29 March 2021
WTO Member Group Negotiating Disciplines on Domestic Regulation in Services Examines Lessons from Trade Deals
Photo Credit: Lynn Wagner
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Proponents of an initiative to develop new disciplines on domestic regulation in services, which is taking place among a group of 63 WTO members, noted at a meeting in March that several disciplines currently under negotiation share the same goals as those of recent free trade agreements.

The initiative, which has set the next Ministerial Conference as its target for concluding negotiations, has drawn questions from other WTO members over how these new disciplines will interact with existing trade rules and affect domestic policy space – and whether multilaterally agreed solutions are a better approach.

Delegations from the group of World Trade Organization (WTO) members negotiating new disciplines on domestic regulation in services provided an update on their efforts in early March, including their intention of finalizing the talks by the WTO’s Twelfth Ministerial Conference (MC12).

These negotiations currently involve 63 of the WTO’s 164 Members. It is a spin-off of the multilateral negotiations under the WTO’s Working Party on Domestic Regulation, which involve the full membership and date back to the earliest days of the Organization.

Article VI:4 of the General Agreement on Trade in Services (GATS), the accord which sets out the WTO’s rules on services trade and has been in force since 1995, mandates that the Council for Trade in Services “develop any necessary disciplines” through subsidiary bodies, with the goal of “ensuring that measures relating to qualification requirements and procedures, technical standards and licensing requirements do not constitute unnecessary barriers to trade in services.”

Over the years, the multilateral negotiations have oscillated between active and quiet periods. The preparations for a planned “Doha light” agreement in 2011 included an evaluation of the advances to date in domestic regulation in services, only for ministers to declare the Doha Round at an impasse during MC8 in December 2011.

Negotiations on domestic regulation then died down until 2016, when several WTO members pushed to have a consensus agreement on select disciplines in time for MC11 in Buenos Aires, Argentina, in December 2017.

While a consensus agreement was not possible in Buenos Aires across the full WTO membership, a smaller group of WTO members who had put forward various proposed disciplines endorsed a “joint statement” pledging that they would continue work among themselves, as well as with the wider membership.

This was one of several “Joint Statement Initiatives” (JSIs) launched in Argentina by groups of WTO members, with other initiatives covering topics such as investment facilitation, electronic commerce, micro, small and medium-sized enterprises (MSMEs), and gender.

Trade agreement examples under review

During the virtual meeting of the services domestic regulation JSI held in March 2021, the WTO members involved examined how the disciplines under negotiation relate to those under recent regional trade agreements such as the Regional Comprehensive Economic Partnership (RCEP).

The discussion came as the JSI is working from a “far advanced” negotiating text on the domestic regulation disciplines, which was circulated on 18 December 2020. Participating WTO members are also submitting draft services schedules under this proposed text, which is being referred to as a “draft reference paper.”

At the March meeting, Australia and Thailand, proponents of the JSI, each flagged the similarities with the RCEP, signed on 15 November 2020 by 15 Asia-Pacific nations. The two delegations also pointed to similarities with some other free trade agreements (FTAs), including those between Singapore and the EU, China and Association of Southeast Asian Nations (ASEAN) member States, and Indonesia and Australia.

While some participants in the JSI noted that these domestic regulation disciplines are becoming increasingly common across regional trade agreements, and argue that this is a reason for other WTO members to join on, well over half of the WTO’s membership has decided not to join the negotiations at this time. The reasons are manifold, some of which date back to long-standing tensions in the larger talks under the Working Party on Domestic Regulation.

Some trade experts, such as Aileen Kwa, have previously warned that new WTO commitments on domestic regulation in services could interact with members’ commitments under international investment agreements, even if these commitments are made at the WTO and not in an investment treaty. Other questions that emerged during the Working Party negotiations included whether these new disciplines could constrain countries’ policy space at the domestic level .

Some WTO members have also expressed concern that the move to negotiate new disciplines among small groups pulls energy and attention away from processes that have multilaterally agreed mandates. India and South Africa circulated earlier this year a communication questioning the legal status of the JSIs (including the JSI on services domestic regulation) and how these will be integrated into the WTO framework.

Additional meetings of the services domestic regulation JSI are planned for 14 April, 10 May, 10 June, and 15 July. Proponents of the initiative say that they aim to finalize negotiations in time for MC12, scheduled for November 2021 in Geneva, Switzerland, and chaired by Kazakhstan. [WTO News Release]

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