TWN Info Service on WTO and Trade Issues (Apr19/19)
25 April 2019
Third World Network

EU, Australia table draft MC12 statement on domestic regulation

Published in SUNS #8893 dated 24 April 2019

Geneva, 23 Apr (D. Ravi Kanth) – The European Union and Australia have circulated a draft joint ministerial statement for finalizing a plurilateral outcome on “domestic regulation disciplines” at the WTO’s twelfth ministerial conference (MC12) taking place in Astana, Kazakhstan, June next year, trade envoys told the SUNS.

The draft appears to be a clear attempt to undermine a multilateral outcome on domestic regulation for trade in services at the World Trade Organization, the envoys said.

The draft ministerial statement for a plurilateral outcome on domestic regulation disciplines is expected to be issued at an informal trade ministerial summit on the margins of the annual Organization for Economic Cooperation and Development (OECD) ministerial meeting in Paris on 23 May.

Framed on the lines of the joint ministerial statement on the plurilateral initiative on electronic commerce issued in Davos on 25 January, it says “ministers representing the following members of the World Trade Organization recognize the importance of good regulatory practice in facilitating trade in services.”

“We welcome the progress made on Domestic Regulation disciplines since the Joint Statement adopted at MC11 [the eleventh ministerial conference in Buenos Aires in December 2017],” the draft says.

“We commit to continue working on outstanding issues with a view to incorporating the outcome of our work in our respective schedules of specific commitments by the Twelfth WTO Ministerial Conference,” it has emphasized.

[Such an incorporation, requiring exemption from the GATS MFN requirement, would require a waiver to be granted by the Ministerial Conference by a three-fourth’s majority, in conformity with and as provided in Art. IV:4 of the WTO Treaty. SUNS]

Further, “we continue to encourage all WTO members to participate in order to improve the regulatory environment for trade in services globally,” the draft statement says.

At a closed-door meeting of select trade envoys more than ten days ago, the EU and Australia sought support from the participating countries for endorsing the statement, which largely contains provisions from the failed TiSA (trade in services agreement) that the United States had worked hard to conclude in 2016.

Several countries which took part in the meeting expressed reservations for finalizing a plurilateral outcome on domestic regulation at a time when the WTO’s Working Party on Domestic Regulation (WPDR) is considering proposals for improving the DR disciplines, particularly for the movement of natural persons under Mode 4 of the General Agreement on Trade in Services (GATS), said trade envoys, who asked not to be quoted.

Against the backdrop of growing support for a multilateral outcome on domestic regulation in services based on the proposals being discussed at the WTO’s Working Party on Domestic Regulation (WPDR), Australia, the EU, Japan, and the United States seem determined to put a spanner in the WPDR’s work, said a trade envoy, who asked not to be identified.

At a meeting of the WPDR on 20 March, a large number of developing and least-developed countries had welcomed a proposal from India on “disciplines for supply of a service through the presence of natural person of a member in the territory of another member.”

The 13-page proposal, said India during the WPDR meeting, is aimed at accomplishing “two broad objectives.”

They include (1) rejuvenating and re-energizing “discussions in the WPDR which had not seen any discussions in 2018 until December 2018”, and (2) bringing to “prominence the need to have commercially meaningful disciplines in the area of mode 4, which is the most important mode of export interest for most developing countries, especially the LDCs, as is evident from the LDC Collective Request, contained in the document (S/C/W/356).”

India said that its earlier proposal that was discussed in December last year had “received good support from developing countries and LDCs.”

An Indian trade official said that “many Members, both individually and as representatives of key Groups, had taken the floor to respond to the Indian proposal, mostly in favour of the proposal.”

During the WPDR meeting on 20 March, India highlighted the reasons cited by Uganda on behalf of the LDC (least-developed countries) Group on the Indian proposal during the previous WPDR meeting in December last year.

Uganda had said the Indian proposal “allows all Members of the WTO to re-engage in the WPDR in accordance with the GATS Article VI.4 negotiations mandate, which is built into the legal framework agreed in the Uruguay Round multilaterally.”

Further, the Indian proposal “is based on the 2009 WPDR chair’s text,” Uganda had argued.

