| TERM
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DEFINITION
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Classification of service sectors
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There are several classification lists that may be used for the purpose of negotiating trade in
services. The most common, however, is the one developed by the WTO in GATS w/120 which sets out 155 service sub-sectors in 12
broad sectoral categories. The categories in this list are based on an aggregated version of the United Nations Commodity Product
Classification List (CPC). The list can be found at the WTO website under the references “Trade Topics – Services”
http://www.wto.org
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| Commercial presence (Mode 3)
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A mode of service supply or trade where services are supplied through any type of business or professional
establishment, i.e. foreign direct investment, of one member of the agreement in the territory of another. An example is the establishment
of a branch of a foreign bank or of a franchising outlet in a foreign location.
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| Consumption abroad (Mode 2)
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A mode of service supply or trade where services are supplied in the territory of one member of a trade
agreement to the consumers of another. This mode of supply requires that the consumer of services move abroad. An example is the traveling
abroad to receive: medical treatment or to enroll in an education program.
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| Cross-border trade in
services (Mode 1)
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A mode of service supply or trade where services are supplied from the territory of one member of a trade
agreement into the territory of another. An example is architectural design services, supplied, by an architect in one country by post or
electronic mail to consumers in another country.
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| Denial of benefits
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The right of members to a trade agreement to deny the preferential treatment provided for by the agreement
to any non-member. In the case of services, benefits may be denied if it is determined that the service is supplied from the territory of
a nonmember country; or by an enterprise that is not duly constituted or domiciled in a member country; or by an enterprise of a non-member
country that does not have substantial business activities or operations in the territory of any member; or by an enterprise that is owned
or controlled by persons of a non-member; or by a combination of these conditions. See Investment, page 32, where this text may have a
slightly different meaning.
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| Domestic regulation
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The set of non-discriminatory and non-quantitative regulations that are applied by governments and that
may affect foreign and national service suppliers alike once in the market, as well as the ability of foreign service suppliers to enter
the market. These consist of measures relating to qualification requirements and procedures,technical standards and licensing requirements,
among others.
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| List of commitments
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Under a positive list approach, the list of commitments comprises a national schedule and contains all of
the commitments, set out by sector, which a party to a trade agreement has chosen to include.
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| List of reservations
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Under a negative list approach, the list that is found in annexes to a trade agreement and that
contains all of the measures that do not conform to the core disciplines of the relevant chapters and that governments choose to
maintain.
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| Market access
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The set of conditions that allow for foreign exporters of goods or services, or foreign service
providers or foreign investors, to access the market of an importing country (member of the trade or investment agreement). In the
context of the FTAA, market access covers five main negotiating areas: tariffs for non-agricultural goods, agriculture, services,
investment and government procurement. In addition, there is a Negotiating Group on Market Access in the FTAA in which the following
six issues are being negotiated: tariffs; non-tariff measures; safeguards; customs procedures; rules of origin; and technical
barriers to trade.
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| Modes of supply in services trade
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The means through which services are traded. There are four modes of supply, which include: Cross-border
trade (Mode 1), consumption abroad (Mode 2), commercial presence (Mode 3), and temporary movement of natural persons (Mode 4). These modes
of supply require the movement of either the service itself (Mode 1), the service consumer (Mode 2) or the service supplier (Modes 3 and
4). For a more detailed explanation, see the definition under each mode of supply in this section.
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| Most favored nation treatment (MFN)
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This principle contained in trade and investment agreements obliges members of a trade agreement to
give the most favorable treatment accorded to any of their trading partners, to all the other members immediately and unconditionally.
It guarantees that foreign services and service providers (from another member country of the trade agreement) are treated no worse
than any other foreign service or foreign service provider. (or/ are extended the best treatment that is provided to any other).
See Investment, page 33, where this text may have a slightly different meaning.
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| National treatment
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This principle contained in trade agreements and in services chapters ensures that there is
no discrimination between foreigners and nationals. It guarantees that foreign services and service providers (those of another
member country of the trade agreement) are treated no less favorably than local services and service providers. See Investment,
page 33 and Tariffs and Non-tariff Measures, page 43, where this text may have a slightly different meaning.
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| Negative list approach
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The comprehensive inclusion of all service sectors, unless otherwise specified in the list of
reservations, under the specific disciplines of the services chapter and the general disciplines of the trade agreement. A negative
list approach requires that discriminatory measures affecting all included sectors be liberalized unless specific measures are set
out in the list of reservations.
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| Positive list approach
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The voluntary inclusion of a designated number of sectors in a national schedule indicating what
type of access and what type of treatment for each sector and for each mode of supply a country is prepared to contractually offer
service suppliers from other countries.
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| Right to regulate
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The sovereign right of all governments, members to a trade agreement, to introduce regulations
for the pursuit of legitimate objectives in order to meet national policy objectives, including those related to the protection
and safety of human, animal or plant life or health, or to prevent deceptive and fraudulent practices or to protect privacy of
individuals.
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| Service sectors
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Several broad service categories have been defined for the purpose of services trade negotiations
at the WTO and used by many countries pursuing services negotiations in other fora. They include the following: business and
professional services; communications; construction/ engineering services; transport services; distribution services;
educational services; health services; financial services; environmental services; cultural and recreational services.
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| Temporary movement
of natural persons (Mode 4)
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A mode of service supply or trade where services are supplied by nationals of one member
of a trade agreement in the territory of another, requiring the physical presence of the service provider in the host country.
This mode includes both independent service providers as well as employees of the services providers of another member. Examples
include consultants, teachers and actors of one country supplying services through their physical presence in a member country,
or the managers of a multinational enterprise.
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| Trade in services
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Trade in services involves the exchange or sale of a service within the eleven broad categories
subsequently indicated between residents of one country and residents of another country, according to one of the four modes of
supply defined below.
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| Transparency
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This principle requires that members of a trade agreement publish or make available
national laws, regulations or decrees or any type of administrative act that may affect trade in services and foreign
service suppliers with respect to the disciplines within the agreement. Transparency obligations in trade agreements
may include publication, notification, right to prior comment, explanation upon request of the adoption of laws or
regulations, and the provision of information to interested parties upon request. See Competition Policy, page 22,
where this text may have a slightly different meaning.
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