Hamid Dom Reg WS March 04 1 INTRODUCTION THE GATS and DOMESTIC REGULATION

Hamid Dom Reg WS March 04 2 Conceptual Basis Liberalization as a means of growth and development Liberalization, not deregulation –the meaning of liberalization (market access and national treatment) –the right to regulate (and need to regulate) The role of liberalization in the process of development Progressivity of liberalization

Hamid Dom Reg WS March 04 3 The GATS A set of Rules and Disciplines –Articles of the Agreement –General Obligations –Specific Commitments –Annexes Schedules of Specific Commitments –Market Access –National Treatment –Additional Commitments

Hamid Dom Reg WS March 04 4 Article I - Scope and Definition oALL MEASURES AFFECTING TRADE IN SERVICES (At all government levels, including non-governmental bodies exercising delegated authority) oDEFINITION OF TRADE IN SERVICES o(1) Cross border supply o(2) Consumption abroad o(3) Commercial presence o(4) Presence of natural persons oUNIVERSAL COVERAGE OF GATS (All services, except those provided in the exercise of governmental authority and air transport )

Hamid Dom Reg WS March 04 5 General Obligations and Disciplines (Part II) Unconditional obligations –Most-Favoured-Nation Treatment –Transparency* –Domestic Regulation* –Monopolies* and Business Practices –Increasing participation of developing countries (contact points) Conditional Obligations (specific commitments) –Transparency* –Domestic Regulation* –Monopolies* –Payments and Transfers Permissive provisions –Economic integration –Recognition Exceptions –Restrictions on Balance of Payments grounds –General and Security Exceptions To be negotiated –Emergency Safeguards –Government Procurement –Subsidies –Disciplines for domestic regulation

Hamid Dom Reg WS March 04 6 Specific commitments (Part III) Article XVI (Market Access) … each Member shall accord services and service suppliers of any other Member treatment no less favourable than that.. specified in its Schedule no limitations on the number of service suppliers* no limitations on the value of transactions and assets* no limitations on number of operations or quantity of output* no limitations on the total number of persons employed* no restrictions on the types of legal entity or joint venture no limitations on foreign capital participation * or requirement of an economic needs test

Hamid Dom Reg WS March 04 7 Specific commitments (Part III) Article XVII (National Treatment) … each Member shall accord services and service suppliers of any other Member, in respect of all measures affecting the supply of services, treatment no less favourable than it accords to its own like services and service suppliers Article XVIII (Additional Commitments) Commitments with respect to measures not subject to scheduling under Articles XVI or XVII Examples: Qualifications, standards, licensing.

Hamid Dom Reg WS March 04 8 Article XVI (Market Access) Addresses six categories of measures Article XVII (National Treatment) Addresses all discriminatory measures whether they grant formally identical or formally different treatment Article VI:4 (Domestic Regulation) Aimed at measures relating to qualifications, licensing and standards not falling within the scope of Article XVI or XVII * Possibility of additional commitments (Article XVIII) Types of restrictive measures XVI and XVII

Hamid Dom Reg WS March 04 9 Role of the WTO and GATS in Domestic Regulation WTO has no direct role either in promoting the creation of domestic regulations or in specifying their content. WTO is not a standard-setting organization GATS preamble explicitly recognizes the right of Members to regulate in order to meet legitimate national policy objectives GATS objective is to ensure that regulations do not create unnecessary barriers to trade

Hamid Dom Reg WS March GATS Article VI - in brief In sectors where commitments are undertaken: VI:1 - Reasonable, objective and impartial administration of measures of general application VI:3 - Decisions on applications within a reasonable period VI:6 - Procedures to verify competence In all sectors, with or without commitments: VI:2 - Procedures for the review of administrative decisions affecting trade in services

Hamid Dom Reg WS March Regulatory Disciplines... To be developed (Article VI:4) To ensure that measures relating to qualification requirements and procedures, technical standards and licensing requirements do not constitute unnecessary barriers to trade, the Services Council shall develop any necessary disciplines Such disciplines shall aim to ensure that these requirements are, inter alia: (a) based on objective and transparent criteria (b) not more burdensome than necessary (c) in the case of licensing procedures, not in themselves a restriction on supply

Hamid Dom Reg WS March Regulatory Disciplines... Provisional application (Article VI:5) (a)In sectors in which a Member has undertaken specific commitments, pending the entry into force of disciplines developed in these sectors pursuant to paragraph 4, the Member shall not apply licensing and qualification requirements and technical standards that nullify or impair such specific commitments … (b)In determining whether a Member is in conformity with the obligation under paragraph 5(a), account shall be taken of international standards of relevant international organizations applied by that Member.

Hamid Dom Reg WS March Stages achieved thus far... Ministerial Decision on Professional Services Results of the Working Party on Professional Services Working Party on Domestic Regulation

Hamid Dom Reg WS March Ministerial Decision on Professional Services April 1995 Established the Working Party on Professional Services (WPPS) Required the immediate implementation of GATS Article VI:4 Gave priority to the accountancy sector

Hamid Dom Reg WS March Do not address measures subject to scheduling under market access & national treatment Apply necessity test - not more trade- restrictive than necessary Enhance transparency Disciplines on licensing requirements & procedures, qualification requirements & procedures, and technical standards Accountancy Disciplines (Dec. 1998) Main Elements

Hamid Dom Reg WS March WTO Working Party on Domestic Regulation (WPDR) Established 26 April Replaced the Working Party on Professional Services. Emphasis on the development of generally applicable disciplines for all services sectors.

Hamid Dom Reg WS March Necessity Test -- obligation not to create unnecessary barriers to trade Transparency -- requirements in addition to general transparency provisions Equivalence -- consideration of education, professional experience etc. obtained abroad) International Standards -- role as a benchmark? Domestic Regulation - Issues under consideration

Hamid Dom Reg WS March Negotiating Guidelines Adopted by the Council for Trade in Services on 28 March 2001 Members shall aim to complete negotiations under Articles VI:4...prior to the conclusion of negotiations on specific commitments. Domestic Regulation in the New Round