1. Unit 12 Trade in Services Text Ⅰ GATS and the Services Liberalization -To have an overview of GATS, mainly the structure of the Agreement and benefits of services liberalization Text Ⅱ Specific Commitments under GATS -To learn the meaning, significance of specific commitments under GATS; the format and terminology used in a schedule of specific commitments Typical Sentence Patterns: litigation instruments (II)

2. Text Ⅰ GATS and the Services Liberalization Useful expressions: accord (n.& v.), notwithstanding (prep., adv., conj.), assume…level of obligation, make/undertake commitments, set limitations (on sth.), withdraw commitments, trading partner, take exemptions from, in line with, put an end to (prep.), under the burden of, access to (prep.), service(s)/goods sector/market, market access ， a precondition for, supply inputs for, spur (n.& v.), to the detriment of, cf. without detriment to, provision of services, capitalize on, services liberalization, building on ， not least, work one’s way (into), be outweighed by, quality gain, on…ground(s), in marked contrast to/with, take-off, amount to (prep.), under stable conditions, give sb. with a stake in / have a stake in, plan with greater certainty, spill over into Terms: schedule of commitments, air traffic rights, 12 service(s) sectors, 4 modes of supply, FDI Proper names: GATS, North-South controversy, Uruguay Round

3. Major contents of Text I 1.General information of GATS: effective date, and significance 2. Structure of GATS: -two parts: 1) text of the Agreement - its Articles and Annexes 2) schedules of specific commitments undertaken by WTO Members 3. 2 exceptions in GATS 4. 4 main elements of flexibility 5. Necessity and benefits of service liberalization

4. Objectives of GATS 1. Progressive liberalization of trade in services The GATS is designed to secure progressively higher levels of liberalization of trade in services through successive rounds of negotiations, which should aim at promoting the interests of all Members of the WTO and at achieving an overall balance of rights and obligations. 2. Promoting economic growth and development Through liberalization of trade in services the GATS will promote economic growth and the development of developing countries, as the GATT does through the liberalization of trade in goods. 3. Increasing participation of developing countries The GATS helps developing countries to take a growing part in world trade in services and to expand their services exports. It aims at developing their export capacity and securing export opportunities.

5. Structure of GATS Like the GATT, the GATS is structured in two parts. The first part is the text of the Agreement - its Articles and Annexes. The second part is the schedules of specific commitments undertaken by WTO Members. The schedules are an integral part of the Agreement, as tariff schedules are an integral part of the GATT. While the text of the Agreement applies uniformly to all Members of the WTO, the scheduling of commitments is decided by the Member concerned, subject to negotiation and agreement with other Members. It is a principle of the Agreement that each Member may undertake specific commitments in a manner commensurate with its level of development; it is thus accepted that developing countries are likely to accept a narrower range of commitments than their industrialized partners.

6. 6 Parts of the text of GATS I.Scope and Definition (Article I) II.General Obligations (Articles II to XV) III.Specific Commitments (Articles XVI to XIII) IV.Progressive Liberalization (Articles XIX to XXI) V.Institutional Provisions (Articles XXII to XXVI) VI.Final Provisions (Articles XXVII to XXIX)

7. Definition of "trade in services" The GATS does not define “services” but does define “trade in services”. The definition covers not only the cross-border supply of services but also transactions involving the cross-border movement of capital and labour. Paragraph 2 of Article I of the GATS defines “trade in services” as the supply of a service through any of four modes of supply.

8. Article I Scope and Definition 2. For the purposes of this Agreement, trade in services is defined as the supply of a service: (a) from the territory of one Member into the territory of any other Member; (b) in the territory of one Member to the service consumer of any other Member; (c) by a service supplier of one Member, through commercial presence in the territory of any other Member; (d) by a service supplier of one Member, through presence of natural persons of a Member in the territory of any other Member.

