What is Services Trade?
Historical Background
Key Points
11 points- 1.
Four Modes of Supply: GATS defines four ways services can be traded:
- 2.
Mode 1 (Cross-border supply): Services delivered from one country to another (e.g., online consulting).
- 3.
Mode 2 (Consumption abroad): Consumers travel to another country to receive services (e.g., tourism, medical treatment).
- 4.
Mode 3 (Commercial presence): A foreign company establishes a subsidiary or branch to provide services (e.g., foreign bank branches).
- 5.
Mode 4 (Presence of natural persons): Individuals temporarily travel to another country to provide services (e.g., IT professionals, doctors).
- 6.
Market Access: Commitments by countries to allow foreign service providers to operate within their borders.
- 7.
National Treatment: Treating foreign service providers no less favourably than domestic ones.
- 8.
Most-Favoured-Nation (MFN) Treatment: Extending the best treatment offered to any trading partner to all other WTO members.
- 9.
Domestic Regulation: Rules related to licensing, qualification requirements, and technical standards.
- 10.
Liberalization: Gradual reduction of barriers to services trade through specific commitments.
- 11.
Working Holiday Visa Scheme: A specific arrangement under Mode 4 to facilitate temporary movement of young people for work and travel.
Visual Insights
Services Trade: GATS & Four Modes of Supply
This mind map illustrates the fundamental aspects of Services Trade, focusing on the WTO's General Agreement on Trade in Services (GATS) and its crucial 'Four Modes of Supply.' It also highlights India's strengths and challenges in this sector.
Services Trade (GATS)
- ●Four Modes of Supply
- ●Key Principles (GATS)
- ●India's Role & Interests
- ●Challenges & New Areas
Recent Developments
5 developmentsIndia is a major exporter of IT and IT-enabled services, contributing significantly to its current account surplus.
Increased focus on Mode 4 liberalization in FTAs to facilitate the movement of Indian professionals.
Growth of digital services and e-commerce blurring the lines between goods and services trade.
Debates on data localization and cross-border data flows impacting digital services trade.
Post-COVID-19, increased reliance on remote work and digital delivery of services.