GATS and its implications for developing countries: Key issues and concerns

This paper discusses the General Agreement on Trade in Services or GATS and assesses some of the key issues and concerns that have been voiced about this agreement, particularly with regard to its implications for policymaking in important social service sectors. The paper provides an overview of the GATS in terms of its key features, structural characteristics, and negotiating modalities. It also assesses the nature of liberalization that has been realized under the GATS during the Uruguay Round of multilateral trade negotiations. The background discussion provides the context for discussing the various criticisms leveled at the GATS. The paper then provides a critical assessment of these criticisms and distinguishes between those that are based on misapprehensions and incorrect information or lack of understanding about the GATS, from those which are genuine concerns and where future negotiations can play an important role. The discussion indicates that while the GATS may generate benefits in the form of efficiency and resource gains, it may also hurt the realization of equity and developmental objectives and could pose challenges to governmental autonomy in the delivery and provision of various social services. However, an important point highlighted in the paper is that underlying domestic conditions and informed domestic policies and regulations can play an important role in facilitating the gains and mitigating the adverse consequences of the GATS. The paper concludes by highlighting the position developing countries could take in the ongoing service sector negotiations at the WTO, and notes the specific GATS provisions on which they need to focus in these discussions.