The World Trade Organization started its work on January 1, 1995 and was the result of the so-called Uruguay Round Agreements of 1994. One of the main innovations of these agreements and the World Trade Organization is the extension of global trade liberalization rules to include services. This was done through the General Agreement on Trade in Services (GATS). According to the preamble of GATS, its members wish to “establish a multilateral framework of principles and rules for trade in services with a view to the expansion of such trade under conditions of transparency and progressive liberalization.”
The trade in services is defined as the supply of a service through four modes. Mode 1 is the cross-border supply of services in which the service is supplied from the territory of one member into the territory of another member state (e.g., the provision of Internet gambling services by an Antiguan gambling operator to consumers resident in the United States). Mode 2 is the consumption abroad whereby the service is supplied in the territory of one member to the service consumer of another member state (e.g., a Dutch citizen travels to Las Vegas and gambles there). Mode 3 is the establishment of a commercial presence by setting up an establishment in the territory of one member by a service supplier of another member state (e.g., a U.K. gambling operator decides to set up a branch or subsidiary in the United States). Mode 4 is the supply by a service supplier of one member state, through presence of natural persons of a member in the territory of any other member state.