Public services and the GATS

Abstract

The status of public services is one of the most hotly debated issues surrounding the General Agreement on Trade in Services (GATS). In principle, there are two approaches to define such services: an institutional approach focusing on the conditions governing supply (e.g. ownership status and market organization) and a functional approach based on the policy objectives that may be involved (e.g. quality-related objectives and concepts of universal access). Given the diversity of existing arrangements among WTO Members, with significant variations over time, the former approach does not appear appropriate. The services provided by government-owned facilities, whose costs are covered directly by the State, may well be indistinguishable, for all practical purposes, from the services provided by private commercial operators under appropriate regulations or incentive mechanisms. This article discusses the relevance of the GATS for different arrangements that governments may use to meet typical public service objectives. All conceivable arrangements, whether based on public monopolies, or regulated or subsidized private supplies, or combinations thereof, are compatible per se with the Agreement. Recent regulatory and technical developments have broadened the scope for - possibly more efficient - market-based solutions, whose credibility may be enhanced by the assumption of commitments under the GATS. There is no common template, however. It is at the end for each WTO Member to decide, sector-by-sector, on the appropriate policy approach and the pros and cons of binding access conditions under the Agreement. © Oxford University Press 2006, all rights reserved.