TWN Info Service on WTO and Trade Issues (Oct17/22)
26 October 2017
Third World Network

Outcome unlikely on domestic regulation in services at MC11
Published in SUNS #8560 dated 25 October 2017

Geneva, 24 Oct (D. Ravi Kanth) - The proposed multilateral outcome on enhanced disciplines for domestic regulation in trade in services by major developed and some developing countries at the upcoming World Trade Organization ministerial meeting in Buenos Aires almost evaporated on Monday (23 October) following unbridgeable divisions on the need to finalize any decision at this juncture, trade negotiators told SUNS.

Major developed countries and some of their allies in the developing world have been promoting proposals for an outcome on enhanced disciplines in domestic regulations in GATS at MC11 in Buenos Aires this December.

At a meeting of the Doha negotiating body on services on 23 October, several developed countries and their developing-country allies pressed for an outcome based on their revised draft proposal for the WTO's eleventh ministerial meeting in Buenos Aires beginning on 10 December.

The sponsors demanding an outcome at Buenos Aires include the European Union, Argentina, Australia, Canada, Chile, Colombia, Costa Rica, Hong Kong (China), Iceland, Israel, Japan, Kazakhstan, Korea, Liechtenstein, Mexico, Moldova, New Zealand, Norway, Peru, Switzerland, Chinese Taipei, Turkey, and Uruguay.

In their latest revised draft proposal Job/Serv/268/Rev.3 (issued as a restricted document), the sponsors maintained that "the main body of text (Articles 1 to 6.1) has been jointly developed by all the Members listed above as a basis for further work."

Several bracketed texts in the draft, according to the sponsors, "indicate areas where the Members listed above have not reached agreement."

The sponsors, however, called for further discussions.

The enhanced disciplines on domestic regulation (DR) as proposed by the sponsors cover areas such as licensing requirements and procedures, qualification requirements and procedures, and technical standards affecting trade in services where specific commitments are undertaken.

The sponsors argued that an outcome on DR disciplines is essential at Buenos Aires, suggesting that they are willing to discuss with other members all aspects in their text.

The six-page draft text suggested in "general provisions" that "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."

The sponsors said that "they do not apply to any terms, limitations, conditions, or qualifications set out in a Member's schedule pursuant to GATS Article XVI or XVII."

Further, the sponsors maintained that "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 disciplines shall not be construed to prescribe or impose particular regulatory approaches or any particular regulatory provisions in domestic regulation."

A group of countries, including China, who are not among the DR sponsors, maintained that they would support an outcome on the DR disciplines at Buenos Aires, according to a trade negotiator who asked not to be quoted.

However, another group of countries, including India and Bangladesh, suggested that an outcome on DR must be finalized after the eleventh ministerial meeting in Buenos Aires, the negotiator said.

India also indicated at the meeting that it is not seeking any outcome on its own proposal for trade facilitation in services at Buenos Aires. India said while it wants credible improvements in trade in services as set out in its proposal, the time is not ripe for immediate discussions.

More than ten countries from Africa and South America - South Africa, Uganda, Zimbabwe, Cameroon, Rwanda, Kenya, and a few South American countries such as Venezuela and Cuba among others - firmly maintained that it would not be possible to have an outcome on domestic regulation in services at Buenos Aires.

South Africa supported by the ten countries suggested that it is realistically impossible to have a multilateral outcome on the domestic regulation at the eleventh ministerial meeting, said another negotiator who asked not to be quoted.

The concerns raised by the African Group of countries on the DR proposals submitted by the sponsors are difficult to be addressed through text-based negotiations before the Buenos Aires meeting, the negotiator said.

In their restricted Job/Serv/269 document issued on 27 September, the African Group said that it has "always approached domestic regulation from a perspective that gives paramount importance and affirmation to, amongst other things, the right to regulate and the inter-linkages between regulations and broader domestic economic imperatives."

"In building the Africa we want, the African Group places great importance on having further clarity from the proponents [the sponsors] in the development of future disciplines on domestic regulation," the African Group maintained.

It raised many questions including "general questions," "questions on administration of measures," "questions on transparency," "questions on development of measures," and "questions on development" among others.

The general questions raised by the African Group include the following:

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

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

c. 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?

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

e. 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?

f. 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?

g. 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?

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

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

j. How will these disciplines contribute to supporting structural transformation and industrialisation for Africa?

k. Can proponents indicate the basis for making their proposal/s differently from the approaches taken in 2009-2011 where separate rules were considered for licensing requirements and procedures and qualification requirements and procedures?

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

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

n. 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?

Even a plurilateral outcome on DR as suggested by the World Trade Organization director-general Roberto Azevedo in Washington last week is not possible in Buenos Aires as it would be unwise to move from a multilateral solution to a plurilateral outcome in less than seven weeks, the negotiator suggested.

On behalf of the African Group, Rwanda's trade envoy Ambassador Francois Xavier Ngarambe expressed "profound concern at attempts to manufacture consensus where there is none on domestic regulation disciplines."

During the informal heads of delegations meeting on Tuesday (24 October), Ambassador Ngarambe said: "There are systemic divergences and conceptual differences in understanding about the scope of application, regulatory capture, preservation of policy space, regulatory models, regulatory autonomy, intrusive GATS-plus transparency obligations, and the sovereign right to regulate, to name a few."

"Simply ignoring these serious concerns is neither pragmatic nor realistic, and it will not bring us any closer towards convergence," he warned.

Meanwhile, the EU, which circulated a proposal on addressing e-commerce related issues in services for Buenos Aires, has suggested that it is ready to take up the issue only after the eleventh ministerial meeting.

In short, the prospects for an outcome on enhanced disciplines in domestic regulation at Buenos Aires seem extremely bleak and close to nil if the mood at the Doha services negotiating group meeting on Monday is any indication, the negotiator argued.