The General Agreement on Trade in Services was first negotiated as part of the Uruguay Round of trade liberalisation negotiations, which concluded in 1994. GATS is designed to apply to services generally, including:

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GATS obligations pertain to the delivery of services by four modes of supply.

1. Cross-border Supply, e.g. electronic commerce, internet banking with an overseas bank.
2. Consumption Abroad, e.g. an Australian studying at an overseas university.
3. Commercial Presence, i.e. acquisition, establishment or operation of any commercial or industrial undertaking in the service sector of one country by a foreign entity.

4. Presence of Natural Persons, e.g. an American actor travelling to Australia for film shooting.
   

The GATS National Treatment obligation requires each WTO member country in areas nominated in its Schedule of Commitments, to:

Depending on the commitments given, this obligation may prohibit television domestic content quotas, cabotage arrangements for costal freight, requirements for standard mail to be carried by the national postal service, and ‘discriminatory’ government funding, i.e. funding that is only available to domestic public sector institutions.

The Market Access obligation precludes a government, in areas nominated in the country’s Schedule of Commitments, from establishing on a nation-wide or regional basis:

• Limitations on the number of service suppliers e.g. monopolies, exclusive service arrangements, numerical quotas, or application of an economic needs test.

• Limitations on foreign shareholdings.

• Limitations on the number of service operations or on the quantity of service output e.g. the number of medical graduates.

• Limitations on the total value of service transactions or assets.

• Measures which restrict or require specific types of legal entity or joint venture.
  
  

Other obligations pertain to:

• Ensuring that technical standards and qualifications and licensing requirements do not constitute unnecessary barriers to trade in services.

• Bilateral agreements affecting trade in services.

• The behaviour of monopolies.

• Business practices which restrain competition.

• The negotiation of new disciplines or obligations to remove the "trade distortive effects" of subsidies.

• Further rounds of GATS negotiations to achieve "progressive liberalisation".

General exemptions apply under the Agreement in respect of national security considerations, temporary measures to deal with a serious balance of payments crisis, services delivered in the exercise of government authority, and health, safety and environmental requirements. However, these exemptions are heavily qualified, e.g:

• A service delivered in the exercise of government authority does not include a service provided or funded by government which is commercial in character or which competes with private providers (e.g. private schools, hospitals, job centres, etc.).

• Environmental, health, and safety regulations are subject to the requirement that they do not constitute "a disguised restriction on trade in services" or unjustifiably discriminate "between countries where like conditions prevail".
  
  

The impact of GATS upon a country depends significantly upon its commitments. From a neo-liberal or trade liberalisation perspective, the Uruguay Round GATS has the disadvantage of being a bottom-up Agreement whereby countries were able to:

• Nominate which service sectors or sub-sectors would be covered e.g. private tertiary education as distinct from all of tertiary education.

• Determine that GATS obligations would apply to a nominated service area in respect of one or more of the four modes of supply, but not all modes.

• Specify limitations and qualifications in respect of their nominations.

Despite the failure of the Seattle WTO meeting to launch a general round of trade liberalisation negotiations, the "millennium round" of negotiations commenced in February 2000 in respect of GATS. The European Union and the US have a fairly ambitious liberalisation agenda for these GATS negotiations.

Australia, in a joint Communication with Chile and New Zealand, outlined the following approach to the negotiations:

• The scope of the negotiations should be comprehensive, with no services sector excluded as a matter of principle.

• The negotiations should achieve higher levels of liberalisation in all services sectors, including air and maritime transport.

• Key objectives include the expansion of market access and the removal of discriminatory barriers .

• There should be more binding obligations to ensure that domestic government regulation, particularly with respect to technical standards, licensing, and qualification requirements, facilitates expansion of market access.

The Federal Government has also signalled support for greater trade liberalisation in respect of education services, but it is unclear what is envisaged beyond securing greater market access for Australia’s education exporters.

Unions and community organisations need to act on the basis that there is a significant risk that the GATS negotiations will advance neo-liberal policy agendas because of the demands of other countries, if not also as a result of liberalisation initiatives from the Federal Government. Pressure should be exerted on the Government to specify in detail what it is proposing in this round. For services where government funding is essentially confined to public sector agencies, it would be a mistake to simply clarify whether the Government intends to accept the National Treatment obligation, i.e. render the funding contestable by private providers, because the liberalisation objective can also be pursued via the Market Access obligation. Similarly, the Government’s objectives on domestic regulation warrant attention. The consequence would be to empower the WTO to overrule domestic regulations affecting an area in the Schedule of Commitments, on the grounds that the regulations are more "trade restrictive" than necessary.

Finally, the Government’s rhetoric about comprehensive GATS negotiations plays into the hands of those countries which seek to turn GATS from a bottom-up agreement where each country determines which services are covered and to what extent, into a top-down agreement covering all services by all modes of supply except where a particular country has been able to negotiate an exemption.