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Services Liberalization and Domestic Regulation

Services Liberalization and Domestic Regulation. Ramesh Chaitoo Head - Services Trade Unit, CRNM rchaitoo@crnm.org CUTS/FICCI Conference on Global Partnership for Development: Where do we Stand and Where to Go? Delhi, August 12-13, 2008. GATS Preamble.

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Services Liberalization and Domestic Regulation

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  1. Services Liberalization and Domestic Regulation Ramesh Chaitoo Head - Services Trade Unit, CRNM rchaitoo@crnm.org CUTS/FICCI Conference on Global Partnership for Development: Where do we Stand and Where to Go? Delhi, August 12-13, 2008

  2. GATS Preamble • Recognizes the right of Members to regulate, and to introduce new regulations, on the supply of services within their territories in order to meet national policy objectives … • But the vast majority of barriers to services trade are regulatory

  3. Regulations as Barriers to trade • Non-discriminatory (not listed in schedules) • Discriminatory (listed in GATS schedules) - Nationality or citizenship requirements - Residency requirements • These practically close a market to foreign professionals if they are part of regulations to get licence or to qualify.

  4. GATS Article VI:1 • In sectors where specific commitments are undertaken, each Member shall ensure that all measures of general application affecting trade in services are administered in a reasonable, objective and impartial manner.

  5. WTO Negotiations re GATS Article VI:4 • Multilateral attempt to craft generic disciplines on 1. Qualification requirements & procedures 2. Technical standards 3. Licensing requirements • 1998 - Guidelines for accountancy sector;

  6. Such disciplines shall aim to ensure that such requirements are, inter alia: • (a) based on objective and transparent criteria, such as competence and the ability to supply the service; • (b) not more burdensome than necessary to ensure the quality of the service; • (c) in the case of licensing procedures, not in themselves a restriction on the supply of the service.

  7. Limited mandate of DR negotiations • NOTE - Market Access (Art XVI) or National Treatment (Art XVII) limitations or barriers that are scheduled are not the subject of rule-making on DR. • Also, in OECD countries professions are regulated by associations; governments have little control, only broad principles are set out in laws. In DCs professional associations are not powerful.

  8. Disciplines on DR- Jan 08 “Chair’s text” • Transparency - Publish information on all requirements & processes that foreign suppliers must meet. • Issues re how to publish - electronically, print, etc.

  9. Licensing requirements • Should not act as trade barrier - Cumbersome ones in devp’d states make it very difficult for the mainly services SMEs in DCs to meet; • Transparent & predictable. • Impartial procedures. • Reasonable time frame for processing. • Reasons for rejecting application. • Fees - should reflect admin cost (except auctions like telecoms).

  10. Qualification requirements & procedures • Must be competent. • Procedures should not be barrier to trade. • Verification & assessment - accreditation body. • Timeframes - “reasonable”. • Explain why if application is rejected. • Fees charged - reflect admin cost & not prohibitive to foreign suppliers.

  11. Technical Standards • Domestic or international? • If purely domestic, should not be overly difficult or different from most other countries. • What level of “participation” in development of standards? • Small countries do not have capacity to develop standards; some rich countries think international standards are lowest common denominator & they want higher.

  12. Development Cooperation • Should DCs be allowed a long time to apply any disciplines on Dom Reg? • Should SVEs or LDCs be exempt from rules? • Lower fees for suppliers from DCs? • What kind of TA from rich countries to DCs? - Develop regulations? Help firms meet regulations overseas?

  13. Other issues • How to liberalize if you do not have regulatory regimes? • But once you schedule a service sector or activity, then clear signal that government will regulate it - telecoms, finance, etc. • Most DCs are at fault in terms of not focusing on services sector development or regulatory regimes in TA programs; preoccupied with goods.

  14. Will WTO rules on DR help? • To some extent but big barriers are in schedules. • Mutual recognition of qualifications among professional associations would be good but tough to do MRAs - engineering in NAFTA took 10 years & only Texas signed it; neither Ontario or Quebec. • Perhaps greater issue is economic needs tests - muddy MA concessions & make it difficult to actually contest services markets. • Outsourcing contracts can avoid the hassles of DR

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