WTO negotiations on domestic regulation disciplines
Article VI.4 of the General Agreement on Trade in Services (GATS) and the Decision on Domestic Regulation (S/L/70) call upon WTO members to develop any necessary disciplines to ensure that measures relating to qualification requirements and procedures, technical standards and licensing requirements and procedures do not constitute unnecessary barriers to trade in services.
“Such disciplines shall aim to ensure that such requirements are, inter alia:
- based on objective and transparent criteria, such as the competence and the ability to supply the service;
- not more burdensome than necessary to ensure the quality of the service;
- in the case of licensing procedures not in themselves a restriction on the supply of the service”.
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Working Party on Domestic Regulation
A Working Party on Domestic Regulation was established in 1999 for the purpose of the negotiations, and replaced the earlier Working Party on Professional Services.
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Why are disciplines on domestic regulation required?
The GATS already contains disciplines on barriers to trade in services in the form of restrictions on market access (Article XVI) and on national treatment (Article XVII). Market access restrictions encompass quantitative restrictions such as limitations on the number of services suppliers, total value of services transactions or assets, total number of services operations, the total quantity of services output, the total number of persons that may be employed, as well as measures restricting or requiring specific types of legal entity or joint venture, and foreign equity limitations. The obligation of national treatment prohibits the discriminatory treatment of foreign services and services suppliers when compared to domestic services and services suppliers.
However, negotiators of the GATS recognized that even if members respect their market access obligations in services sectors and even if they refrain from adopting discriminatory licensing requirements and procedures, qualification requirements and procedures, and technical standards, such measures could nevertheless act as a barrier to trade in services. For example, excessively lengthy, complex and intransparant licensing procedures may discourage foreign services providers to seek access to the market of another WTO member. Lack of objective and transparent criteria, on the basis of which authorities would grant a qualification, may give rise to hidden protectionism by such authorities.
The negotiations on the disciplines have the potential to address and prevent such undesirable regulatory practices. At the same time, developing country members that do not have regulatory frameworks in place for certain services sectors may benefit from the guidance and technical assistance provided on the basis of the future disciplines.
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What is being negotiated?
Prior to the Doha Round of trade negotiations, which commenced in 2001, WTO members had negotiated Disciplines on Domestic Regulation in the Accountancy Sector (S/L/63). The Accountancy Disciplines are intended to be integrated into the GATS at the end of this Round. Currently, members are engaged in negotiating a separate set of “horizontal” disciplines on domestic regulation. Unlike the Accountancy Disciplines, these “horizontal” disciplines will not be sector-specific and will apply to all measures affecting trade in services within the scope of the GATS.
The WTO Hong Kong Ministerial Declaration in 2005 instructed negotiators to develop these disciplines and to adopt text before the end of the Round. While the negotiations are still on-going, several versions of a Chairman's text, which reflect drafting suggestions, have been produced. The envisaged disciplines, like the Accountancy Disciplines, are expected to contain chapters with specific requirements on transparency, disciplines on the submission and treatment of licensing and qualification applications, and the development and application of technical standards.
The Chairman of the Working Party on Domestic Regulation produced a Progress Report (S/WPDR/W/45) on 14 April 2011, reflecting the progress so far achieved in the negotiations of disciplines on domestic regulation. This Progress Report has been attached to the Report by the Chairman of the Council on Trade in Services to the Trade Negotiations Committee (TN/S/36) dated 21 April 2011.