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Symposium on issues confronting the world trading system
summary reports by the moderators

6 and 7 July, World Trade Organization, Geneva, Switzerland  

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Friday, 6 July

Session IV: Services Regulation and liberalization under GATS and Participation of developing countries

Moderator: B.K. Zutshi — former Indian Ambassador to WTO


Summary of the discussions:

  • On regulation and liberalization under GATS, the debate focussed on: the Members' rights to regulate, the need to improve the general understanding of the GATS agreement, the WTO’s work on domestic regulation, as well as the need to clarify the benefits of liberalization under the GATS.

  • Some speakers emphasised the importance of regulatory transparency through the publication of measures at all levels of government, identifying the officials responsible for administering regulations, and providing opportunity for the appeal of administrative decisions.

  • Necessity requirements for regulations were considered useful by some to help ensure the creation of good regulations, and preference was expressed by some for the creation of general, rather than sectoral, disciplines. It was clarified that, under the GATS, any disciplines that may be developed on domestic regulation would not necessarily be of general application. The disciplines developed for accountancy, for example, are applicable only to scheduled commitments in the sector.

  • Consideration of the level of development of the regulatory framework at the national level was important for another speaker, who advocated caution when creating regulatory disciplines. Concern was expressed that prior comment provisions (as a type of transparency requirement) could impinge of the sovereign decision-making right of governments.

  • Concern was also expressed over whether the GATS preamble, which explicitly recognizes the right of governments to regulate, and to create new regulations, was equally legally binding as the main GATS text. The response was affirmative, and that the entire GATS agreement has been deliberately structured to protect the regulatory rights of governments through its great flexibility to accommodate government policy requirements.

  • A question was also raised as to why the GATS did not contain an exceptions provision for the protection of exhaustible resources, as found on the goods side in the GATT agreement. The reply was that, again, the flexibility of the GATS with respect to non-discriminatory regulations permits governments to easily accommodate any concern in this regard.

  • Participants also discussed issue of whether Article XIX of the GATS on progressive liberalization could force developing countries to open services sectors before they were ready. The response was that the GATS make no requirement for governments to open any particular sector. In addition, the GATS explicitly states there shall be appropriate flexibility for individual developing country members to open fewer sectors and to liberalize fewer types of transactions.


Summary of the discussion:

  • The second issue discussed in yesterday's session was the participation of Developing Countries in the current negotiations on trade in services.

  • Views seemed to converge on the fact that the GATS is probably the most development-friendly agreement in the WTO system. In that regard, some participants felt that it could even constitute a model for other agreements.

  • The "development dimension" is reflected in several features, such as the bottom-up approach; the principle of progressive liberalization; the notion of successive rounds of negotiations; the right to regulate; the provisions on appropriate flexibility for Developing Countries; and the fourth mode of supply. In summary, the GATS structure allows countries to open up services sectors according to of their development needs.

  • The balance of current concessions between Developed and Developing Countries was discussed. It was acknowledged that the Developing Countries did not make significant commitments on services in the Uruguay Round, except in basic telecommunications and financial services. They did not gain from commitments by their more developed trading partners either, as these remained very limited in sectors and modes of export interest to them.

  • The importance of services for development was also discussed, in particular the contribution of infrastructural services, such as transport, distribution or telecommunications. Participants seemed to agree that Developing Countries needed to strengthen the service supply side by additional investment, including FDI, and greater competition. However, the point was also made that liberalization did not mean de-regulation. On the contrary, further liberalization requires an appropriate regulatory framework to sustain it. Developing Countries need to create the regulatory capacity necessary to reap the benefits of liberalization.

  • In the latter context, the issue of technical cooperation and capacity building was raised. Capacity building was needed to improve domestic regulatory processes and to ensure that Developing Countries would be able to implement their multilateral commitments. It was recognized that there were limits to what the WTO Secretariat could deliver in that area; a more comprehensive and coordinated approach might be needed, involving other international organizations or Developed Countries' agencies.

  • Developing Countries face several important challenges in the current negotiations:

Firstly, the objective of raising the overall level of commitments.

Secondly, the need to identify areas of interest. Some participants felt that Developing Countries should adopt a more pro-active role in these negotiations. The Movement of Natural Persons (Mode 4) was highlighted as an area of interest. Sectoral priorities should also be identified, and particular reference was made to the relevant provisions of Article IV of GATS.

Thirdly, the recognition of autonomous liberalization undertaken since previous negotiations. It was important that developing countries felt they were getting something in return for their own liberalization moves. Basic Telecommunications was mentioned as a case in point.

Finally, the need to improve the dialogue between policymakers, regulators, the business community and NGOs at the national level. Better internal coordination could help developing countries to identify and overcome their weaknesses and to capitalize on their strengths in the current negotiations.

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