The Scope of Liberalisation as a Matter of Interpretation: How to Read the Governmental Authority Exclusion Clause in the General Agreement on Trade in Services?

Abstract

Firstly, the paper gives an overview of the most important GATS provisions. Following on, the paper explains that the discussion around art I(3)(b)(c) GATS is so crucial because some commentators fear that if this provision is interpreted narrowly many public services fall under the GATS with the result that the affordability and accessibility of these services will be impaired. The paper then discusses the different elements of the governmental authority exclusion clause under application of the interpretation rule of the Vienna Convention on the Law of Treaties. The paper concludes that “on a commercial basis” refers to profit-seeking activities and that whether two service suppliers are “in competition” must be determined through an analogous application of the concept of direct competition or substitutability. Finally, the paper discusses practical implications and aspects of the interpretation result and concludes that, firstly, many public services will not be excluded from the GATS, secondly, ignoring the narrow scope of the GATS might lead to unintended liberalisation and, thirdly, several possibilities to regulate the GATS scope exist.