Bilateral or multilateral free trade agreements between
countries are formed majorly based on the WTO agreement system. In particular,
GATS as an Agreement under the WTO system, is the first and only set of multilateral
rules governing international trade in services. Ways or modes of trading
services are basic provisions of GATS, including: Cross-border supply (mode 1),
Consumption abroad (mode 2), Commercial presence (mode 3), Presence of natural
person (mode 4). The categorization of modes covering its own regulations
depends on the territorial presence of the supplier and the consumer at the
time of the transaction.
International trade
dispute law firm in Vietnam
According to GATS, cross -border supply means supply of a
service from the territory of one Member into the territory of any other
member, and supplier and consumer of a member do not present within the
territory of other member. Consumption abroad means supply of a service in the
territory of one Member to the service consumer of any other member. Presence
of natural person means supply of a service by a service supplier of one
member, through presence of natural persons of a member in the territory of any
other member. It should be noted that cross-border supply of services is
defined depending on each Agreement. Under CPTPP, cross-border supply includes
modes 1, 2 and 4 above. In this article, cross-border supply is equivalent to
mode 1, under GATS.
When participating in GATS, members make commitments for market
access with respect to each mode of service supply and sub-sector. The GATS
provides a set of general principles that all WTO members must adhere to, which
there is no unnecessary barriers applied to trade. However, GATS expressly
recognizes the rights of member governments to manage and regulate the supply
of services in pursuit of their own policy objectives. GATS also does not
interfere in internal affairs ad policies of members. Therefore, the
governments absolutely have the right to decide and adopt their trade policies.
The enterprise of a member must comply with domestic regulations in the
territory of other member where they conduct business and trade in services and
refer to that Member’s Schedule of Specific Commitments to understand market
access obligations and national treatment.
Most sub-sectors do not restrict market access and national
treatment for foreign suppliers providing cross-border services in Vietnam
(legal, accounting, auditing, tax, architecture, advertising, management
consulting, …). Although the market access is not restricted, it does not mean
that the foreign suppliers freely provide services in Vietnam without
satisfaction of conditions or without the consent of the competent state
authorities. To consider this mater and have a correct understanding, the
national treatment principal should be reviewed, it requires that each member
shall accord to services and service suppliers of any other member the
treatment no less favourable than that it accords to its own like services and
service suppliers. Having said that, in the event that a member maintains
business conditions for the domestic services and service suppliers, these
conditions may also apply to the foreign services and service suppliers.
Such as accounting service business, foreign service suppliers
are not restricted in market access and national treatment under the Schedule
of Specific Commitments in Services. It means that a foreign accounting firm
can provide accounting services to a Vietnamese enterprise. However, accounting
service is a conditional business applicable to domestic firms. According to
the national treatment principle, Vietnam has the right to impose similar
conditions on foreign suppliers. Reference to the provisions of Vietnamese
laws, the foreign accounting firm must fully meet the conditions of head office
and personnel to be licensed its business in Vietnam. Further, there are tax liabilities
arisen which obligations of registration and declaration depend on particulars
of transactions. It is suggested that international trade lawyers
are consulted to avoid potential disputes or non-compliance of cross-border
supply of services.
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