The definition of services trade under the General Agreement on Trade in Services (GATS) is four-pronged, depending on the territorial presence of the supplier and the consumer at the time of the transaction.  The four modes of supply are as follows:


Mode 1:Cross-border

Definition: services supplied from the territory of one WTO Member into the territory of any other Member

Example: A user in country A receives services from abroad through its telecommunications or postal infrastructure.  

Mode 2:Consumption abroad

Definition: services supplied in the territory of one WTO Member to the service consumer of any other Member

Example: Nationals of country A have moved abroad as tourists, students, or patients to consume the respective services.

Mode 3:Commercial presence

Definition: services supplied by a service supplier of one WTO Member, through commercial presence, in the territory of any other Member  

Example: The service is provided within country A by a locally-established affiliate, subsidiary, or representative office of a foreign-owned and — controlled company (bank, hotel group, construction company, etc.).

Mode 4:Presence of natural persons

Definition: services supplied by a service supplier of one WTO Member, through the presence of natural persons of a Member in the territory of any other Member 

Example: A foreign national provides a service within country A as an independent supplier (e.g., consultant, health worker) or employee of a service supplier (e.g., a consultancy firm, hospital, construction company).


See also: https://www.wto.org/english/tratop_e/serv_e/cbt_course_e/c1s3p1_e.htm


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