Bilateralism in services trade: Is there fire behind the (BIT-)smoke

In most of the current literature, the spread of regionalism in international trade relations is discussed in terms of a rapidly rising number of preferential trade agreements (PTAs). Far less attention is given to the even more rapid proliferation of bilateral investment treaties (BITs) and their overlap with obligations assumed by WTO Members under the General Agreement on Trade in Services (GATS). BITs generally apply across a much wider range of service sectors, in particular in the case of least-developed countries (LDCs) and developing countries, than those scheduled under the GATS. Furthermore, a number of relevant disciplines, including on fair and equitable treatment, expropriation and dispute settlement, may go beyond potential counterparts under the GATS. At the same time, pursuant to GATS Article II, these disciplines are to be applied on a most-favoured-nation (MFN) basis. Based on a comparative analysis of relevant provisions, this article discusses options on how WTO Members could proceed.