WTO Members conclude negotiations on services domestic regulation

A group of 67 WTO Members – representing over 90 per cent of world services trade – have concluded the negotiations on services’ domestic regulation which reduces red tape and increases transparency. The newly agreed rules will particularly benefit financial, business, communications and transport services. Once its rules are implemented, annual cost savings in services trade could amount to USD 150 billion globally, according to the study “Services domestic regulation in the WTO: Cutting red tape, slashing trade costs, and facilitating services trade”.

The list of 67 WTO Members that negotiated and will apply the new disciplines can be accessed here. They include, among others, Kazakhstan, Moldova, Russia and Ukraine.

The new disciplines explained

The disciplines – which are listed below – apply to measures relating to licensing requirements and procedures, qualification requirements and procedures, and technical standards affecting trade in services.

The focus of the disciplines lies on measures that are closely linked to the process of authorization to supply a service. They seek to ensure that existing market access and national treatment commitments are not nullified by opaque and complex authorization procedures. They aim to facilitate trade in services.

The disciplines provide built-in flexibilities to preserve space for differences in WTO members’ regulatory capacity and approaches, for example, by allowing participants to implement certain obligations “to the extent practicable”, or simply “encouraging” them to take certain actions.

The disciplines apply to sectors where Members have undertaken commitments in their GATS schedules of specific commitments. A possibility is foreseen for Members to voluntarily expand the application of the disciplines to additional sectors.

Developing economies that subscribe to the disciplines can delay the application of specific provisions in sectors in which they face implementation difficulties for up to 7 years. The use of transitional periods would allow them to make any necessary adjustments to their domestic regulatory frameworks.

The disciplines are as follows:

• On transparency:
  • Publish and make available information required to comply with requirements and procedures for authorization, including through electronic means;
  • Establish appropriate mechanisms for responding to enquiries from service suppliers;
  • Engage stakeholders by publishing proposed laws and regulations, providing opportunity for comments from interested persons, and considering comments received.
• On legal certainty and predictability:
  • Establish indicative timeframes for processing applications;
  • Process applications in a timely manner;
  • Provide information on the status of applications;
  • Allow applicants to correct minor deficiencies in incomplete applications and identify additional information required;
  • Inform applicants of reasons for rejection of applications and allow resubmission;
  • Allow authorization once granted to enter into effect without undue delay;
  • Allow reasonable time between publication of laws and regulations and date of required compliance by service suppliers;
  • Hold examinations at reasonably frequent intervals.
• On regulatory quality and facilitation:
  • Require applicants to approach only one competent authority to obtain authorization;
  • Permit submission of applications at any time throughout the year, or at least, allow reasonable periods of time for submission;
  • Accept electronic applications and authenticated copies of documents;
  • Ensure that authorization fees are reasonable, transparent, and do not in themselves restrict the supply of service;
  • Support professional bodies wishing to establish dialogues on issues relating to recognition of professional qualifications;
  • Ensure that competent authorities reach their decisions in a manner independent from services suppliers;
  • Consolidate relevant information on a single online dedicated portal;
  • Develop technical standards through open and transparent processes;
  • Base measures relating to authorization on objective and transparent criteria;
  • Ensure that procedures are impartial, adequate and do not unjustifiably prevent fulfilment of authorization requirements;
  • Ensure that authorization measures do not discriminate between men and women.*

(*) For the first time, a WTO negotiated text contains a provision on non-discrimination between men and women. The objective is to support women's economic empowerment and boost their participation in services trade.

How will WTO Members, and ultimately the private sector, benefit from the new disciplines?

According to the above-mentioned study, the implementation of the agreed rules will deliver benefits as follows:

• An improved business climate: The rules contain good regulatory practices, as above-listed. By enhancing the transparency, efficiency, and predictability of regulatory systems, the disciplines on services domestic regulation will address the practical challenges that affect the ability of businesses and suppliers to operate.
• Services trade facilitated: Building on efforts to identify and disseminate good regulatory practice, an increasing number of “new generation” trade agreements have moved beyond the removal of quantitative restrictions and discriminatory measures to include a comprehensive set of disciplines largely equivalent to those developed at the WTO. At the same time, economies at all levels of income have also implemented reforms with a view to making their regulatory environment more trade facilitative for services businesses.
• Lowered trade costs and broader trade benefits generated: Through the full implementation of the disciplines on services domestic regulation, economies can lower trade costs and reap substantial trade benefits. As indicated above, the annual trade cost savings could be in the range of USD 150 billion. Moreover, a positive correlation between the implementation of services domestic regulation measures and services trade by all four modes of supply, as well as a more active engagement of economies in global value chains, hints to even broader economic benefits.

Implementation of the new rules will result in widespread gains beyond the 67 WTO Members that concluded the negotiations of the new disciplines. Exporters from all WTO members will benefit from the improved regulatory conditions when they trade with Members implementing the new rules. However, significantly larger benefits will accrue to WTO members that are implementing the disciplines themselves in their internal regulatory frameworks.

Will Azerbaijani companies benefit from these new disciplines?

Members that will apply the new rules on a most-favoured-nation basis. Thus, companies of all WTO Members will benefit from the reduction of red tape and increased transparency. Members may also choose to extend the benefits to companies from non-WTO Member countries.

Where can I learn more about the new disciplines?

The new rules are available in the WTO website (click here). They will be translated into Azerbaijani and will be available in http://wto.az/senedler-melumat-ve-menbeler/

For more information on the WTO Joint Initiative on Services Domestic Regulation, click here.