IMPORTING SERVICES

While the discussion, theory, and practice of trade and importing has focused on products over the centuries, importing services has become a common occurrence, fueled in part by the General Agreement on Trade in Services (GATS). GATS, the service industries counterpart of GATT, covers almost all commercial services including financial services, telecommunications services, air transportation services, and maritime transportation services. Financial services in particular have undergone globalization enabling various countries to import and export credit, investment banking, insurance, and related services. For example, international insurers accounted for about 10 percent of total U.S. premiums in the late 1990s. Ratified in 1994 and implemented in 1995, GATS includes legislation that will reduce barriers to the trade of services in much the same way as GATT will reduce barriers to the trade of goods. Under the agreement, participating countries will gradually reduce trade barriers for specific service sectors according to schedules that are unique to each country. Furthermore, GATS provides the rules that govern the trade of services and prohibits national policies that discriminate in favor of domestic services over imported ones. In addition, the FTAA also will have a component devoted to the trade of services.