International Trade in Services.pdf - DSpace at Khazar University

8 International Trade in Services
for proximity between the consumer and the producer implies that the
consumer or the producer must move to make an international transaction possible.
Because the conventional definition of trade, which involves products
crossing frontiers, would miss out on a whole range of international transactions,
the GATS takes a wide view of trade, which is defined to include four
modes of supply.
Table 1.2 presents and defines these modes of supply and indicates the modes
that are particularly relevant for the eight service sectors studied in the various
chapters. It does not, however, take into consideration the many policy-induced
restrictions that sometimes prohibit or impede trade in these modes. The table
illustrates the horizontal importance that commercial presence (Mode 3) has as a
potential mode of service delivery in all the sectors.
The movement of natural persons (Mode 4) is also an important source of supply
in the great majority of the sectors. Intracorporate transfers of professionals
linked to foreign direct investment are crucial for all sectors. The restrictions that
Table 1.2. Modes of Supply and the GATS
Presence of
Examples of
supplier Other criteria Mode sector relevance
Service supplier is
not present in the
territory of member
Service supplied in
the territory of one
member from the
territory of any
other member
Service supplied to
a consumer of a
member outside his
or her territory, in
the territory of any
other member
Service supplied in
the territory of one
member through
the commercial
presence of the
supplier in another
member
Service supplied in
the territory of
member and
supplier from other
member is present
in the form of a
natural person
Crossborder supply
[Mode 1]
Consumption
abroad [Mode 2]
Accounting,
engineering, health,
IT, and legal services
Health and legal
services
Service supplier is
present in the
territory of member
Commercial
presence
[Mode 3]
Movement of
natural persons
[Mode 4]
Accounting,
construction,
distribution,
engineering,
environmental,
health, IT, and legal
services
Accounting,
construction,
engineering,
environmental,
health, IT, and legal
services
Sources: WTO (2001), authors’ assessment.