WTO GENEVA: SERVICES DIVISION How to read a GATS Schedule - READ THIS FIRST

The services obligations of each WTO member cannot be understood by reference only to the general rules of the GATS. As explained in the opening section of this chapter, a member's obligations -- even in such fundamental respects as treating a foreign service supplier on the same basis as a national supplier -- depend largely on the specific commitments it has undertaken in its national schedule. The services schedules are complex, and very different from GATT schedules, which consist of little more than long lists of numbers identifying different products and specifying a maximum import duty chargeable on each. The easiest way of understanding how a services schedule works is to look at one. The following paragraphs will examine the brief schedule, shown in Box 3.1, of an imaginary WTO member we shall call Arcadia.

          We have already met most of the ingredients of a services schedule in the preceding sections of this chapter. The most important are probably the distinction between four modes of delivery of a service (cross-border, consumption abroad, commercial presence and movement of natural persons), and the basic requirements in Part III of the GATS on market access (Article XVI), national treatment (Article XVII) and possible additional commitments (Article XVIII). Not much remains to be added now. The most important further element is the classification of services used in making commitments.  The GATS schedules largely follow a classification, based on the United Nations Central Product Classification (CPC) system, which identifies 11 basic service sectors (plus a twelfth category for miscellaneous services).  These sectors are subdivided into some 160 sub-sectors or separate service activities. (The number of activities actually covered by GATS commitments is a little smaller.)  The 12 sectors are:

          --       business (including professional and computer) services

          --       communication services

          --       construction and related engineering services

          --       distribution services

          --       educational services

          --       environmental services

          --       financial (insurance and banking) services

          --       health-related and social services

          --       tourism and travel-related services

          --       recreational, cultural and sporting services

          --       transport services and

          --       other services not included elsewhere

          As an example, the tourism category breaks down into sub-sectors for hotels and restaurants, travel agencies and tour operators, and tourist guide services.

          The services schedule of "Arcadia" is divided into four columns. The first specifies the sector or sub-sector covered by the notations in the other columns. The second sets out any limitations to market access for the sector or sub-sector concerned, when the service is provided by a particular mode of delivery, that fall within the six types of restriction mentioned in Article XVI. (The need for a separate column endlessly listing the four individual modes is avoided by simply placing a number from (1) to (4) in front of each entry. A note at the top of the schedule reminds us that, for instance, (1) refers to cross-border supply of the service.)  The third column specifies in the same way limitations that are placed, in accordance with the rules in Article XVII, on national treatment for foreign suppliers of the service.  A final column is provided to enter any further binding commitments that have been offered, as envisaged in Article XVIII. Arcadia's final column is empty, like that of most non-fictitious WTO members. The schedule as a whole is divided into two parts. Part I lists "horizontal commitments": in other words, provisions that apply to foreign suppliers of any service that has been scheduled. Part II sets out the commitments undertaken for each listed sector or sub-sector.  No specific commitments have been undertaken for any sector or sub-sector that is not listed in the schedule.

          Arcadia's schedule includes examples of the three kinds of annotation to be found in all schedules.  At one extreme, the entry "none" means that the scheduling member has undertaken to place no limitation on market access (or, as the case may be, on national treatment) for foreign supply of that service by the mode concerned.  At the opposite extreme, "UNBOUND" means that the member has undertaken no commitment, and therefore retains full freedom to act as it may desire.  In between is the annotation which sets out in detail the nature of a market access or national treatment limitation.  These limitations operate in exactly the same way as a GATT binding affecting a particular product: they represent a bound commitment that, when the service concerned is supplied by the specified mode, it will receive treatment not less favourable than is stated in the schedule[1] 

          Arcadia's schedule can now be easily read and understood. The horizontal commitments show that any foreign service supplier wishing to establish a commercial presence in Arcadia for delivery of any scheduled service will have to meet notification and examination requirements, and will need authorization to buy land. Arcadia accepts no commitments, except as specified, to allow entry of foreigners to its national territory to deliver services. Foreign suppliers of retailing services are completely free to offer such services to Arcadians who go to the foreign countries concerned, or to supply them by mail order, but for other modes of supply they face the limitations indicated.

          This example of a GATS schedule of specific commitments on services is artificially short, with its commitments for only one sub-sector, although those for some developing countries are not much longer.  Otherwise, it is realistic.  The next section of this study turns from fiction to fact, and examines the content of the services schedules of the WTO's real-life membership.