analysis of GATS commitments in 27 emerging markets. For example countries which experienced financial crisis during 1991-97 show a combined indicator of financial services trade restrictiveness three times as high (= less favourable for financial stability) as countries without a crisis. The study' s findings have two important policy implications. Firstly liberalising international trade in financial services can be a market-based means to improve the "quality" of capital flows and to strengthen financial systems. This would complement other policies including financial regulation. Secondly even in countries where the financial system is weak and where immediate full-fledged financial sector liberalisation is not advisable certain types of financial services trade could be liberalised as such trade strengthens the financial system without provoking destabilising capital flows.
Financial Services and the WTO
This paper analyses the results of the financial services negotiations under the General Agreement on Trade in Services (GATS) at the World Trade Organization (WTO). It shows that the negotiations have contributed to more stable and transparent policy regimes in many developing and transition countries. The wide range of market access and non-discrimination commitments should advance the process of progressive liberalization. The commitments do not compromise the ability of countries to pursue sound macroeconomic and regulatory policies. However other aspects of the outcome do raise some concerns. First there has been less emphasis on the introduction of competition through allowing new entry than on allowing (or maintaining) foreign equity participation and protecting the position of incumbents. Secondly even where immediate introduction of competition was not deemed feasible not much advantage has been taken of the GATS to lend credibility to liberalization programmes by precommitting to future market access.
National Treatment in the GATS
This paper is concerned with three problems in the interpretation of the national treatment obligation in the General Agreement on Trade in Services (GATS). First the precise domain of Article XVII on national treatment has not been clearly delineated particularly in relation to Article XVI dealing with market access. Secondly there is a difference between the text of Article XVII and the structure of the schedules of commitments which makes it difficult to interpret the scope of the national treatment obligation even for identical services supplied through different modes. The final and most complex problem arises in establishing the definition of "like" services and "like" service suppliers. Uncertainty about the precise meaning of the national treatment obligation may undermine the key GATS objective of creating a secure predictable trading environment. Moreover the extent of liberalization implied by the commitments under GATS depends on the precise choice of interpretation.
World Trade Statistical Review
The "World Trade Statistical Review" series provides a detailed analysis of the latest developments in world trade. It will be produced on an annual basis and replaces the series "International Trade Statistics" the WTO's former annual statistical publication.
Services Profiles
"Services Profiles" provides key statistics on infrastructure services i.e. transportation telecommunications finance and insurance for over 150 economies. This series of publications has been integrated into the "Trade Profiles" series since 2016.
Trade Profiles
"Trade Profiles" provides two-pages snapshots of the most relevant indicators on merchandise trade services and intellectual property for over 200 economies including all WTO members.