General Agreement on Trade in Services (GATS) : its effects and implementation in Malaysia

Abstract

This study examines and analyzes the effects of General Agreement on Trade in Services (GATS) on the Malaysian services sector. It provides a brief historical background on the laws that governed trade amongst countries before the World Trade Organization (WTO) came into force. The GATS is one of the WTO agreements that regulate trade in services among members of the WTO. Although, services sector includes a wide range of business activities, this study focuses only on a few areas of services such as the laws that govern the trade in financial, professional and telecommunication services in the Malaysian context The data for this analysis is derived from academic books, articles, judicial decisions, and statutes. In addition to that, Internet sites have been utilized to garner the latest information on the research topic. The examination of GATS reveals that member states have made specific commitments to liberalize their markets so that foreign players would participate in such markets. Under the GATS Malaysia, has made very cautious commitments by opening up to only 30% foreign participation. In some areas of services Malaysia has made no commitments at all or it has limited foreign participation in scope or venue of practice. The WTO and GATS can specifically be thought of as a double-edged sword because its legal framework gives the foreign players the right to compete in the local market and at the same time it gives the local players the right to penetrate foreign markets.