GATS TRAINING MODULE: CHAPTER 3

A Closer Look at Domestic Regulation

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3.2 Disciplines for Domestic Regulation

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Regulations that are not intended to serve protective purposes, under Article XVI and XVII, may nevertheless severely restrict trade. Such restrictive effects may be justified in view of a prevailing policy objective, or they may be due to excessive and/or inefficient intervention. The latter possibility seems to be stronger in services than in merchandise trade, given the defining role of regulation for products that are intangible by nature and the intrinsically close relationship between product and supplier.

Because of the importance of the domestic regulatory environment as a context for trade, the Council for Trade in Services has been given a particular negotiating mandate in Article VI:4. It allows the Council to develop, in appropriate bodies, any necessary disciplines to prevent domestic regulations (qualification requirements and procedures, technical standards, and licensing requirements) from constituting unnecessary barriers to trade. The Working Party on Domestic Regulation (WPDR) has been established for that purpose.

The disciplines envisaged under Article VI:4 are intended to ensure that domestic regulations are, inter alia:

  1. based on objective and transparent criteria, such as competence and the ability to supply the service;
      
  2. not more burdensome than necessary to ensure the quality of the service;
      
  3. in the case of licensing procedures, not in themselves a restriction on the supply of the service.
      

While it is difficult to predict the outcome of current work, there is already some sort of precedent which may provide guidance: The Disciplines on Domestic Regulation in the Accountancy Sector (document S/L/64, (6 pages, 45KB)), approved by the Services Council in December 1998. The relevant Council Decision (document S/L/63, (1 page, 39KB)) provides that the “accountancy disciplines” are applicable only to Members who have scheduled specific commitments on accountancy. The disciplines are to be integrated into the GATS, together with any new results the WPDR may achieve in the interim, at the end of the current round. A core feature of the disciplines is their focus on (non-discriminatory) regulations that are not subject to scheduling under Articles XVI and XVII.

Measures relating to licensing, qualifications and technical standards which discriminate between foreign and domestic suppliers, whether formally or in fact, would need to be scheduled as national treatment limitation in the sectors where GATS commitments have been made.

Pending the entry into force of the disciplines under Article VI:4, Members are required not to apply their domestic regulation a way that would: nullify or impair specific commitments; be incompatible with the three above criteria; and could not have reasonably been expected at the time when the relevant commitments were made.

  

  

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