Exporting Your Services

International Trade Agreements

Exporting services continues to be the fastest growing part of international export activity, particularly business and professional services. Services now account for approximately two-thirds of the world’s economic activity. Recent globalization of world markets is a result of rapid growth in the service sector. Trade in services is expected to represent half of all world trade by 2020. The following eight questions and answers provide information on the international trade agreements that can affect your services export activities and give you websites where you can monitor Canada’s negotiations regarding trade in services:

What is the World Trade Organization?
What is the General Agreement on Trade in Services (GATS)?
How do trade agreements (like the GATS) help me as an exporter?
Where can I get information on GATS liberalization commitments in my service?
How can I follow Canada’s services trade negotiations?
What is APEC?
What is Canada’s policy about services trade?
What should I do if I feel unfairly blocked from exporting my service?

What is the World Trade Organization?

The World Trade Organization (WTO) supports an intergovernmental treaty that went into effect in January 1995. Its Secretariat in Geneva administers a basic framework of rules for international trade in goods and services.

The WTO Agreement contains three major multilateral accords incorporating contractual agreements negotiated by its members: the General Agreement on Tariffs and Trade (GATT), the General Agreement on Trade in Services (GATS), and the Agreement on Trade-Related Aspects of Intellectual Property (TRIPs). Through this framework and agreements, the WTO provides a clear set of trade obligations for each of its member countries.

What is the General Agreement on Trade in Services (GATS)?

The General Agreement on Trade in Services (GATS) is a multilateral trade agreement that establishes a framework of principles and rules for trade in services. Its objectives are to expand services trade under liberal conditions, and to promote economic growth of its trading partners. In addition to a general framework of principles, the GATS requires its members to set out a specific schedule of commitments defining how much market access service providers are allowed for specific service sectors.

Obligations and commitments made by GATS members are enforced through the WTO. Once commitments on specific services have been made, they cannot be withdrawn without compensating the other members. However, being a signatory to GATS does not necessarily mean that each country has made far-reaching commitments in terms of opening its markets to others. Levels of commitment vary significantly among WTO members.

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How do trade agreements (like the GATS) help me as an exporter?

The primary benefit of the GATS for service exporters is increased transparency and predictability in international markets. Agreements such as GATS also incorporate provisions to prevent further trade restrictions, and establish requirements for members to participate in ongoing rounds of negotiations.

In terms of accessing foreign markets, the GATS ensures your firm is treated the same way as any of your foreign counterparts. The GATS also contains rules designed to eliminate discrimination between foreign service providers and their domestic counterparts. If unfair discrimination does exist in the regulation of a market, the onus is on members to declare this discrimination openly so it is clearly visible to exporters.

Where can I get information on GATS liberalization commitments in my service?

Each GATS member is required to submit a schedule of commitments for specific service sectors. If you are planning to export your services to a new market, you should review the schedule of commitments for your target market(s) to determine what access and national treatment conditions prevail. The WTO website provides legal texts, sector-specific reports on trade liberalization agreements, new developments, and government procurement opportunities. If you click on “Trade Topics” along the upper bar of the WTO website, then on “Services” you will find the Services Database under “Mandate.” Alternately, you can search the Documents Online database by doing the following:

  • Click on “Documents Online”
  • Choose either “simple” or “advanced” search
  • In the section entitled “Document Symbol,” type: GATS/SC
  • In the section for “Countries” type the country you want
  • Click on “Search”
  • The country’s schedule of commitments and all the supplements will be listed.
  • Download the file in the format and language desired.
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How can I follow Canada’s services trade negotiations?

Canada has negotiated commitments in the area of services in several bilateral and regional trade agreements. The best known is the North American Free Trade Agreement (NAFTA). Canada has also concluded Free Trade Agreements with other countries such as Chile, Costa Rica, the European Union, and Israel. All of these agreements can be accessed at Trade Negotiations and Agreements.

Additionally, Canada is involved in negotiations for trade in services under the following agreements:

  • Free Trade Agreement of the Americas (FTAA)
  • Canada-Korea Free Trade Agreement
  • Canada-Singapore Free Trade Agreement

Canada is also exploring potential negotiations with the following countries or organizations:

  • Andean Community countries
  • CARICOM (Caribbean Community)
  • Central America Four (El Salvador, Guatemala, Honduras and Nicaragua)
  • Dominican Republic
  • Jordan

You can also get information on government’s consultations with the private sector.

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What is APEC?

The Asia-Pacific Economic Cooperation Organization , or APEC, is the premier forum for economic growth, cooperation, trade and investment in the Asia-Pacific region. APEC is the only inter governmental grouping in the world operating on the basis of non-binding commitments, open dialogue and equal respect for the views of all participants. Unlike the WTO or other multilateral trade bodies, APEC has no treaty obligations required of its participants. Decisions made within APEC are reached by consensus and commitments are undertaken on a voluntary basis.

APEC has 21 members - referred to as “Member Economies” - which account for more than a third of the world’s population (2.6 billion people), approximately 60% of world GDP (US$19,254 billion) and about 47% of world trade. It also proudly represents the most economically dynamic region in the world having generated nearly 70% of global economic growth in its first 10 years.

In addition to Canada, APEC Member Economies include Australia, Brunei Darussalam, Chile, People’s Republic of China, Hong Kong, China, Indonesia, Japan, South Korea, Malaysia, Mexico, New Zealand, Papua New Guinea, Peru, The Republic of the Philippines, The Russian Federation, Singapore, Chinese Taipei, Thailand, United States of America, and Vietnam.

What is Canada’s policy about services trade?

The Canadian government recognizes that the services sector is an important part of the Canadian economy, employing three out of every four Canadians. Canada has been an active participant on services trade issues in all international fronts.

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What should I do if I feel unfairly blocked from exporting my service?

You should report the situation to International Trade Canada:

Trade Policy Consultations and Liaison Division (EBC)
International Trade Canada
Lester B. Pearson Building
125 Sussex Drive
Ottawa, Ontario
K1A 0G2
Fax: (613) 944-7981
E-mail: consultations@dfait-maeci.gc.ca

Though there is no direct access for private sector firms to the WTO, member governments who feel their firms are being treated unfairly or discriminated against by other members can bring these cases before the WTO dispute settlement mechanism.

The dispute settlement mechanism provides a forum for discussions between the members to reach a mutually satisfactory solution. If no satisfactory solution is reached through bilateral discussions, your government can request that an independent panel be established to review the case and impose a binding ruling. Members who are found to be violating their obligations are required to bring their measures into compliance with their obligations under the GATS or provide compensation to the offended member.