TWN Info Service on WTO and Trade Issues (Apr10/03)
9 April 2010
Third World Network

Chair issues annotated text on services domestic regulation
Published in SUNS #6895 dated 31 March 2010

Geneva, 30 Mar (Riaz K. Tayob) -- The Chair of the Working Party on Domestic Regulation (WPDR) has tabled a nearly 80-page new annotated text, which is expected to be discussed by WTO Members at the next meeting of the Working Party, expected to be held towards the end of April.

The new annotated text is in the form of a room document dated 14 March 2010 and titled "The Annotated Text - Informal Note by the Chairperson of the Working Party on Domestic Regulation: Disciplines on Domestic Regulation Pursuant to General Agreement on Trade in Services (GATS) Article VI:4."

The document was prepared under the responsibility of the Chair of the WPDR and is based on discussions that took place in the Working Party between June 2009 and February 2010.

The document was tabled by the Chair at a meeting of the Working Party on 15 March. Many delegates welcomed the text at that meeting, according to some developing country trade diplomats who spoke to SUNS after that meeting.

However, the document was not discussed, as Members said that they needed more time to consider the document. Many Members said that they would provide their inputs on the text at the next session of the Working Party. (A meeting of the Working Party has been scheduled for 27 April.)

According to a trade diplomat, India reiterated its position that it had sought a revised Chair's text and not an annotated text.

Other developing countries said that they did not consider the annotated text as a basis for negotiations and that it was only for the purposes of the Doha stocktaking exercise (that took place from 22-26 March).

According to one developing country trade diplomat, comments on the annotated text were not negative and some Members seemed happy that there was progress in the talks.

However, the trade diplomat expressed some doubts as to whether real progress had been made, as the text simply captured the divergences and disagreements in the negotiations.

The Annotated Text by the Chair of the Working Party, Ms Misako Takahashi of Japan, states that it aims at capturing the past discussions as factually as possible. "I added my personal suggestions where I thought they might help facilitate future discussions," added the Chair.

The Annotated Text describes the method used in its preparation and includes:

-- The Annotated Text incorporates proposals submitted in writing or orally since March 2009 (that is, subsequent to the issuance of the current Chairman's revised draft). Therefore, it does not take account of earlier negotiating proposals unless they have been specifically re-introduced by Members. Such older proposals are the basis of the March 2009 text, and remain on the table.

-- The document seeks to capture specific text-related comments. More general comments relating to the negotiations are recorded in [the Chair's] informal  summaries, but are not repeated in the Annotated Text.

-- Two written drafting proposals that were submitted during the discussion period are annexed to this annotated text (Communication from the delegations of Australia, Chile, the Separate Customs Territory of Taiwan, Penghu, Kinmen and Matsu, Colombia, Hong Kong-China, Republic of Korea, New Zealand and Switzerland -- Room Document dated 1 February 2010; and communication from the delegations of China, Hong Kong-China and Pakistan -- Room Document dated 1 February 2010).

The Chair states that a multitude of issues have been set out in this annotated text, reflecting the complexity of the issues at hand, and the divergence and facets of Member's positions.

The Chair's sincere hope was that this annotated text can provide guidance for the continuing negotiations and help pave the way for future progress.

The sections in the Annotated Text cover the following issues: Introduction, Definitions, General Provisions, Transparency, Licensing Requirements, Licensing Procedures, Qualification Requirements, Qualification Procedures (Chapters V-VIII), Technical Standards, Development and Institutional Provisions.

The Annotated Text states that several comments were received concerning the structure and title of the opening chapter of future disciplines.

[The relevant elements of Chapter I, the Introduction, include four paragraphs. In short, the relevant provisions relate to:

[--  the purpose of the disciplines, which is stated, "to facilitate trade in services by ensuring that measures relating to licensing requirements and procedures, qualification requirements and procedures, and technical standards are based on objective and transparent criteria, such as competence and the ability to supply the service, and do not constitute disguised restrictions on trade in services."

[-- Members recognize the right to regulate, and to introduce new regulations, on the supply of services within their territories in order to meet national policy objectives and, given asymmetries existing with respect to the degree of development of services regulations in different countries, the particular need of developing countries to exercise this right.

[-- Members recognize the difficulties which may be faced by individual developing country Members in implementing disciplines on domestic regulation, particularly difficulties relating to level of development, size of the economy, and regulatory and institutional capacity.

[-- Members recognize the difficulties which may be faced by service suppliers, particularly those of developing country Members, in complying with measures relating to licensing requirements and procedures, qualification requirements and procedures, and technical standards of other Members.]

The Annotated Text further states that several delegations considered that Chapter 1 (Introduction) contained essentially preambular language. Some of these delegations expressed a preference for the chapter-heading to be changed to "Preamble", and to edit these into standard preambular language.

The Annotated Text states that it was noted by others that the title of Chapter I should be determined depending on the eventual legal form of the disciplines, that is: if the disciplines took the form of an Annex, the Preamble of the GATS would directly inform the disciplines, and no further Preamble might be necessary. GATS Annexes did not contain a separate Preamble, but addressed the scope or objectives of the Annex in their first paragraph(s).

Some Members considered that the first chapter could be amended in this vein, by integrating elements of paragraph 10 (on scope of application), and be titled "Objectives" or "Objectives and Scope".

The text states that it would appear that the structure and title of the first chapter is closely linked with the eventual legal nature of the disciplines. Generally, in the WTO system, covered Agreements and Understandings contain a Preamble. They are introductory statements explaining the basis and objective of the subsequent text.

Preambles do not stipulate directly applicable obligations, but have a contextual role in statutory interpretation.

Should Members decide that the future domestic regulation disciplines take the form of a stand-alone Agreement, separate from the GATS, they may consider pursuing the use of a Preamble, says the text.

The text further states that, conversely, in the WTO system, Annexes to any of the covered Agreements never commence with a separate Preamble, as it is understood that the Preamble of any Agreement also informs the interpretation of each respective Annex.  Rather, Annexes contain opening sections setting out the scope of application, and, in the case of the Annex on Telecommunications, also the objectives of the Annex.

The text elaborates that should Members consider a "Reference Paper" approach for the disciplines, a Preamble would not be needed, since the disciplines would be incorporated as additional commitments by individual Members into their schedules of specific commitments.

These are in turn annexed to the GATS Agreement. As Reference Papers impose individual obligations on each Member who chooses to incorporate them into its schedule, they would not require an opening section summarizing common intentions or objectives of all Members.

The Chair's Annotated Text concludes that "depending on the decision Members take on the legal form of the disciplines, questions of the structure and title of chapter I may need to be revisited."

A special session of the Council for Trade in Services was held on 16 March.

According to a trade diplomat present at the meeting, most developed countries and coordinators of plurilateral groupings made the same assessment, in that there was no progress in the talks since 2008.

According to a trade diplomat, the session was presented with some statistics on the sectors and number of requests and offers made, the number of countries that have responded to such offers, and those that have not responded at all.

According to another trade diplomat, a developing country criticized the approach taken because it was tantamount to bench-marking and that quantitative statistics cannot be used as a qualitative tool to assess requests and offers. +