Service-Driven AI and challenges under the GATS framework

Regarding whether GATS applies to services provided by AI technology, Article 1.1 of GATS declares that this Agreement applies to measures of Members affecting trade in services, focusing on “measures.” Since GATS applies to all trade in services regardless of the means of supplying services, supplying services electronically falls within the scope of GATS. In addition, GATS does not have provisions distinguishing between various technological means of supplying services, so services provided by AI technology are also included within the scope of GATS. AI is essentially software, and software is a service, so AI falls under the “Computer and Related Services” sector under the 1991 W/120 classification. Under the current CPC Version 3.0, AI will be specified under the subsector “Application software provision” and “On-line software”. GATS prepared its service concessions under the 1991 W/120 classification, and this classification has been aligned with the corresponding CPC classification numbers. Since this classification document was prepared in 1991, once the CPC Version 3.0 revision work is complete, the classification document will need to be revised to align with the new CPC classification numbers. Service-driven AI technology are imported when purchasing subscriptions from foreign-owned or foreign-based LLMs providers, and then a service trade occurs. Purchasing data labeling or data annotation services from foreign-owned or foreign-founded companies is also importing services. This type of service trade is likely to occur through Mode 1 among the service supply modes. On the other hand, when AI technology is installed in a product, such as a self-driving car, and the product is imported, and the product exists in the country where the consumer resides and provides the service, the product and the service are provided and consumed simultaneously, and the product acts as a kind of “service provider” at the moment the consumer consumes the service, which may differ from the WTO’s regulatory system. Therefore, there have been attempts to recognize the form of service trade included or embodied in a product as Mode 5, and to recognize it as a new supply of service in GATS, but it has not been formally discussed at the WTO level. The trade method in the form of Mode 5 is similar to Mode 1, which is the cross-border supply of services, so service trade is treated as Mode 1, and when services are integrated with products and trade occurs, the service no longer exists and the GATT, which is the rule applied to products, is applied.