Page 273 - DECO503_INTERNATIONAL_TRADE_AND_FINANCE_ENGLISH

Unit 24 : Multilateralism and WTO

a chance to negotiate comparable pacts. The recognition of other countries’ qualifications must not be Notes
discriminatory, and it must not amount to protectionism in disguise. These recognition agreements
have to be notified to the WTO.
International payments and transfers : Once a government has made a commitment to open a service
sector to foreign competition, it must not normally restrict money being transferred out of the country
as payment for services supplied (current transactions) in that sector. The only exception is when
there are balance of payments difficulties, and even then the restrictions must be temporary and
subject to other limits and conditions.
Progressive liberalization : As the Uruguay Round was only the beginning, GATS requires more
negotiations, which began in early 2000 and formed part of the Doha Development Agenda. The goal
is to take the liberalization process further by increasing the level of commitments in schedules.
Complexity of International Trade in Services
International trade in goods is a relatively simple idea to grasp—a product is transported from one
country to another. Trade in services is much more diverse. Telephone companies, banks, airlines,
and accountancy firms provide their services in ways quite different from each other. The GATS
annexes cover some of the diversity as discussed here.
Movement of natural persons : This annex deals with negotiations on individuals’ rights to stay
temporarily in a country for the purpose of providing a service. It specifies that the agreement does
not apply to people seeking permanent employment or to conditions for obtaining citizenship,
permanent residence, or permanent employment.
Financial services : Instability in the banking system affects the whole economy. The financial services
annex gives governments very wide latitude to take prudential measures, such as those for the
protection of investors, depositors, and insurance policy holders, and to ensure the integrity and
stability of the financial system. The annex also excludes from the agreement services provided when
a government is exercising its authority over the financial system, e.g., central banks’ services.
Telecommunications : The telecommunications sector has a dual role : it is a distinct sector of economic
activity, and an underlying means of supplying other economic activities (such as, electronic money
transfers). The annex says governments must ensure that foreign service suppliers are given access
to the public telecommunications networks without discrimination.
Air transport services : Under this annex, traffic rights and directly related activities are excluded
from GATS’ coverage. They are handled by other bilateral agreements. However, the annex establishes
that GATS will apply to aircraft repair and maintenance services, marketing of air transport services,
and computer-reservation services.
The capabilities of services and areas of interests are vastly different in developed and developing
countries. Developed countries have always been keen to use pressure tactics to access developing
countries’ markets in their areas of special interest, i.e., financial, and telecommunication services
that received priority in the negotiation process. On the other hand, developed countries have been
hesitant to open up their markets in the service sectors of interest to developing countries in Mode 4
and Mode 1.
India’s efforts have been to secure binding commitments in Cross Border Supply of Services (Mode 1)
and Movement of Natural Persons (Mode 4). Mode 4 objectives are driven by the competence of
India’s service professionals and Mode 1 objectives by its strong competitive edge in IT and IT enabled
services (ITeS). India has been pushing for the elimination of the Economic Needs Test, clear
prescription of the duration of stay, provisions for extension, etc. Some of these concerns have been
addressed in the Hong-Kong Ministerial Declaration, which provides a direction for developing
disciplines in domestic regulations.
Agreements on Anti-dumping Practices
The WTO agreement on anti-dumping allows governments to act against dumping where there
is genuine (material) injury to the competing domestic industry. A product is considered to be
dumped if

LOVELY PROFESSIONAL UNIVERSITY 267