By Peter Ungphakorn
POSTED FEBRUARY 15, 2022 | UPDATED FEBRUARY 19, 2022
We now take for granted that services can be traded internationally in four ways known as the “four modes”, but once upon a time this was not so clear-cut.
The four “modes of supply” (or “modes of delivery”) are:
- cross border supply — where a service provider in one country sells the service to a customer in another country without anyone moving, for example professional advice over the telephone or internet
- consumption abroad — where the customer travels, for example tourism
- foreign commercial presence — where the service provider sets up a subsidiary or branch in another country, for example a bank or insurance company
- movement or presence of natural persons — where individuals travel to provide the service either as staff in the foreign branch or subsidiary or independently, for example maintenance engineers travelling to service aircraft abroad
This is now established right at the top of the World Trade Organization’s General Agreement on Trade in Services, under Article 1, “Scope and Definition”:
2. For the purposes of this Agreement, trade in services is defined as the supply of a service:
(a) from the territory of one Member into the territory of any other Member;
(b) in the territory of one Member to the service consumer of any other Member;
(c) by a service supplier of one Member, through commercial presence in the territory of any other Member;
(d) by a service supplier of one Member, through presence of natural persons of a Member in the territory of any other Member.
How they are now applied can be seen in the commitments that each WTO member has made in services, in fiendishly complicated documents known as “schedules” of commitments (explained in this technical note).
But it took some time to arrive at that point.Continue reading “‘Who invented the four modes of services supply?’”