1. Schedules of Services Commitments
Achim Seiler,
Trade Consultant and Capacity Building Specialist
EU-Project: Trade and Private Sector Development (TPSD)
TPSD is implemented by
in cooperation with
and

2. Table of Contents I Objectives Scope Structure Modes of Supply Sectors
The Scheduling of Commitments
Sample Schedule
Basic Principles Underlying Specific Commitments
Market Access
National Treatment
Typical Market Access and National Treatment Barriers
Horizontal Limitations imposed by Developing Countries
“Niche Opportunities” for Export of Services of Developing Countries

3. Table of Contents II
Examples of Critical Intersectoral Linkages by Sector
Modification of Schedules
Commitments by Country Group
Role and Responsibilities of Member Countries
Market Access Limitation of Member countries (Examples)
National Treatment Restrictions of Member Countries (Examples)
Resources used
Annex: Comprehensive list of National Treatment restrictions of
Members

4. Objectives
“...multilateral framework of principles and rules for trade in services with a view to the expansion of such trade under conditions of transparency and progressive liberalization and as a means of promoting the economic growth of all trading partners and the development of developing countries” (Preamble)

5. Scope
This Agreement applies to measures by Members affecting trade in services (Art. 1.1.)
“measures by Members means measures taken by
(i) central, regional of local governments and authorities; and
(ii) non-governmental bodies in the exercise of powers delegated by central, regional or local governments or authorities (Art. 1.3.)
“measure” means any measure by a Member, whether in the form of a law, regulation, rule, procedure, decision, administrative action, or any other form (Art. 28.a)

6. Structure GATS consist of:
a framework text containing rules and principles applicable to measures affecting the trade in services
the annexes to the Agreement pertaining to specific sectors (complementing the text)
specific commitments listed in the national schedules of member countries

7. Modes of supply
From the territory of one Member into the territory of any other Member (mode 1)
In the territory of one member to the service consumer of any other Member (mode 2)
By a service supplier of one Member, through commercial presence in the territory of any other Member (mode 3)
By a service supplier of one member, through presence of natural persons of a Member in the territory of any other member (mode 4)

8. Sectors I Business (including professional and computer) services
Communication services
Construction and engineering services
Distribution services
Educational services
Environmental services
Financial (insurance and banking) services

9. Sectors II Health Services Tourism and travel services
Recreational, cultural and sporting services
Transport services
Other services

10. The Scheduling of Commitments
First: “positive list” approach: Members assume obligations only with a view to the (sub)-sectors listed
Second: “negative list” approach: once a specific services (sub)-sector has been listed, it is assumed that no trade barriers exist unless stated in the schedule

11. The Scheduling of Commitments
Horizontal commitments, applying across all services sectors by mode of supply
Sectoral commitments, with specific limitations listed by services sectors and mode of supply

12. The Scheduling of Commitments
“none” : no limitations inconsistent with the relevant market access and national treatment provisions
[text] : the text states the limitation(s) for the particular mode of supply
“Unbound”: measures inconsistent with the market access of national treatment provisions of GATS may exist or be introduced
“Unbound*”: unbound because the delivery of a specific service through this mode is technically not feasible (e.g. hairdressing through mode 1 = cross-border supply)

13. Sample Schedule of Commitments
Mode of supply
Limitations on Market Access
Limitations on National Treatment
Additional Comments
Horizontal
1. Cross-border supply
None
None other than differential tax measures with respect to R+D services
2.Consumtion
abroad
Unbound for subsidies, tax incentives and tax credits
3. Commercial presence
Maximum foreign equity stake is 49 per cent
Unbound for subsidies. Under Law X, approval is required for equity stakes over 25%
4. Temporary entry of natural persons
Unbound except for intracorporate transfers of executives and services sellers
Unbound except for categories of natural persons referred to in the market access column

14. Sample Schedule of Commitments II
Mode of supply
Limitations on Market Access
Limitations on National Treatment
Additional Comments
Sectoral
Architectural services
1. Cross-border supply
Commercial presence required
unbound
2.Consumtion
abroad
None
none
3. Commercial presence (FDI)
25% of senior management should be nationals
Unbound
4. Temporary entry of natural persons
Unbound except as indicated in Horizontal commitments

15. Basic principles underlying specific commitments
Market Access
National Treatment
Most-favored Nation Treatment (unless restrained in line with Art.2)

16. Specific Commitments: Market Access
No limitations with a view to a specific sector
unless listed in the schedule as:
Limitations on the number of service suppliers
Limitations on the total value of service transactions or assets
Limitations on the total number of service operations or on the total quantity of service output
Limitations on the total number of natural persons
Measures which restrict or require specific types of legal entity
Limitations on the participation of foreign capital

17. Specific Commitments: Market Access
“With respect to market access through the modes of supply identified in Article 1, each Member shall accord services and service suppliers of any other Member treatment no less favorable than that provided for under the terms, limitations and conditions agreed and specified in its Schedule.” (Art. 16.1)

