General Agreement on Trade in Services (GATS) is a framework that sets out rules for the international trade of services between countries. It was created by the World Trade Organization (WTO) in 1995, and it is one of the most significant agreements in the global trading system. The GATS aims to promote the growth of international trade in services and ensure that countries have access to each other`s service markets on a non-discriminatory basis.
According to the GATS, services can be categorized into four main groups: cross-border trade, consumption abroad, commercial presence, and movement of natural persons. Cross-border trade includes services that are delivered electronically or by phone or fax. Consumption abroad refers to services that involve consumers traveling to another country to receive the service. Commercial presence includes services that are delivered through a branch or affiliate of a foreign company in another country. Finally, movement of natural persons refers to services that involve people traveling to another country to provide a service.
The GATS requires countries to provide equal treatment to foreign service providers as they do to their domestic service providers. This concept is known as national treatment. In addition, the GATS allows countries to negotiate with each other to increase access to each other`s service markets. Countries can make commitments to open specific service sectors to foreign service providers, known as specific commitments.
One of the criticisms of the GATS is that it can negatively impact the ability of countries to regulate their domestic service markets. This is because the GATS requires countries to provide a level of openness to foreign service providers that can limit their ability to regulate services in the public interest. For example, a country may want to limit the number of foreign doctors that can practice in their country to ensure a certain level of quality in their healthcare system.
Overall, the GATS is an essential agreement for the international trade of services. It provides a framework for countries to negotiate and open their service markets to each other. However, it is important to strike a balance between opening markets to foreign service providers and ensuring countries can regulate services in the public interest.