TWN Info Service on WTO and Trade Issues (Feb17/04)
6 February 2017
Third World Network

Green room process on services domestic regulation
Published in SUNS #8395 dated 6 February 2017

Geneva, 3 Feb (D. Ravi Kanth) - The WTO Director-General, Roberto Azevedo, held a green room meeting Thursday (2 February) on domestic regulation in services to prepare the ground for a possible outcome in this area at the forthcoming Ministerial Conference in Buenos Aires end of 2017.

Such a meeting at this juncture, ignoring the ongoing efforts of the new Trump administration in the US and the US Congress to rewrite rules for restricting visas for short-term service providers, seemed bizarre, creating a false sense of security on the international trade front, several trade envoys told SUNS.

Knowing full well that the Trump administration wants to curtail H1B visas and impose stringent rules for the movement of natural persons under Mode 4 of the General Agreement on Trade in Services (GATS) and the US opposition to improvements in domestic regulation, Azevedo discussed with select trade envoys proposals for improving domestic regulation so as to prepare the ground for an outcome at the eleventh ministerial meeting later this year, trade envoys told SUNS.

The US has generally been opposed to horizontal disciplines on domestic regulation. Instead, they have sought regulatory disciplines on a sector by sector basis which they managed to secure in accountancy services, financial services and telecommunications, amongst others, according to another trade envoy who asked not to be quoted.

Even in TISA negotiations (being held largely outside the WTO), the US has been strongly opposed to ambitious disciplines.

This has resulted in a low ambition text by Australia, Chile, Colombia, et al in the WTO. Noticeably, New Zealand and Hong Kong-China did not join in on the text due to their insistence on having the "necessity test" applicable to domestic regulation, the trade envoy said.

"What is striking about the current text on the table in the WTO is that it is on the administration of measures only. The proponents, led by Australia, have invited Members to table texts under all the elements under the GATS Article VI.4 mandate on licensing requirements and procedures, qualification requirement and procedures and technical standards," the envoy said.

Developing countries were able to secure a development chapter in the 2009 Chair's text in exchange for Transparency obligations at the insistence of the US.

However, with this new and flawed process, it is not clear whether development is off the table. The US late last year indicated that they want to start on a clean slate, with no reference to the 2009 and 2011 Chair's texts.

However, China, India, the ACP and African Group all expressed their preference to use the 2009 Chair's text as the basis for negotiation on domestic regulation disciplines. This process and having an outcome at MC11 are unlikely to yield positive results despite the current Chair's persistence to move forward and the DG's green room meeting yesterday, one trade envoy told SUNS.

There is simply no appetite for negotiations, especially not at a time when the US administration has signalled its intentions, the envoy said.

Against this backdrop, in the green room meeting on Thursday, the DG discussed with the proponents two separate proposals on "domestic regulation-administration of measures", "domestic regulation-technical standards," and "possible elements of a trade facilitation in services agreement."

In the first proposal on "domestic regulation-administration of measures" circulated on 31 October 2016, the co-sponsors - Australia, Chile, Colombia, the European Union, Japan, Mexico, Norway, Peru, Korea, and Chinese Taipei - have proposed elements of domestic regulation related to the "development" of licensing requirements and procedures, qualification requirements and procedures, and technical standards.

These elements, according to the co-sponsors, "would be addressed separately under 'Development of Measures and Technical Standards'". The ten countries said "elements related to Transparency, Development, and Institutional Provisions would also be addressed."

The administration of measures include a single window approach for clearing applications, electronic application and acceptance of copies, rapid processing of applications, reasonable authorization fees which do not restrict the supply of the relevant service, and schedule of examinations at reasonably frequent intervals for applicants.

Besides, Australia also circulated an unofficial room document on "domestic regulation-technical standards" on 24 November 2016 in which it proposed that "the International Organization for Standardization (ISO) could be invited to update Members on services standards and the implications for the growth of international trade."

The Indian proposal on "possible elements of a trade facilitation in services agreement" which was circulated on 14 November 2016 seeks to address "numerous border and behind-the-border barriers as well as procedural bottlenecks" that continue to impede trade in services for small and medium enterprises.

The elements proposed by India include:

(i) The focus of the TFS [trade facilitation in services] Agreement will be with regard to measures affecting trade in services in all sectors where specific commitments are undertaken, including provisions such as transparency (India had opposed a proposal by Australia and other countries for focusing only on transparency at the WTO's tenth ministerial meeting in Nairobi in December 2015);

(ii) Publication and availability of information which is going to be based on GATS Article III on transparency;

(iii) Administration of measures such as single window facility for applications, specific timeframes for applications, and acceptance of electronic applications;

(iv) Fees and charges - provisions similar to the DR text, which seek to ensure that fees and charges applied are reasonable, transparent, and commensurate with the costs incurred by the competent authorities;

(v) Administration of economic needs tests, particularly the need to provide information;

(vi) Facilitating cross-border flow of information under Mode I, which is relevant in today's Internet-driven and highly digitalized world, including cross-border flow of information (data), without barriers;

(vii) Facilitating consumption abroad, particularly for health services and medical tourism, and issues such as lack of insurance coverage for availing medical services in a foreign country, and expedited processing of immigration formalities;

(viii) Provisions facilitating movement of natural persons in Mode 4 and exemption of committed categories of natural persons from payment of additional costs and charges, including social security payments;

(ix) Cooperation among competent authorities for facilitating trade in service;

(x) Special and differential treatment;

(xi) Technical assistance;

(xii) Institutional arrangements.

During the last meeting of the WPDR on 25 November 2016, several countries had expressed grave doubts on some of the proposals.

Bangladesh had stated "that some elements of the proposals were difficult for LDCs." Bangladesh had suggested "that preferences granted to LDCs under the LDC Waiver Decision be included under the scope of application of Australia's proposal."

Barbados underscored the need for "development provisions in the final outcome of domestic regulation and any other services negotiations."

On behalf of the LDC group, Uganda expressed the view that discussions should remain within the framework of the 2009 and 2011 Chair's Texts agreed ad referendum by the membership.

In accordance with the 2009 text, Uganda suggested that a provision should be included in the proposal to the effect that LDCs were not required to comply with the disciplines, but only encouraged to do so to the extent compatible with their economic situation. Uganda had argued for the reduction of regulatory barriers, in particular application fees for visas, licences and work permits.

Several trade envoys, commenting on the process, said that the director-general must first speak his mind on the threats posed by the trade initiatives being pursued by the Trump administration before holding green room meetings on domestic regulation and fisheries subsidies.

At a time when he is seeking a second term, his continued silence on the pronouncements made by the new Trump administration is a wake-up call for members, the envoy said.