While services currently account for more than two-thirds of world output and employment, they account for no more than 25% of total trade, as measured by the balance of payments. But this apparently modest proportion should not be underestimated. Indeed, the balance of payments statistics do not cover one of the types of services defined in the GATS, i.e. the supply by commercial presence in another country (mode 3). Although services are increasingly being exchanged in their own legislation, they also serve as essential inputs for the production of goods and, therefore, services, when value-added, account for about 50% of world trade. The creation of the GATS was one of the key principles of the Uruguay Round, the results of which came into force in January 1995. The GATS was essentially inspired by the same objectives as its merchandise trade counterpart, the General Agreement on Tariffs and Trade (GATT): the creation of a credible and reliable system of international trade rules; Ensure fair and equitable treatment of all participants (principle of non-discrimination); boosting economic activity through guaranteed political ties; Promoting trade and development through gradual liberalization. While the concept of progressive liberalisation is one of the fundamental principles of the GATS, Article XIX provides that liberalisation takes place in accordance with national political objectives and the level of development of members, both in the various sectors and in the various sectors. Developing countries will thus have flexibility to open fewer sectors, liberalize fewer types of transactions and gradually expand market access depending on their development situation. Other provisions ensure that developing countries have greater flexibility in implementing the policy of economic integration, maintaining constraints on the reasons for the balance of payments and determining access and use of their telecommunications networks and services. In addition, developing countries are entitled to technical assistance from the WTO secretariat. While the overall goal of the GATS is to remove barriers to trade, members are free to decide which sectors will be progressively “liberalized” (i.e. commercialized and privatized); What type of delivery would apply to a particular sector and to what extent this “liberalisation” will take place over a fixed period of time.
Members` obligations are governed by a ratchet effect: obligations are unilateral and cannot be terminated after resolution. The reason for the rule is to create a stable business climate (i.e. a market). However, Article XXI allows members to withdraw their commitments and, so far, two members have made use of this option (the United States and the EU). In November 2008, Bolivia announced that it was withdrawing its health commitments. Transparency: GATS members are required, among other things, to publish all measures of general application and to set up national investigative bodies to respond to requests for information from other members. The GATS agreement has been criticized for replacing the authority of national law and justice with that of an GATS dispute resolution body that holds closed hearings. Spokespeople for WTO government members have an obligation to reject this criticism because they had previously pledged to recognize the benefits of the dominant trade principles of competition and “liberalization. The provision of many services often requires the simultaneous physical presence of the producer and the consumer.
There are therefore many cases where, in order to be commercially reasonable, trade obligations must extend to cross-border consumer movements, the establishment of a commercial presence in a market or the temporary free movement of the service provider. The General Agreement on Trade in Services (GATS) is the first multilateral agreement on trade in services.