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The General Agreement on Trade in Services (GATS) is an historical agreement covering a wide range of international service transactions. The underlying theme of this Guide is that competitive suppliers of all lands of services, both from developing and developed economies, can expect to benefit directly from the more open trading regime of GATS which aims to reduce and eventually eliminate regulatory restrictions affecting the international supply of services. Users of services, including service businesses themselves, can also expect to gain from the greater variety of service products and prices offered by more companies around the world.
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Until 1995, no multilateral agreement existed on rules for the trade in services. This was largely due to a lack of knowledge about the services trade itself. Economists generally viewed services as not tradeable or, even worse, as non-productive economic activities and therefore unworthy of policy focus.
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By the end of the Uruguay Round, despite initial scepticism, significant progress had been made in developing general disciplines for governments regarding international transactions in services. Those disciplines can be described in four categories: legal rights; the general obligations of transparency and MFN treatment; the conditional obligations of market access and national treatment; and other supporting obligations. The general obligations of Members are modelled in large part on experience under GATT, the difference being that each obligation undertaken is extended to both the services and services suppliers of Members.
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In addition to the general obligations discussed in chapter 2, each Member is expected to assume specific liberalization commitments through a process called ‘scheduling’ (the preparation of a formal schedule of commitments which forms part of GATS). Under Article XX, a certain flexibility has been created for the scheduling process. Each Member first identifies the services sectors in which it is willing to make either ‘standstill’ (freezing the status quo) or ‘rollback’ (increasingly liberal) commitments.
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At the beginning of the Uruguay Round, many assumed that trade in services was a post-industrial issue. As discussions progressed, though, Members began to realize that most economies obtain the largest part of their gross domestic product from services industries. Re-examination of economic development showed that, of the countries commonly looked to as economic leaders, neither the United States nor Japan has ever been primarily a manufacturing economy.
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