When the Dillon Round took place in the laborious process of individual negotiations on customs duties, it became clear well before the end of the Round that a more comprehensive approach was needed to address the challenges arose from the creation of the European Economic Community (EEC) and EFTA, as well as the rebirth of Europe as an important international trader in general.  Bertil Ohlin published this theory in 1933. For a brief explanation of the Heckscher-Ohlin theory, see nobelprize.org/educational_games/economics/trade/ohlin.html. Traditional economic theory assumed that commodities were traded between countries, but that factors of production (e.g.B labor, capital, and technology) and services were not traded from one country to another. However, in recent times, capital, technology and services have become increasingly easy to cross national borders and even workers move more often from one country to another. As a result, in recent rounds of multilateral negotiations and bilateral agreements of the United States, negotiators have attempted to develop rules on investment, intellectual property protection, services and labour. The existing economic literature on international trade agreements focuses on customs agreements that cover trade in goods and provides an explanation of the essential features of GATT. However, tariffs play almost no role in services markets and existing models cannot explain the radically different approach to trade liberalization in agreements such as the WTO`s General Agreement on Trade in Services (GATS). We are developing a model that helps to understand the key features of the GATS, including the focus on „deep integration“ – sectoral negotiations on border policy instruments. . . .