Explain General Agreement On Trade In Services

• Improve access to projects financed by international financial institutions for service enterprises in developing countries and countries with economies in transition. The expansion of trade in services has great prospects, although countries are generally reluctant to liberalize them. According to the WTO, “services currently account for more than 60% of global output and employment, but do not account for more than 20% of total trade (BOP basis).” As far as services are concerned, the situation is more complex: in many cases, the supplier and the customer are in the same place as for tourism. This means that there are four possibilities of movement: the service moves across the border; the customer crosses the border to benefit from the service; the producer crosses the border to provide the service through a commercial establishment; or the producer only temporarily crosses the border to provide the service. Accordingly, the GATS Agreement defines four “modes of supply” for trade in services (see box). The General Agreement on Trade in Services, abbreviated as GATS, is a World Trade Organization (WTO) treaty that entered into force in 1995 after the Uruguay Round negotiations. It was created to include services in the multilateral trading system. From architecture to voice telecommunications, services are now the largest and most dynamic component of the economies of developed and developing countries (accounting for more than 60 per cent of global output and employment, but no more than 20 per cent of total trade). According to the OECD and the WTO, the world services market was estimated at more than $3 trillion in 1998. Until 1995, there was no multilateral agreement on trade in services.

This is mainly due to a lack of knowledge of trade in services itself. This is part of the agreements within the World Trade Organization (WTO) to remove barriers to trade in services. Most of the time, these barriers are national laws and regulations that limit the right to offer legal services or to be a certified doctor in another country. The GATS does not remove such barriers, but includes more general obligations, such as. B the non-limitation of the number of foreign enterprises allowed to operate in a country and the guarantee that foreign enterprises are not treated less well than domestic enterprises. GATS rules are much less generous than for trade in goods and states can generally choose the sectors to which they give access to foreign service providers. One of the obstacles to multilateral discussions was the lack of clarity as to how services could be exchanged. For trade in goods, the concept is relatively simple: producers stay in one country and goods cross a border into another country.

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