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What are the four alternative modes of international Transactions in Services?

What are the four alternative modes of international Transactions in Services?

Owlgen
Course: M.Com

1 Answer

According to Article 1.2 of GATS, trade in services defined as the supply of a service:

  • From the territory of one party into the tributary of any other party.
  • In the party tributary of one party to the service consumer of any other party.
  • Through the presence of service providing entities of one party in the tributary of any other party.
  • By natural persons of one party in the territory of any other party.

The above mentioned provisions give us four alternative modes of transactions in services:

  1. Cross-border movement.
  2. Movement of consumer.
  3. Commercial presence abroad.
  4. Presence of natural persons abroad.

Cross-border Movement:

Cross-border movement of services means “separated services” under this alternative, services are supplied from the territory of one country (say India) into the territory of another 4 country (say Pakistan). Example such services are credit cards, telephone, broadcasting, television, consultancy etc. In this case customer and service organization transact business at arms length. It includes the service that can be transmitted through telecommunication or services embodied in a consultant report or a software on a diskette.

Movement of Consumer:

This category of services is characterized by the movement of consumers to service organization. This entails supply of services in the territory of one country (country of service provider) to the service consumer of any other country. For example, tourism, theater, transport services, across national borders.

Commercial Presence Abroad:

This category of services means supply of services by a service organization of one country through commercial presence in the territory of any other country. For example, banking.

Natural Presence Abroad:

This category of services is characterized by the presence of natural persons of the country in the territory of any other country. For example, an Indian engineer working in USA, or an Indian doctor going to abroad to provide medical services.

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November 14, 2019
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