Services: Introduction to WTO General Agreement on Trade in Services (GATS)

The UK economy is underpinned by a highly competitive services sector, therefore, increased liberalisation of global services markets offers significant economic opportunity to the UK. A more liberal trading environment will benefit corporate and individual consumers of services who will gain in terms of choice, value and quality from the effect of greater competition. UK and European businesses will become more efficient in response to competitive pressures – boosting overall productivity and prosperity. And there will be major new opportunities for UK and EU service providers to export in such an environment. For all these reasons it is important to use the Doha Round to promote such an environment.

Developing countries also have a keen interest in securing a successful outcome to these negotiations. Developed countries must demonstrate a clear commitment to respond to the specific needs of developing countries in terms of achieving significant reductions in barriers to global services trade in sectors of import and export interest to developing countries. Access to competitive sources of high quality financial, professional, telecommunications, transport, infrastructure and other services – which, the UK is well placed to provide – are crucial for economic development.

WTO members must retain the flexibility to take commitments,which respect national policy objectives and their individual level of development. It is vital that all developing countries retain the right to decide when, if and how to open domestic service markets to foreign competition in a progressive and sequenced manner. Nevertheless, the Government will continue to encourage all WTO members to participate actively in the negotiations.

Barriers to trade in services

Although UK markets are largely open to foreign service suppliers, many markets around the world have significant barriers to trade in services - more so than for goods. Unlike goods, for the most part these barriers are mainly found in countries’ domestic regulation rather than at the border. While countries remain – and should remain – free to regulate for national policy objectives, the purpose of trade negotiations in services is to avoid regulation that is more trade restrictive than necessary to achieve a domestic policy objective, thereby freeing up trade and enhancing wealth creation for the benefit of all countries – developed and developing.

The GATS

The UK, through its membership of the World Trade Organisation (WTO), has taken on the obligations of the GATS. This agreement, which came into force in 1995, sets out a framework of legally-binding rules governing the conduct of world trade in services. It is supported by a number of schedules of specific commitments undertaken by individual WTO Members. These commitments bind Members not to introduce more restrictive rules which could have an adverse effect on trade. Under successive rounds of negotiations, aimed at progressive liberalisation, Members individually choose in which sectors to make binding commitments, and in which not to. This is known as a "positive listing", or "bottom-up", approach. Negotiations proceed on the basis of requests and offers; that is, countries request each other to consider liberalisation in particular sectors, and respond with offers. Agreement to liberalise is not reached until all participating Members – including developing countries – are satisfied with the total package being offered. This does not prevent any country from making commitments unilaterally at any time.

Contact:

John Forrest
Tel: 020 7215 4409
Fax: 020 7215 4512
Email: john.forrest@dti.gsi.gov.uk