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General Agreements in Trade and Services

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Traditionally, trade agreements have focused on trade in goods; however, trade in services has become very important, to the point that there is a special agreement for services: the General Agreement on Trade in Services (GATS). GATS opens international competition to services ranging from financial services to trash collection to legal, accounting, and medical services.

Prepare a briefing for Abbie in which you

(a) explain the current status of GATS including its four modes and
(b) outline benefits of liberalization and criticisms of it.

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The response address the queries posted in 1660 words with references.

// In this paper, we have to explain the 'Current status of GATS' including its four modes and outline benefits of liberalization and criticisms of it. But before dealing with the topic, we will first introduce GATS explaining its inception, the idea behind its origin, its objective and area where its applicable. This will help us better understand about its modes. //

General Agreement in Trade & Services

General Agreement in Trade & Services (GATS) is one of the most important agreements that came out in the Uruguay Round negotiations. It is considered to be a landmark achievement in the World Trade Organization negotiations which came into force in January 1995. This treaty was done to include service sector in the multilateral trading system. Prior to this, service sectors were ignored by the provisions of General Agreement on Tariffs and Trade (GATT). GATT only included the merchandise trade between countries. This treaty is obligatory for all the members of the WTO. The clauses of most favored nation (MFN) Status are applicable for GATS.

The objective of GATS is to establish a credible and dependable system of rules for international trade which would ensure fair and equitable treatment of all the member countries. This would result in flow of economic activities through policy bindings. This agreement would encourage trade and development through the policy of gradual liberalization. The services currently make up for more than 60 percent of global production and employment. As a result of the globalization trend, many services which had been considered prior as domestic activities have now turned internationally mobile (Mattoo, Stern& Zanini, 2007).

// We will include in our introduction, not only the services to which the policies of GATS applies; but also mention the services, which do not fall under the purview of GATS namely the 'public services' and the 'air services'. //

This agreement applies to the entire service sector however, there are two major exceptions. The GATS excludes those services which are provided for the exercise of governmental authority. These services are not provided either for a commercial purpose or in competition with other providers. For instance public services like health and educations are not covered under GATS as they don't operate in market conditions. This agreement also excludes coverage measures which have direct impact on air traffic rights and services. This clause is provided in Annex on Air Transport Services.

// After giving detailed description about GATS which covers its origin, reason for inception, objective, policies and procedure and services to which it is ...

Solution Summary

The response address the queries posted in 1660 words with references.