Introduction
Disputes involving trade and investment in services are a rarity in the WTO. Up to now, the WTO dispute settlement mechanism (DSM) has addressed over 130 cases, of which only a handful concerned services. Furthermore, only two disputes were true General Agreement on Trade in Services (GATS) cases, as the other three were primarily ‘goods’ cases, with only a secondary services dimension concerning the disciplines on the importation of goods – bananas and cars.
In addition, investment in services has received minimal consideration in these disputes. Of the two GATS cases, only Mexico – Telecom paid some attention to trade in services through ‘commercial presence’ (or ‘mode 3’, GATS jargon for ‘foreign investment’), but the dispute concerned mostly cross-border trade. The three goods cases involving the GATS also said little about the disciplines concerning investment in services, although some clarifications can be found in the bananas case.
It is possible to identify three reasons that may explain, at least partially, the marginal attention that WTO dispute settlement has paid to investment in services.
First, multilateral commitments in services, like tariff bindings in goods, feature an important level of ‘water’ between bound policies and applied measures. That is, domestic policies towards foreign services suppliers are commonly more liberal than those to which Members have committed under GATS rules. Indeed, the GATS has been accused of providing for very little real liberalisation.