The GATS specifically provides a clear indication of regulatory freedom. The GATS is not intended to deregulate; it is intended to remove barriers to international service trade. The question now becomes just how far this regulatory freedom applies in relation to the examples provided above.15 To
conclude that these measures are still part of the regulatory freedom, two distinctive aspects need to be investigated. First, these measures should not run counter to one of the GATS obligations. Second, if a measure does indeed breach a GATS obligation, it can still fall within the scope of an exception ground or these measures may be part of the carve-out provided in relation to Mode 4. Note that the Mode 4 carve-out is not an exception ground, rather the GATS does not apply to such measures.
As to the breach that sponsorship and prior imprisonment conditions may cause, these measures are not part of the market access commitment, as the types of measures listed there are different.16 Moreover, in the author’s
14 See the UK Immigration Rules, para. 320(2)(b).
15 The GATS Preamble indicates that the agreement will give due respect to national
policy objectives and specifically recognises the right of members to regulate trade in services on their territory. On the right to regulate, see Jackson (2006), pp. 57, 62.
16 If a measure does not take the form listed in Art. XVI, it is not covered by that provision,
as the list is exhaustive. See Pauwelyn (2005), p. 159; Krajewski (2005), pp. 431–32; and Zleptnig (2008), p. 393. See also the WTO’s US – Gambling Panel Report (United States – Measures Affecting the Cross-Border Supply of Gambling and Betting Services (US – Gambling) WT/DS285/R, 10 November 2004), paras 6.298 and 6.318. This Panel finding seems to be implicitly confirmed by the Appellate Body in the US – Gambling Appellate Body Report (WTO, United States – Measures Affecting the Cross-Border Supply of Gambling and Betting Services (US – Gambling) WT/DS285/AB/R, 20 April 2005), para. 215. The exhaustive nature of the list was confirmed by the Panel in the Argentina –
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opinion, even though sponsorship takes the form of a licence, sponsorship is not addressed by the domestic regulation provision either. Art. VI GATS does address qualification requirements and procedures, technical standards and licensing requirements (QTLs), yet these measures relate to the standards and quality of the service provided. Sponsorship does not address the quality of the service provider; it essentially entails a shift in migration control from the government to employers.17 However, it is argued here that
both measures breach the national treatment obligation.
National treatment requires no less favourable treatment of foreign services and foreign service providers in comparison with domestic services or service suppliers. A condition is that the foreign and domestic service are ‘like’, which is essential to any non-discrimination provision as equal treatment requires similar conditions for similar situations.18
Are domestic Mode 4 service suppliers like their counterparts in other WTO member countries? Taking the accountant as an example (relying on CSS), a domestic company providing accountancy services to a domestic client will use its employees to provide the service. Clearly, such employees will be nationals, or others with access to the domestic labour market. The conditions of no prior imprisonment and sponsorship will not apply.19 If,
however, a non-EU accountancy firm will provide the service it will use its own third-country national personnel, and compliance with the sponsorship
Financial Services Panel Report (WTO, Argentina – Measures Relating to Trade in Goods and Services (Argentina – Financial Services) WT/DS453/R, 30 September 2015), paras 7.418-7.419.
17 In relation to Dutch sponsorship, see Lange (2011).
18 A useful overview of this obligation is provided by Muller (2016). For case law
addressing the GATS national treatment provision, see the WTO’s China – Publications and Audiovisual Products Panel Report (China – Measures Affecting Trading Rights and Distribution Services for Certain Publications and Audiovisual Entertainment Products (China – Publications and Audiovisual Products) WT/DS363/R, 12 August 2009), para. 7.975; see also the WTO’s Argentina – Financial Services Appellate Body Report (Argentina – Measures Relating to Trade in Goods and Services (Argentina – Financial Services) WT/DS453/AB/R, 14 April 2016), paras 6.38-6.45.
19 Note that the GATS does not facilitate domestic companies hiring third-country
nationals to perform a service contract, and to such situations national law would apply. The GATS applies to international trade in services and cannot be used to ‘circumvent’ national law, that is, using GATS commitments to provide services in the home state through foreign employees. See WTO (CTS) 2009 (Presence Natural Persons), para. 19; see also Engblom et al. (2016), p. 73.
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and prior imprisonment conditions will be required. Note that the entire purpose of CSS is exactly that of non-EU service providers being allowed to bring their own personnel to provide a service. Under EU law, this form of service provision is referred to as the posting of workers, and on many occasions the Court of Justice of the European Union (CJEU) has held that not being able to bring one’s own personnel to provide a service is a competitive disadvantage in comparison with domestic companies that can use their own personnel. Needing to work with host state personnel leads to a disadvantage, if only due to the company needing to work with unknown employees.20 Given the purpose of CSS, there can be little doubt that
domestic service providers using their own personnel to provide a service are in a like situation as foreign service providers using their own personnel. As these measures introduce additional hurdles, the conditions of competition are upset as well. Sponsorship obligations and refusal grounds based on prior imprisonment make it more difficult for the foreign service provider to work in the EU host state than without these requirements.