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2020 | OriginalPaper | Chapter

Disciplines on Domestic Regulations Affecting Trade in Services: Convergence or Divergence?

Author : Gabriel Gari

Published in: Coherence and Divergence in Services Trade Law

Publisher: Springer International Publishing

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Abstract

The paper examines recent developments on disciplines on domestic regulations affecting trade in services at regional, plurilateral and multilateral level. It identifies a significant degree of convergence between the disciplines adopted at regional level with those currently negotiated at plurilateral level, and suggests that, discrepancies over the extent and eligibility for special and differential treatment for developing countries are the main obstacle to reach a multilateral agreement on this matter. The paper also argues that it is unlikely that regional or plurilateral disciplines may generate trade diversion. First, in most cases the disciplines are phrased in soft terms, giving countries plenty of flexibility to decide how and when to comply with them. Second, those sponsoring the plurilateral negotiations account for fifty seven per cent of world exports of commercial services (seventy six cent including the U.S.) and have pledged to incorporate the results of the negotiations into their GATS schedules as additional commitments under Article XVIII of the Agreement (and thus extending the benefits of the disciplines on a Most Favoured Nation basis to WTO Members that have not participated in the negotiations). Finally, even those few disciplines included in Preferential Trade Agreements that go beyond the plurilateral reference paper are, for practical reasons, applied de facto, on an MFN basis.

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previous chapter Services Liberalization by Sub-Central Entities: Towards Deeper Commitments?

next chapter Privacy and Data Protection in the EU- and US-Led Post-WTO Free Trade Agreements

See, e.g. Hoekman and Mattoo (2013).

See Statement from New Zealand, Report of the Meeting of the Working Party on Domestic Regulations held on 16 June 2016 (S/WPDR/M/67, 28/06/16).

Ibid.

Back in 1988, a Price Waterhouse’s survey to service exporters identified that discriminatory treatment is not written into the published laws and regulations but is a matter of official practice, “the way things have always been done”, “general bureaucratic tendency not to approve new activities”, etc. Cited by Feketekuty (1988).

See, for example, Kox and Lejour (2005); Schwellnus (2007); Kox and Nordås (2007, 2009); Van der Marel and Shepherd (2013). The recently created OECD database on regulatory barriers to trade in services has the potential to make a valuable contribution on this matter. See Nordås (2016); for professional services, see Mattoo and Mishra (2009); Crozet et al. (2016).

For a detailed analysis of this provision see Krajewski (2008).

Krajewski (2008).

See below, Sect. 2.1.

See below Sect. 2.2.

Gari (2020).

Second Revision, Draft Disciplines on Domestic Regulation Pursuant to GATS Article VI.4, Informal Note by the Chairman, Room Document, 20 March 2009.

Disciplines on Domestic Regulation Pursuant to GATS Article VI4, Chairman’s Progress Report (S/WPDR/W/45, 14 April 2011).

Draft Reference Paper on Services Domestic Regulation, Note by the Chairperson, INF/SDR/W/1/Rev.1, 12 December 2019. Copy on hold.

Trade disciplines are classified as ‘hard’ or ‘soft’ according to the extent to which they are legally enforceable. This is a text-based classification. When the text of the provision includes an unqualified expression such as “shall”, it is regarded as ‘hard’. By contrast, when the text qualifies the verb “shall” by terms such as ‘to the extent possible’, or where there is an explicit textual exclusion of the said provision from the jurisdiction of the PTA’s enforcement mechanisms, then it is regarded as ‘soft’. This criteria is inspired by the methodology developed by Horn et al. (2010), pp. 1572–1573.

Decision on Professional Services, 1 March 1995 (S/L/3).

See Decision of the CTS adopted on 14 December 1998 (S/L/63, 15/12/98 and S/L/64, 17/12/98).

Para 2, S/L/63.

See paragraph 2, Decision of the CTS adopted on 14 December 1998 (S/L/64, 17/12/98).

CTS Decision on Domestic Regulation adopted on 26 April 1999 (S/L/70, 28/04/99).

Communication from Australia; Chile; China; Colombia; Hong Kong, China; the Republic of Korea; Mexico; New Zealand; Norway; the Russian Federation; Singapore; Switzerland; the Separate Customs Territory of Taiwan, Penghu, Kinmen And Matsu; and Turkey—Elements for Discussion (JOB/SERV/231/Rev.1, 13/06/16).

Communication on “Transparency” from Australia, Colombia, the European Union, Japan, Republic of Korea, Mexico, New Zealand and the Separate Customs Territory of Taiwan, Penghu, Kinmen and Matsu (JOB/SERV/251/Rev.1).

Communications on “Development of Measures” from Australia, Canada, Colombia, the European Union, Israel, Japan and Mexico (JOB/SERV/250) and Hong Kong, China, New Zealand, Switzerland and Chile (JOB/SERV/252/Rev.2).

