WORLD TRADE ORGANISATION
The World Trade Organization (“WTO”) Agreement, which took effect in 1995, is a legally binding treaty between most of the world's trading nations aimed at ensuring freer and non-discriminatory market access for internationally traded goods and services.
The WTO is the only global international organization dealing with the rules of trade between nations. At its heart are the WTO agreements, negotiated and signed by the bulk of the world’s trading nations and ratified in their parliaments. The goal is to ensure that trade flows as smoothly, predictably and freely as possible.
The GATS is the part of the WTO Agreement which deals with trade in services, including banking and other financial services. It creates obligations for governments in respect of their laws, regulations and other actions which affect trade in services and thus creates benefits for the suppliers of these services.
The central obligation under the GATS, applying to all services sectors, is most-favoured-nation treatment (“MFN”). Simply put, it ensures equality of treatment among foreign service suppliers and services. Thus third countries must treat banks based in London as favourably as those based, for example, in New York or Tokyo.