India, Africa resist IC moves to finalize domestic regulation outcomes at MC11

Proposed WTO disciplines governing domestic regulation of services have sparked apprehension among India and the African Group, which argue that such rules would constrain countries’ right to regulate.

by D. Ravi Kanth

GENEVA: India and the African Group have expressed sharp concern over attempts by major industrialized countries and their allies in the developing world to finalize outcomes on domestic regulation for trade in services without adhering to the work done in previous draft negotiating texts, services negotiators told the South-North Development Monitor (SUNS).

The proponents are seeking an outcome on various disciplines in domestic regulation concerning trade in services at the WTO’s upcoming eleventh Ministerial Conference in Buenos Aires.

The proposed disciplines seem to have been transposed from the failed draft text of the plurilateral Trade in Services Agreement (TiSA), in which the US was largely comfortable with the proposals for transparency improvements in domestic regulation, according to negotiators familiar with the discussions.

The US was not prepared to address the substantive issues on which considerable work had been done in 2009 and 2011 draft texts issued by the then chairs of the WTO domestic regulation talks, according to negotiators familiar with the work.

In a restricted proposal issued on 3 October, the proponents – the European Union, Japan, Canada, Norway, Switzerland, New Zealand, Australia, Chile, Colombia, Costa Rica, Hong Kong (China), Iceland, Israel, Kazakhstan, Korea, Mexico, Liechtenstein, Moldova and Chinese Taipei, among others – floated a working document for negotiating outcomes on various disciplines on domestic regulation.

The working text for negotiations in the WTO GATS (General Agreement on Trade in Services) Working Party on Domestic Regulation, according to the proponents, “consolidates proposals on Administration of Measures, Development of Measures, Transparency, Technical Standards, and Gender Equality.”

These disciplines, the proponents said, “apply to measures by Members relating to licensing requirements and procedures, qualification requirements, and procedures, and technical standards affecting trade in services where specific commitments are undertaken.”

The proposed disciplines, however, “do not apply to any terms, limitations, conditions, or qualifications set out in a Member’s schedule pursuant to GATS Articles XVI [Market Access] and XVII [National Treatment]” in specific commitments.

Further, “Members recognize the right to regulate, and to introduce new regulations, on the supply of services within their territories in order to meet [national] policy objectives”.

These proposed disciplines, according to the proponents, “shall not be construed to prescribe or impose particular regulatory approaches or any particular regular provisions in domestic regulation.”

The proposal calls for various disciplines in the administration of measures such as submission of applications, application timeframes, electronic applications, acceptance of copies, processing of applications, fees and examinations.

It has suggested how a competent authority must administer decisions in an independent manner and listed various transparency provisions such as publication and information to be made available by members, setting up of enquiry points, opportunity to comment and information before entry into force.

The proponents included technical standards and development of measures based on objective and transparent criteria.

In addition, some of the proponents – Albania, Argentina, Canada, Chile, Colombia, the EU, Iceland, Kazakhstan, Liechtenstein, Moldova, Norway, Panama and Uruguay – included their proposal on gender equality.

The proposal says: “Where a Member adopts or maintains licensing requirements, licensing procedures, qualification requirements or qualification procedures, the Member shall ensure that such measures do not discriminate against individuals on the basis of gender.”

Significantly, another subset of proponents – Chile, Hong Kong (China), Moldova, New Zealand and Switzerland – included a proposal on “necessity test.”

The proposal says: “Where a Member adopts or maintains [measures relating to licensing requirements and procedures, qualification requirements and procedures, or where a Member adopts or maintains measures relating to technical standards as a condition for the supply of a service], the Member shall ensure that such measures are not more burdensome than necessary to ensure the quality of the service.”

In short, the consolidated draft text includes elements on which some of the proponents are not on board and yet, they pressed for negotiating an outcome on all the issues.


India, in a restricted room document, exposed the glaring contradictions in the consolidated proposal issued by the proponents.

India said significant work by members had been undertaken in the chair’s reports of 2009 and 2011, including several clauses in the 2011 report on which there was “ad referendum” agreement.

It asked the proponents “why did they adopt the approach of dissecting specific elements, only to consolidate them” in their document.

The draft consolidated text “does not reflect the common position of the proponents, and there appear to be several aspects on which some of the Members are still consulting, or differences remain with regard to bracketed texts”, India said.

Some of the members “appear to be proponents only for the single article on Gender Equality, and not on the remaining aspects of the Disciplines”, India said.

