The Multilateral Trading System Basic Elements

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THE GATS and DOMESTIC REGULATION
INTRODUCTION
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Conceptual Basis

• Liberalization as a means of growth and
  development
• Liberalization, not deregulation
• the meaning of liberalization (market access and
  national treatment)
• the right to regulate (and need to regulate)
• The role of liberalization in the process of
  development
• Progressivity of liberalization

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The GATS

• A set of Rules and Disciplines
• Articles of the Agreement
• General Obligations
• Specific Commitments
• Annexes
• Schedules of Specific Commitments
• Market Access
• National Treatment
• Additional Commitments

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Article I - Scope and Definition

• ALL MEASURES AFFECTING TRADE IN SERVICES
• (At all government levels, including
  non-governmental bodies exercising delegated
  authority)
• DEFINITION OF TRADE IN SERVICES
• (1) Cross border supply
• (2) Consumption abroad
• (3) Commercial presence
• (4) Presence of natural persons
• UNIVERSAL COVERAGE OF GATS
• (All services, except those provided in the
  exercise of governmental authority and air
  transport )

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General Obligations and Disciplines (Part II)

• Unconditional obligations
• Most-Favoured-Nation Treatment
• Transparency
• Domestic Regulation
• Monopolies and Business Practices
• Increasing participation of developing countries
• (contact points)
• Conditional Obligations
• (specific commitments)
• Transparency
• Domestic Regulation
• Monopolies
• Payments and Transfers

• Permissive provisions
• Economic integration
• Recognition
• Exceptions
• Restrictions on Balance of Payments grounds
• General and Security Exceptions
• To be negotiated
• Emergency Safeguards
• Government Procurement
• Subsidies
• Disciplines for domestic regulation

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Specific commitments(Part III)

• Article XVI (Market Access)
• each Member shall accord services and service
  suppliers of any other Member treatment no less
  favourable than that .. specified in its
  Schedule
• no limitations on the number of service
  suppliers
• no limitations on the value of transactions and
  assets
• no limitations on number of operations or
  quantity of output
• no limitations on the total number of persons
  employed
• no restrictions on the types of legal entity or
  joint venture
• no limitations on foreign capital participation
• or requirement of an economic needs test

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Specific commitments(Part III)

• Article XVII (National Treatment)
• each Member shall accord services and service
  suppliers of any other Member, in respect of all
  measures affecting the supply of services,
  treatment no less favourable than it accords to
  its own like services and service suppliers
• Article XVIII (Additional Commitments)
• Commitments with respect to measures not subject
  to scheduling under Articles XVI or XVII
• Examples Qualifications, standards, licensing.

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Types of restrictive measures
Article XVII (National Treatment) Addresses all
discriminatory measures whether they grant
formally identical or formally different treatment
XVI and XVII

• Article XVI
• (Market Access)
• Addresses six categories of measures

Article VI4 (Domestic Regulation) Aimed at
measures relating to qualifications, licensing
and standards not falling within the scope of
Article XVI or XVII Possibility of additional
commitments (Article XVIII)
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Role of the WTO and GATS in Domestic Regulation

• WTO has no direct role either in promoting the
  creation of domestic regulations or in specifying
  their content. WTO is not a standard-setting
  organization
• GATS preamble explicitly recognizes the right of
  Members to regulate in order to meet legitimate
  national policy objectives
• GATS objective is to ensure that regulations do
  not create unnecessary barriers to trade

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GATS Article VI - in brief

• In sectors where commitments are undertaken
• VI1 - Reasonable, objective and impartial
  administration of measures of general application
• VI3 - Decisions on applications within a
  reasonable period
• VI6 - Procedures to verify competence
• In all sectors, with or without commitments
• VI2 - Procedures for the review of
  administrative decisions affecting trade in
  services

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Regulatory Disciplines...To be developed
(Article VI4)

• To ensure that measures relating to qualification
  requirements and procedures, technical standards
  and licensing requirements do not constitute
  unnecessary barriers to trade, the Services
  Council shall develop any necessary disciplines
• Such disciplines shall aim to ensure that these
  requirements are, inter alia
• (a) based on objective and transparent criteria
• (b) not more burdensome than necessary
• (c) in the case of licensing procedures, not in
• themselves a restriction on supply

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Regulatory Disciplines...Provisional application
(Article VI5)

• (a) In sectors in which a Member has undertaken
  specific commitments, pending the entry into
  force of disciplines developed in these sectors
  pursuant to paragraph 4, the Member shall not
  apply licensing and qualification requirements
  and technical standards that nullify or impair
  such specific commitments
• (b) In determining whether a Member is in
  conformity with the obligation under paragraph
  5(a), account shall be taken of international
  standards of relevant international organizations
  applied by that Member.

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Stages achieved thus far...

• Ministerial Decision on Professional Services
• Results of the Working Party on Professional
  Services
• Working Party on Domestic Regulation

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Ministerial Decision on Professional Services

• April 1995
• Established the Working Party on Professional
  Services (WPPS)
• Required the immediate implementation of GATS
  Article VI4
• Gave priority to the accountancy sector

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Accountancy Disciplines(Dec. 1998) Main Elements

• Do not address measures subject to scheduling
  under market access national treatment
• Apply necessity test - not more trade-
  restrictive than necessary
• Enhance transparency
• Disciplines on licensing requirements
  procedures, qualification requirements
  procedures, and technical standards

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WTO Working Party on Domestic Regulation (WPDR)

• Established 26 April 1999.
• Replaced the Working Party on Professional
  Services.
• Emphasis on the development of generally
  applicable disciplines for all services sectors.

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Domestic Regulation - Issues under
consideration

• Necessity Test -- obligation not to create
  unnecessary
• barriers to trade
• Transparency -- requirements in addition to
  general
• transparency provisions
• Equivalence -- consideration of education,
  professional
• experience etc. obtained abroad)
• International Standards -- role as a benchmark?

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Domestic Regulation in the New Round

• Negotiating Guidelines
• Adopted by the Council for Trade in Services
• on 28 March 2001
• Members shall aim to complete negotiations under
  Articles VI4 ...prior to the conclusion of
  negotiations on specific commitments.