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All members of the WTO are signatories to the GATS. The basic WTO
principle of most favoured nation (MFN) applies to GATS as well.
However, upon accession, Members may introduce temporary
exemptions to this rule.
HISTORICAL BACKGROUND
While the overall goal of GATS is to remove barriers to trade,
members are free to choose which sectors are to be
progressively "liberalised", i.e. marketised and privatised,
which mode of supply would apply to a particular sector,
and to what extent liberalisation will occur over a given
period of time.
Members' commitments are governed by a "ratchet effect",
meaning that commitments are one-way and are not to
be wound back once entered into.
FOUR MODES OF SUPPLY
In other words
Consumers or firms making use of a service in another country (e.g. tourism) is officially
consumption abroad (mode 2)
Supplier Presence - Service supplier not present within the territory of the member
This mode of supply requires that the consumer of services move abroad.
EDUCATION SERVICES AND CONSUMPTION ABROAD
Possible Barriers to Trade in Education in Mode 2:
Visa Requirements
Recognition of Prior Qualifications
Foreign Currency and Exchange Requirements
Quota on Numbers of International Students
Restrictions on Employment while Studying
Recognition of new qualification by other countries
MODE 3: COMMERCIAL PRESENCE
Services supplied by a service supplier of one Member, through commercial presence, in the
territory of any other Member
In other words
locally-established affiliate, subsidiary, or representative office of a foreign-owned
and controlled company (e.g. Banks) is officially Commercial presence (mode 3)
Supplier Presence - Service supplier is present within the territory of the member through a
subsidiary or representative.
This mode of supply does not require the consumer of services to move abroad.
Areas of uncertainty
difference between employment and service contract
what does constitute a service?
many commitments currently focus on highly-skilled workers
THE SIZE OF MODE 4 TRADE?
Small compared to total trade, and to other modes of trade in services (is the
most restricted)
Importance varies across countries and sectors
Mobility for skilled workers increasing and facilitated by special programs
Both developed and developing countries are traders where mode 4 can be
involved
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