The GATS brought under its purview the entire gamut of services trade, as classified into 161 service activities under 12 broad sector heads in the GATS sectoral classification list.
However, this breadth of coverage was achieved at the cost of certain flexibilities. One of the key flexibilities embedded in the GATS is the discretion that a member country of the WTO enjoys in deciding which of the services sectors it wants to schedule for undertaking liberalisation commitments under the GATS rules. This is often termed a ‘positive list’ approach or a ‘bottom-up’ approach.
‘Legal Services’
Legal Service has been classified as a professional service under the category of Business services as per the World Trade Organization's Classification list of Services Sector (W/120). Description of Legal services has been defined in UNCPC (United Nations Central Product Classification) which includes legal advisory and representation services and is as follows:.
Legal Services Definition (CPC 861) - This sector corresponds to the United Nations Central Product Classification (UN CPC) at the three-digit level. The definition includes:
8611: Legal advisory and representation services in the different fields of law: (86111 - Legal advisory and representation services concerning criminal law):-
Legal advisory and representation services during the litigation process, and drafting services of legal documentation in relation to criminal law. Generally, this implies the defence of a client in front of a judicial body in a case of criminal offence. However, it can also consist of acting as a prosecutor in a case of criminal offence when private legal practitioners are hired on a fee basis by the government. Included are both the pleading of a case in court and out-of-court legal work. The latter comprises research and other work for the preparation of a criminal case (e.g. researching legal documentation, interviewing witnesses, reviewing police and other reports), and the execution of post-litigation work, in relation to criminal law.
8611: (86119 - Legal advisory and representation services in judicial procedures concerning other fields of law):-
Legal advisory and representation services during the litigation process, and drafting services of legal documentation in relation to law other than criminal law. Representation services generally consist of either acting as a prosecutor on behalf of the client, or defending the client from a prosecution. Included are both the pleading of a case in court, and out-of-court legal work. The latter comprises research and other work for the preparation of a case (e.g. researching legal documentation, interviewing witnesses, reviewing police and other reports), and the execution of post-litigation work, in relation to law other than criminal law.
8612: (86120 - Legal advisory and representation services in statutory procedures of quasi-judicial tribunals, boards, etc.):-
Legal advisory and representation services during the litigation process, and drafting services of legal documentation in relation to statutory procedures. Generally, this implies the representation of a client in front of a statutory body (e.g. an administrative tribunal). Included are both the pleading of a case in front of authorized bodies other than judicial courts, and the related legal work. The latter comprises research and other work for the preparation of a non-judicial case (e.g. researching legal documentation, interviewing witnesses, reviewing reports), and the execution of post-litigation work.
8613: (86130 - Legal documentation and certification services) :-
Preparation, drawing up and certification services of legal documents. The services generally comprise the provision of a number of related legal services including the provision of advice and the execution of various tasks necessary for the drawing up or certification of documents. Included are the drawing up of wills, marriage contracts, commercial contracts, business charters, etc.
8619 (86190 - Other legal advisory and information services):-
Advisory services to clients related to their legal rights and obligations and providing information on legal matters not elsewhere classified. Services such as escrow services and estate settlement services are included.
GATS schedules distinguish between the following legal services: (a) host country law (advisory/representation); (b) home country law and/or third country law (advisory/representation); (c) international law (advisory/representation); (d) other legal documentation, certification, advisory, and information services.
The GATS covers all advisory and representation services in the various fields of law and in statutory procedures. This includes notarial services since they are supplied on a commercial basis. However, activities related to the administration of justice (judges, court clerks, public prosecutors, etc.) are effectively excluded from the scope of the GATS as in most countries it is considered a “service supplied in the exercise of governmental authority.”
Modes of Supply and Legal Services
In order to capture the complex nature and diverse forms of international transactions in services, the GATS adopted a novel approach of classifying the entire range of services trade into four ‘modes’:
• Mode 1 (cross-border)
• Mode 2 (consumption abroad)
• Mode 3 (commercial presence)
• Mode 4 (movement of natural persons)
Major ways in which service suppliers serve their clients (corresponding to the modes of supply mentioned above). Countries have to say whether or not they allow:
• foreign firms to deal with clients in their market from across the border (i.e. to give legal advice electronically);
• their citizens to travel abroad to visit the supplier ( e.g. a foreigner comes to India to consume the services of an Indian lawyer of law firm) in order to consume a service;
• foreign service suppliers to establish an operation ( e.g. law firm etc) in their market; or
• suppliers to enter the country in person ( e.g. a lawyer) to do business.
As a result, firms know where they stand in foreign markets and in their dealings with foreign clients. If they encounter barriers related to these modes of supply, they can verify whether the GATS Member concerned has made legal commitments in this area and ask for the assistance of their government in resolving the issue. All Members have recourse to a WTO dispute settlement process in case another Member does not conform to its obligations.
Provisions/Commitments under GATS
The GATS, among other elements, consists of a series of general provisions that largely apply across the board to all measures affecting trade in services.
However, the GATS also includes a set of ‘specific commitments’ that applies only to service sectors that are enlisted in a member’s GATS schedule. For each specific sector scheduled by it, a member undertakes ‘specific commitments’ on market access (MA) and national treatment (NT) for each mode of services trade.
Importantly, members need not grant full MA and can deny NT by inscribing limitations on MA and/or NT in their respective schedules.
Members are at liberty to schedule their commitments in one of the following ways:
(i) Full commitment: “none” or “no limitations”, which implies that the Member does not seek in any way to limit market access or national treatment through measures inconsistent with Articles XVI or XVII of GATS.
(ii) Commitment with limitations: the Member details the measures maintained which are inconsistent with market access or national treatment, and implicitly commits itself to take no other inconsistent measures.
(iii) No commitment: “unbound” indicates that the Member remains free to maintain or introduce measures inconsistent with market access or national treatment.
(iv) No commitment technically feasible: “unbound*” indicates that in the sector in question, a particular mode of supply cannot be used.
“Commitments” generally involve the following obligations:
I) General Obligations:-
MFN: The ‘most favoured nation’ obligation applies across all sectors and all modes of supply, unless otherwise indicated through an exemption in the ‘MFN Exemption List’. This obligation forces all members to give the most favourable treatment that it has accorded to any of its trading partners to all other WTO members. In short, it obliges each country to not discriminate against any of its fellow members in the WTO.
Transparency: This principle obliges all members to identify and publicise all rules and regulations affecting trade in services. Any change in the regulations must also be made public. Information about any particular regulation must be readily available through national enquiry points.
II) Specific Obligations:-
National Treatment: This obligation requires non-discrimination between foreign and domestic services and service suppliers once they have entered the market. If a member wishes to discriminate for in a particular service he must enter it into its ‘Schedule of Commitments’.
Market Access: This obligation means that there can be no discrimination among services and service suppliers and that the only restrictions that can be enforced by members, provided they are scheduled (in the ‘Schedule of Commitments’ as mentioned above), are quantitative and legal restrictions on:
• the number of service operations
• the value of service transactions or assets
• the number of operations or quantity of output
• the number of natural persons supplying a service
• the participation of foreign capital
• the type of legal entity
Requests made to India under Legal Services (GATS)
There are certain requests to India by a number of countries to open up the legal services market. The plurilateral request in legal services is cosponsored by Australia, Canada, the EC, Japan, New Zealand, Norway, and the USA. Certain other countries have also joined in with the above cosponsors requesting India to open up its legal services sector.
For details of requests made to India by different countries and commitments offered please see the consultation paper of the Department of Commerce, Government of India available at: http://commerce.nic.in/trade/consultation_paper_legal_services_GATS.pdf
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