18. Specific Commitments: National Treatment
In the sectors inscribed in its Schedule, and subject to any conditions and qualifications set out therein, each Member shall accord to services and service suppliers of any other Member, in respect of all measures affecting the supply of services, treatment no less favorable than that it accords to its own like services and service suppliers (Art. 17.1)
A Member may meet the requirements of paragraph 1 by according to services and service suppliers of any other Member, either formally identical treatment or formally different treatment to that it accords to its own like services and service suppliers (Art. 17.2)

19. Specific Commitments: National Treatment
Formally identical or formally different treatment shall be considered to be less favorable if it modifies the conditions of competition in favor of services or service suppliers of the Member compared to like services or service suppliers of any other Member (Art. 17.3)

20. Typical Market Access and National Treatment Barriers I
Economic needs test
Size limitations for establishments
Restrictive licensing practices
Fixed equity limits
Residency and nationality requirements
Restrictions on mobility of key personnel
Restrictions on the form of doing business
Limitations on the purchase or rental of real estate for the sector
Measures requiring the use of local partners or joint ventures to establish in the market
Tax treatment discriminating against foreign suppliers

21. Typical Market Access and National Treatment Barriers II
Quantitative limitations on the number of service suppliers
Discrimination between domestic and foreign suppliers regarding the application of laws, regulation and practices
Restrictions on geographical expansion and discrimination as to the types of activities that can be carried out in different geographical areas
Restrictions on the number of employees and nationality and residency requirements for executives and employees
Different regulations across subcentral and local governments
Limitations on the recognition of qualifications obtained overseas

22. Horizontal Limitations Imposed by Developing Countries
The establishment of commercial presence will be allowed on the basis of a joint venture
The foreign supplier will be permitted to have less than a majority share in the equity of such a joint venture
A specific number of board members must be nationals of the country
The foreign service supplier should use appropriate and advanced technology and managerial experience
It should train and pass on the benefit of technology to local employees
It should employ, wherever possible, domestic subcontractors
It must furnish accurate and prompt records on its operations

23. “Niche Opportunities” for Exports of Services of Developing Countries
Different expert meetings convened by UNCTAD identified 6 sectors in which developing countries have an apparent or potential comparative advantage:
Professional and business services (i.e. computer and office services)
Health services
Tourism
Construction
Audiovisual services
Transport
These sectors are all linked to the movement of natural persons

24. Examples of Critical Intersectoral Linkages by Sector I
Linked to:
Sector
Computer services
Environmental services
Health services
Tourism
Accounting/auditing X
Air transportation
Construction
Consulting engineering
Insurance
Legal services

25. Examples of Critical Intersectoral Linkages by Sector II
Linked to:
Sector
Computer services
Environmental services
Health services
Tourism
Local transportation X
Management consulting
Research and Development
Telecommunication
Training

26. Modification of Schedules
Modification or withdrawal of schedules commitments at any time after three years
Notification of intent to modify or withdraw a commitment three months in advance
Negotiation with other Members affected by the modification with a view to reaching an agreement on compensatory adjustment
Compensatory adjustments shall be made on a most-favored-nation basis

27. Unconditional Obligations:
Transparency
Domestic
regulations
Monopolies
Business
Practices
Subsidies
MFN
Participation
of DCs
Cover ALL services sectors irrespective of the schedules
Unscheduled
Sectors
Conditional
General Obligations
Transparency
Domestic Regulation
Monopolies
Payments and
Transfers
Cover services sectors scheduled
Scheduled Sectors

28. Commitments by Country Group, March 2004
Countries
Average number of sectors committed per country
Range (lowest/highest number of scheduled sectors
LDCs 20
1-110
DCs and transition economies 54
(106)*
1-154
(58-154)*
Developed countries
108
87-117
Accessions since 1995
106
37-154
* Transition economies only,
Total number of sectors: around 160

29. Role and Responsibilities of Member Governments
A: Unconditional Obligations:
Ensure compliance with MFN requirement (Art. II)
Publish all measures pertaining to or affecting the operation of the GATS (Art. 3.1)
Institute legal complaints mechanisms for affected suppliers (Art. 4.2)
Ensure that recognition measures are compatible with the provisions of Art. 7
Prevent monopolies from undermining the MFN requirement (Art. 8.1.)
Consult with other Members, upon request, on business practices that may restrain competition (Art. 9.2)

30. Role and Responsibilities of Member Governments
B: Conditional Obligations:
Notify any new laws, regulations etc. that significantly affect trade (Art. 3.3.)
Administer regulations in a reasonable, objective, and impartial manner (Art. 6.1)
Prevent licensing and qualification requirements and technical standards from nullifying or impairing commitments (relevant criteria are specified in Art. 6.5)
Prevent monopolies from undermining commitments (Art. 8.1,2,)
Ensure absence of restrictions on payments and transfers (Art )

31. Market access limitation of Member Countries I
Limitations on the number of service suppliers:
Licence for a new restaurant based on an economic needs test.
Annually established quotas for foreign medical practitioners.
Government or privately owned monopoly for labour exchange agency services.
Nationality requirements for suppliers of services (equivalent to zero quota).
Limitations on the total value of transaction or assets:
Foreign bank subsidiaries limited to x percent of total domestic assets of all banks.
Limitations on the total number of service operations or quantity of service output:
Restrictions on broadcasting time available for foreign films.

