All members of the WTO are signatories to the GATS. The basic WTO principle of most favoured nation (MFN) applies to GATS as well.
Nevertheless, some service sectors—in particular, international finance and maritime transport—have been largely open for centuries, as necessary components of merchandise trade. Other large sectors have undergone fundamental technical and regulatory changes in recent decades, opening them to private commercial participation and reducing barriers to entry. The development of information technologies and the internet have expanded the range of internationally tradeable service products to include e-banking, 'telemedicine', distance learning, as well as international remote gambling, 'spam' and pornography. Governments are increasingly being influenced by business to open up publicly-owned, publicly accountable services to international market forces. At the same time, powerful countervailing arguments and civil-society movements have been pressing for fuller accountability and legislative restriction of potentially unethical market and corporate behaviours.
|Mode 1: Cross-border supply||Service delivered within the territory of the Member, from the territory of another Member||Service supplier not present within the territory of the member|
|Mode 2: Consumption abroad||Service delivered outside the territory of the Member, in the territory of another Member, to a service consumer of the Member|
|Mode 3: Commercial presence||Service delivered within the territory of the Member, through the commercial presence of the supplier||Service supplier present within the territory of the Member|
|Mode 4: Presence of a natural person||Service delivered within the territory of the Member, with supplier present as a natural person|
|Note: From the document MTN.GNS/W/124, available on the World Trade Organization Website, posted courtesy of ISTIA|
Members can, in principle, freely decide where to liberalize sector by sector, including which specific mode of supply they want to cover for a given sector. Yet the goal of the GATS, as expressed in its preamble, is progressively higher levels of liberalization. Members' commitments are governed by a "ratchet effect" meaning that commitments are one-way and cannot be wound back once entered into. The ratchet effect was one of the objectionable features of the failed MAI treaty.
Services Sector Classifications addressed in the GATS are defined in the so-called " W/120 list", which provides a list of all sectors which can be negotiated under the GATS. The title refers to the name of the official WTO document, MTN.GNS/W/120.
The most notorious privatisation of a public utility occurred in January 2000 when the government of Bolivia gave control over the water supply of the city of Cochabamba to a Bechtel Corporation subsidiary, a deal which resulted in a steep price increase, widespread public protest and the shooting of protesters by troops. When the corporation was forced to give up, it filed a multimillion-dollar legal demand in a World Bank tribunal against the government for its loss of potential profits. After persistent international criticism over several years,
On January 19, 2006 Bechtel and Abengoa representatives traveled to Bolivia to sign an agreement in which they abandoned the ICSID case for a token payment of 2 bolivianos (30 cents). This is the first time that a major corporation has ever dropped a major international trade case such as this one as a direct result of global public pressure.See also Wikipedia article Cochabamba protests of 2000.