International investment agreements

The General Agreement on Trade in Servcies (GATS): An Analysis


On 15 April 1994, at the Marrakech Ministerial Meeting, Ministers from over 100 countries signed the Final Act of the Uruguay Round of Multilateral Trade Negotiations. This concluded the eighth Round of GATT Trade Negotiations, which had been launched in September 1986 in Punta del Este, Uruguay. Under the umbrella of the Agreement establishing the World Trade Organisation (WTO), the package comprises agreements on such diverse issues as agriculture, textiles, intellectual property and trade-related investment measures. And, for the first time, parties established worldwide rules on trade in services through the General Agreement for Trade in Services (GATS). It is expected that the GATS, together with the WTO, will enter into force on 1 January 1995.

The initiative for including services in the Uruguay Round came from OECD countries. In view of the growing importance of services trade in world economic relations, the need for a rules-based framework which would in particular incorporate the most advanced non-Members of OECD had become apparent. Now that this goal has been achieved, the present paper is intended to provide an in-depth description of the new worldwide rules governing trade in services.

The GATS, like all other Uruguay Round agreements, is an annex to the Agreement establishing the World Trade Organisation (WTO). It therefore does not have its own signature and ratification process, but will enter into force at the same time as the WTO Agreement and all other Annexes. There is no opting out of the GATS: those who want to benefit from the other elements of the Uruguay Round have to adhere also to the GATS.

The GATS consists of two main parts: The "General Framework" with its annexes, on the one hand, and participating countries' individual "Schedules of Commitment", on the other hand. This construction resembles somewhat that of the OECD Codes of liberalisation which consist of a body of Articles and individual country "schedules" of reservations attached. As is the case under the Codes, it is only possible to define an individual GATS participant's obligations by reading both elements together.

The General Framework of GATS is composed of a preamble and 28 Articles, followed by eight annexes, eight ministerial declarations and decisions, and one "understanding" on financial services. Most of the annexes contain specific provisions applying to certain sectors, whereas the declarations and decisions address general institutional issues, such as the setting up of working parties, work programmes, mandates, etc. The individual country schedules of commitment, plus a consolidated European Union schedule, are grouped in an "Appendix" to the Framework. Several countries have also submitted lists of MFN exemptions together with their schedule. Finally, certain instruments outside the GATS, such as the Understanding on Settlement of Disputes and certain institutional provisions of the WTO Agreement itself, also apply as part of the WTO package.

The presentation of this report is organised as follows: Section II deals with the general principles and obligations, including dispute settlement and institutional rules. Section III analyses, sector by sector, the specific sectoral provisions contained in the annexes, decisions, declarations and understanding. Sections IV and V contain some brief remarks on schedules of commitments and MFN exemption lists, respectively.

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