Manual on Statistics of International Trade in Services

GATS framework 
4. The growth of trade in services and the 
internationalization of services production have led to an 
increase in the movement of natural persons as service 
providers across borders.
a
 
 Firms operating 
internationally need to transfer expertise through the 
temporary relocation of specialists and professionals.
b
  
The development of faster, lower cost transport services 
and communication networks, as well as improvements 
in the dissemination of information generally, tend to 
make the temporary movement of natural persons an 
increasingly important mode or aspect of trade. 
Established statistical systems do not include this aspect 
of trade in services in the scope of trade. Nor can 
existing mechanisms for administrative reporting of the 
movement of natural persons across international 
borders or for direct collection of the necessary 
information by statistical agencies capture mode 4 
activities in a satisfactory manner. As a result, available 
statistics are scarce and incomplete, and this makes it 
difficult to get internationally comparable statistics on 
trade in services according to this mode, in particular on 
the movement of natural persons across international 
borders.  
5.  Trade in services involving the presence of foreign 
nationals is defined in GATS as mode 4.
c
  Mode 4 is the 
supply of service by a supplier from one member 
country (say, country A) in the territory of any other 
member (country B) through the presence of natural 
persons of a member (citizen or resident of country A or 
                                                           
a
  Some illustrative data for the Asia and Pacific region are 
provided in Philippe Garnier, “International trade in services: 
a growing trend among highly skilled migrants with special 
reference to Asia”, Asia and Pacific Migration Journal, vol. 5, 
No. 4 (1996). 
b
  The importance of mode 4 for private business has been 
emphasized in the Recommendations of the World Services 
Congress 99, 1
−
3 November 1999, Atlanta. 
c
  Throughout the present annex, reference is made to the 
articles and provisions of the General Agreement on Trade in 
Services (World Trade Organization, The Results of the 
Uruguay Round of Multilateral Trade Negotiations: The 
Legal Texts (Geneva, 1995), annex 1B). 

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74 
any other country except B).
d
  In other words, the 
definition states that mode 4 is the production, 
distribution, marketing, sale, or delivery of a service 
abroad by a natural or juridical person (to the extent a 
juridical person employs foreign nationals in the host 
country). The GATS annex on movement of natural 
persons supplying services under the Agreement 
describes the movement of natural persons as seeking 
non-permanent entry to supply services abroad. Thus, 
GATS refers to the “presence”, which is the stock of 
foreign service providers at any given period in time, 
while the GATS annex addresses their “movement”. The 
GATS annex extends to natural persons of all categories
e
 
who could be engaged with a “temporary” or “non-
permanent” status by any service supplier supplying the 
service––including one present in the host country. For 
the purposes of national commitments under GATS, 
“temporary” or “non-permanent” status may be 
interpreted by each member State and might also differ 
for different categories of persons.
f
 
6.  This suggests that the Agreement covers natural 
persons: 
(a)  Who are independent service providers abroad. 
This is the case where a foreign natural person has the 
status of a juridical person - for example, as is the case 
with a number of persons providing professional 
services: he or she could sell services to the host country 
company under the agreement or to an individual 
consumer through mode 4 - for example, as an architect 
or an accountant. The sale of such services is covered by 
BPM5 trade in services (i.e., services transactions 
between residents and non-residents), although these 
sales are included with sales of such services through 
other modes of supply; 
(b) 
Who are employed abroad by service 
companies:  
                                                           
d
  This would imply nationals working for the foreign affiliate, 
which is not part of trade in GATS mode 4. 
e
  Natural persons performing particular services in any of the 
services sectors and of any skill level.  
f
 
The GATS Annex is very clear that GATS does 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, nor shall it prevent a member from applying 
measures to regulate the entry of natural persons into, or their 
temporary stay in, its territory, including those measures 
necessary to protect the integrity of and to ensure the orderly 
movement of natural persons across its borders. In addition, 
the sole fact of requiring a visa for natural persons of certain 
members and not for those of others shall not be regarded as 
nullifying or impairing benefits under specific commitment. 
(i) 
That are foreign (owned, controlled, or 
affiliated) companies with some presence in 
the host country; 
(ii)  That are domestically owned firms; 
(iii)  That have no lasting presence in the 
host country, e.g., if a foreign company as a 
service supplier obtains a contract or is 
subcontracted to supply services to the host 
country company and sends its employee(s) 
to provide the services. The foreign natural 
persons employed by a foreign-owned 
company with a service contract would be 
employees of a non-resident employer. 
In effect, the case (b)(i) is related to trade through 
commercial establishment (mode 3). However, the 
GATS commitments allocate to mode 4 that part of a 
service that involves the presence of natural persons 
abroad. In either case, services could be supplied for 
final use as consumption or investment, or as an 
intermediary product, and could be supplied to an 
individual consumer or a company. 
7.  At present, the value of services provided through 
mode 4 may be recorded in a number of ways. Some 
services provided through mode 4 are recorded as part of 
resident/non-resident transactions in services as 
described in BPM5 and in chapter III of the present 
Manual, indistinguishably included with resident/non-
resident transactions that take place through other modes 
of supply. This is discussed further in chapter II of the 
Manual, which describes some simplified rules of 
allocation for such services across the modes of supply. 
The compensation for the provision of labour across 
national economic boundaries is recorded in BPM5 as