The General Agreement on Trade in Services (GATS) ranks amongst the chief accomplishments of multilateral trade diplomacy at the end of the 20th century, but lies at the centre of the controversies surrounding trade policy at the start of the 21st. WTO negotiations in the services field resumed on 1 January 2000, as foreseen under the Uruguay Round’s "built-in" agenda. As negotiations have progressed, the GATS has become the critical focus of civil society groups representing a wide range of interests. Arguments against the GATS concern principally the threat it is alleged to pose to countries’ sovereign rights to regulate the production, sale, distribution or import of service activities and to supply services across borders. For the most part, these claims are based on misunderstandings that this study aims to address. Still, concerns about the GATS, its effect on public services, its implications for national sovereignty and governments’ ability to regulate are genuine and need to be addressed. The new negotiating round provides a ready-made opportunity for governments to inform concerned constituencies about the GATS and its impact on national economic and social goals. To serve a useful purpose, however, the public policy debate must be based on facts and not misconceptions.

This study has a threefold purpose. First, to recall the economic case that underpins service sector reforms and the policy rationales for pursuing open service markets through trade and investment liberalisation. Second, to address concerns over the effects of the GATS by explaining the operation of the Agreement, the obligations WTO members subscribe to and the policy options they may pursue under it. And third, to point out some of the key negotiating challenges of the current GATS round, focusing particular attention on the interests and concerns of developing countries and recalling the potential the GATS holds for anchoring development-enhancing reforms in services markets....