mc12 briefing note

Joint Initiative on Services Domestic Regulation

On 2 December 2021, 67 WTO members adopted a Declaration concluding the negotiations on Services Domestic Regulation, which were aimed at slashing administrative costs and creating a more transparent operating environment for service providers hoping to do business in foreign markets. The initiative was launched by a group of members at the WTO's 11th Ministerial Conference in Buenos Aires in 2017.

The Declaration contains a set of negotiated disciplines that seek to ensure that measures relating to licensing requirements and procedures, qualification requirements and procedures, and technical standards with which services businesses need to comply to operate in other markets are clear, predictable, and transparent and do not unnecessarily restrict international trade. These disciplines are contained in a Reference Paper on Services Domestic Regulation. The reduction in trade costs from implementing the new disciplines could amount to USD 150 billion annually globally, with particularly important gains for financial, business, communications and transport services.

The disciplines focus mainly on the transparency, predictability and effectiveness of procedures that businesses have to comply with to obtain authorization to supply their services. They apply to all sectors where participants have undertaken commitments in their schedules for trade in services, as well as to any other sectors that individual participants have designated.

The Declaration also welcomes the schedules of specific commitments that participants have submitted. The objective is to incorporate the new disciplines as “additional commitments” in the schedules of specific commitments that members have, as WTO members, in the area of services. Services suppliers from all WTO members will be able to rely on these new commitments, which will apply on a “most-favoured nation” basis, meaning that they will benefit the entire WTO membership. Participants aim to submit their draft schedules for certification by December 2022, subject to the completion of any required domestic procedure.

The participants intend to meet again regularly  to discuss, among other things, the necessary steps related to the certification procedures. Participation in the meetings of the initiative is open to all WTO members and observer governments.

The 67 WTO members participating in the initiative account for 90 per cent of world services trade (1) .

For the first time, a WTO negotiated text contains a provision on non-discrimination between men and women. The objective of this provision is to support women's economic empowerment and boost their participation in services trade. Participants further agreed to a maximum transitional period of seven years for developing countries that need more time to implement individual disciplines for specific services sectors.

WTO members are free to regulate their services sectors to pursue their domestic policy objectives. The General Agreement on Trade in Services (GATS) recognizes that such regulations may adversely affect trade in services. The Reference Paper seeks to ensure that the process to obtain authorization to supply a service follows good regulatory practices and, thereby, does not constitute an unnecessary impediment to the business activity. The disciplines will provide a reference point for countries aiming to undertake regulatory reforms to improve the domestic business environment.

The full implementation of the disciplines is expected to generate greater economic performance and substantial trade costs savings for all economies, while particularly benefitting small and medium-sized enterprises for which navigating regulatory procedures for services authorizations can be costly and complex.

Calculations by the Organisation for Economic Co-operation and Development on the reduction of trade costs foreseen in the G20 can be found here and in the Asia-Pacific Economic Cooperation countries, here.

WTO Secretariat research on the increasing prevalence of the domestic regulation disciplines in trade agreements and their potential linkages with economic performance can be found here.

A factsheet on the state of play of the negotiations, their origin and objectives, is available here.

Background

Ministers from 59 WTO members launched negotiations at the 11th Ministerial Conference held in 2017 in Buenos Aires. In May 2019, ministers meeting on the side lines of the Organisation for Economic Cooperation and Development meetings confirmed their commitment to delivering a meaningful outcome by MC12.

Each WTO member's schedule of commitments can be accessed here.

The list of sectors covered by the GATS can be found here.


More on Services Domestic Regulation.


Notes:

  1. Albania; Argentina; Australia; Austria; Bahrain, Kingdom of; Belgium; Brazil; Bulgaria; Canada; Chile; China; Colombia; Costa Rica; Croatia; Cyprus; Czech Republic; Denmark; El Salvador; Estonia; European Union; Finland; France; Germany; Greece; Hong Kong, China; Hungary; Iceland; Ireland; Israel; Italy; Japan; Kazakhstan; Korea, Republic of; Latvia; Liechtenstein; Lithuania; Luxembourg; Malta; Mauritius; Mexico; Moldova, Republic of; Montenegro; Netherlands; New Zealand; Nigeria; North Macedonia; Norway; Paraguay; Peru; Philippines; Poland; Portugal; Romania; Russian Federation; Saudi Arabia, Kingdom of; Singapore; Slovak Republic; Slovenia; Spain; Sweden; Switzerland; Separate Customs Territory of Taiwan, Penghu, Kinmen and Matsu; Thailand; Turkey; Ukraine; United Kingdom; United States, and Uruguay. back to text

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