In Article I above mentioned, the term ‘trade in services’ is regulated as well as ‘services’. The trade in services is defined as the provision of services through 4 models of supply (see Box 2) through transition from one country area to another or called cross border supply, the provider of service within the area of one member country serves incoming consumers of services from other countries of member or called consumption abroad, the provider of service from one country is present through a company in another country or called commercial presence, the transition of manpower of service provision to another country or called presence of natural persons. The mode of foreign manpower is regulated in an exclusive enclosure.
Four Modes of Service Supply (Mode of Supply) in GATS
Mode 1. Cross Border Supply
The services supplied by the supplier coming from a country (still within his area/country) to the consumer in another country. For example: international postal services, telecommunication, distance learning services, and telemedicine.
Such services has the sign of 1) or mode 1 in the modes of supply in terminology used in the Schedule of Specific Commitment and the discussion of the liberalization of service sectors.
Mode 2. Consumption Abroad
The services supplied by the supplier in a country to the consumer outside of the area of the consumer’s country (the consumer coming to the services supplier in the supplier’s country). For example: tourism, studying abroad, and having a treatment abroad.
The services supplied by the supplier coming from a certain country through the physical presence of enterprise in another country. For example: foreign hospital, foreign university, and foreign bank.
Such services have the sign of 3) or mode 3 in the modes of supply in terminology used in Schedule of Specific Commitment and the discussion of the liberalization of service sectors.
Mode 4. Presence of Natural Persons
The services done by the supplier coming from a certain country to another country through his professional presence a country area. For example: foreign doctor expatriates working as hotel managers or consultants.
Such services have the sign of 4) or mode 4 in the modes of supply in terminology used in Schedule of Specific Commitment and the discussion of liberalization of service sectors.
1.2.2. General Obligations in GATS
Within GATS, there are many obligations all its members have to obey, including three general obligations which are taken as strong compulsories:
The first one is Most Favoured Nations (MFN) (Article II). It is mentioned there that each country, obligatorily immediate and unconditional, gives an equal treatment to services and service provider from another country as well as from other countries of member. This treatment is given within the general obligations applicable for all sectors and applied in the specific obligation of each sector, which becomes the commitment of each country of member.
The second one is Transparency (Article III). Each country of member must publish all the laws, rules of execution, and all generally applicable resolutions issued both by central and local government, which have impacts on the practices of GATS. Every change in laws and the addition of new rules must be reported to The Council of the Trade of Service (CTS). The countries must also comply with the demand of specific information from other countries of member about many generally applicable rules. Therefore, the countries have to find one information centre, or more, to provide all the information needed and demanded.
The third one, National Treatment (Article XVII). Within this principle, each country is not allowed to give a stronger protection on its domestic industries. So, the foreign businessmen have to be treated as equally as the domestic ones.
1.2.3. Liberalization in Stages
Progressive Liberalization in GATS is regulated in Article XIX. The article covers several items, such as, that each country has to have a series of negotiations in order to achieve the step-by-step liberalization – those negotiations are directed to increase the market access (article XIX; 1). That liberalization process itself has to be carried out by keeping on respecting national interests and the development stage of each country (article XIX; 2). Meanwhile, the obligation of CTS to give an assessment to both the sectoral and general practices of trade in services with reference to what this agreement is carried out for. (Article IV on the promotion of developing countries participation in the trade of service) (Article XIX; 3). The process of liberalization in stages has to be continued in every negotiation, either bilateral, plurilateral, or multilateral, which is aimed at promoting specific commitment that each member country takes.
1.2.4. Specific Commitment
The establishment of specific commitment is a part, which cannot be detached from the whole, in which each country is obliged to set up a list of liberalized sectors along with the time schedule. The commitment will be an integral part of the agreement and it has to become an integral appendix.
In the specific commitment, each country has to list the condition, limitation, and requirement upon the market access (Article XVI); the condition and qualification upon national treatment (Article XVIII) and the date of the commitment’s validity, should that be taken necessarily to be listed.