32. Market access limitation of Member Countries II
Limitations on the total number of natural persons:
Foreign labour should not exceed x percent and/or wages xy percent of total.
Restrictions or requirements regarding type of legal entity or joint
venture:
Commercial presence excludes representative offices.
Foreign companies required to establish subsidiaries.
In sector x, commercial presence must take the form of a
partnership.
Limitations on the participation of foreign capital:
Foreign equity ceiling of x percent for a particular form of commercial presence.

33. Examples of limitations on national treatment
(a) Domestic suppliers of audiovisual services are given preference in the allocation of frequencies for transmission within the national territory. (Such a measure discriminates explicitly on the basis of the origin of the service supplier and thus constitutes formal or de jure denial of national treatment.)
(b) A measure stipulates that prior residency is required for the issuing of a licence to supply a service. (Although the measure does not formally distinguish service suppliers on the basis of national origin, it de facto offers less favourable treatment to foreign service suppliers because they are less likely to be able to meet a prior residency requirement than like service suppliers of national origin.)

34. Resources used
ITC: Business Guide to the World Trading System, Geneva 1999
ITC: Business Guide to the General Agreement on Services
UNCTAD: Tools for Multilateral Trade Negotiations on Trade in Services (
UNCTAD: Advanced Training Tools for Negotiations on Trade in Services (
WTO: GATS Training Module (
WTO: GATS, Trade Policy Courses, Chapter 19
WTO: Guidelines for the Scheduling of Specific Commitments under the General Agreement on Trade in Services (GATS), 28 March 2001, (S/L/92)
WTO/Trade in Services Division: Services Negotiations under the GATT: Current State of Play ( )

35. Annex
National Treatment Restrictions of Members (examples form the schedules)

36. National Treatment Restrictions of Member Countries I
Subsidy measures
Eligibility for subsidies reserved to nationals
Tax measures
A 4 per cent federal excise tax is imposed on all non-life insurance premiums that are paid to companies that are not nationally incorporated
An excise tax of 10 per cent is applicable on net premiums paid to non-resident insurers
Other financial measures (fees, charges, etc.)
Charges taken for port services from foreign and national ships may differ in favour of national flag vessels
Higher license fees are charged for non-residents

37. National Treatment Restrictions of Member Countries II
Nationality requirements
Provision of yacht chartering and cruising reserved to nationals
Agents or manages must be citizens
Sale or purchase of travellers cheques by individuals requires citizenship status
Residency requirements
Permanent residency requirements for chiropodists
Residency requirement for manages and the mebes of the board of directors of a company
Residence requirement for actuarial profession
Advisory and auxiliary financial services and asset management: The establishment must be managed by a resident of the province
For foreign bank employees residence is required

38. National Treatment Restrictions of Member Countries III
Licensing and qualification requirements
In order to work as a mountain guide or ski istructor,passing of an examination is required: access to such exams for foreigners may be restricted
Barristers and commercial lawyers in natural law are required to be graduates of national universities
Condition of licenses is one year previous residency
Three years of prior professional practice in the country required
Non-residents must be registered and licensed in order to purchase unprocessed fish from primary producers and/or process fish

39. National Treatment Restrictions of Member Countries IV
Registration requirements
Marketing of legal advice activities by foreign companies is restricted to registered law firms
It is necessary to be registeed as an accountant, for which it is necessary to be a national or an alien domiciled in the country for at least three years prior to the application
Foreign companies are required to have a registered office in the country
Certification of certain works involving health and safety is limited to registered engineers, who to become registered, must be ordinarily resident in the country

40. National Treatment Restrictions of Member Countries V
Authorization requirements
Loans to non-residents need to be approved by the Central bank
Banks: until 30 June 1999, ministerial approval is required for foreign bank subsidiaries to open more than one bank
A non-national needs permission to become a director of a financial institution
Technology transfer/training requirements
Skilled foreign employees required to provide training to locals
Foreign service suppliers are required to offer on-the-job raining for national employees
The foreign service supplier must prove commitment to recruit and develop more local human resources
The foreign service supplier shall use appropriate and advanced technology and managerial experience and shall have the obligation to transfer its technology and pass on its expeience to national personnel

41. National Treatment Restrictions of Member Countries VI
Local content requirements
Preferential use of local services to the extent they are available under the conditions of quality, price and delivery equivalent to those of like services of foreign origin
With regard to personnel, materials, equipment, facilities and services required in the petroleum operations, priority shall be given to the employment of national subcontractors, provided that they are competitive in delivery, time, price and quality

42. National Treatment Restrictions of Member Countries VII
Ownership of property/land
Foreigners may not acquire direct ownership of land in a 100km strip along the frontiers
The acquisition, purchase as well as rent or lease of real estate by foreign natural persons and juridical persons requires an authorization by the competent regional authorities which will consider whether important economic, social or cultural interests are affected or not
Foreign entities may only acquire real property through participation in joint ventures
Non-residents are excluded from the acquisition of real estate