Services distributed by the mode of supply is the identification of the way how the services were traded. It is important to assess not only the individual services sectors, but also the services how they were traded or each service sector assessed by the modes of supply. This is the extended scope of international trade in services, also mentioned as international supply of services.
For example, it would be useful to know the volume of trade between two countries in legal services, that takes place through cross-border supply, consumption abroad, commercial presence or presence of natural persons, both by monetary, but also by non-monetary indicators (number of persons).
The General Agreement on Trade in Services (GATS), the first multilateral agreement to cover trade in services defines trade in services as the supply of a service through any of four modes of supply:
- cross-border supply: from the territory of one country into the territory of another country;
- consumption abroad: in the territory of one country to the service consumer of other country;
- commercial presence: by a service supplier of one country, through commercial presence in the territory of other country. The foreign affiliates trade (FATS) statistical framework is designed to provide information on the activity of enterprises located in foreign markets.
- presence of natural persons: by a service supplier of one country, through presence of natural persons of a country in the territory of any other country.
Since the commitments under the GATS are specified according to the four modes of supply, trade statistics for each service sector should ideally also be available according to each of the modes of supply.