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WTO minutes, Zoning as Barrier to Trade
WORLD TRADE ORGANIZATION
Working Party on Domestic Regulation
REPORT ON THE MEETING HELD ON 2 OCTOBER 2001
Note by the Secretariat
The Working Party on Domestic Regulation (WPDR) held its thirteenth meeting on 2 October. The agenda for the meeting is contained in Airgram WTO/AIR/1623 and /Corr.1. Discussion at this meeting was based largely on a new Chairperson’s Note. Significant progress was made regarding the relationship between domestic regulatory measures falling under GATS Article VI:4 and measures subject to scheduling under Articles XVI and XVII, as well as on a range of other issues. Members also further discussed the proposal to advance the work on professional services.
(a) Development of Regulatory Disciplines under GATS VI.4
(i) Discussion of Concepts Relating to the Development of Disciplines
The Chairperson noted that the first item on the agenda was the discussion of concepts relating to the development of regulatory disciplines, which was directly related to the second item, the development of general disciplines for professional services. Members had excellent discussions under these two agenda items at the previous meeting of the Working Party on 3 July and because of the progress made, he had circulated another Chairman’s Note, distributed as JOB(01)/130, dated 14 September 2001, which attempted to lay down some further thoughts on the range of issues before the Working Party.
The Chairperson emphasized that Members should feel free to draw upon any contributions that were already part of the discussions, including the Accountancy Disciplines, as well as the range of negotiating proposals from the Council for Trade in Services’ Special Session.
Members accepted the Chairperson’s suggestions that discussions be held in informal mode, so as to encourage as free-ranging a discussion as possible.
Examples of actual regulatory issues
The Chairperson observed that, at the previous meeting, members had commented on the informal Secretariat paper, Examples of Measures to be Addressed by Disciplines under GATS Article VI:4, circulated as JOB(01)/62, dated 10 May 2001. Among the points raised was the need for additional examples, as well as for greater detail. Two delegations suggested addition measures to
be included, and another delegation questioned the inclusion in Annex I of the example “Restrictive regulations relating to zoning and operating hours”. As Chairperson, he had suggested that Members first consider the issues somewhat further before having the Secretariat undertake any revisions of the Examples paper.
Linkage between transparency and necessity
The Chairperson stated that, as indicated in his Note (para 5), it would appear as though previous discussions on this issue had engendered a useful exchange of views, which had been encapsulated in the Informal Summary of Discussions that appeared as an Annex to the Minutes. He was, however, unsure as to how much further Members could take this particular issue, and looked forward to any further thoughts that members might have.
Relationship between GATS Articles VI:4 and Articles XVI/XVII
The Chairperson observed that, at the previous meeting, there had been a major discussion of this issue, with some very important points being raised. One Member, for example, stated that a single measure could have diverse effects. These different effects should be dealt with in different fora, with Article VI:4 effects dealt with in the WPDR while the market access and national treatment effects were dealt with in the schedules. Another delegation said the relationship sought between Article VI:4 and Articles XVI & XVII was one of complementarity, i.e. with no obvious overlap. Both aspects deal with trade restrictions, the delegation noted, albeit of a different nature.
As noted by the Secretariat, the issues were being clarified during the meeting as the discussion continued. “Measures” were defined very broadly under the GATS, the Secretariat noted, and covered laws, regulations, decisions and even unwritten practices. Licensing systems could be composed of both Articles XVI and XVII, and Article VI:4 measures. There was no overlap. The situation was similar to automatic and non-automatic licensing for goods, in that there was always a distinction between the administrative measures and the restrictions they administered. In the GATS context, there needed to be distinction [sic] between a licensing system and its various components, in terms of their different requirements and different measures. The existence of a licensing system did not necessarily mean it had to be scheduled, provided it was composed only of measures within the scope of Article VI:4. The Secretariat also stated that Article VI:4 was not designed to handle measures scheduled under Articles XVI and XVII.
As he had indicated in his Note, the Chairperson believed that the Secretariat’s observations had usefully pointed the Working Party in the right direction and should probably form the basis of any understandings that the Working Party might be able to come to on this issue. It was fairly clear from the negotiating history and the work under the auspices of the Working Party on Professional Services that an overlap between Articles XVI and XVII, which belong to Part III of the GATS, and Article VI:4, which belongs to Part II of the GATS, was not desirable. Instead, the relationship would rather seem to be one of “complementarity” where Articles XVI and XVII and Article VI:4 both dealt with trade restrictions, albeit of a different nature.
Scope of GATS Article VI:4
The Chairperson noted that, as indicated in his Note (para 9), previous discussions had highlighted that most members believed that Article VI:4 did not extend beyond the five items listed in the provision (namely, qualification requirements, qualification procedures, technical standards, licensing requirements and licensing procedures). Given the language of Article VI:4, as well as the mandate of the Working Party, there did not appear to be too much more to add to this. There were, of course, other issues that would probably require further consideration (e.g. applicability of horizontal disciplines to sectors where specific commitments had or had not been made), but these
would probably only be able to be fully answered at a later stage of the Working Party’s work when the final shape of the disciplines became clearer.
The Chairperson introduced this topic, noting that at the previous meeting, one Member had noted that emphasis in the revised Checklist of Issues for WPDR (JOB(01)/92 dated 19 June 2001) was placed on only one type of administrative burden, i.e., on prior comment, and said that more balance was needed. For example, the administrative burden associated with necessity provisions should also be considered. Another delegation said the requirement in Article VI:4 that measures be “not more burdensome than necessary” implied that measures could in fact be burdensome, and that the issue was to make measures less burdensome. There was a need to balance the various elements involved, including protecting the right to regulate and interests of services suppliers and consumers. One Member stated that regulatory impact analysis led to better regulation and less burden in the longer-term, especially for small and medium-sized enterprises. As observed in his Note, these issues and concerns had been referred to in the Informal Summary of Discussions. It would be useful if Members could indicate whether there were any other issues or concerns that needed to be acknowledged by the Working Party at the current stage of the discussions.
