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.
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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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