Restrictions on services trade
Without further negotiation, the UKs trade in services with the EU would be governed by the WTO General Agreement on Trade in Services (GATS). Under this agreement, EU Member States (and other parties to the agreement) have chosen which sectors they are prepared to liberalise, and the time scale over which they wish to do so. As with trade in goods, GATS also operates on the principle of non-discrimination, meaning broadly that outside of preferential agreements, restrictions on market access must be applied uniformly across all countries.
Barriers to services trade are usually in the form of non-tariff barriers, such as domestic laws and regulations, also known as behind the border measures. In general, services markets are more highly regulated than the market for goods. Often, regulation is intended to meet social objectives, or to correct failures in supply, rather than directly to restrict foreign suppliers, but the effect on market access for foreign companies can in some cases be highly restrictive. EU Member States retain considerable national discretion over services regulation and supervision. Just as a fully level playing field in services trade does not exist within the EU, so exporters from outside the EU face different levels of market access in individual Member States. However, the level of market access would generally be far more limited for UK exporters under a GATS arrangement than it is currently for a number of reasons.17 16 European Commission, Anti-dumping and anti-safeguard statistics covering the first eight months of 2013 17 See, for instance, Centre for European Policy Studies (2013)
Access barriers to services markets
many restrictions that are forbidden within the EU remain applicable to firms outside
the EU because Member States have made no commitments under the GATS
schedules in those areas
the EU (unlike the GATS) has pursued the harmonisation of regulation and
supervision in several large services sectors, thereby taking away the justification of
Member States to insist on national regulation in this respect
the right of commercial establishment is guaranteed under EU treaties, significantly
facilitating trade in services provided via the commercial presence of a foreign firm
similarly, the free movement of labour facilitates trade in those services provided
through the presence of people in the territory of another economy
EU competition policy prevents, to an extent, barriers to services trade arising from
incumbent firms benefitting from excessive market power
the Treaty rights with respect to free movement of services, freedom of
establishment, and free movement of labour are enforced supranationally by the
Court of Justice of the European Union, underpinned by extensive case law on
services exchange. Under GATS, an independent panel can be appointed to settle
and enforce disputes, but there is no presumed right of market access; the job of the
panel is merely to assess whether the barrier in question non-discriminatory.
As well as affecting cross-border trade in services, these restrictions could also have
implications for UK companies providing services through a commercial presence (effectively outward direct investment) in other Member States.18 The EU treaties require that a service provider from one Member State be legally free to establish in another, while continuing to regulated by the authorities of its home country. A UK company that provides services through establishments in other Member States may find, if Britain is no longer a member of the EU, that it has to comply with the requirements of a foreign regulatory authority
