The General Agreement on Trade on Services (GATS) has opened up opportunities before the entrepreneurs of the developing countries to participate in international trade as one of the many small suppliers to the global retail chains. The transnational retailers now optimize their return on capital by integrating global supply chain with their retail outlets spread worldwide. Goods, commodities and services are increasingly sourced from low cost offshore destinations. While this model of transnational retailing has been developed purely on economic logic, it ignores social and ethical issues. Various research findings highlight these limitations of this model. Now the challenge before the stakeholders of this trading system is to develop a more acceptable model by incorporating social and ethical parameters into it. Any model which is socially unsustainable would find it difficult to sustain itself in the long run, purely on economic strength. The paper has been divided into two parts. This paper deals with the basic concepts of GATS, the driving forces behind the retail boom, and the theoretical construct of the retail model. The author also focuses on some of the concerns expressed worldwide against organized retailing are analyzed and it is tried to identify the limitations of this business model. As global consolidation is more pronounced in food business, discussion is mainly focused on food retailing sector though it cited few examples from apparel sector also.

The General Agreement on Trade on Services (GATS), which is binding on all the World Trade Organization (WTO) members, aims at the early achievement of progressively higher levels of liberalization of trade in services through successive rounds of multilateral negotiations. Table 1 indicates the increasing importance of services in the global economy. The figures also capture the changing importance of different service sectors. For example, between 1989-91 and 2001-02, the share of FDI in financial service to the total FDI in services, has declined from 38.61 percent to 22.27 percent. The corresponding shares in `business activities' and `transport, storage, and communication' services have increased substantially.

For the sake of convenience, GATS has classified services under 12 major sectors which have been further subdivided into 161 sub-sectors. `Distribution services' is one of the 12 major sectors and the sub-sectors under distribution services are: commission agents' services, wholesale trade services, retailing services, franchising, and others.

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