GATS

Indian Economy glossary

Also called: General Agreement on Trade in Services · Topic: International Trade Policy, WTO and Intellectual Property · NCERT: Beyond NCERT

Meaning

The General Agreement on Trade in Services (GATS, 1995) is the WTO agreement that extends trade rules to services, such as banking, IT, telecom, education and health. It uses positive-list scheduling. The most-favoured-nation (MFN) rule, which means treating all WTO members equally, applies to all services. But two other rules apply only in the sectors and modes a country lists in its schedule:

  • market access: foreign suppliers are allowed to enter;
  • national treatment: foreign suppliers are treated no worse than domestic ones.

This lets countries open services step by step, at their own pace.

Example

GATS covers four modes of supply. India's key demand is Mode 4, the temporary movement of professionals, such as Indian engineers on H-1B visas. India wants rich countries to commit more here. Visa curbs such as higher H-1B fees and UK and EU caps hurt India's services exports.

Don't confuse with

  • GATT: GATT (now GATT 1994) covers trade in goods. GATS covers services.

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