The General Agreement on Trade in Services (GATS) is a treaty of the World Trade Organization (WTO) which entered into force in January 1995 as a result of the Uruguay Round negotiations. The treaty was created to extend the multilateral trading system to service sector, in the same way the General Agreement on Tariffs and Trade (GATT) provides such a system for merchandise trade.
All members of the WTO are parties to the GATS. The basic WTO principle of most favoured nation (MFN) applies to GATS as well. However, upon accession, members may introduce temporary exemptions to this rule.
The agreement aims to recognize the increasing importance of service trade for the growth and development of the global economy and to create a multilateral framework of principles and rules for trading services. The expansion of such trade is expected to be facilitated by market transparency and the progressive liberalization, promoting economic growth of all trading partners and particularly aiding the development of developing countries. The goals are to be achieved through successive rounds of further multilateral negotiations, explicitly aiming to increase the participation of developing countries in service trade and to expand their service exports. The agreement also makes a point of addressing the serious issues faced by the least developed countries given their economic situation and their needs in the areas of development, trade, and finance.[1]
The European Community, in accordance with its competencies, has ratified the agreements reached during the Uruguay Round of multilateral negotiations (1986–1994) and authorized the legal signing of the treaty establishing the World Trade Organization. This enabled GATS, included in Annex 1B of the Marrakesh Agreement, to come into effect across the European Community member states.[2]