Manual on Statistics of International Trade in Services

particular, that they are not more burdensome than is 
necessary to ensure the quality of the service. 
2.13.  Under GATS, WTO members are committed to 
entering into successive rounds of trade liberalizing 
negotiations.
22
  It was agreed that the first such round 
was to begin not later than five years from the date of 
entry into force of GATS, that is, by 1 January 2000. 
(b)  The four GATS modes of supply 
2.14.  In GATS, trade in services is defined as the 
supply of a service: 
a.  from the territory of one [WTO] Member 
[country] into the territory of any other Member; 
b.  in the territory of one [WTO] Member to the 
service consumer of any other Member; 
                                                 
22
  Commitments are often negotiated bilaterally at the detailed 
sectoral level, and then extended to all WTO member 
countries in compliance with the MFN principle; to support 
the negotiation process, statistical information would thus 
need to be provided by origin and destination at the most 
detailed product level. 
c.  by a service supplier of one [WTO] Member, 
through commercial presence in the territory of any 
other Member; 
d.  by a service supplier of one [WTO] Member, 
through presence of natural persons of a Member in 
the territory of any other Member. 
 
2.15.  These modes are generally referred to as mode 1 
or cross-border supply, mode 2 or consumption abroad, 
mode 3 or commercial presence, and mode 4 or presence 
of natural persons. 
2.16.  Mode 1, cross-border supply, takes place when 
the consumer remains in his or her home territory while 
the service crosses national borders, the supplier being 
located in a different country. The delivery of the service 
can be effected, for example, by telephone, fax, Internet 
or other computer mediated links, television or the 
sending of documents, disks, tapes, etc. by mail or 
courier.  It is similar to the traditional notion of trade in 
goods, where both the consumer and the supplier remain 
in their respective territory when the product is 
delivered. Indeed, freight transport services, which 
support trade in goods, are themselves examples of 
cross-border supply of services. Correspondence courses 
and telediagnosis are other examples. 
2.17.  Mode 2, consumption abroad, occurs when a 
consumer moves outside his or her home territory and 
consumes services in another country. Such tourist 
activities as visits to museums and theatres are typical 
examples of consumption abroad.  Medical treatment of 
non-resident persons and language courses taken abroad 
are other examples of consumption abroad.  Such 
activities such as ship repair abroad, where only the 
property of the consumer moves or is situated abroad, 
are also covered. 
2.18.  Mode 3, commercial presence, recognizes that it 
is often necessary for services to establish a commercial 
presence abroad as a way to ensure a close contact with 
the consumer in his or her home territory at the various 
stages of production and delivery, as well as after 
delivery. Commercial presence in a market abroad 
covers not only juridical persons in the strict legal sense, 
but also legal entities that share some of the same 
characteristics, such as representative offices and 
branches.  Under GATS rules, “supply of a service” 
includes production, distribution, marketing, sale and 
delivery. Medical services provided by a foreign-owned 
hospital, courses in a foreign-owned school, and services 
supplied by a domestic branch or subsidiary of a foreign 

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12 
bank are examples of supplies through commercial 
presence. 
2.19.  Mode 4, presence of natural persons, occurs 
when an individual has moved into the territory of the 
consumer to provide a service, whether on his or her 
own behalf or on behalf of his or her employer.  Thus, it 
covers two distinct categories of natural persons: self-
employed and employees. 
2.20.  Mode 4 also applies to two areas: trade in 
services in the BPM5 sense (e.g., financial auditing 
services by an auditor sent by a foreign firm or provision 
of entertainment services by a self-employed 
professional foreign entertainer who is temporarily on 
tour in the host economy), and employment, meaning 
labour input in the production process. Presence of 
natural persons covers only non-permanent employment 
in the country of the consumer.23 However, GATS 
provides no definition of “non-permanent” employment. 
In countries’ commitments, the temporary status 
generally covers two to five years, and it may be 
different for different categories of natural persons. 
2.21.  Short-term employment of foreign doctors or 
teachers is covered under mode 4.  Intra-corporate staff 
transfers and, more generally, short-term employment of 
foreign staff in foreign affiliates are particularly relevant 
in the GATS context because many countries have 
referred to this subcategory of natural persons in their 
schedules of commitments. Other examples are short-
term employment of construction workers or paid 
domestic helpers. 
(c)  Services Sectoral Classification list - GNS/W/120 
2.22.  In 1991, the GATT secretariat produced a note 
setting out a classification of service sectors, known as 
the GNS/W/120 Services Sectoral Classification list, 
resulting from consultations with member countries. The 
list identified relevant sectors and sub-sectors with 
regard to national services regulations so that specific 
commitments on these regulations could be made and 
negotiated. GNS/W/120 should thus be considered as a 
negotiating list rather than as a statistical classification. 
It is reproduced in full in annex VI. In order to assist the 
clear delineation of each sub-sector, codes from the 
                                                 
23
  The GATS annex on movement of natural persons states: 
“The Agreement shall not apply to measures affecting natural 
persons seeking access to the employment market of a 
Member, nor shall it apply to measures regarding citizenship, 
residence or employment on a permanent basis,” (see WTO, 
work cited in footnote 18). 
Provisional CPC were assigned to each of the sub-
sectors. 
2.23. The 12 major categories in the GATT 
GNS/W/120 list are: 
1. Business 
services. 
2. Communication 
services. 
3.  Construction and related engineering services. 
4. Distribution 
services. 
5. Educational 
services. 
6. Environmental 
services. 
7. Financial 
services. 
8.  Health-related and social services. 
9.  Tourism and travel-related services. 
10.  Recreational, cultural, and sporting services. 
11.  Transport services.  
12.  Other services not included elsewhere. 
 
2.24.  The List may evolve over time, and the services 
trade negotiators may use other classifications in future 
negotiations, as has been the case for basic 
telecommunications, financial services and maritime 
transport.