Introduction

The services economy has been undergoing a major transformation over the last three decades, moving away from the old model, where services were more often than not government functions provided by public utility entities, towards a new paradigm of private, sector-led, competitive markets, where services are exchanged on a commercial basis. Accordingly, the role of governments has fundamentally changed in many activities from being the provider of the service into that of the supervisor or regulator in pursuit of public interests. Increasingly, services markets continue to be liberalized, motivated by the usual gains from competition (better quality, lower prices, wider choices, expanding markets and more job creation).

The General Agreement on Trade in Services (GATS) is the international community’s response to the transformation (or paradigm shift) in the services sector. It provides a legal framework that institutionalizes concepts for a new form of international trade, through the four modes of supply. Rather than triggering the process of liberalization, it was seen as a rules-based framework for international cooperation in the field of trade in services, consolidating liberalizing steps, and as a multilateral antidote to backsliding in national policies (the role of policy commitments).