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  • Subject area(s): Marketing
  • Price: Free download
  • Published on: 14th September 2019
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  • Number of pages: 2

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The General Agreement of Trade in Service was concluded by the Member States of the WTO. It entered into force in January 1995.  Unprecedentedly, the WTO listed trade in services within the rules governing multilateral trading system. The GATS aim to gradually increase the level of liberalization in trade of services. That is anticipated to be achieved through negotiations that seeks to improve the interests of WTO Member States and secure a balance in rights and obligations. Also, it aims to strengthen economic growth and development.   In the framework of the bilateral negotiations, it is up to the countries to choose the sectors to be opened to the external competition, while reserving the right to set the restrictions and conditions they consider necessary in the liberalization of the service sectors.  

The GCC countries are required by the GATS to comply to two fundamental principles of the World Trade Organization (WTO), that are based on non-discrimination treatment among foreign service providers (MFN), and between foreign suppliers and local service suppliers (NT).  However, the General Agreement on Trade in Services obligations on member states doesn't restrict the right of choice of sectors to which the GCC countries intend to offer for foreign competition, but rather guarantees it, with the existing restrictions in those sectors and preferences maintained for their companies of the GCC companies or other state companies that might enter agreements of exchanging preferences on market access and the application of the national treatment base.   In that sense, the WTO does not interfere with the public services provided by the State in the exercise of its governmental authority, as the GATS does not interfere with public monopolies and private sector monopolies granted by the State. Also, the governments organization and management of their service sectors remains as a sovereign right of WTO Member State States.  Two articles should be clarified under the General Agreement on Trade in Services, the first is the most-favored-nation principle (Article 2) and the national treatment (Article XVII), which is different from the General Agreement on Trade in Services in comparison to commodity conventions. States are bound to circulate any preference it grants to foreign services or suppliers among the rest of the foreign suppliers of the Member States, as the MFN principle applies to all service sectors in the State.   

The possibility of exceptions to the application of the MFN principle in the framework of regional trade agreements is provided in Article V of the General Agreement on Trade in Services, allowing for the possibility of exchanging concessions in the field of the supply of services among States parties without circulating to the rest of the WTO Members. Additionally, it is allowed by the General Agreement on Trade in Services to have exceptions adopted if appropriate in the application of the MFN principle, as stated in a separate list of its obligations to the WTO. The principle of national treatment applies only to sectors declared in the lists of special commitments for external competition. The State grants access to national services and services to foreign companies within the sectors listed in the submitted list of special obligations within the limits of the conditions and restrictions set out in each service sector. Every member state has a list of horizontal obligations that shows the restrictions that are imposed on all service sectors in that list.   In this context, unless the member state wishes to improve market liberalization or encourage the application of principles of the Most-favored-nation and national treatment, the member states should not go beyond what is already set out in their lists of commitments in terms of imposed restrictions, or the actions of amending legislation, regulations and conditions. Liberalization of trade services doesn't mean the member State is exempted from the rules and regulations of the service sectors and lifting the restrictions on them, rather the internal laws and regulations remain governing the functions of the service sectors, particularly the public services which requires continuity and a high level of regulation and precautionary measures.  

Even tough GATS extends to the air transport sector, many services fall short under the scope of application, and only few services are subject to the agreement. These are Aircraft maintenance and repair services, Global distribution System, and selling and marketing air transport services  The exceptions also include the Most Favored Nation clause from being applied on air transport services from all GCC GATS schedules because of the availability of bilateral agreements in that regards with other states.  

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