Communication on “Administration of Measures” from Australia, Chile, Colombia, the European Union, Japan, Mexico, Norway, Peru, Republic of Korea, and the Separate Customs Territory of Taiwan, Penghu, Kinmen and Matsu (JOB/SERV/239/Rev.1).

Communication from Albania; Argentina; Australia; Canada; Chile; China; Colombia; Costa Rica; The European Union; Hong Kong, China; Iceland; Israel; Japan; The Republic Of Kazakhstan; The Republic of Korea; Liechtenstein; The Former Yugoslav Republic of Macedonia; Mexico; The Republic of Moldova; Montenegro; New Zealand; Norway; Peru; The Russian Federation; Switzerland; The Separate Customs Territory Of Taiwan, Penghu, Kinmen And Matsu; Turkey; Ukraine; and Uruguay, Disciplines on Domestic Regulation, 13 December 2017 (WT/MIN(17)/7/Rev.2).

See, inter alia, statements by South Africa, Bolivia, Cuba and Uganda, in the meeting of the WPDR held on 15, 16, 22 June and 5 July 2017 (S/WPDR/M/71, 29/09/17).

Comments by India on Co-Sponsors’ Text on Disciplines on Domestic Regulation (WT/MIN(17)/7; WT/GC/190), WT/MIN(17)/19, 5/12/17.

Ibid.

Disciplines on Domestic Regulation African Group Elements for Ministerial Decision, WT/MIN(17)/8, 4 December 2017.

See Communication from India GATS Article VI:4—Disciplines for Supply of a Service through the Presence of a Natural Person of a Member in the Territory of Another Member (S/WPDR/W/61/Rev.1, 8/08/19).

DR8-A, GATS Article VI:4 Disciplines, Non-Attributed Working Text, 9 November 2018. Copy on hold.

It is interesting to note that at the same time, outside the WTO, the APEC Members adopted the APEC Non-binding Principles for Domestic Regulation of the Services Sector, which closely resemble the DR8-A text. See https://www.google.com/url?sa=t&rct=j&q=&esrc=s&source=web&cd=1&ved=2ahUKEwi_2KLI6o_kAhUwIrkGHQA1DqoQFjAAegQIBhAC&url=https%3A%2F%2Fapec.org%2F-%2Fmedia%2FAPEC%2FPublications%2F2018%2F11%2F2018-CTI-Report-to-Ministers%2FTOC%2FAppendix-13%2D%2D-APEC-Nonbinding-Principles-for-DR-Drafting-Group.pdf&usg=AOvVaw2zUHeK96YcZx1XUto-z1v4.

Joint Statement on Services Domestic Regulation, 23 May 2019 WT/L/1059, circulated at the request of the delegations of Albania; Argentina; Australia; Brazil; Canada; Chile; China; Colombia; Costa Rica; El Salvador; European Union; Hong Kong, China; Iceland; Israel; Japan; Kazakhstan; Republic of Korea; Liechtenstein; Mexico; Republic of Moldova; Montenegro; New Zealand; Nigeria; North Macedonia; Norway; Paraguay; Peru; Russian Federation; Switzerland; the Separate Customs Territory of Taiwan, Penghu, Kinmen and Matsu; Turkey; and Uruguay. While not formally subscribing to the Joint Statements, the U.S. is participating on the negotiations.

World Trade Statistical Review (WTO, 2019), available at https://www.wto.org/english/res_e/statis_e/wts2019_e/wts19_toc_e.htm.

Draft Reference Paper on Services Domestic Regulation, Note by the Chairperson, INF/SDR/W/1/Rev.1, 12 December 2019. Copy on hold.

Indicative draft schedules have been submitted by the following participants: Albania; Australia; Brazil; Canada; Chile; China, Colombia; Costa Rica; the European Union; Hong Kong, China; Iceland; Israel; Japan; Liechtenstein; North Macedonia; Mexico; Rep. of Moldova; Montenegro; Norway; Paraguay; Rep. of Korea; New Zealand; Switzerland; Chinese Taipei; Turkey; and Uruguay. Minutes of Meeting held on 4 February 2020, INF/SDR/R/9.

For instance, Shingal et al. (2018).

WTO RTAs database, available http://rtais.wto.org/UI/publicsummarytable.aspx.

Acharya (2016).

See, inter alia, Latrille and Juneyoung (2012) and Araujo (2014).

Roy et al. (2007).

Ortino and Lydgate (2019).

Gari (2020).

For example, CPTPP, CETA, EU-Japan FTA.

For example, the agreement between the EU and Central America.

For example, the agreements between China and Australia, EU and Colombia, Peru and Ecuador and Japan and India.

Article III.1 and 2.

Paragraph 13.

Paragraph 13, Section II.

