2. The mandate of the negotiations is clearly laid out in Part IV of GATS entitled "Progressive liberalization". Thus, the main aim of these negotiations is to achieve greater degree of liberalization in all the service sectors and in all the 4 modes of supply of delivery of Services. The negotiations will be comprehensive, covering all sectors and modes of supply, with no a priori exclusions in order to achieve an overall balance for all the WTO Members. The Services Sectoral Classification List under GATS has listed out 12 sectors and 161 sub-sectors all of which will be part of these negotiations.

3. The GATS recognises 4 modes of delivery of Services. These are as follows :

1. Mode 1-Cross border supply, e.g. supply of diskettes, architects blueprints, etc.
2. Mode 2-Consumption abroad, e.g. a tourist availing of Services abroad
3. Mode 3-Commerical presence, e.g. form of legal entity established abroad like a bank branch
4. Mode 4-Movement of Natural Persons, e.g. physical movement of professionals, skilled and unskilled labour for temporary period. It does not cover permanent migration

5. The basic architecture of GATS is most likely to be preserved in the next Round of Services Negotiations as well. However, it is also true that there will be both broader and deeper liberalization undertaken by Members as a result of new Round of Services Negotiations involving commitments in more sectors and removal of existing restrictions in those sectors that have been scheduled earlier.

6. While the forthcoming Round will cover all sectors and modes of supply as earlier mentioned, the emphasis of developed and developing countries is likely to be different. Developed countries would in all probability press for greater liberalization in mode 3 relating to commercial presence since they would be interested in providing market access for their capital. Hence, the pressure on developing countries, including India, would be to provide greater market access in mode 3 and schedule more sectors in this mode. On the other hand, for many developing countries including India, the most important source of export would continue to be mode 4 relating to "Movement of Natural Persons". India, in particular, has interests in seeking greater market access for its professionals and skilled labour in mode 4 because of its surplus trained and skilled manpower. Thus, the trade-off in these negotiations are bound to be cross-sectoral with India seeking market access mainly in professional service sectors and others demanding greater market access in infrastructure sectors like Financial Services, Telecommunication Services, Transport Services, Distribution Services, etc.

7. It may also be mentioned that the basic Approach of these negotiations would most likely continue to be the Request and Offer Approach as in the previous round. Under this approach, countries would lay on the table, their requests (demand lists from other trading partners) and would in turn also place their offer list. India would also have to prepare such a Request and Offer List for the various sectors and modes of supply. There may be some attempts by developed countries to introduce horizontal or formulae approach in addition to this Approach to facilitate cross-cutting liberalization. Specific suggestions for development of such formulas include: -

1. Establishment of standardised minimum liberalization commitments on a sub-sectoral or on a modal basis.
2. Exclusion of certain types of restrictions like nationality requirements across the board;
3. Classification of sectors on a cluster basis and commitments based on the cluster;
4. Use of model schedules (those used for Financial Services and Basic Telecommunication Services)

However, India believes that horizontal formulas should not in any way curtail the flexibility in scheduling commitments and change the basic structure of GATS. Hence, they may be used at best as practical tools for facilitating scheduling and adding to the clarity of schedules and should not force commitments in sectors which otherwise members may not wish to schedule. The basic approach must continue to be the Request and Offer approach.

8. India’s main interest and focus area in these negotiations would be to provide effective market access to its professionals and skilled labour force and bring about a symmetry in the movement of capital and labour.

9. In order to provide effective market access to professionals, it would be necessary to take the following steps: -

1. Economic Needs Test should be totally eliminated for at least in certain specified categories. At a minimum, it should be based on transparent and objective criteria.
2. Social security contributions required to be made even for temporary movement even though they are not eligible for receiving benefits of such contributions also affect their comparative advantage and needs to be corrected.
3. Administration of visa regimes may be made more transparent. Notion of a separate GATS visa for personnel covered by horizontal and sectoral commitments scheduled by a Member, different and less onerous from the normal immigration visa may be considered.
4. Specific sectoral commitments in line with requirements of developing countries need to be taken. For this purpose, more detailed sub classification of categories of personnel and their inclusion in sectoral/horizontal commitments may be required.
5. Recognition of qualifications by developed countries often acts as a serious barrier to market entry. It would be necessary to work for the establishment and adoption of minimum international standards and criteria for recognition. There should be a mechanism to attend to specific problems being faced by developing countries regarding the mutual recognition of qualification so as to ensure complete equity and fairness on recognition matters.

10.     India believes that the sectors where market access for its professionals is specifically required are the following

1. Health
2. Software
3. Construction and Engineering
4. Legal and
5. Accountancy

11. India’s negotiating strategy for each of these Services sectors would cover the following areas :

(a) The commitments under each of the four modes of supply that India is willing to undertake in the particular sector in the next round of negotiations. It would also indicate, the kinds of limitations on market access that India may put in its schedule in case it is willing to undertake commitments. It would also indicate, wherever relevant, the autonomous liberalization measures undertaken by India since the Uruguay round and the extent to which India may be agreeable to multilaterally bind such measures.

(b) The commitments in each of the four modes of supply that India would want to demand from its major trading partners in that particular sector, including the limitations on market access and on national treatment that may be removed/made less restrictive as compared to the trading partners’ existing schedules.

(c) The domestic policies and regulatory matters that have a bearing on market access available in the sector and the proposed changes therein. Such domestic regulations/policy changes may be required in case India is to fully exploit potential in that sector. Further, in many cases, such regulations/policies may be acting as a hindrance to the development of that particular sector and even autonomously, India may be prepared to make such changes.

Modes of Delivery : How international trade in services is supplied and consumed. In other words, these are the ways in which a service can be rendered. They may include sales through establishment, cross-border sales, and the movement of persons involved in the provision of services. The GATS Agreement identified the supply of service under mode 1: cross border supply (provision of the service from the territory of a Member to the territory of another Member); Mode 2: consumption abroad (movement of the consumer from his country of origin to the country of supply of such services, etc.); Mode 3 : commercial presence (right of establishment, i.e. through foreign direct investment); and Mode 4 : movement of natural persons.