Question

India has been constantly negotiating for an expansion in the trade in services via Mode 4 as defined under the General Agreement on Trade in Services (GATS). Consider the following pairings regarding different modes of Services under GATS of the WTO:

1. Mode 1 : Cross-Border Supply of Services

2. Mode 2 : Temporary cross-border movement of a natural person to consume services abroad

3. Mode 3 : Cross-border provision of services via the commercial presence of a company in another country

4. Mode 4 : Temporary cross-border movement of service providers

Which of the above are correctly paired?

1. Only 1 and 4
2. Only 2 and 3
3. Only 1, 3 and 4
4. All of the above

Answer 1

Correct Answer - Option 4 : All of the above

The correct answer is All of the above.

•  The GATS distinguishes between four modes of supplying services: cross-border trade, consumption abroad, commercial presence, and presence of natural persons.
  1. Cross-border supply is defined to cover services flows from the territory of one member into the territory of another member (e.g. banking or architectural services transmitted via telecommunications or mail); Hence, statement 1 is correct.
  2. Consumption abroad refers to situations where a service consumer (e.g. tourist or patient) moves into another member's territory to obtain a service; Hence, statement 2 is correct.
  3. Commercial presence implies that a service supplier of one member establishes a territorial presence, including through ownership or lease of premises, in another member's territory to provide a service (e.g. domestic subsidiaries of foreign insurance companies or hotel chains); Hence, statement 3 is correct.
  4. The presence of natural persons consists of persons of one member entering the territory of another member to supply a service (e.g. accountants, doctors or teachers). The Annex on Movement of Natural Persons specifies, however, that members remain free to operate measures regarding citizenship, residence or access to the employment market on a permanent basis. Hence, statement 4 is correct.