9. 服务贸易总协定的独特之处在于它并没有对 “ 服务 ” 进行定义，而是直接界定了服务贸易 (trade in services) 的四种交易模式 (modes of supply) 。 服务贸易总协定第一条第 2 款规定： “ 在本协定中， 服务贸易定义为： (a) 在一成员境内将服务提供至任何其他成员境内； (b) 在一成员境内，向其他成员在该成员境内的服务消费 者提供服务； (c) 一成员的服务提供者通过其在其他成员境内的商业存 在提供服务 ; (d) 一成员的服务提供者通过其派往其他成员的自然人提 供服务。

10. 4 modes of supply under GATS  Cross-border supply （跨境支付） - the possibility for non- resident service suppliers to supply services cross-border into the Member‘s territory.  Consumption abroad （境外消费） - the freedom for the Member‘s residents to purchase services in the territory of another Member.  Commercial presence （商业存在） - the opportunities for foreign service suppliers to establish, operate or expand a commercial presence in the Member‘s territory, such as a branch, agency, or wholly-owned subsidiary.  Presence of natural persons （自然人流动） - the possibilities offered for the entry and temporary stay in the Member‘s territory of foreign individuals in order to supply a service.

11. 12 broad sectors under GATS 1.Business; 2.Communications; 3.Construction and Engineering; 4.Distribution; 5.Education; 6.Environment; 7.Financial; 8.Health; 9.Tourism and Travel; 10.Recreation, Cultural and Sporting; 11.Transport; 12."Other".

12. Article II Most-Favoured-Nation Treatment Article II Most-Favoured-Nation Treatment 1. With respect to any measure covered by this Agreement, each Member shall accord immediately and unconditionally to services and service suppliers of any other Member treatment no less favourable than that it accords to like services and service suppliers of any other country. 2. A Member may maintain a measure inconsistent with paragraph 1 provided that such a measure is listed in, and meets the conditions of, the Annex on Article II Exemptions. 3. The provisions of this Agreement shall not be so construed as to prevent any Member from conferring or according advantages to adjacent countries in order to facilitate exchanges limited to contiguous frontier zones of services that are both locally produced and consumed.

13. Terms schedule of commitments 具体承诺（减让）表 air traffic rights 空中交通权、航空权 、航权 12 service(s) sectors 12 个国际服务贸易部门（包括 11 大部门和其它） 4 modes of supply 国际服务贸易 4 种方式 FDI (foreign direct investment) 外国直接投资

14. Proper names GATS (the General Agreement on Trade in Services) 《服务贸易总协定》 -Annex 1B of the Marrakesh Agreement Establishing the World Trade Organization: Preamble & 6 Parts (29 Articles) & Annexes -Annex 1B of the Marrakesh Agreement Establishing the World Trade Organization: Preamble & 6 Parts (29 Articles) & Annexes See the text at http://www.wto.org/english/thewto_e/whatis_e/eol/e/wto06/wto6_6.htm http://www.wto.org/english/thewto_e/whatis_e/eol/e/wto06/wto6_6.htm See the translation at http://www.jincao.com/t.90.htm http://www.jincao.com/t.90.htm Cf. GATT (the General Agreement on Tariffs and Trade) 《关税与贸易总协定》 GATT: regulating international trade in goods; GATS: regulating international trade in services the North-South controversy 南北争议

15. Text Ⅱ Specific Commitments under GATS specific commitments 具体承诺 horizontal commitments 水平承诺 market access 市场准入 national treatment 国民待遇 none 没有限制 unbound 不作承诺 tariff binding 关税约束 non-violation complaint 非违约之诉 (GATS: Art. 23 (3))

16. Text Ⅱ Specific Commitments UN Central Product Classification 联合国产品中央分类制度 OECD (Organization for Economic Co-operation and Development) 经合组织，经济合作与发展组织 — 由主要西方发达国家于 1961 年 9 月 30 日成立的政府间的经 济协调机构，总部设在巴黎。 DSB (Dispute Settlement Body) （ WTO ）争端解决机构 中国商务部世贸司 http://sms.mofcom.gov.cn/ http://sms.mofcom.gov.cn/ 中国商务部 WTO 咨询网 http://chinawto.mofcom.gov.cn/ http://chinawto.mofcom.gov.cn/ 中国加入世界贸易组织法律文件 http://www.mofcom.gov.cn/aarticle/zhongyts/ar/200207/200 20700032358.html http://www.mofcom.gov.cn/aarticle/zhongyts/ar/200207/200 20700032358.html http://www.mofcom.gov.cn/aarticle/zhongyts/ar/200207/200 20700032358.html

