WTO TRADE IN SERVICES

Presented by :Arshi Bhatia Bhawna Dagar Chhavi Jain Renju Romals Andrea

THE WORLD TRADE ORGANIZATION

} 1947: GATT (General Agreement on Tariffs and Trade) } 1995: WTO (World Trade Organization) - trade in goods + agriculture + services + intellectual property - binding trade disputes procedure } 151 members (3/4 developing countries) } Ministerial conference (every 2 years) } General Council (monthly) - oversees day to day operations - directs the dispute settlement system - encharge of the trade policy review mechanism

WTO: PURPOSES
} To assist the free flow of trade by facilitating the removal of trade tariffs or other border restrictions on the import and export of goods and services - Multilateral trade agreements (MLAs) } To serve as a forum for trade negotiations - Most favoured nation clause - National treatment clause - exceptions: poor countries } To settle trade disputes based upon an agreed legal foundation

HOW DOES GATS WORK?

}Successive rounds of negotiations with a view to achieving a progressively higher level of liberalization in their service sector (art. XIX) }WTO members make liberalization requests / offers of other member countries in bilateral secret meetings in Geneva

SCOPE OF GATS
}151 countries (all WTO members) }Any sector (160) in any service except: - Services supplied in the exercise of governmental authority (fire, police, ) - Traffic air regulations

KEY PRINCIPLES
} Non discrimination - Most Favoured Nation Treatment (MFNT): applies to all countries that signed GATS - National Treatment (NT): applies only to those sectors for which commitments are made } Market access (6 quantitative limitations) } Transparency: all regulations accessible and open to appeal } Temporary exemption: to MFN and NT i.e., on short-term economic crises } Lock-in effect: once a commitment is made, it is very difficult to withdraw it

MODES OF TRADE
MODE MEANING EXAMPLE - Telehealth - Passing of information by means of fax or email - Tourism - Consumers who cross borders to obtain medical treatment Mode 1 Trade takes place from the Cross-border trade territory of country A into that of B Mode 2 Consumption abroad Mode 3 Commercial presence Mode 4 Movement of natural persons Services consumed by nationals of country A in territory of country B

A service supplier of country A - Establishment of a crosses the border to establish and private hospital by a provide a service in country B European company in Ecuador Temporary movement from - Doctors moving to country A to B to supply a service another country to temporarily provide their services

GATS AND PUBLIC SERVICES

}GATS does not apply to services supplied in the exercise of government authority }A service is supplied in the exercise of governmental authority only when it is supplied neither on a commercial basis nor in competition with one or more service suppliers }Regulation?

GATS AND DOMESTIC REGULATION



GATS does not remove a government s right to regulate services in its country

 Government regulation of a service should be not more burdensome than necessary to ensure the quality of the service (possibility of necessity test)  Threat to democracy?

MAJOR AREAS OF SERVICES NEGOTIATIONS

There are four major areas of services negotiations: } market access } domestic regulation } GATS rules on emergency safeguard measures, government procurement and subsidies } implementation of LDC modalities (i.e. special treatment for least-developed countries under GATS Article IV.3).

IMPORTANCE OF SERVICE SECTOR

} Services are important for employment and employment growth. This is because many traditional services, including distribution, education and social services, are labour intensive. In many services sectors it has also proved more difficult to substitute capital for labour than in manufacturing. } The expansion of services and the emergence of new services have been driven by income-related demand shifts, technological developments, falling costs of communications and the increased presence of transnational corporations. In particular, the new information and communication technologies and the incessant compulsion on companies to cut costs have led to the growth of outsourcing of services. In recent years this outsourcing is now being off-shored to low-cost countries such as India, Philippines etc.

INDIAS SERVICES SECTOR

} Indias services trade has witnessed consistently high levels of growth in recent years. Over the past two decades, the service sector has replaced agriculture as the dominant sector in India. The share of service sector in GDP has risen from 38 percent in 1980s to around 54.1 per cent in 2005-06. The average annual growth rate of the sector increased from 7 per cent in the 1980s to 8 per cent in the 1990s making it one of the driving forces of the Indian Economy. } The Services sector also contributes to improving efficiencies in the manufacturing sector in addition to playing a significant role in employment generation. Indias comparative advantages and strengths are in Mode 1 (Cross border trade) and Mode 4 (Movement of natural persons).

Recent Policy Reforms and Issues under Consideration: