Services trade and the WTO
There are multiple ways – called 'modes' in the World Trade Organization (WTO) – for services to be delivered in international trade:
- Cross-border supply: where a service is supplied from one country to another, for example, an international phone call uses telecommunications services in both the caller's and the receiver's countries.
- Consumption abroad: where consumers from one country purchase a service in another country. The best examples of this mode are education and tourism services.
- Commercial presence: where a company from one country establishes a subsidiary, branch or office and provides a service in another country.
- Presence of natural persons: where individuals travel to another country to provide a service, such as a business consultant undertaking an IT contract overseas.
How is trade in services regulated?
The rules for international trade in services are set by members of the WTO and are contained in the General Agreement on Trade in Services (GATS). Under the GATS, individual WTO Members make specific undertakings on the degree of access foreign service providers will enjoy in their market, and whether they are treated differently than local service providers. The Australian Government, like other WTO Members, retains the right to regulate and fund public services, such as water supply, public health and public education.
The GATS is designed to apply to any service in any sector except services supplied in the exercise of governmental authority. For ease of reference, the services commitments of WTO Members are generally categorised as follows:
- Computer and related
- Research and development
- Real estate
Construction and Engineering
- General construction for buildings
- General construction for civil engineering
- Installation and assembly work
- Building completion and finishing work
- Commission agents' services
- Wholesale trade services
- Retailing services
- Primary education
- Secondary education
- Higher education
- Adult education
- Sewage services
- Refuse disposal services
- Sanitation and similar
- All insurance and insurance-related services
- Banking and other financial services
- Hospital services
- Other human health services
- Social services
Tourism and Travel
- Hotels and restaurants
- Travel agencies and tour operators
- Tourist guides services
Recreation, Cultural, and Sporting
- Entertainment services
- News agency services
- Libraries, archives, museums and other cultural services
- Sporting and other recreational services
- Maritime transport
- Internal waterways transport
- Air transport services
- Space transport
- Rail transport
- Road transport
- Pipeline transport
Other services not included elsewhere.
Australia's role in the WTO Doha Round services negotiations
In the Doha Round, negotiations on individual services commitments have been conducted on a request-offer basis, whereby a WTO Member has requested better access to a particular services sector in another WTO Member's economy. This has been followed by an offer to grant all, some or none of the additional access requested. The process upheld the voluntary nature of GATS commitments, whereby each member is entitled to decide their own levels and sectors of liberalisation. An important element of the process is that any offer made is non-binding and could be amended or withdrawn at any time during the negotiations.
In 2006, the Doha Round of negotiations moved into a new phase with the launch of the plurilateral (or collective) sectoral request process agreed by Ministers at the 6th WTO Ministerial Conference in Hong Kong in December 2005. The collective negotiations differed from the traditional 'request-offer' approach, which was conducted on a 'one-to-one' or bilateral basis.
The plurilateral requests followed a broadly similar formatwhich included a common preamble that emphasised the flexibilities available to Members under the GATS, and a common structure that defined the sectoral coverage of the request and the specific commitments Members sought and limitations to be removed from schedules (such as restrictions on foreign equity, limitations on form of establishment, nationality requirements, discriminatory regulatory policies). A number of requests attached model schedules, checklists or menus to help recipient Members make commercially meaningful commitments.
Importantly, co-sponsors of plurilateral requests were 'deemed' recipients of the request to the extent that their own schedules did not comply. Deemed recipientsundertook to consider and respond to a request in good faith, but they did not have to necessarily commit to every element of the request.
Australia was a co-sponsor of 14 sectoral plurilateral requests and a recipient of eight sectoral plurilateral requests, most notably audio-visual and Mode 4. Information relating to sectoral requests can be accessed from the WTO website.
The full list of requests in which Australia was involved is as follows:
- Accounting services
- Air transport services
- Architectural and engineering services
- Computer and related services
- Construction services
- Education services
- Energy services
- Environmental services
- Financial services
- Legal services
- Logistics services
- Maritime transport services
- Most Favoured Nation (MFN) Exemptions
- Audiovisual services
- MFN exemptions (only for Audiovisual services)
- Mode 1/2 (cross-border services )
- Mode 3 (commercial Presence)
- Mode 4 (temporary movement of service suppliers)
- Postal/courier services
- Services related to agriculture