Introduction

The General Agreement on Trade in Services (GATS) broke new ground when it entered into force on 1 January 1995 as part of the Marrakesh Agreement Establishing the World Trade Organization (WTO Agreement). It put in place a set of disciplines that now regulates trade in services among close to 150 countries. GATS negotiators faced a significant challenge when having to craft a comprehensive set of disciplines in this area. Trade in services is complex, in particular due to the various forms of delivery that are involved and the extensive nature of regulation in many sectors, for instance, financial services and professional services. Disciplines also often had to be developed anew.

The result is somewhat complex. Some obligations, in particular the most-favoured-nation treatment (MFN) obligation, apply to any measure affecting trade in services. Others, like the market access and national treatment obligations, apply only in respect of service sectors or sub-sectors (hereinafter ‘sectors’) of a Member's choosing. There is overlap between the market access and national treatment obligations, and the relationship between these two disciplines and those on domestic regulation is not clearly established. Additional obligations have been adhered to on a voluntary basis, in particular those contained in the Reference Paper on basic telecommunications services and the Understanding on Commitments in Financial Services. In general, the interpretation and understanding of Members’ Schedules of Specific Commitments (‘Schedules’) proves to be a laborious exercise.

This provides fertile ground for difficult and often sensitive interpretive issues to arise.