TWN Info Service on WTO and Trade Issues (Dec18/05)
11 December 2018
Third World Network

Strong support for India's initiative on improving DR disciplines
Published in SUNS #8812 dated 7 December 2018

Geneva, 6 Dec (D. Ravi Kanth) - A large majority of developing and least-developed countries, including China, on 5 December welcomed India's initiative to "rejuvenate" and "re-energize" negotiations at the World Trade Organization for a multilateral outcome towards improving the disciplines on domestic regulation (DR). The Indian initiative aims to enhance market access for the movement of short-term services providers under Mode 4 of the General Agreement on Trade in Services (GATS), trade envoys told SUNS.

At a meeting of the WTO's Working Party on Domestic Regulation (WPDR) on 5 December, many countries - China, the ACP (Africa, Caribbean, and Pacific) group, the African Group, the least-developed countries, South Africa, Indonesia, Turkey, Cuba, Ecuador, Bolivia, Venezuela, Egypt, and Nigeria among others - strongly supported India's initiative for negotiating the improvements in DR disciplines.

In a direct challenge to the plurilateral proponents of improvements in DR (domestic regulation) led by Australia and the European Union, India proposed an initiative for improving disciplines on DR for the supply of services through the presence of natural persons of a member country in the territory of another member country.

Major developed countries - the EU, Australia, the US, and Japan among others who are all strong votaries of the plurilateral outcome on domestic regulation - remained silent during the meeting.

Negotiations at the WTO's Working Party on Domestic Regulation (WPDR) for improvements in the DR disciplines, which come under Article VI:4 of the GATS, had remained in limbo throughout this year because of a concerted effort by the plurilateral proponents of the informal joint statement initiative group to hammer out a plurilateral deal on DR disciplines.

The plurilateral proponents launched the joint statement initiative (JSI) group at the WTO's eleventh ministerial conference in Buenos Aires, Argentina, in December 2017, knowing full well that the WPDR is the multilateral forum fo r bringing the improvements in DR.

Subsequently, the JSI participants which include all the developed countries and some developing countries such as Nigeria, Egypt, Turkey and Indonesia among others held several meetings throughout this year and floated a draft text.

The plurilateral JSI on the improvements in DR is largely based on the failed Trade in Services Agreement (TiSA) text which largely reflects the interests of Canada and the United States that continue to impose numerous DR barriers for the movement of natural persons or short-term services providers under Mode 4 of the GATS.

Significantly, the JSI in DR coincides with the plurilateral proponents' initiatives for new rules on electronic commerce in Mode 1 of the GATS on cross-border services and investment facilitation in Mode 3 of the GATS on commercial presence.

The JSI plurilateral proponents, however, remain opposed to any improvements in Mode 4 concerning the short-term movement of natural persons, which is the most vital area of importance in GATS for developing and poorest countries.

The plurilateral proponents want to start negotiations on both electronic commerce and investment facilitation at the WTO's 12th ministerial conference in Astana, Kazakhstan, in June 2020.

Against this backdrop, at the WTO's Working Party on Domestic Regulation (WPDR), India sought to discuss its proposal "on disciplines on domestic regulations for supply of a service through the presence of a natural person of a Member in the territory of another Member."

Consequently, the dormant WPDR came back to life on Wednesday (5 December).

In its introductory statement at the WPDR meeting, India said that "Mode 4 [concerning the movement of short-term services providers] is the most important mode of export interest for most developing countries including LDCs."

"Unfortunately, it is most neglected and therefore needs facilitation through DR Disciplines," India emphasized.

Several studies had pointed to the gross asymmetries in the market access in the four modes of the GATS, particularly between Mode 3 of commercial presence and Mode 4 of the movement of natural persons.

But major industrialized countries led by the US and the EU had severely opposed market access demands in Mode 4, including demands for removing the impediments in the DR disciplines.

India said the "disciplines on DRs are most relevant for Mode 4 service suppliers, as the issue of recognition of educational qualifications and licenses acquired in the territory of another Member is a major impediment to mode 4 access, especially in case of regulated professions."

Maintaining that it "acknowledges that measures relating to Qualification Requirements (QR), Licensing Requirements (LR) and even Technical Standards (TS) are applied by Members to achieve legitimate public policy objectives, " India pointed out that these measures "can also limit access to the ranks of the profession within a foreign jurisdiction as such requirements governing the supply of services vary widely across Members."

"Put together, the regime of DRs, covering LR [Licensing Requirements], QR [Qualification Requirements] and TS [Technical Standards], result in significant trade barriers for mode 4 service suppliers, in the absence of necessary disciplines," India argued.

"Therefore," India said, "for commercially meaningful access for mode 4 professionals, it is critical that Members ensure that their competent authorities take account of qualifications and licenses acquired in the territory of another Member on the basis of equivalency of education, experience and/or examination requirements and have adequate procedures to meet these requirements."

In several rounds of negotiations on domestic regulation since 1999, there has been substantial progress in negotiating disciplines on domestic regulation at the WPDR which was earlier called the Working Party on Professional Services (WPPS).

