To understand the concern about the GATS, it is necessary to have some
understanding of its context in world trade.
Before GATS came into being, there was the General Agreement on Trade and Tariffs (GATT).
GATT was both an international trade treaty and an organization of 23 countries
founded in 1948. The GATT worked to
remove or reduce barriers from international trade in goods, which
included customs duties, subsidies and import bans. It also acted as a
forum for trade
issues and while the organization had the ability to render judgments in trade
disputes, it did not have the power to enforce those decisions. A clause
in the agreement stated that the country that lost the judgment also had to
agree to the sanction prescribed by the judgment. This clause effectively
prevented any international sanctions to a country that bargained in bad faith
or that later pulled out of a negotiated agreement. The result was that
deals in trade between countries were not meaningful or reliable.
In 1986, the GATT began the
Uruguay Round Negotiations that lasted until 1994. The result of these
negotiations was the formation of the World Trade Organization (WTO) in 1995.
The most significant change to international trade was that the WTO was granted
the power to enforce trade treaties. Members agreed that trade disputes would
be heard before a WTO panel and its decisions would be binding. The WTO appoints
independent experts who base their judgments on "interpretations of the
agreements and individual countries’ commitments"
(WTO, The WTO, 4).
The other major result of the Uruguay Round Negotiations was the
implementation of a new
agreement called the General Agreement on Trade in Services (GATS) in 1995.
This agreement, like GATT before it, is focused on reducing barriers to
international trade, but
in this treaty the focus is on the trade of services.