TWN Info Service on WTO and Trade Issues (Mar17/17)
20 March 2017
Third World Network

GATS domestic regulations disciplines hinge on progress in agriculture
Published in SUNS #8423 Thursday 16 March 2017

Geneva, 15 Mar (D. Ravi Kanth) -- Members of the African Group along with the least-developed countries on Tuesday (14 March) delivered the strongest message yet that any potential deliverables in domestic regulation disciplines at the World Trade Organization's eleventh ministerial meeting (MC11) in Buenos Aires will hinge on commensurate results in other areas of the Doha Development Round (DDR), particularly agriculture, services negotiators told SUNS.

On India's proposal for substantive commitments as part of a new agreement on trade facilitation for services (TFS), the African Group said it is extremely "broad" without any mandate at this juncture. The Indian proposal would impose burdensome multilateral obligations for members, the African Group suggested.

During a meeting of the WTO Working Party on Domestic Regulation (WPDR) on Tuesday, many developing and least-developed countries severely criticized proposals on "transparency," "development of measures" by Australia, Canada, Colombia, the European Union, Israel, Japan, and Mexico; and "administration of measures" by Australia, Chile, Colombia, the European Union, Japan, Mexico, Norway, Peru, Korea, and Chinese Taipei.

Bolivia said the proposal by major developed and several developing countries on transparency, development of measures, and administration of measures in domestic regulation doesn't seek any improvements in Mode 4 concerning short-term movement of services providers.

It would also curb the right to regulate services in politically sensitive areas, Bolivia said, suggesting that the proposal would also deny "regulatory policy space" for developing countries.

Speaking for the African Group, South Africa said African countries are not demandeurs for domestic regulation disciplines.

But they want the right to regulate and to introduce new regulations concerning the supply of services for accomplishing their overall developmental policy objectives, South Africa said.

The African Group reminded the proponents that work on improving disciplines in domestic regulation as per Article VI: 4 in the GATS is part of the overall development round as mandated in the Doha Development Agenda.

Without internal balance in each area, particularly agriculture, and balance among all DDA issues, it would be naive to work on DR (domestic regulation), the African Group cautioned.

Moreover, the general thrust of the proposals on transparency, development of measures, and administration of measures, as set out in the separate proposals by the proponents, impose burdensome regulatory disciplines that go far beyond the Article VI: 4 of GATS mandate.

The mandate in the Article VI: 4 of GATS says: "With a view to ensuring that measures relating to qualification requirements and procedures, technical standards and licensing requirements do not constitute unnecessary barriers to trade in services, the Council for Trade in Services shall, through appropriate bodies it may establish, develop any necessary disciplines. Such disciplines shall aim to ensure that such requirements are, inter alia: (a) based on objective and transparent criteria, such as competence and the ability to supply the service; (b) not more burdensome than necessary to ensure the quality of the service; [and] (c) in the case of licensing procedures, not in themselves a restriction on the supply of the service."

The African Group asked the proponents as to why they are seeking "a piecemeal approach and fragmentation of the proposals" and why they are not tabling "a single working document".

It reiterated the Group's commitment to engage in the discussions but on the condition that there is movement across all areas of the DDA, according to negotiators who were present at the meeting.

On behalf of the least-developed countries, Uganda said that "over the years, the LDCs' services trade deficit has widened from US$16.43 billion in 2005 to US$39 billion in 2015. Being net importers of commercial services, the LDCs will face further erosion in their export of services because of domestic regulation disciplines being demanded by the proponents."

Uganda said that domestic regulation disciplines imply effective market access and the LDCs will be granting "unfettered" market access because of DR.

Therefore, any deliverable on domestic regulation must state explicitly that "LDCs shall not be required to apply these disciplines... LDCs are nonetheless encouraged to apply these disciplines, to the extent compatible with their special economic situation and their development, trade and financial need," according to Uganda.

The LDCs also expressed sharp concern on the application of a necessity test in the proposal on development of measures circulated by Hong Kong-China and New Zealand. It raised several questions on what is meant by the "objective" and "transparent measures".

Cuba said the original draft text circulated by Peter Govindasamy in 2009 must remain the basis while insisting that DR cannot be dealt in isolation without resolving the unfinished DDA issues, particularly special safeguard mechanism and the permanent solution for public stockholding programs for food security.

Ecuador said the proposals by the proponents on DR seem to be "very intrusive" and might compromise policy space for development objectives.

Venezuela concurred with Ecuador that the DR proposals impose burdensome requirements on developing countries.

But Thailand, New Zealand, and several other countries welcomed the proposals on transparency, development of measures, and administration of measures for improving DR disciplines.

Meanwhile, India made a power-point presentation of its draft legal text on Trade Facilitation for Services (TFS) at the WPDR meeting, seeking a constructive dialogue.

The underlying rationale for TFS, India said, is to remove the hurdles in global trade in services on the lines of the Trade Facilitation Agreement for goods so as to ensure that market access remains "effective" and "commercially" meaningful.

The TFS, India emphasized, is not about "new market access". India explained the provisions in the 13-page draft legal text, suggesting that it is ready to continue negotiations both bilaterally and in various groups.

Ecuador said while it is not a demandeur in services, it is willing to discuss issues concerning the movement of short-term services providers as set out in the Indian proposal.

Paraguay and Thailand welcomed the Indian proposal but were willing to work on issues relating to domestic regulation disciplines in the Indian proposal.

Brazil praised the Indian proposal as "balanced" and "reasonable", suggesting that it is ready to engage in serious discussions.

Peru said it is ready to engage in further discussions on administration of economic needs test but cautioned that short-term results are difficult.

Venezuela and Bolivia said the TFS would impose additional burden on developing countries and goes beyond the Article VI: 4 of GATS.

Turkey praised India for presenting a bold proposal on TFS which covers several issues in Mode 4 and cross- border insurance. Turkey said it is ready to support the Indian proposal.

Canada said it is still studying the Indian proposal while the European Union welcomed the TFS suggesting the "overarching notion is valuable and promising."

The EU suggested that substance in the Indian proposal should prevail over form, arguing that it has large domestic regulation provisions.

On behalf of the African Group, South Africa said while it shares the constraints the Indian services suppliers are continuing to face, the African countries would benefit from removing hurdles in the movement of short-term services providers.

South Africa expressed surprise over the timing of the Indian proposal on TFS against the backdrop of worsening political climate.

The African Group, according to South Africa, is concerned about several new and potentially onerous multilateral commitments that are proposed in the Indian proposal without any existing mandate at this juncture.

The TFS proposal is "extremely broad" and appears to be inappropriate. Further, the enhanced transparency obligations in the Indian proposal go beyond GATS Article III, South Africa suggested.

Instead of a development-centered proposal, the TFS actually imposed burdensome requirements on many African countries, particularly the LDCs, South Africa said.

It maintained that provisions such as creation of a "single window", resolution of appeals on a fast track, and several other elements are costly and difficult for African countries to implement at this juncture.

South Africa reminded India that the proposed TFS cannot be fitted into the Trade Facilitation Agreement- template that centered around customs procedures while questioning whether it will offer any long-term gains for African countries who are net services importers, according to negotiators, who asked not to be quoted.

Nevertheless, the African Group said it will work with India for addressing issues concerning the movement of short-term services providers in Mode 4 in the TFS proposal.

In short, India's proposal on TFS was welcomed more by developed and several advanced developing countries.

Many African and other developing countries remained concerned about the Indian proposal on grounds that it would impose burdensome commitments at a time when they are net importers of services.