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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).

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