Outcome of the negotiations on services:
Negotiation about trade in services proved to be very complex. Trade in goods is easily identifiable and controllable. Goods exported hm one country to another cross the border into the importing country at some point. At this border point trade is controlled by tariffs or licenses or other trade policy measures as you have read in Unit 4, Block 2. It can also be judged whether the product meets the country's health and safety standards. But this is not the case with services (Sampson and Snape, 1985). Trade in service can take different forms. As you have read in Unit 5, section 5.3, Block 2; there are principally four modes of providing services to foreigners and these are defined in the General Agreement in Trade in Services (GATS) as
1) Cross-Border Supply: Frop the territory of one member into the territory of any other member.
2) Movement of Cansumer: Supply of the service in the temtory of one member to the consumer of any other member.
3) Commercial Presence: By a service supplier of one member, through the commercial presence in the temtory of any other member.
4) The Right of Natural Persons to Travel: By a service supplier of one member through presence of natural persons of the member in the temtory of any other member. Indian doctors could travel to the US to provide medical services.
Technology may determine in which mode a service is delivered. Till a few years ago medical serVices could not be provided across borders. But today they can be provided, though imperfectly, over the internet. Another example is outsourcing. Today these services are provided across borders without an Indian company establishing branches abroad or Indian people moving abroad. But till a few years ago this could not have been done. Now it is clear from the examples that trade in services are controlled by domestic laws. For instance, recall the attempts by some state legislatures and even Congress in the US to prevent outsourcing of government contracts. Domestic laws govern the qualifications of doctors or regulations that hospitals have to follow. Whether foreign consumers can come to India for medical treatment may depend on whether the patient's insurance company will pay for such treatment. This, in turn, may depend on the regulations governing operations of insurance companies. If a country allows entry of foreign doctors it has to decide whether to accept foreign degrees or subject them to additional tests or requirements. While this may be relatively easy to do if the doctor comes to the country it might be very difficult to do if the medical services are provided over the internet. Since trade in services is controlled by domestic laws and regulations; laws may need to be changed with liberaiisation and as technology changes. No country, whether developed or developing, was willing to envisage a complete overhaul of its laws and regulations. Consequently, the agreement was reached on the basic principles that should govern trade in services. It was envisaged in the Agreement that the same principles of Most Favoured Nation (MFN) and National Treatment (NT), subject to some limitations, should apply to trade in services as they applied to trade in goods. However, unlike in the case of goods, MFN and NT are not unconditional. Countries can specify exceptions to these in their offers and in the agreements reached. Since trade in services is more governed by laws and regulations, all members are required to publish all measures, which govern supply of a service, which it has agreed to liberalise.
It is also required to inform the WTO's Council for Trade in, Services of these measures. Each member has also to establish one or more enquiry points to provide specific information to other members upon request. Also, where specific commitments have been made, members should prescribe procedures and bodies to review complaints and to provide appropriate remedies where necessary. As can be immediately seen, these affect domestic procedures, regulations and laws.
GATS also followed a diff'erent approach regarding which services would be liberalised. The agreement on services followed the positive list approach rather than the negative list approach followed in case of goods. A-country had to 'offer' a particular service for liberalisation. It could also choose the mode of delivery for which the trade was liberalised. For instance, no country has made significant offers under mode 4, namely, movement of natural persons, as a country wants to be able to control which persons can enter its territory. A country could also 'request' another country to liberalise particular service sectors. This is called the 'requestfoffer' negotiation procedure. Because of the difficulties little progress was made in actual liberalisation beyond agreement on principles. However, some progress has been made. Most developed countries have made sectoral commitments in more than 70 sectors, while the US, the EU, Japan and some other countries made commitments in more than 100 sectors. However, developing countries made commitments in only 16 sectors (Altinger and Enders, 1996).