Article 8.18.2.

See, e.g., Article 13.22, Telecommunications Chapter, CPTPP.

Paragraph 20.

See Article 2.9 WTO Agreement on Technical Barriers to Trade; paragraph 5, Annex B Agreement on Sanitary and Phytosanitary Measures; Article 1.4(b) Agreement on Import Licensing Procedures; and Article 2 of the Agreement on Trade Facilitation. The latter is the only case where the opportunity to make comments is extended to “traders and other interested parties”.

See Abugattas Majluf L (2006) Policy Paper on Trade in Services and Sustainable Development: Domestic Regulation. Domestic Regulation and the GATS: Challenges for Developing Countries, www.ictsd.org/downloads/2008/06/dom_reg.pdf.

Paragraph 15.

S/WPDR/W/45, at 23.

Paragraphs 17 and 18, Section II.

India’s Comments on Communication JOB/SERV/268—Disciplines on Domestic Regulation (RD/SERV/145, 29/09/17) at 7.

African Group Elements for Ministerial Decision, WT/MIN(17)/8, 4/12/17, para. 2.1.

Article 309.2(c).

For example, Annex 11-B, Section E of the CPTPP.

For example, Article 13.22 of the CPTPP and 21.1 of USA-KOR includes a duty to consult that requires to make publicly available all relevant comments filed by interested persons and to respond to all significant and relevant issues raised in comments filed.

Articles III.3, III.4 and IV.2.

Article IIV.2.

Paragraph 14.

S/WPDR/W/45, at 22.

Paragraph 14, Section II.

Comments by India on Co-Sponsors’ Text on Disciplines on Domestic Regulation (WT/MIN(17)/7; WT/GC/190) (WT/MIN(17)/19, 5/12/17).

EU-CARIFORUM, EU-COL-PER, EU-CENTRAM, JPN-IND and CAN-KOR.

See CMT2009, paragraphs 5–9 and CPR2011, pp. 10–14.

Paragraph 1 Section II.

Paragraph 2 Section II.

See EU-VNM, EU-SGP, EU-ARM and CETA.

See CPR2011, p. 4.

See Gari (2016).

Paragraph 40.

CPR2011, p. 41.

Paragraph 21, Section II.

Article 15.8.5.

Article 8.32.

Paragraph 10.

CPR2011, at 16.

Paragraph 7, Section I.

Paragraph 8, Section I.

Paragraph 9, Section I.

See footnote 16, DRP2019 and Article 15.8.2(a), USMCA.

Article 8.30 EU-JPN and Article 15.8.2 USMCA.

See the multiple alternatives suggested for the necessity test in CPR2011, pp. 7 and 18.

See proposal from Chile; Hong Kong, China; The Republic Of Moldova; Peru; New Zealand And Switzerland in WT/MIN(17)/7/Rev.2, 13/12/17, para 6.3.

Most developing countries, but also Canada and the U.S.

Article 8.7.3 CHN-CHE, Article JPN-MNG and Article CPTPP.

Paras 17 and 31.

CPR2011, p. 25.

Para 22(c), Section II.

Article 15.8.2(c).

100

Article 8.31.1.

101

See proposal from Albania; Argentina; Australia; Canada; Chile; Colombia; The European Union; Iceland; The Republic of Kazakhstan; Liechtenstein; The Former Yugoslav Republic of Macedonia; Mexico; The Republic of Moldova; Montenegro; New Zealand; Norway; Pakistan; Panama; Paraguay; Peru; The Russian Federation; Switzerland; Ukraine and Uruguay in WT/MIN(17)/7/Rev.2, 13/12/17, para 6.2. The wording of the proposal reads as follows: “With a view to promoting women’s economic empowerment, where a Member adopts or maintains measures relating to authorisation for the supply of a service, the Member shall ensure that such measures do not discriminate against women”.

102

Comments by India on Co-Sponsors’ Text on Disciplines on Domestic Regulation (WT/MIN(17)/7; WT/GC/190), para 8.

103

See para 22(d), Section II.

Paragraph 41.

CPR2011, p. 43.

Article 8.7.4.

Article 10.8.3.

See, for example, Article 2.4 and 2.5 of the TBT Agreement, and 3.1 and 3.2 of the SPS Agreement.

109

Article 7.8.3 JPN-MNG.

110

Articles 8.30 and 8.31 EU-JPN.

111

Article 10.8.3 CPTPP.

112

Article 8.7.3 CHN-CHE.

113

Han-Wei and Ching-Fu (2017).