17. Introduction to Specific Commitments Specific commitments under the GATS are registered in schedules. Each Member of the WTO is required to have a schedule in which it registers its commitments to provide market access and national treatment to services and service suppliers of other Members. When making a commitment, a Member binds the level of market access and national treatment specified in the schedule and undertakes not to impose any new measures that would restrict entry into the market or discriminate in favour of services or services suppliers of national origin. A specific commitment thus has an effect similar to a tariff binding under the GATT. Commitments can only be withdrawn or modified after negotiation and agreement with other Members on a compensatory adjustment through which the modifying Member offers alternative commitments. However, new commitments and improvements to existing ones can be added at any time.

18. Schedules of Commitments All schedules conform to a standard formula which is intended to facilitate comparative analysis. For each sector or sub-sector inscribed, the schedule must indicate, with respect to the four modes of supply set out in Article I (2), any limitations on market access or national treatment which are to be maintained. A commitment therefore consists of entries which indicate the presence or absence of market access and/or national treatment limitations with respect to each mode of supply. The first column in the standard format contains the sector or sub- sector which is the subject of the commitment; the second column contains limitations on market access; the third column contains limitations on national treatment. In the fourth column, a Member may enter any additional commitments relating to matters which are not subject to scheduling under market access or national treatment. The terminology used in schedules has been standardized wherever possible.

19. Article XX: Schedules of Specific Commitments Article XX: Schedules of Specific Commitments 1. Each Member shall set out in a schedule the specific commitments it undertakes under Part III of this Agreement. With respect to sectors where such commitments are undertaken, each Schedule shall specify: (a) terms, limitations and conditions on market access; (b) conditions and qualifications on national treatment; (c) undertakings relating to additional commitments; (d) where appropriate the time-frame for implementation of such commitments; and (e) the date of entry into force of such commitments. 2. Measures inconsistent with both Articles XVI and XVII shall be inscribed in the column relating to Article XVI. In this case the inscription will be considered to provide a condition or qualification to Article XVII as well. 3. Schedules of specific commitments shall be annexed to this Agreement and shall form an integral part thereof.

20. Horizontal Commitments In nearly all schedules, commitments are divided into two sections: "horizontal" and "sector- specific" commitments. The horizontal section contains limitations which apply to all sectors included in the schedule. These often refer to particular modes of supply, notably commercial presence and movement of natural persons. The only purpose of having a section for horizontal commitments is to avoid repeating the same entry in relation to each sector contained in the schedule. Any evaluation of sector-specific commitments must therefore take into account the horizontal entries.

21. Commitments relating to Sectors and/or Sub-Sectors In the sector-specific section of a schedule, commitments are inscribed in relation to the description of a sector or a sub-sector of the first column. In the majority of schedules, sectors and sub-sectors are listed according to the sectoral classification list developed by the Secretariat and contained in document MTN.GNS/W/120 （ GATS 服务部门分类表 ）. The list contains 12 broad sectors. These are: 1. Business; 2. Communications; 3. Construction and Engineering; 4. Distribution; 5. Education; 6. Environment; 7. Financial; 8. Health; 9. Tourism and Travel; 10. Recreation, Cultural and Sporting; 11. Transport; 12 "Other". In most cases, sectoral entries are accompanied by numerical references to items of the Central Product Classification (CPC) system of the United Nations, which gives a detailed explanation of the service activities covered by each listed sector or sub-sector.

22. Market Access When a Member undertakes a commitment it must indicate for each mode of supply what limitations, if any, it maintains on market access. Article XVI:2 of the GATS lists six categories of restrictions which may not be adopted or maintained unless they are specified in the schedule. All scheduled limitations on market access therefore must fall into one of these categories.

