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International Transactions

with Services
4th Course 2nd part:
a. Definition;
b. Classification.

What is an international transaction?

Residents / non-residents

Change in ownership of goods


Provision of services

INTERNATIONAL

Provision of labour
Provision of capital
Change in ownership of financial assets

ITS Classification
1. Terry Clark identified what crosses the

border:

contact-based services - people (producers or


consumers) cross borders to engage in
transactions;
vehicle-based services communications are
directed into and out of nations via radio,
television and satellite transmissions, wires
and/or other facilitating vehicles';
asset-based services - where commercial service
ideas tied to foreign direct investment cross
borders to establish an operating platform;
object-based services, physical objects
impregnated with services move into a nation.

ITS Classification
2.) Gary Sampson & Richard
Snape degree of consumerproducer interaction
Consumer does
not move

Consumer moves

Supplier does not


move

Supplier moves

ITS Classification - GATS


Mode 1 cross-border trade / supply
the supply of a service from the territory of
one Member into the territory of any other
Member
Situations:
Services embodied in a transportable medium
(paper, computer diskette);
Services transmitted through a tangible support
(transportation);
Digitized services transmitted through
telecommunication
links;
COUNTRY A
COUNTRY B
Mode 1: service transactions
Consumer

The service crosses the border

Supplier

ITS Classification - GATS


Mode 2 consumption abroad /
movement of consumers - the supply of a
service in the territory of a Member to the
service consumer of any other Member
Situations:
Travel;
Ship repair abroad (the property of the consumer
moves or is situated abroad).

COUNTRY A

COUNTRY B

Mode 2: service transactions


Consumer

The consumer goes abroad

Consumer

Service

Supplier

ITS Classification - GATS


Mode 3 commercial presence the
supply of a service by a service supplier of one
Member, through commercial presence in the
territory of any other Member
Situations:
Juridical persons in the strict legal sense +
corporations, joint ventures, partnerships,
representative offices, branches;
The commercial presence entity must be owned or
controlled by the entity located in the home country.

COUNTRY A

COUNTRY B

Mode 3: service transactions


Consumer Service

Foreign

Direct investment in country A

Company

ITS Classification - GATS


Mode 4 presence of natural persons /
temporary presence the supply of a service by
a service supplier of a Member, through presence
of natural persons of a Member in the territory of
any other Member
Situations:
self employed individuals consultants, professors
employees.

COUNTRY A

COUNTRY B

Mode 4: service transactions


Consumer
from A

Service
supply

Natural
person

Self-employed goes to country A


or employee sent by firm from B

Natural
person

Mode 4: employment
Service
firm

Temporary employment

Natural
person

ITS
Consequently, the concept of
international transactions with
services

refers NOT ONLY to


- cross-border trade, but ALSO to:
- movement of consumers
- various forms of commercial
presence
- movement of suppliers