Gats and Transnational Retailing: Few Concerns and Challenges

Abstract

The General Agreement on Trade on Services (GATS) has opened up opportunities before the entrepreneurs of the developing countries to participate in international trade as one of the many small suppliers to the global retail chains. The transnational retailers now optimize their return on capital by integrating global supply chain with their retail outlets spread world wide. Goods; commodities and services are increasingly sourced from low cost offshore destinations. While this model of transnational retailing has been developed purely on economic logic, it ignores social and ethical issues. Various research findings highlights these limitations of this model. Now the challenge before the stake holders of this trading system is to develop a more acceptable model by incorporating social and ethical parameters into it. Any model which is socially unsustainable would find it difficult to sustain itself in the long run, purely on economic strength.

The paper has been divided into two parts. Part-I deals with the basic concepts of GATS, the driving forces behind the retail boom and the theoretical construct of the retail model. In Part II, we analyzed some of the concerns expressed world wide against organized retailing and tried to identify the limitations of this business model. As global consolidation is more pronounced in food business, we focused our discussion mainly on food retailing sector though few examples from apparel sector are also cited.

Keywords: GATS, Retail