Manual on Statistics of International Trade in Services

4. 
Statistical treatment of modes of supply: the 
simplified approach 
2.72. Modes of supply are central to GATS. They are 
defined in its very first article and are the basis on which 
WTO member countries’ commitments are scheduled. 
The 
Manual
introduces, for the first time, modes of 
supply in the statistical context. 
2.73. However, a comprehensive statistical treatment 
of modes of supply that would fully mirror the GATS 
legal definition and other GATS articles would be out of 
the scope of the present 
Manual
. Such an approach 
would fail to ensure compatibility with international 
statistical systems, such as BPM5 and the 1993 SNA, 
and would demand excessive resources for 
implementation. 
2.74. Drawing on GATS legal provisions, the 
Manual
proposes, as a first approximation, a simplified approach 
to the statistical allocation of trade in services to modes 
of supply that is operational in the statistical context and 
consistent with international statistical standards. 
(a) Simplified statistical criteria 
2.75. To allow the allocation of services transactions to 
modes of supply in a systematic way, the 
Manual
proposes unambiguous criteria derived from the GATS 
definitions. The 
Manual
acknowledges that this 
allocation is only a first step in the estimation process 
and that further research and empirical information will 
be required both to validate and to refine the estimates. 
These simplified criteria are based on the following 
considerations: 
(a) To the extent that foreign affiliates are a good 
approximation of commercial presence entities, FATS 
statistics provide information of service supplied 
through mode 3; 
(b) Service transactions between residents and non-
residents, as captured in the balance of payments 
accounts described in the BPM5 system, broadly cover 
mode 1, mode 2, and part of mode 4.
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There are some limitations, however, to the assimilation of 
commercial presence entities to foreign affiliates or to the 
correspondence between BPM5 service transactions and 
modes 1, 2 and 4. For example, such limitations relate to the 
foreign ownership criteria used for the identification of 
foreign affiliates and to the residence criteria that underpin 
statistical systems, while GATS legal provisions are not based 
2.76. It is therefore possible to derive much 
information on services transactions by modes of supply 
from BPM5 and FATS statistics. However, the fourth 
mode of supply, mode 4, goes beyond the notion of 
“services transactions” in BPM5 and FATS. It would be 
necessary to draw on supplementary data from BPM5 
and FATS as well as from other statistical systems, such 
as migration and labour market statistics, to have a 
broader picture of mode 4. 
2.77. The simplified statistical criteria are based on the 
territorial location
of the transactors (consumer and 
supplier) at the time the service is supplied, as well as on 
the type of the supplier (an individual or a business 
enterprise, respectively termed “natural or juridical 
persons” in GATS). They yield the same results as the 
GATS definition in most cases, while also providing 
clear guidelines for those that present special difficulties. 
However, it should be stressed that the 
Manual
’s 
guidelines on the compilation of statistics by modes of 
supply are laid out only for statistical purposes and do 
not imply any legal interpretation of GATS provisions.
These criteria are shown in chart 1. In addition, each 
mode of supply is further illustrated in chart 2. 
2.78. These statistical criteria for the allocation of 
modes of supply are further complemented with 
simplification rules discussed below.