The GATS Exceptions: Articles XIV and XIV bis

In one line

A member may depart from any GATS obligation for one of six listed reasons, provided the measure is necessary and is not applied so as to discriminate arbitrarily or to disguise a restriction.

In exam wording: Article XIV of the GATS contains the general exceptions, subject to a chapeau in substantially the same terms as Article XX of GATT 1994, and Article XIV bis contains the security exceptions.

The structure

A chapeau and six paragraphs, applied in that order but in the same two step method as Article XX of GATT: paragraph first, chapeau second.

The chapeau. Subject to the requirement that such measures are not applied in a manner which would constitute a means of arbitrary or unjustifiable discrimination between countries where like conditions prevail, or a disguised restriction on trade in services, nothing in the Agreement shall be construed to prevent the adoption or enforcement of measures falling within the paragraphs.

Note the one textual difference from GATT. The GATT chapeau says "between countries where the same conditions prevail"; the GATS says "like conditions". Nothing has turned on the difference.

The six paragraphs

Paragraph (c) is the provision under which data protection is defended, and it is the most important of the six for a modern answer: a data localisation or transfer restriction is defended as necessary to secure compliance with a privacy law not inconsistent with the Agreement.

Paragraphs (d) and (e) are unique to the GATS and have no GATT counterpart, because direct taxation and double taxation treaties are far more entangled with services than with goods.

The case

United States: Measures Affecting the Cross-Border Supply of Gambling and Betting Services, WT/DS285/AB/R, adopted 20 April 2005. Facts. Antigua and Barbuda complained that three American federal statutes, the Wire Act, the Travel Act and the Illegal Gambling Business Act, together with several State statutes, prohibited the cross-border supply of gambling and betting services. The United States argued that its Schedule did not commit gambling and that in any event the measures were justified. Held. The scheduled entry covered gambling; the federal statutes were a zero quota and so a market access limitation contrary to Article XVI:2(a) and (c); the measures were provisionally justified under Article XIV(a) as necessary to protect public morals and maintain public order, the United States having established that they addressed concerns about organised crime, money laundering, fraud, underage gambling and pathological gambling and that no reasonably available less restrictive alternative had been shown;