Manual on Statistics of International Trade in Services

Chart 1. The four modes of supply: statistical criteria 
 
 
 
 
 
 
 
 
 
Territorial presence of transactors
Mode of supply
Major statistical
areas 
Consumer outside territory of residence 
Mode 2.
Consumption abroad 
BPM5 
Consumer in his/her territory of residence: 
Supplier outside the territory of the consumer 
Supplier in the territory of the consumer: 
 
Mode 1.
Cross-border supply 
BPM5 
(a) Through commercial presence 
(b) Through the presence of natural persons 
Mode 3.
Commercial presence 
Mode 4.
Presence of natural persons 
FATS 
BPM5 / Other 
a 
 
a
The “other” statistical areas, such as migration and employment statistics, are not part of the statistical framework defined in 
the body of the 
Manual
; they are dealt with in annex I. 
Consumer 
located:
Supplier
 located:
Supply 
through:
Outside 
territory of residence 
Outside 
consumer’s territory 
Mode 2 
(BPM5) 
Mode 1
(BPM5) 
Mode 3
(FATS)
Mode 4
(BPM5/Other)
Commercial
presence 
Within 
consumer’s territory 
Within territory 
of residence 
Presence of 
natural persons 

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23 
Chart 2. Synthetic view of modes of supply 
(c) FATS statistics and modes of supply 
FATS statistics and commercial presence 
2.91. By including commercial presence as a mode 
of supply, GATS has created a need for information 
on foreign affiliates in host economies. Service 
suppliers may choose to set up foreign affiliates as 
a means to sell their services in foreign markets as 
an alternative or a complement to exports through 
mode 1. On the grounds that such sales may, to a 
certain extent, substitute for cross-border exports, 
the 
Manual
views domestic sales of foreign 
affiliates as the primary statistical indicator of 
mode 3. 
2.92. FATS statistics, as recommended in the 
Manual
, 
differ from the coverage of the GATS in the following 
ways: 
(a) 
GATS refers to control as well as majority 
ownership, whereas FATS statistics mainly use the latter 
as the criterion for inclusion; 
(b) GATS covers services products, whereas FATS 
is primarily based on activities. 
FATS statistics and presence of natural persons 
2.93. Non-permanent employment of foreign staff in 
foreign affiliates is particularly relevant to mode 4, as a 
subcategory of natural persons often referred to in 
countries’ schedules of commitments. Quantitative 
information on foreign employment in foreign affiliates 
would be an indicator of the 
income
dimension of mode 
4. The 
Manual
does not propose a further breakdown 
between permanent and short-term employment because 
the GATS notion of “non-permanent employment” 
differs among countries, and it is generally for a 
substantially longer period than the one-year rule