114

Han-Wei and Ching-Fu (2017) cite, inter alia, the following examples: Reagan’s Presidential Executive Order 12291 of 17 February 1981 implementing a mandatory Regulatory Impact Analysis (RIA); replaced by Clinton’s Executive Order 12866 of 30 September 1993. The latter strengthened the RIA process and introduced a centralized planning mechanism providing for early interagency coordination to avoid inconsistency, incompatibility, or duplication among various regulations adopted by federal agencies. The interagency coordination was to a entrusted to a central coordinating body, the Office of Management and Budget (OMB), with the advisory assistance of its Office of Information and Regulatory Affairs (OIRA).

115

Han-Wei and Ching-Fu (2017), pp. 15–23.

116

See, e.g., the APEC-OECD Integrated Checklist on Regulatory Reform (2005), a voluntary tool to evaluate regulatory reforms checklist aimed at promoting efficiency, transparency and accountability of regulations; the OECD—Recommendation of the Council on Regulatory Policy and Governance (2012), available at https://www.oecd.org/gov/regulatory-policy/2012-recommendation.htm.

117

For example, the most recent TBT triennial reviews include thematic sessions that illustrate about Members’ practice on this matter. See in particular sixth, seventh and eighth TBT triennial reviews. See also G/TBT/26, 13 November 2009, paras. 8–9.

118

Four other EU PTAs reviewed include a single provision on good regulatory practice and administrative behaviour which expresses the consent of the Parties to cooperate in promoting regulatory quality and performance, including through exchange of information and best practices on their respective regulatory reform processes and regulatory impact assessments. See Article 14.7 EU-VNM, Article 13.7 EU-SGP, Article 12.7 EU-KOR and Article 313 EU-ARM.

119

Article 25.1, CPTPP.

120

See Chapter 28 USMCA.

121

Article 28.20 USMCA.

122

See OECD Regulatory Policy Outlook 2018, available at https://read.oecd-ilibrary.org/governance/oecd-regulatory-policy-outlook-2018_9789264303072-en#page5.

123

See World Bank’s Worldwide Governance Indicators, available at http://info.worldbank.org/governance/wgi/index.aspx#home.

124

The case of Vietnam in the CPTPP could entail a risk of forced regulatory alignment, although such risk is minimized by the fact that the parties to define the scope of application of these disciplines.

125

Disciplines on Domestic Regulation African Group Elements for Ministerial Decision, WT/MIN(17)/8, 4 December 2017.

126

In the GATS these standards are prescribed by Articles VI.1 and VI.2. In most PTAs these standards are included in horizontal Transparency or Anti-corruption chapters and their scope of application is extended to laws, regulations, procedures and administrative rulings of general application on any mattered covered by the Agreement.

127

Paragraph 3, Section II defines authorisation as the “means the permission to supply a service, resulting from a procedure a person must adhere to in order to demonstrate compliance with licensing requirements, qualification requirements or technical standards.”

128

Comments by India on Co-Sponsors’ Text on Disciplines on Domestic Regulation (WT/MIN(17)/7; WT/GC/190), WT/MIN(17)/19, 5/12/17, paragraph 2.1.

129

Ibid.

130

See Hepburn J, Global Administrative Law and the Role of Domestic Administrative Lawyers. AdminLawBlog, 29 November 2017, https://adminlawblog.org/2017/11/29/global-administrative-law-and-the-role-of-domestic-administrative-lawyers/.

131

See Cassesse (2005), p. 113.

132

Ibid, at 112.

133

Ibid.

134

See contrasting views between Communication from U.S. An Undifferentiated WTO: Self-Declared Development Status Risks Institutional Irrelevance (WT/GC/W/757, 16/01/19), and Communication from China, India, South Africa and The Bolivarian Republic of Venezuela: The Continued Relevance of Special and Differential Treatment in Favour of Developing Members to Promote Development and Ensure Inclusiveness (WT/GC/W/765, 18/02/19).

135

Disciplines on Domestic Regulation African Group Elements for Ministerial Decision, WT/MIN(17)/8, 4 December 2017.

136

CPR2011, pp. 45 and 46.

137

CPR2011, pp. 47 and 48.

138

CPR2011, p. 49.

139

See CPR2011, p. 50.

140

Disciplines on Domestic Regulation African Group Elements for Ministerial Decision, WT/MIN(17)/8, 4 December 2017.

141

See Agreement on Trade Facilitation, Section II.

142

Paragraph 12, Section I.

143

Paragraph 12, Section I.

144

Paragraph 13, Section I.

145

Paragraph 14, Section I.

146

Article 21.1 CPTPP.

147

Article 21.5 CPTPP.

148

Mattoo (2015), p. 11.

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Title: Disciplines on Domestic Regulations Affecting Trade in Services: Convergence or Divergence?
Author: Gabriel Gari
Publisher: Springer International Publishing
Book: Coherence and Divergence in Services Trade Law
Print ISBN: 978-3-030-46954-2

Electronic ISBN: 978-3-030-46955-9

Copyright Year: 2020
DOI: https://doi.org/10.1007/978-3-030-46955-9_4

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