Special Issue
Vol. XII, No. 1
(Summer '20)

-

To a certain extent, the WTO’s General Agreement on Trade in Services (GATS) has remained in the shadow of its precursor in merchandise trade, the General Agreement on Tariffs and Trade (GATT). Apart from some sector-specific liberalization moves in the wake of the Uruguay Round (UR), i.e. after January 1995, it has attracted relatively little attention as a multilateral instrument to further advance and bind liberalization in services trade. Moreover, there are still gaps in the Agreement’s framework of rules which remain to be filled. By the same token, the GATS has given rise to far fewer trade disputes than the GATT, despite its particularly broad structure in terms of permissible trade policy measures, application to product and factor flows (capital and labour), co-ordination problems within and between national administrations, and overlaps with other policy instruments, in particular investment treaties. This article intends to provide an overview assessment of what has been achieved under the Agreement and the many remaining challenges and uncertainties. In the end, it would be for forward-looking WTO Members, as in the past, to promote and defend a ‘public good’ called multilateralism in all its facets. Unfortunately, such Members are in short supply at present.

The taxation of multinational digital companies has recently captured the policy headlines. A disagreement between France and the United States almost led to yet another trade feud. For now, at least, the disputing parties have moved away from pugilistic behaviour and have promised to attempt a negotiated solution. The solution to the issue should, of course, take into account the Members' rights and obligations under the relevant World Trade Organization (WTO) Agreements, especially the General Agreement on Trade in Services (GATS). Consistency with the GATS, however, is only one aspect of the story, albeit an important one. Taxation is generally legal, if a jurisdictional link between the taxing authority and the taxed entity can be established, and jurisdictional issues are not explicitly addressed in GATS, even though, absent implicit understanding on this score, key GATS principles risk being invalidated. The complicating factor in this discussion, is that multinational digital companies do not necessarily need to be physically incorporated in each jurisdiction where they operate. Tensions may arise since, in the absence of fiscal harmonisation, companies may have the incentive to choose the seat of their incorporation in jurisdictions where tax rates are lower, whereas governments in countries where tech companies operate may want to increase their tax burden. In this paper, we map the brass tracks of the relevant international legal framework that digital taxes must observe, and the evolving norms regarding the basis for taxation with special focus on the curious case of the digital sector.

Tradability of services increases and transforms business processes around the world. This article illustrates the statistical tools that are available today to analyse this development. It describes global datasets on trade in services drawn from official statistics, shows experimental datasets on trade in services by partner or by mode of supply, and sketches out indicators that depict deviations from global trends. Possible statistical frames to measure new phenomena such as digital trade or sources for analysing regulations are described as well as research issues to help improve trade in services statistics.

International trade agreements may limit the policy options available to States when respecting, protecting and fulfilling human rights. The present paper addresses this relationship from the perspective of rules concerning the liberalisation of trade in services such as the General Agreement on Trade in Services (GATS) and chapters on services trade in free trade agreements (FTAs) as well as new plurilateral and multilateral initiatives in the field of trade in services including the negotiations of a Trade in Services Agreement (TiSA). After a brief overview of the history of the discourse on services trade liberalisation and human rights, the paper recalls the main obligations of States under human rights law on the one side and their obligations under trade law on the other side. Based on this, the paper assesses if the concerns and fears about the impact of the GATS on human rights articulated twentyfive years ago are still valid. Subsequently, the paper discusses if the findings concerning the GATS and human rights need to be revisited in light of new bilateral, regional and plurilateral developments. Finally, the paper proposes and analyses options for future agreements on trade in services which could mitigate the negative effects of trade agreements on human rights.

This paper analyses the role of telecommunications as a means of transport for services exports with a focus on computer and other business services in India. Telecommunications are typically dominated by major suppliers which need to be regulated and exposed to competition to fulfil their role. This paper notes that India took sweeping unilateral reforms in the telecommunications sector in the 1990s but has been reluctant to bind reforms in international trade agreements. It goes on to show that India is lagging as compared to other lower middle-income countries on international measures of connectivity, and that connectivity is strongly related to timely adjustment of policy to changing market conditions and technology. Second, using gravity estimates, it has been found that connectivity is an important driver for trade in computer and other business services. In particular, broadband connectivity significantly reduces the rate at which exports fall off with distance and extends the reach of exports to distant markets.

