WTO Origin Rules for Services and the Defects: Substantial Input Test as One Way Out?

Abstract

The origin of services is often one of the issues that regulators have to address to determine whether there is trade in services. It is also indispensable for the application of preferential trade commitments including national and most-favoured-nation (MFN) treatment, among others. This article examines the relevant provisions to ascertain whether there are any defects in origin rules for services of the General Agreement on Trade in Services (GATS), and, if so, how they could possibly be handled. It concludes, first, that there is the twofold typology for the origin rules: general origin rules and special origin rules. Second, four defects exist in general origin rules for commercial presence, particularly the ownership or control requirement. They are insufficient to determine the origin for juridical persons of equal or scattered shareholding structure or services co-supplied by providers of different nationality. Neither are they always capable of identifying the economic service suppliers and the ultimate owner or controller of suppliers. Third, the application of the general interpretation rule leaves the meaning ambiguous. A substantial input test based on the value added criteria could be adopted as the supplementary means of interpretation.

Keywords: GATS, rules of origin for services, substantial input test, interpretation