The time of services has arrived. WTO's bold move into this area of economic activity would not have occurred or been possible, without the profound transformations of global production and technology that have occurred in recent decades. The services sector is the leading edge of global growth and the technological revolutions in information, communications, and organisation have helped to fuel this development. Without a liberalised global environment in which services could move freely and without the threat of hindrances, investment would not have moved into these areas on the scale it has. We are familiar with this in the Caribbean, where most of the island economies have been transformed in the space of three decades, from commodity staple exporters to ones dependent on tourism, financial services, entertainment, and recreation.

Last week we described the WTO's embrace of services through the General Agreement on Trade in Services (GATS) as bold, simply because the eventual aim of that organisation is to commercialize every service sector in every WTO member country. This is an enormous undertaking, when we bear in mind that the description of a service is literally any human activity designed to satisfy a need (demand), which is not in the form of a tangible commodity. With such a wide coverage, there is little that can justifiably escape the rules and standards imposed by the WTO/GATS.

We also noted last week week that there are three rules governing trade in services under the GATS: national treatment, or "favour one favour all"; most-favoured-nation treatment, or "equal treatment for foreigners and nationals"; and, transparency or "full disclosure of law, regulations, and administrative practices pertaining to trade in services".

Government Obligations

These rules recognise that domestic regulations are the means through which governments exercise influence and control over trade in services. Consequently, one obligation laid on government under the GATS is to regulate trade in services objectively and impartially. This is of course easier said than done, since one government's "objectivity" may be seen by another as "rank bias".

Another obligation is that governments would progressively liberalize access to their markets for imported services. To reinforce this, the GATS specially provides a time-table for future negotiations - stating that these would commence within five years of the coming into force of the GATS.

A third related obligation is in the area of international payments and transfers connected with services. Simply put, if the Guyana government opens up a service sector to foreign competition, it cannot routinely restrict payments for those services to overseas suppliers, through administering some form of payment or exchange control. If, however, a serious balance-of-payment crisis develops, a country may obtain "temporary" permission to impose restrictions on payments subject to declared limits and conditions.

Two-part Agreement

The GATS is a two-part Agreement. One part is the "framework agreement, " and the other the "certified schedules of specific commitments undertaken by member countries". There are therefore two sets of conditions to which members agree. Under the framework agreement some of the general principles discussed earlier are regulated. Within the certified schedules, members make specific commitments for particular service sectors as well as general obligations.

How are these schedules arrived at? There is a standard format. Each member gives a binding commitment to the particular service sector and activity for which it is prepared to give market access, and for which it agrees to apply the national treatment obligations described earlier. In other words, it states how open its market will be for the particular service. All commitments are "bound". This means that they can only be withdrawn or modified under very limited and specific conditions, which require negotiations with the affected countries and compensation to exporters and importers for their losses. This difficulty in retreating from bound commitments, makes the GATS a credible and predictable Agreement, and so favours investment and trade in services.

The commitments undertaken by members are either expressed as "horizontal", because they apply to all sectors in a given schedule, or "sector-specific", because they apply to particular services and activities. In the Caribbean most of the horizontal restrictions pertain to such matters as work permits, alien land holdings, exchange controls, and company registration.