Many developing countries had approved the 2009 WPDR text that was prepared by former Singaporean trade official Peter Govindasamy.

More important, the Indian proposal, according to Uganda, took on board “ideas and considerations advanced by the LDC group in various past discussions on the subject.”

The LDC group had welcomed various provisions in the Indian proposal such as right of Members to regulate, the use of electronic means for conducting examinations from the home country of the applicant, the exemption for LDCs to apply the DR disciplines, and the reduced administrative fees for service suppliers from developing country members.

The ACP group, according to India, has emphasised their offensive interests “in the elimination or reduction of restrictions in qualification requirements and procedures; and licensing requirements and procedures, particularly in Mode 4, in favour of developing countries and LDCs.”

Several provisions in the Indian proposal, particularly on disciplines on qualification requirements and procedures, were part of the earlier texts on disciplines on DR.

India emphasized the following provisions in its earlier proposal. They include:

A. Verification and assessment of qualifications of foreign service suppliers – consideration to professional experience and membership in professional association;

B. Identification of deficiencies – details of how deficiency in qualification can be addressed by applicants;

C. Examinations through electronic means, and from home country of the applicant;

D. Recognition – to provide adequate opportunity to developing country Members, in particular to LDCs, 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.

Based on the support it had received from the LDCs and the ACP countries, India had said that it had further revised its proposal on the “introduction of disciplines on application procedures and requirements for temporary entry related to fulfilment of domestic regulations under Article VI.4.”

India said the disciplines on temporary entry can be introduced under the GATS Article VI:4 based on the Council Decision dated 28 April 1999.

“While the GATS Article VI:4 mandates disciplining measures “relating” to qualification requirements and procedures, technical standards and licensing requirements, the Council Decision dated 28 April 1999 (S/L/70) mandates developing any necessary disciplines to ensure that such measures do not constitute unnecessary barriers to trade in services,” India pointed out.

Most importantly, India said that the LDC Group statement delivered on 5 December 2018 specifically urged the Working Party that any disciplines in this area must help to create export trading opportunities for LDC service suppliers taking into account elements of the LDC Services Waiver Collective Request, namely reduction of fees, paperwork, and onerous procedures and requirement s for visas, work permits, and residence permits, and facilitation of creating a better enabling environment for recognition of LDC institutions, degrees and qualifications.

India said disciplines on “temporary entry will complement and supplement disciplines on licensing requirements and procedures, qualification requirements and procedures, and technical standards affecting trade in services for a commercially meaningful outcome.”

India said it is proposing to bring in disciplines on temporary entry measures (such as on timelines, procedures and fees) only in the context where:

a. there is a specific Mode 4 commitment;

b. entry is required to fulfil a GATS Article VI:4 measure arising out of either Qualification Requirements or Qualification Provisions, Technical Standards , Licensing Requirements or Licensing Provisions; and

c. where electronic authorisation is not possible.

At the meeting, India had assured members that its proposed disciplines “on temporary entry will not prejudice Members’ rights to regulate, and to introduce new regulations, on the supply of services within their territories in order to meet national policy objectives.”

Other key changes include improvements in transparency provisions for publishing relevant documents on-line for facilitating access of natural persons to relevant information, and a best endeavour provision for not requiring physical presence to submit an application for a license of qualification.

India said its draft proposal for improving DR disciplines for Mode 4 services suppliers seeks to “reinvigorate the WPDR discussions” for a multilateral outcome.

Citing Rwanda’s remarks at the WPDR meeting last year, India said clear disciplines on domestic regulations in mode 4 are indeed important, not only for India but also for all developing countries, in particular LDCs.

“Members cannot continue neglecting this longstanding issue for developing countries.”

In response to India’s proposal, major developed countries – the United States, the European Union, and Australia among others – said they cannot agree with India’s proposal, said a trade envoy who asked not to be quoted.

The US asked India why it is opposing the plurilateral proposal on DR disciplines while the other industrialized countries demanded an outcome on the provisions stated in the informal joint initiative on domestic regulation in services.

In short, the EU and Australia seem determined to issue the joint ministerial statement on a plurilateral outcome on DR disciplines to sabotage a multilateral outcome for improving DR disciplines on the movement of natural persons, trade envoys maintained.