GATS eliminates various legal barriers to international marketing in services. Discuss.

International marketing in services is subject to a number of legal barriers. These barriers include the following:

  • Restrictions on cross border movement of services.
  • Protection of domestic firms from foreign competition.
  • Subsidies to domestic industries.
  • Laws for infringement of international copyright and trade mark.

GATS is a part of WTO and aims at liberalization of trade in services. General Agreement on Trade in Services (GATS) refers to a multilateral treaty containing rules, disciplines and commitments for progressive liberalization of trade in services. GATS covers four modes of international delivery of services:

  • Cross-border supply (trans border data flows, transportation, services).
  • Commercial presence (Provision of services abroad).
  • Movement of personnel (entry and temporary stay of foreign consultants).

Among the obligations is a most favored nation (MFN) obligation that essentially prevents countries from discriminating among foreign suppliers of services. Another obligation is the transparency requirements according to which each member country shall promptly publish all its relevant laws and regulations pertaining to services including international agreements pertaining to trade in services to which the member is a signatory.

Further each member shall also respond promptly to all requests for specific information, by any other member, pertaining to any aspect of the service covered by the GATS. Each member shall also establish one or more inquiry points to provide specific information to other members.

The GATS lays down that increasing participation of developing countries in world trade shall be facilitated through negotiated commitments on access to technology, improvements in access to distribution channels and information network and the liberalization of market access in sectors and models of supply of export interest to them.

With reference to domestic regulations, the Agreement lays down that all measures of general application affecting trade in services are administrated in a reasonable objective and impartial manner. There would be a requirement that parties establish ways and means for prompt reviews of administrative decisions relating to the supply of services.

It is recognized that particular pressures on the balance of payments of a member in the process of economic development or economic transition may necessitate the use of restrictions to ensure, inter alia, the maintenance of a level of financial reserves adequate for the implementation of its program of economic development or economic transition.

A member country may, therefore, apply restrictions on international transfers and payments for current transactions under certain circumstances envisaged under the GATS. In the event of serious balance of payments and external financial difficulties of threat thereof, a member may adopt or maintain restrictions on trade in services on which it has undertaken specific commitments including on payments or transfer for transactions related to such commitments.

The commitments of member countries under the GATS also include national treatment (that is, to treat foreign suppliers or services like domestic suppliers and provision of market access. Hence, it may be concluded that GATS has eliminated Various legal barriers to international marketing in services.


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