Public services and trade liberalization: Mapping the legal framework

The impact of the General Agreement on Trade in Services (GATS) on public services is subject to a vivid political debate. From a legal perspective, an important issue is the sectoral scope of the GATS and the exact meaning of the term 'services supplied in the exercise of governmental authority' in Article I:3(b) GATS. This paper shows that this provision is likely to be interpreted narrowly and that most public services will fall within the sectoral scope of GATS. The reason for this finding lies in the definition of governmental services, which emphasizes the non-commercial basis and non-competitive supply of a service. This definition distinguishes GATS law from the similar provision in Article 45 EC. WTO Members wishing to reduce the impact of GATS on public services can do so through their schedules of specific commitments or seek an interpretation of the GATS, which would give them more regulatory flexibility.