Which Agreement Deals with Trade in Service

When it comes to international trade, the focus is often on the exchange of tangible goods, such as cars, electronics, and textiles. However, trade in services has become an increasingly significant component of global commerce. In fact, services account for nearly 70% of the world`s GDP and 20% of global trade.

So, which agreement deals with trade in services? The answer is the General Agreement on Trade in Services (GATS). GATS is a multilateral agreement that was created as part of the Uruguay Round negotiations of the World Trade Organization (WTO) in 1995. Its purpose is to facilitate the liberalization of trade in services between member countries.

GATS is a comprehensive agreement that covers all services sectors, including business, communication, construction, distribution, education, environment, financial, health, tourism, and transport. It also applies to all modes of supply, such as cross-border delivery, consumption abroad, commercial presence, and movement of natural persons.

One of the key principles of GATS is national treatment, which requires member countries to treat foreign service providers no less favorably than their own domestic providers. This means that foreign service providers cannot be discriminated against based on their nationality.

Another important principle of GATS is the most-favored-nation (MFN) treatment, which requires member countries to provide the same level of treatment to all other member countries, regardless of whether they have a free trade agreement or not. This principle aims to prevent discrimination among member countries and to promote fair competition.

GATS also allows member countries to negotiate specific commitments on liberalization of trade in services. These commitments may include the removal of market access restrictions, such as quotas, licenses, or foreign equity limitations, or the reduction of discriminatory measures, such as discriminatory taxation or regulatory requirements.

Finally, GATS includes provisions for dispute settlement mechanisms, which allow member countries to resolve disagreements related to the interpretation or application of the agreement.

In conclusion, the General Agreement on Trade in Services (GATS) is the primary international agreement that deals with trade in services. It aims to facilitate the liberalization of trade in services between member countries, while promoting fairness and non-discrimination. Its principles of national treatment, most-favored-nation treatment, and specific commitments on liberalization of trade in services are essential to foster a level playing field for service providers around the world.