GATS Classification of Digital Services - Does 'The Cloud' Have a Silver Lining?

Abstract

This article removes the ambiguity surrounding the GATS classification of digital services and provides a technical analysis that might guide this (heavily politicized) debate. Digitization principally impacts trade in services, enabling the widespread use of digital services and enabling cross-border supply of services on an unprecedented scale. It is the seemingly new nature of these services that has caused confusion and anxiety among WTO Members. It is therefore worthwhile to take a closer look at what these services entail and whether, from the perspective of the GATS, we are actually dealing with a new phenomenon. First, the concept of digital services is clarified. Second, the classification issue is studied. The classification of digital services within the existing WTO services classification has been contested by some Members, who have claimed that such ‘new’ digital services cannot be classified within the existing framework. This opinion is not shared by the author, as the technologically neutral nature of the GATS allows for all services to be covered by this Agreement. Therefore, the way in which services are supplied should not render the GATS inapplicable. Rather, classification of services within the GATS framework should be based on the function of the services. Third, the article applies the proposed approach for a consistent classification to several contested digital services. It entails a legal analysis of how digital services fit within the scope of the GATS and the existing services classification.