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There are eight annexes attached to the GATS, namely annex on Article II exemptions, annex on the movement of natural persons, annex on air transport, annex on financial services, second annex on financial services, annex on telecommunications, annex on negotiation on basic telecommunications, and annex on negotiation on maritime transport services.
Two of the most important and permanent annexes, those on Article II exemptions and on the movement of natural persons, have already been discussed in conjunction with the GATS provisions on most-favored-nation treatment and presence of natural persons. The others concern four specific sectors of trade in services: air transport, financial services, telecommunications and maritime transport services.
1. Annex on the Movement of Natural Persons. This annex concerns the movement of labor. It permits parties to negotiate specific commitments applying to the movement of people providing services under the agreement. It requires that people covered by a specific commitment shall be allowed to provide the service in accordance with the terms of the commitment. Nevertheless, the agreement would not apply to measures affecting employment, citizenship, residence or employment on a permanent basis.
2. Annex on Air Transport Services. International air transport services are for the most part governed by arrangements negotiated under the Chicago Convention. The annex specifically excludes this complex network of bilateral agreements on air traffic rights from the new services rules. In consequence, the GATS, as far as the air transport sector is concerned, applies at present only to aircraft repair and maintenance services, the selling and marketing of air transport services (a function defined as not including the pricing or conditions of transport services) , and computer reservation systems.
The WTO dispute settlement procedures can be invoked only in respect of obligations specifically assumed by members, and only after any bilateral or other procedures have been exhausted. A provision for periodic reviews of developments in the air transport sector, to be undertaken at least once in every five years, leaves the door open for a possible future extension of GATS commitments in the sector.
3. Annex on Financial Services and the Second Annex on Financial Services. In negotiating the GATS, it was generally recognized that the very important sector of financial services would need some special treatments. Governments everywhere feel the need to regulate banks, insurance companies and other providers of finance or financial information closely. One reason is that a country's economic growth and development are linked to the stability of its financial institutions. The other is that users of financial services need protection against providers of these services who lack sufficient financial backing or are badly managed or dishonest. The main GATS Annex on Financial Services is designed to meet these needs.
"Services supplied in the exercise of governmental authority", the activities of central banks or other authorities carrying out monetary or exchange rate policies are excluded from the coverage of the GATS. The exclusion of foreign service suppliers also extends to activities which form part of statutory social security or public retirement plans, or other activities that are carried out by a public entity for the account or using the financial resources of the government, provided domestic non-governmental financial suppliers are also not allowed to take part in these activities.
The central provision of the annex is what is generally known as the "prudential carve-out", an exception from the GATS rules designed to ensure that governments can protect the financial system and its users. "Notwithstanding any other provisions" of the GATS, WTO members are free to take prudential measures to protect investors, depositors, policy holders or persons to whom a fiduciary duty is owed by a financial service supplier, or to ensure the integrity and stability of the financial system. Yet this exception cannot be used as an escape route from obligations under the agreement. The remainder of the annex Identifies sixteen forms of financial services covered by its special rules, and descriles them in considerable detail.
Governments believed that broader commitments could be achieved if negotiations lasted a little longer, up to the end of June 1995, so they agreed in the Second Annex on Financial Services that, until then, members could maintain some measures that were inconsistent with the MFN requirement, without formally listing these measures as MFN exemptions, and would be free to change scheduled commitments on financial services.
4. Annex on Telecommunications and Annex on Negotiations on Basic Telecommunications. Telecommunications is a service sector which in itself is exceptionally large and dynamic and, at the same time, vital to the delivery of many other services. The annex on telecommunications establishes the right to make use of public telecommunications networks and services. Each member is required to ensure that all service suppliers seeking to take advantage of any commitments included in its GATS schedule are allowed access to, and use of, public basic telecommunications "on reasonable and nondiscriminatory terms". "Non-discriminatory" is defined to mean not only that the foreign service supplier will receive MFN and national treatment but will also be able to use the telecommunications network or service on terms and conditions as good as those enjoyed by any other user in like circumstances. Rights under the annex apply to all available public services such as telephone, telegraph, telex and data transmission, but not to the transmission of radio or television programming.
The annex spells out in detail the implications of the basic right of access and use. The annex allows developing countries to place some limitations on access and use if this is necessary in order to strengthen their telecommunications capacity, but any such limitations have to be specified in their GATS schedules. Other provisions call for technical cooperation with developing countries. In the Uruguay Round, many countries made commitments to permit the supply of what are defined as "value-added" telecommunications services that is, services which make use of telecommunications networks, for instance electronic mail services and on-line data retrieval services. In general, however, they did not make commitments on the supply of ''basic telecommunications", the networks and other services that allow telephone messages and other traffic to be transmitted. Negotiations to liberalize basic telecommunications were taken up after the Round, with the aim of completion in April 1996. An Annex on Negotiations on Basic Telecommunications played a similar role for these negotiations as the Second Annex on Financial Services did for the 1994-1995 negotiations: it postponed the need to specify exceptions to MFN treatment for basic telecommunications until the negotiations were over.
5. Annex on Negotiations on Maritime Transport Services. This annex is another which allowed negotiations to continue after the end of the Uruguay Round to liberalize the supply of services in maritime transport. It closely resembles that on negotiations on basic telecommunications. There is also a similar Ministerial Decision which specified arrangements for the maritime transport services negotiations, to be concluded by June 1996.
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