1.7 Conditional Granting of Market Access and National Treatment
The GATS is a very flexible agreement that allows each Member to
adjust the conditions of market entry and participation to its
sector-specific objectives and constraints. Two sets of legal
obligations — governing, respectively, Market Access and National
Treatment — are relevant in this context. As already noted, Members
are free to designate the sectors, and list them in their schedules
of commitments, in which they assume such obligations with regard to
the four modes of supply. Moreover, limitations may be attached to
commitments in order to reserve the right to operate measures
inconsistent with full market access and/or national treatment.
The
market access provisions of GATS, laid down in
Article XVI,
cover six types of restrictions that must not be maintained in the
absence of limitations. The restrictions relate to
the number of service suppliers
the value of service transactions or
assets
the number of operations or quantity
of output
the number of natural persons
supplying a service
the type of legal entity or joint
venture
the participation of foreign capital
These measures, except for (e) and (f), are not necessarily
discriminatory, i.e. they may affect national as well as foreign
services or service suppliers.
National treatment
(Article XVII) implies the absence of all discriminatory measures
that may modify the conditions of competition to the detriment of
foreign services or service suppliers. Again, limitations may be
listed to provide cover for inconsistent measures, such as
discriminatory subsidies and tax measures, residency requirements,
etc. It is for the individual Member to ensure that all
potentially relevant measures are listed;
Article XVII does not
contain a typology comparable to
Article XVI. (Examples of
frequently scheduled national treatment restrictions are given in
Attachment 1 to document S/L/92
(40 pages, 178KB)). The national treatment obligation
applies regardless of whether or not foreign services and suppliers
are treated in a formally identical way to their national
counterpart. What matters is that they are granted equal
opportunities to compete.
The purpose of commitments, comparable to
tariff concessions under GATT, is to ensure stability and
predictability of trading conditions. However, commitments are not
a straitjacket. They may be renegotiated against compensation of
affected trading partners (Article XXI); and there are special
provisions that allow for flexible responses, despite existing
commitments, in specified circumstances. Under
Article XIV, for
example, Members may take measures necessary for certain overriding
policy concerns, including the protection of public morals or the
protection of human, animal or plant life or health. However, such
measures must not lead to arbitrary or unjustifiable discrimination
or constitute a disguised restriction to trade. If essential
security interests are at stake,
Article XIVbis provides cover.
Article XII allows for the introduction of temporary restrictions to
safeguard the balance-of-payments; and a so-called prudential
carve-out in financial services permits Members to take measures in
order, inter alia, to ensure the integrity and stability of their
financial system (Annex on Financial Services, para.2).
Commitments must not
necessarily be complied with from the date of entry into force of a
schedule. Rather, Members may specify in relevant part(s) of their
schedule a timeframe for implementation. Such “pre-commitments”
are as legally valid as any other commitment.
Food for Thought:
Imagine that your country intended to schedule the following
services: telecommunications, banking, and rail transport.
What could be an example of a market
access restriction in these sectors?
What could be an example of a national
treatment restriction?
Possible reply:
Existence of exclusive or monopoly
operators. Prescribed forms of legal incorporation (e.g. joint
stock companies). Quantitative restrictions on presence of natural
persons.
Restrictions on foreigners’
participation in company boards. Prohibition of foreign land
ownership. Discriminatory minimum capital or minimum reserve
requirements.