More important, “given the fragmentation of views, what is the process that the proponents believe should be followed on the way forward?” India asked.

India said it is “concerned” about the overarching aspect of the consolidated text wherein it is stated that “these disciplines relate to licensing requirements and procedures, qualification requirements and procedures, and technical standards affecting trade in services where specific commitments are undertaken”.

The African Group said that its trade ministers had already emphasized in November 2016 that “the work we undertake in multilateral trade and rule-making [should] support Africa’s continental integration agenda and, at a minimum, not undermine it.” The African trade ministers had underlined the need to ensure that “any outcome on GATS Article VI.4 disciplines on domestic regulation does not involve implementation of new and/or onerous administrative requirements or requirements that intrude into the domestic policy-making processes.”

The proposal by the proponents, according to the preliminary assessment of the African Group, includes various provisions that “are intended to prescribe or impose particular regulatory approaches.”

“In our view, this would significantly constrain African Members’ right to regulate for legitimate public policy objectives,” the African Group said.

The African Group said domestic regulation must provide “the right to regulate and the inter-linkages between regulations and broader domestic economic imperatives.”

The African Group posed the following general questions:

i. In accordance with GATS Article VI.4, which disciplines do you think are necessary, and why?

ii. What were the circumstances or specific issues that led to the suspension of the domestic regulation (DR) negotiations in the past, and have those circumstances changed?

iii. Is there a clear economic rationale for adopting DR disciplines, and what is the evidence that benefits from the proposed disciplines will accrue to all members?

iv. Is there any evidence of the costs entailed by introducing these new obligations, and who would bear those costs?

v. Is there any consideration that there are different capabilities amongst members, and amongst their firms and stakeholders, to take greater advantage of these proposed new disciplines?

vi. Have the proponents undertaken an economic impact assessment that demonstrates that their stakeholders are losing out on economic opportunities in the absence of multilateral DR disciplines?

vii. In which members have your stakeholders experienced problems that the disciplines are seeking to address, and has there been any attempt to resolve them bilaterally? Have domestic remedies been exhausted?

viii. In instances where you have felt aggrieved, has the issue been taken up with the competent authorities in the member?

ix. To what extent has the application of GATS Article VI.5 been insufficient in meeting the objectives being sought?

x. How will these disciplines contribute to supporting structural transformation and industrialization for Africa?

xi. Can proponents indicate the basis for making their proposal/s differently from the approaches taken in 2009-11 where separate rules were considered for licensing requirements and procedures and qualification requirements and procedures?

xii. Can proponents clarify whether their proposals would impose obligations only on existing commitments?

xiii. Are there linkages between the proposed DR disciplines and e-commerce and investment?

xiv. What are the proponents’ perspectives on DR in an increasingly digital world economy, how do each of the DR elements relate to e-commerce, and what are the implications?

On administration of measures, the African Group raised several pertinent questions:

1. What is the scope of these provisions, and how does this scope relate to the development of measures and transparency provisions?

2. Some proponents have recently introduced changes to their skilled visa policies. To what extent would these proponents themselves be infringing on the proposed DR disciplines, in terms of the general provisions where it says, “These disciplines apply to measures by Members relating to licensing requirements and procedures, qualification requirements and procedures, and technical standards affecting trade in services where specific commitments are undertaken”?

3. How do you define “authorization”?

4. How do technical standards and licensing requirements operate in Mode 1 in relation to the proposed DR disciplines?

The African Group also posed numerous questions on “transparency”, “development of measures,” including gender equality, and on “development.”

It asked the proponents “under which mandate” they are seeking to “address transparency in DR disciplines” and “what do these provisions have to do with trade?”

It asked the proponents to clarify on the “relationship between GATS Article III and the transparency provisions,” and “under which mandate are the proponents seeking to expand GATS Article III?”

On gender equality, the African Group sought to know “how would gender issues be taken up in DR disciplines and trade agreements” and the “underlying economic rationale” for such a provision.

“Could those principles and approaches be extended to other poor, disadvantaged or marginalized groups or regions in Members?” the African Group asked.

On development measures, the African Group asked the proponents whether the provisions suggested by them are subjected to their own necessity test.

In short, the proposal by the major industrialized countries along with their allies seeking outcomes on disciplines in domestic regulation at the Buenos Aires meeting fails to address the core issues concerning the recent spate of barriers imposed by major industrialized countries themselves, trade negotiators argued. (SUNS8547)                                

Third World Economics, Issue No. 647, 16-31 August 2017, pp8-9, 15