Topics handled by WTO committees and agreements
Issues covered by the WTO’s committees and agreements

GATS: FACT AND FICTION
Misunderstandings and scare stories:
The GATS and domestic regulation



The Lancet on 9 December 2000, published an article entitled "Rewriting the regulations: how the World Trade Organization could accelerate privatization in health-care systems". In addition to many other inaccuracies, the article says that:

"Article VI:4 of the GATS is being strengthened with the aim of requiring Member States to show that they are employing least trade-restrictive policies. The legal tests under consideration would outlaw the use of non-market mechanisms such as cross-subsidization, universal risk pooling, solidarity, and public accountability in the design, funding and delivery of public services as being anti-competitive and restrictive to trade."

This is a false account of the work on domestic regulation, seriously misleading in three respects. First, Member Governments will not have to submit regulations to the WTO for approval. Nor will they have to show that they are employing least-trade-restrictive practices, unless asked to justify a specific regulation in the event of a dispute with another Government. Second, none of the measures said to be at risk of being "outlawed" has ever been considered or even mentioned in the Article VI:4 negotiations. This is not surprising since the negotiations under Article VI:4 are confined to qualification requirements and procedures, technical standards and licensing requirements. The "legal tests" applicable to these are that they should be based on objective and transparent criteria, should be not more burdensome than necessary to ensure the quality of the service and, in the case of licensing procedures, that they should not in themselves be a restriction on the supply of the service. None of this applies to the measures cited, and there are no disciplines in the GATS on subsidies beyond that mentioned on page 9 above. Third, services supplied in the exercise of governmental authority are in any case outside the scope of the Agreement, and no disciplines which might be developed on domestic regulations would apply to them. Following is the text of Article VI:4 which contains the mandate for the work on domestic regulation.

Article VI:4

With a view to ensuring that measures relating to qualification requirements and procedures, technical standards and licensing requirements do not constitute unnecessary barriers to trade in services, the Council for Trade in Services shall, through appropriate bodies it may establish, develop any necessary disciplines. Such disciplines shall aim to ensure that such requirements are, inter alia:

(a) based on objective and transparent criteria, such as competence and the ability to supply the service;

(b) not more burdensome than necessary to ensure the quality of the service;

(c) in the case of licensing procedures, not in themselves a restriction on the supply of the service.

< Previous   Next >