WTO negotiations on domestic regulation disciplines

WTO members are conducting negotiations 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. These negotiations are mandated by Article VI.4 of the General Agreement on Trade in Services (GATS) and the Decision on Domestic Regulation (S/L/70).

GATS Article VI states:

“Such disciplines shall aim to ensure that such requirements are, inter alia:

  1. based on objective and transparent criteria, such as the 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.”
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Development of disciplines on domestic regulation

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.

In drafting the GATS, negotiators recognized that non-quantitative, non-discriminatory measures relating to licensing and qualification requirements and procedures, and technical standards could also adversely affect trade in services. For example, excessively lengthy, complex and opaque licensing procedures may discourage foreign services providers from doing business in the market of another WTO member. By the same token, lack of objective and transparent criteria, on the basis of which authorities would grant a qualification, may disguise protectionist intentions.

Article VI:4 is not intended to start a deregulatory process, but rather to lead to better regulation that has the potential to address and prevent undesirable regulatory practices. In more general terms, WTO negotiations on domestic regulation disciplines seek to boost good regulatory practices and to enhance regulatory quality, with a view to boosting economic growth and development.

Evolution of the negotiations

Between 1995 and 1998, WTO members negotiated in the Working Party on Professional Services the Disciplines on Domestic Regulation in the Accountancy Sector (S/L/64) and adopted the Guidelines for Mutual Recognition Agreements or Arrangements in the Accountancy Sector (S/L/38). The Accountancy Disciplines were intended to be integrated into the GATS at the end of the Doha Round of trade negotiations (S/L/63). Therefore, they have not yet entered into force. Subsequently, a Working Party on Domestic Regulation was established in 1999 for the continuation of the negotiations, replacing the earlier Working Party on Professional Services. The mandate of the Working Party is to develop generally applicable disciplines and to develop disciplines as appropriate for individual sectors.

WTO members have focused on negotiating general disciplines on domestic regulation applicable to any services sectors within the scope of the GATS. Members felt that work on general disciplines would be more efficient than negotiating specific disciplines for each sector.

In December 2005, the WTO Hong Kong Ministerial Declaration called on members to intensify negotiations and to develop a text for adoption before the end of the Doha Round. 

In the Working Party on Domestic Regulation, more than 60 WTO members have submitted drafting proposals. These were consolidated into a number of texts issued by the chair of the working party.  The most recent was contained in a 2011 Progress Report reflecting progress in the negotiations up to 2011 and containing possible options for disciplines on domestic regulation. 

Following a slowdown in negotiations between 2012 and 2015, activities were revived in 2016, with a number of text proposals submitted by members in the hope of securing an outcome by the 11th Ministerial Conference (MC11) in Buenos Aires in December 2017. However, no outcome was achieved at MC11.

The Working Party on Domestic Regulation met most recently in March 2019 to discuss a revised proposal for disciplines on domestic regulation.

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Joint Initiative on Services Domestic Regulation

At MC11, a group of 59 WTO members decided to advance discussions on domestic regulation in parallel to the work of the Working Party on Domestic Regulation. A Joint Initiative on Services Domestic Regulation was issued at the end of the conference.

Since then, members of the Joint Initiative have met regularly at the WTO, with a view to concluding negotiations on domestic regulation disciplines before the 12th Ministerial Conference (MC12) scheduled to take place in 2021.

In May 2019, 59 WTO members issued a second Joint Statement on Services Domestic Regulation. This includes a commitment by the signatories to continue work on outstanding issues, with a view to incorporating the outcome in their respective schedules of commitments by MC12. Participation in the Joint Initiative is open to all WTO members.