Blockchain is a distributed or decentralised ledger technology that uses cryptographic algorithms to verify the creation and transfer of digitally represented assets or information over a peer-to-peer network. It eliminates the need for a central authority to keep, update and verify data. Traditionally, services provided by these central authorities constitute a significant part of the services industry. This paper argues that Distributed Ledger Technology (DLT) is changing the services industry in three ways. First, services previously provided by central authorities are now being replaced and supplied jointly by some or all participants on the distributed ledger. Second, with the elimination of central authorities, auxiliary services used to support the operation of these central authorities are being eliminated. Third, services trade may be expanded and become more inclusive by engaging previously disadvantaged or marginalised individuals. This paper further argues that the General Agreement on Trade in Services (GATS), as the first and the only multilateral trade agreement on services, is highly relevant for the development and regulation of DLT-based applications. This relevance is unpacked by: (i) identifying the services relevant in the context of DLT-based applications; and, (ii) exploring whether a WTO Member, in adopting regulations affecting DLT-based applications, needs to consider its obligations under the GATS. The paper arrives at the conclusion that the GATS can be an effective instrument in expanding trade in DLT-replaced or enabled services.

The multi-faceted character of the digital challenge combined with the inherent fluidity of digital technologies render the regulatory design that can adequately accommodate them complex and hard to elaborate. This article addresses one particular aspect of the digital trade discourse and seeks to identify its links with the regulation of trade in services in particular. It does so by examining the current state of affairs in those sectors that are most pertinent for digital trade (telecommunications, computer and audio-visual services) under the regulatory framework of the World Trade Organization (WTO) and then traces more recent regulatory developments in preferential trade venues. The article finally evaluates the process of adaptation of international trade law and addresses broader governance questions about the efficacy of this adaptation and the adequacy of the chosen evolutionary path.

The services sector is gaining importance in international trade and commerce globally. Like goods trade, services trade also requires facilitation for enhancing global trade. Trade Facilitation in Services (TFS) Proposal was submitted by India in the World Trade Organization (WTO) for the consideration of the Members. However, unlike the Trade Facilitation Agreement in Goods (TFA) which was adopted by Members to be an integral part of the WTO agreement, no appetite was shown by Members to adopt the TFS proposal. An analysis of free trade agreements (FTAs) of selected WTO Members reveals that these Members included many of the TFS provisions in their new age FTAs, thereby reflecting a dichotomy in Members’ approach for TFS in WTO and their FTAs.  

Measuring the restrictiveness of applied services trade policies is far from straightforward. In addition to identifying policy measures of interest, there is also the problem of weighting and aggregating them into Services Trade Restrictiveness Indices (STRIs). This paper tackles that problem, which has traditionally been solved by using weights determined by analysis or expert judgment. The approach here is novel: a machine learning algorithm is used to determine the weights that have the best predictive power for bilateral trade costs. This alternative approach produces an index with significantly greater explanatory power for bilateral trade than the Organisation for Economic Cooperation and Development (OECD) STRI, using the banking sector as an example. A quantitative simulation shows that the alternative methodology makes a major difference in policy terms: the global impact of a 10% reduction in the restrictiveness of applied services policies is about ten times larger than the estimated impact using the OECD’s STRI.

India has always sought to exploit its export potential in ‘Mode 4’ of delivery of services involving the movement of natural persons. However, it has not been able to realise its offensive interest in Mode 4 services exports due to legal, economic, political, and geopolitical factors. This Article seeks to contextualise pivotal moments in the formulation of India’s Mode 4 strategy by situating these negotiating stances against larger political and geopolitical phenomena. It focuses on India’s ambitious proposal tabled in November 2000 which suggested comprehensive amendments to GATS and demanded significant changes in immigration and labour laws. Rather than viewing this proposal as a result of the growth in IT exports in 1995-2000, this Article argues that the proposal should be understood as a continuation of a process that started in the mid-1980s which involved the Indian state playing a more open and proactive role in the growth of the IT sector. The Article then shifts its focus to the chapter on Mode 4 in the India-Singapore Comprehensive Economic Cooperation Agreement. This chapter is contextualized by India’s Look East Policy. It traces the economic and geopolitical factors that led to the negotiation of the free trade agreement and the overwhelming anti-immigration sentiment which ultimately led to its undoing. Lastly, the India-ASEAN Trade in Services Agreement is evaluated. While this agreement fulfilled the geopolitical ambitions of the Look East Policy, it failed to improve the level of services liberalisation set out in the GATS. We argue that the India-ASEAN Trade in Services Agreement demonstrates the costs of an excessive focus on geopolitics during the negotiation of free trade agreements.

This paper reviews findings from recent literature on the trade effects of Aidfor-Trade (AfT) which has now begun to examine the impact of this aid on services trade in a significant departure from only looking at merchandise trade and investment. The paper also discusses the major transmission channels for the trade-enhancing effects of AfT and considers both direct and spill-over effects of AfT on services trade. Recent work suggests that AfT allocated to services activities may be effective in enhancing services exports of small value exporting countries, which is a significant finding from the perspective of the objective of AfT disbursement. It also provides scope for export diversification, global value chain (GVC) integration and enhancing firm productivity in recipient countries.