GATS has two main objectives: (a) to define a set of general concepts, principles and rules that allows 'trade
' in service
s to be measured, and (b) make WTO
members declare commitments to liberalising market access
to foreign service delivery providers.
There are four modes of supply which defines how a service is traded:
Mode 1: cross-border supply not requiring the movement of commodities or people (eg: data warehousing)
Mode 2: movement of the consumer to the country of supply (eg: tourism)
Mode 3: services delivered by foreigners in a foreign country who have established a commercial presence (eg: accounting)
Mode 4: services requiring the temporary movement of natural persons (eg: circus troopes).
GATS does not apply to government services, air or maritime transport. Beyond that, WTO members are supposed to progressively reduce limitations on market access for various sectors in a non-discriminatory fashion. Developing countries are given some latitude in their schedules.
Sectors that involve activities governments normally are responsible for like health and education are not as likely to have been committed to liberalisation as other areas, whereas tourism has been liberalised in over 120 countries.
Mode 2 services have attracted the greatest number of full commitments. There may be more partial commitments for Mode 3 services than for Mode 1, but there are less full commitments, since governments would like a foreign presence to also transfer technology and generate employment. Also, probably because governments don't like foreigners rocking up to their shores with a mediocum of capital, Mode 4 services have only been fully accepted by a few transitional economies (although it has the largest number of partial commitments).