General Agreement on Trade in Services (GATS) By Samatha S.

(1114389) Veena Balakrishnan (1114333) Sneha John (1114326)

The General Agreement on Trade in Services (GATS) is a treaty of the World Trade Organization (WTO) that 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. It has three main parts:1. The main text with general principles and obligations; 2. annexes with rules for specific sectors; 3. and Member countries' specific commitments to provide access to their markets. The overall aim of GATS is to liberalize trade in services. The agreement covers four different modes (modes 1-4 trade in services) all of which affect health: Mode 1 Cross-border supply. Health services provided from the territory of one Member State in the territory of another Member State. This is usually via interactive audio, visual and data communication. The patient therefore has the opportunity to consult with physicians in a different country, as do local doctors. Typical examples include Internet consultation, diagnosis, treatment and medical education. This form of supply can bring care to under-served areas, but can be capital intensive and divert resources from other equally pressing needs. Mode 2 Consumption abroad. This usually covers incidents when patients seek treatment abroad or are abroad when they need treatment. This can generate

foreign exchange, but equally can crowd out local patients and act as a drain on resources when their treatment is subsidized by the sending government. Mode 3 Foreign commercial presence. Health services supplied in one Member State, through commercial presence in the territory of another Member State. This covers the opening up of the health sector to foreign companies, allowing them to invest in health operations, health management and health insurance. It is argued that, on the one hand, FDI can make new services available, contribute to driving up quality and create employment opportunities. On the downside, it can help create a two-tier health system and an internal braindrain - and thus exacerbate inequity of health provision. Mode 4 Movement of natural persons (individuals rather than companies). The temporary movement of a commercial provider of services (for example, a doctor) from their own country to another country to provide his or her service under contract or as a member of staff transferred to a different country. This is one of the most contentious areas for health, as there is concern that it will increase the brain drain of health personnel from poor to rich countries. However, GATS is concerned only with health professionals working in other countries on a temporary basis. Brain drain refers to the emigration of educated, qualified, and skilled people from poorer countries to richer countries. WHOs Human Resources for Health initiative aims to increase individual countries' pools of qualified health staff. Services covered by GATS GATS considers education as a tradable service. GATS covers 12 service sectors (Business; Communication; Construction and Engineering; Distribution; Education; Environment; Financial; Health; Tourism and Travel; Recreation, Cultural, and Sporting; Transport; Other.). Two exceptions are services in the exercise of governmental authority and air traffic rights. Laws covered by GATSGATS applies to all measures affecting trade in services. GATS defines measures as all laws, regulations and practices from national, regional or local government or non-governmental bodies exercising powers delegated to them by government that may affect trade.

Criticism on GATS

Opponents of GATS are convinced that it will limit a state's sovereign powers to protect human health, and ensure provision of good quality, affordable health services. Specifically, they fear that progressive liberalization of services under GATS will force WTO Members to privatize health care currently provided by governments and that these changes will be irreversible. They are also concerned that the capacity of states to regulate health-related services will be eroded.

GATS and its impact on education The higher education sector has in recent years been attracting increasing attention, largely due to its contribution to improving Productivity, increasing economic growth, and enhancing Innovation and technological capability. The expansion of the sector is considered a necessary condition for growth and expansion in the global economy. Higher education has traditionally been provided by public authorities through public institutions. However, the pressure to expand, coupled with the Fiscal constraints of the state, has compelled many governments to adopt market-friendly reforms to support this growing sector. These reforms included cost-recovery and incomegenerating measures in public institutions and encouragement of the establishment and expansion of private higher education institutions, which do not depend on state funding. A further extension of the marketization process is the view that education can be treated as a tradable commodity. The creation of the General Agreement on Trade in Services (GATS) reflects the formalization of market processes and procedures for international trade in services. GATS encompasses all internationally traded services, including education. Within the education sector, GATS covers five categories of education services: primary, secondary, higher, adult, and others. Trade in education under the GATS framework takes place in four modes: (1) cross-border supply of the service (where consumers [students] remain within the country); (2) Consumption abroad (where consumers cross the border); (3) Commercial presence of the provider in another country (institutional mobility); (4) Presence of persons in another country (staff mobility). Two of the most important and visible forms of trade in education are the cross-border mobility of students and cross-border

institutional mobility. The internationalization of education is not new. Students have been going abroad to study for decades motivated by a lack of facilities at home or the attraction of better education opportunities abroad, or the desire to learn a new language and experience new cultures. Countries in the European Union encouraged this tendency through programmes such as ERASMUS. But the sudden spurt in student mobility in recent years is a result of globalization, and it has become a financially rewarding experience for some countries, where cost-recovery levels are high. Today, nearly 3 million students study abroad, and the market for cross-border students are rapidly increasing. Similarly, the cross-border mobility of institutions is also on the rise. Countries such as Malaysia, Singapore, Hong Kong, United Arab Emirates and Qatar host branch campuses of a number of foreign universities. In general, students move from less developed to developed countries, whereas institutions move from developed to developing countries. In both cases, money moves from developing to the developed countries. The trade in education, through all modes, accounts for billions of dollars and can be highly profitable. Countries such as the United States, the United Kingdom, and Australia attract large numbers of students, establish institutions overseas, and are the biggest beneficiaries of trade in education. Some critics argue that the developed countries have disproportionately benefited from trade in education, while the disadvantages chiefly affect developing countries. Indeed, if foreign universities are allowed to exploit and dominate the imperfect education markets operating in developing countries, this could weaken the higher education system in those countries.