GATS (General Agreements on Trade in Services)
It is a known fact that trade in services is the rapidly growing field in the
global scenario. According to WTO, in the year 2001, services
constituted about 60% of the world’s output (in GDP). The trade in
services has particularly increased in developing countries. The total
trade in services occupied more than 50% in the exports of the
developing countries. The rapid growth and change has prompted the
members of the WTO to bring in changes in rules and regulations on
trade in services and GATS was introduced on 1st January 1995. This is
one of the important agreements of WTO which contains two main parts:
the frame work of agreement containing rules and regulations and the
schedule of Nations who gave the commitment on access to their
domestic markets by foreign suppliers. Now WTO has 148 member
countries.
Each WTO member lists in its national schedule those services, which it
wished to guarantee access to foreign suppliers. All member countries
are considered as MFNs (Most Favoured Nations) i.e, all commitments
apply on non – discriminatory basis to all member countries.
Coverage of GATS:
The GATS covers all internationally traded services with two exceptions:
services provided by the Government and services in Air transport
sector. The GATS defines that trade in services can be made in four
ways, they are:
1. Services supplied from one country to another (e.g. International
telephone calls)
2. Consumers from one country making use of another country (e.g.
Tourism)
3. A company from one country setting up subsidiaries or branch to
provide services in another country (e.g. Banking)
4. Individual travelling from their own country to supply services in other
country (e.g. Actress or construction worker)
Benefits of Services Liberalisation:
1. An efficient services infrastructure provides a base for economic
success. Services such as telecommunications, banking, insurance and
transport supply strategically important inputs for all sectors.
2. People can have access to world-class services.
3. Trade liberalisation in services leads to low cost. The best e.g.
telecommunications.
4. Faster innovation takes place with liberalised services e.g. ATM,
Phone banking, Internet banking etc.
5. Greater transparency and predictability benefit is there for customers.
This makes possible for the people to make their investments in service
sector.
6. More FDIs are attracted in the countries, which will bring the new
skills and technologies into the country. The domestic employees can
learn the new skills from the MNCs.
Service sector in India:
In the line with the global trend, the services sector in India is growing
rapidly and the contribution of services in India’s GDP increased to
54.2% in 2000-01 from 51.5% in 1998-99. The total trade in services from
India is accounting to 1.3% in the total world trade in services. India
exhibits a strong revealed comparative advantage in services related
goods. The importance in service sectors in India are
telecommunications, IT, ITES, BPO and Banking and financial services.
India has permitted 100% FDI in IT and ITES and more than 51% in
telecommunications.
Trade Related Investment Measures (TRIMs)
It refers to certain condition or restrictions imposed by a Government in
respect of foreign investment in the country. The TRIM text provides that
the foreign capital would not be discriminated by the member
Governments.
Features of TRIMs
1. Abolition of restriction imposed on foreign capital
2. Offering equal rights to the foreign investor on par with the domestic
investor
3. No restrictions on any area of investment
4. No limitation or ceiling on the quantum of foreign investment
5. Granting of permission of without restrictions to import raw material
and other components
6. No force on the foreign investors to use the total products and or
materials
7. Export of the part of the final product will not be mandatory
8. Restriction on repatriation of dividend interest and royalty will be
removed
9. Phased manufacturing programming will be introduced to increase
the domestic content of manufacturer
Trade Related Intellectual Property Rights (TRIPs)
Intellectual property rights may be defined as “Information with
commercial value”. IPR have been characterised as a composite of
“ideas and creative expression”. Plus “ the public willingness to bestow
the status of property. It include
a. Protection of patent
b. Copyright
c. Industrial design
d. Geographical indication
e. Trademarks
f. Trade secrets
g. Layout design (topographies of integral circuits)