23. 所谓市场准入 (market access) ，是一种需要通过 谈判达成协议才承担的义务。 GATS 第 16 条规定：任 何成员对于来自其他成员的服务和服务提供者，都必 须给予不低于其他具体承诺减让表中列明的待遇。 关于服务贸易市场准入的规定，包括：第一，每 一成员应当按照其提交的承诺表所指明的有关服务部 门开放期限、限制和条件为另一成员提供市场准入待 遇。第二，每一成员在其承担市场准入义务的服务部 门中，除非在承诺表中有特别规定，不应采取或继续 以下 6 种影响市场准入的措施，即：对服务者数量的 限制；对服务交易和资产总值的限制；对服务业务总 数和服务产出总量的限制；对特定服务部门或服务提 供者可以雇佣人数的限制；限制或要求通过特定类型 的法律实体或者合营企业形式提供服务；对外国资本 的参与比例限制或对外国资本投入总额的限制。

24. National Treatment The national treatment obligation under Article XVII requires Members to accord to services and service suppliers of any Member treatment no less favourable than that it accords to services and service suppliers of national origin. A Member wishing to maintain measures providing more favourable treatment of nationals must inscribe these limitations in the third column of its schedule.

25. Additional Commitments According to Article XVIII, If a Member decides to undertake any commitments relating to measures other than those subject to scheduling under market access or national treatment, for example, relating to qualification requirements, technical standards and licensing requirements, they should be inscribed as additional commitments in the fourth column of the schedule.

26. How commitments are recorded in schedules In essence, the entries which constitute a legally binding commitment in a Member’s schedule indicate the presence or absence of limitations on market access and national treatment in relation to each of the four modes of supply for a listed sector, sub- sector or activity.

27. Terminology: NONE Where there are no limitations on market access or national treatment in a given sector and mode of supply, the entry reads NONE. However, it should be noted that when the term NONE is used in the second or sector-specific part of the schedule it means that there are no limitations specific to this sector: it must be borne in mind that, as noted above, there may be relevant horizontal limitations in the first part of the schedule.

28. UNBOUND All commitments in a schedule are bound unless otherwise specified. In such a case, where a Member wishes to remain free in a given sector and mode of supply to introduce or maintain measures inconsistent with market access or national treatment, the Member has entered in the appropriate space the term UNBOUND. In some situations a particular mode of supply - such as the cross-border supply of bridge-building services - may not be technically possible or feasible. In such cases the term UNBOUND* has been used, usually in conjunction with an explanatory footnote stating “Unbound due to lack of technical feasibility”.

29. Textual descriptions In many cases it will be seen that there are textual descriptions of bound commitments which indicate limitations on market access or national treatment. Such entries, which vary in length considerably, do not use uniform terminology but are based on one of two common approaches:  The entry describes in the appropriate space the nature of the limitation, indicating the elements which make it inconsistent with Articles XVI and XVII of the GATS.  In some cases, Members have chosen to indicate a limited commitment by describing what they are offering rather than the limitations they are maintaining. Such an approach is often used to indicate the market access opportunities for the entry of certain categories of foreign natural persons who supply services.

30. Lists of Article II (MFN) Exemptions Most-favoured-nation treatment is a general obligation that applies to all measures affecting trade in services. However, it has been agreed that particular measures inconsistent with the MFN obligation can be maintained — in principle for not more than ten years and subject to review after not more than five years. Such measures must have been specified in a list of MFN Exemptions submitted by the end of the Uruguay Round of Multilateral Trade Negotiations or by the conclusion of extended negotiations on certain sectors for which the delayed submission of related exceptions was expressly authorized. Subsequently, requests for exemptions from Article II (MFN) can only be granted under the waiver procedures of the Marrakesh Agreement. Most-favoured-nation treatment is a general obligation that applies to all measures affecting trade in services. However, it has been agreed that particular measures inconsistent with the MFN obligation can be maintained — in principle for not more than ten years and subject to review after not more than five years. Such measures must have been specified in a list of MFN Exemptions submitted by the end of the Uruguay Round of Multilateral Trade Negotiations or by the conclusion of extended negotiations on certain sectors for which the delayed submission of related exceptions was expressly authorized. Subsequently, requests for exemptions from Article II (MFN) can only be granted under the waiver procedures of the Marrakesh Agreement.