Theory of International Trade in Services Chapter seven Chapter seven

Learning objective: learn about the brief history, characteristics, main contents of GATS; its key limitations and follow-up negotiations; get to know the regional agreements on trade in services.

7.1Introduction to General Agreement on Trade in Services Background of GATS birth

(1)Liberalization of service trade proposed Developed country Developing country

Led by the United States, developed countries actively propose the liberalization in service trade.

Why do the United States proposed the liberalization?

1) The pressure from the transnational corporations

2) The desire to promote American interests in service trade and international investment.

What ’ s the attitude for the developing country?

Oppose support (2) Attitude transformation of trade liberalization in services in the developing countries

(3) Process of trade in services negotiation and birth of GATS First period of Uruguay Round negotiation started on Oct 27th 1986 ended in Dec 1988 Second period From the interim review to June 1990 Third period From the July 1990 to Dec 1993 GATS came into effect Jan 1st parts, 29 clauses and 8 appendixes

(4) Significance of GATS to international trade in services Common observance Liberalization Increase the related goods trade Coordinate benefits of member countries

(4) Significance of GATS to developing countries Fast development New exporting opportunities Secure access to foreign markets

7.1.2 Main purpose and basic rules of GATS

(1) Main purpose of GATS To extend global service trade under the condition of transparency and gradual liberalization by setting up multilateral rules in service trade

1 Most Favored Nation Treatment 2 National Treatment 3 Transparency 4 Market Access (2) Basic rules of GATS  Unified arrangement in service and trade  Further participation of developing countries  Respect domestic laws Other rules:

7.2 Review on General Agreement on Trade in Services Structure and Characteristics of GATS( 结构与特点 )

(1) Structure of GATS( 结构 ) Preface The aim of purpose of GATS Main Body Part 1 (Article1 ) Scope and definations Part 2 (Articles 2-15) obligations and principles Part 3 (Articles 16-18) Special obligations Part 4 (Articles 19-21) Progressive liberalization Part 5 (Articles 22-26) Systems and organizations Part 6 (Articles 27-28) Provisions and withdrawing Appendix

(2) Characteristics of GATS 1) GATS follows and uses the basic principle and spirit of GATT for reference.

2) GATS formulates respectively the general and special obligations. 3) Large amount of specific regulations and concrete promises need to be negotiated and defined further.

7.2.2 Contents of GATS （ 1 ） Preface( 序言 ) （ 2 ） Main Portion( 主体 ) （ 3 ） Appendix of GATS （ GATS 附录）

Main portion 1) Range and definition of service trade 2) Regular duty of each member 3) Special responsibility undertaken 4)Gradual liberalization 5) Regulation items 6) Final clauses

Definition of service trade ① Cross-border supply ( 跨境交付方 式 ) ② Consumption Abroad （境外消费 ) ③ Commercial Presence （商业存在） ④ Movement of natural person ( 自然 人流动 )

Main portion 1) Range and definition of service trade 2) Regular duty of each member 3) Special responsibility undertaken 4)Gradual liberalization 5) Regulation items 6) Final clauses

Most favored nation treatment Transparency Developing countries participation Economic integration Domestic regulation Approval Monopoly and special service suppliers Business practices Emergency security measures Transfer and payments Government purchase Regular exception Subsidy Regular duty of each member

Main portion 1) Range and definition of service trade 2) Regular duty of each member 3) Special responsibility undertaken 4)Gradual liberalization 5) Regulation items 6) Final clauses

Special responsibility undertaken

Main portion 1) Range and definition of service trade 2) Regular duty of each member 3) Special responsibility undertaken 4)Gradual liberalization 5) Regulation items 6) Final clauses

Appendix of GATS （ GATS 附录） 1. Appendix of exemption in most favored nation treatment 2. Appendix of natural person movement in service supply 3. Appendix of natural person movement in service supply

Appendix of GATS （ GATS 附录） 4. Appendix of financial service 5. Second appendix of financial service 6. Appendix of sea-transportation service negotiation

Appendix of GATS （ GATS 附录） 7. Appendix of telecom service 8. Appendix of Basic telecom service negotiation

7.3 Main Limitation and Follow- up Negotiations of GATS 7.3.1Main Limitation of GATS （ GATS 的主要局限）

（ 1 ） Unbalance of Benefits Between Developed and Developing Countries Developed countries Developing countries

（ 2 ） Less Binding Force in Trade Principle (3) Unpleasant Result of concession

7.3.2 Further Negotiations of GATS (GATS 的后续谈判 ) （ 1 ） Negotiations on improvement of framework agreement （完善框架协议 的谈判）

Negotiations Government procurement ( 政府采购问题 ) Subsidy for service industry ( 服务业补贴问题 ) Emergency safeguard in service industry ( 服务业紧急保障问题 )

7.3.2 Further Negotiations of GATS (GATS 的后续谈判 ) （ 2 ） Further negotiation of GATS

7.4 Regional Agreements on Service Trade ( 服务贸易的区域性协议 ) Service Trade Agreement of EEC( 欧盟服务贸易协议 )

Service Trade Agreement Inside EEC ( 欧盟内部的服务贸易协议 ) Free movement of personnel ( 人员的自由流动 ) Transportation Service （运输服务） Financial Service （金融服务） Telecom Service （电信服务） （ 1 ） Service Trade Agreement Inside EEC

（ 2 ） EEC Agreement on Foreign Trade in Services （欧盟对外服务贸易协议）

7.4.2 Agreement on Service Trade in North-American Free Trade Area （北美自 由贸易区的服务贸易协议）

Main regulations Finance （金融业） Telecommunication （电信业） Other Services （其他服务业）

Finance （金融业） Main principles Trade presence and cross-border trade Non-discrimination treatment Transparency in procedure Precautionary measures and BOP measures Consult

7.4.3 APEC agreements on trade in services ( 亚太经合组织的服务贸易协议 )

(1) Manners of trade liberalization in services in APEC (2) Osaka Action Agenda and service liberalization (3) Manila Action Plan for APEC and service liberalization

Homework 1.What is the main frame of the General Agreement on Trade in Services? 2.What is the principle of the General Agreement on Trade in Services? 3.What are the main cores and principles for China to participate in the General Agreement on Trade in Services?