Several submissions were made by Members for disciplines in other regulated professional services like legal and engineering services, India said, emphasizing that from the very beginning of DR discussions since 1999, Mode 4 was the target for Art. VI:4 disciplines.

India said "global changes in demographics and patterns of investment in human capital have created increased scope for international trade in professional services."

According to India, "the scope for mutually beneficial trade is, however, inhibited by a range of qualification and licensing requirements and procedures."

"Commercially meaningful disciplines on DRs can therefore unleash the potential for mutually beneficial trade specially in professional services and more generally in trade in services," India argued.

India maintained that addressing "disciplines on the entire gamut of DRs for Mode 4, especially qualification requirements and procedures, will also help address Part "C" of the LDC Collective Request pursuant to the LDC Services Waiver Decision related to recognition of qualifications of LDC professionals."

India said that "a large group of Members comprising developing countries and LDCs have been questioning the "necessity" of DR disciplines as they recognize the difficulties which may be faced by individual developing country Members and in particular the least-developed country Members, in implementing horizontal disciplines on domestic regulations."

Time has come for the WTO members to "focus on developing disciplines on DR for Mode 4," that "is not only the key mode of export interest for most developing countries but is also in dire need of disciplines for commercially meaningful access."

As per the decision of the WTO's Council for Trade in Services (CTS) dated 28 April 1999, members are required "to develop any necessary disciplines to ensure that measures relating to licensing requirements and procedures, technical standards and qualification requirements and procedures do not constitute unnecessary barriers to trade in services."

India criticized the JSI of the plurilateral proponents on DR for pursuing "GATS Article VI:4 Disciplines outside of the WPDR when the WPDR, in accordance with the Decision on Domestic Regulation adopted by the CTS on 28 April 1999 (S/L/70), is mandated to develop such necessary disciplines."

India said "as per the decision, the WPDR is required to report its recommendations to the CTS."

India severely criticized the JSI for proposing that the non-attributed working text on GATS Article VI:4 Disciplines being developed under the JSI does not include any of the following commercially significant disciplines on qualification requirements and procedures (QRP), all of which were an integral part of the earlier work done in the WPDR:

* Verification and assessment of qualifications of foreign service suppliers - consideration to professional experience and membership in professional association;

* Identification of deficiencies - details of how deficiency in qualification can be addressed by applicants;

* Examinations - through electronic means, and from home country of the applicant.

In short, India said that "the GATS VI:4 mandate must be used to develop commercially meaningful disciplines in the key area of Qualification Requirements and Procedures (QRPs), as reflected by the history of DR negotiations at the WTO."

"Additionally, the GATS VI:4 mandate cannot be used to multilateralise a particular template developed in the context of some Regional Trade Agreements [such as the failed Trans-Pacific Partnership or the failed Trade in Services Agreement (TiSA)]".

India spoke about the drafts texts on DR that were prepared by the chairs of the WPDR in 2009 and 2011.

The draft texts include disciplines in the five mandated elements, namely, licensing requirements (LR) and licensing procedures (LP), technical standards (TS) and qualification requirements (QR) and qualification procedures (QP) for Mode 4, as compared to the "disciplines on "authorization" along broad thematic areas in the non-attributed working text" of the JSI group.

India said "disciplines on Licensing Procedures and Qualification Procedures, and Licensing Requirements and Qualification Requirements have been merged to do away with overlap between the separate sections on LP and QP and between LR and QR, as in the earlier versions of the texts being discussed in the WPDR."

Further, as regards disciplines on QRP, India said that its text retains th e disciplines as contained in the earlier versions of the texts, with one additional provision "to provide adequate opportunity to developing country Members to negotiate accession to existing agreements pertaining to recognition, pursuant to GATS Article VII and the various provisions built in the GATS for increasing trade opportunities for developing countries (paragraph 20 of S/WPDR/W/61)."

India said that its proposed "draft for discussion on DR disciplines for Mode 4 service suppliers" is aimed at reinvigorating "the WPDR discussions and welcome constructive suggestions to take the process ahead."

India also requested the WTO Secretariat to "do a briefing session on the history of DR negotiations, much of which relate to professional services, and the past submissions on DR disciplines to guide the membership in fulfilling the mandate pursuant to Article VI:4 of the GATS, in its letter and spirit."

At the meeting, services negotiators of the ACP (Africa, Caribbean, and Pacific) group, the African Group, the least-developed countries, Ecuador, Cuba, Bolivia, Indonesia, Turkey, Nigeria, Egypt, and Thailand among others supported India's initiative for re-starting work to improve the disciplines in the domestic regulation.

China said that India's initiative presents a multilateral framework for improving the DR disciplines, while South Africa welcomed India's proposal, suggesting that it would need further discussions.

Significantly, services negotiators from the United States, the European Union, Australia, and Japan among others remained utterly silent during the brief discussion on the Indian proposal.

In conclusion, it is clear as daylight that the developed countries are determined to pursue plurilateral initiatives to safeguard their interests and deny market access in areas of interest to the developing countries such as domestic regulation in services, said trade envoys, who asked not to be quoted.