The Chairperson stated that this issue, which now fell under the rubric of General Issues, but had previous been classified under Transparency, concerned how far-reaching any disciplines that the Working Party might develop would be. For example, would the disciplines that the Working Party might eventually develop apply only to measures at a federal or national level? Or, would they apply to measures at the sub-federal or sub-national level? He had touched upon this in his Note, and would be grateful for any comments from delegations.
Summary of informal discussions
The Chairperson summarized the informal discussions by noting that members had very substantial, fruitful, and constructive discussions of the General Issues, which showed they had given careful thought to the issues concerned. The results of these discussions would form the basis for further progress of the Working Party.
On the question of examples of actual regulatory issues, Members seemed to be increasingly focusing on this issue. It was important to get a better understanding of the range of regulatory issues relating to Article VI:4. The examples provided by the Secretariat paper, and from Members’ interventions and written contributions, were seen as particularly useful. Some delegations also referred to the Special Session negotiating proposals as a source of additional examples. Following an exchange of views among Members over whether a revised Secretariat paper was required, it was agreed that the responsibility was upon Members to review all the available sources, with the intention to focus more on the substance and details of examples at the next meeting.
On the relationship between GATS Articles VI:4 and Articles XVI/XVII, Australia’s contributions were very useful. There was a coalescing of Members’ views around the ideas expressed in para 8 of the Chairperson’s Note, especially the idea that these GATS Articles should be viewed as complementary to each other (i.e. they all dealt with trade restrictions, but with restrictions of different natures). There was agreement that para 6 of the Chairperson’s Note, together with the meeting Minutes and the Informal Summary of Discussions, were an accurate reflection of Members’ discussions.
On the issue of the scope of GATS Article VI:4, the Chairperson observed that para 9 of his Note, especially the last part regarding when a decision should be made on the applicability of disciplines with respect to scheduled and unscheduled measures, had produced much discussion. It was timely to again have a discussion of this question, he stated, and many Members were interested. In pursuing the issue further, The Secretariat Intervention regarding the negotiating history had been useful, and the issued needed further discussion.
Concerning the question of administrative burden,, the Chairperson stated that Venezuela’s point was important and, in his view, the issue of the administrative burden of regulatory disciplines on developing countries was particularly important. On para 11 of his Note, regarding federal/bus-federal measures, he observed that this was also an important issue for Members, with a number of insightful comments made, and further reflection would be necessary.
The Chairperson noted that the next group of topics was the issue of necessity. As he had noted during the last meeting, the revised Checklist, items 6 to 8, contained a range of issues relating to necessity that the Working Party would need to work through. At the previous meeting, one Member (supported by a number of other delegations) said they had come to the conclusion that it was probably “more burdensome than necessary” to develop a list of legitimate objectives, as the result was likely to be either overly restrictive or too broad to be of much guidance. In para 13 of his Note, he had asked whether this was a fair assessment of the discussions and, if so, whether would it be appropriate if this issue was put to one side until such time as the Working Party had made more progress on the final shape of the disciplines that are envisaged by Article VI:4.
On the question of the criteria for the necessity test, as well as the “third aspect” of the necessity test, his Note observed that the Working Party had made good progress, but it still needed to come to a better understanding on the various terms that were currently on the table. In so doing, he believed that Members should continue to bear in mind the necessity test that was developed for the Disciplines on Domestic Regulation in the Accountancy Sector. In his view, this test continued to provide the basis for anything that the Working Party might be able to develop on a more horizontal basis.
Summary of informal discussions
Following comments by Members, the Chairperson summarized by noting that Members continued to attach considerable importance to further discussions on necessity, highlightin the importance of the accountancy disciplines in this regard as well as the linkages between necessity and transparency. There was a general consensus that the discussions of legitimate objectives could be put to one side for the time being.
The Chairperson noted that the next issue for the Working Party was that of transparency. Once again, the revised Checklist, in items 9 to 14, contained a range of issues relating to transparency that the Working Party would need to work through. In this regard, he had raised a number of questions in paras 16 and 17 of his Note in relation to each of the issues relating to transparency. He then opened the floor to any comments that delegations might wish to make.
Following discussions by Members, the Chairperson summarized by stating it was clear that Members attached importance to transparency, and that more focused discussions were needed
regarding the substantive details of the aims and objectives of transparency disciplines. The discussions on issues such as prior comment provisions, and notifications related to prior comment provisions could probably be put aside for a moment to focus on transparency objectives. Members’ interventions had usefully clarified the substantive issues for further discussion, including the role of GATS Article III and the relevance of the accountancy disciplines. Regarding the definition of regulations, he noted this was linked to the General Issues, and stated that it would be more appropriate to discuss it there.
The Chairperson then stated he wished to continue discussions on the “new” topics introduced in the revised Checklist. The first was the issue of equivalence. As he had stated at the previous meeting, the revised Checklist posed a short question for the Working Party to consider in relation to equivalence – namely, whether Members thought that the concept of equivalence was relevant to the Working Party’s work on Article VI:4 disciplines. He noted that Members should feel free to introduce, or draw upon, the contributions on professional services in continuing discussions on more horizontal disciplines not only in relation to equivalence, but all other areas of the Working Party’s work.
During the previous meeting, one delegation drew attention to the existing requirements of Article VII and said, if used appropriately, they could lead toward some convergence with respect to the recognition of qualification requirements, etc. New requirements should not be imposed, the delegation stated. In addition, the delegation said it would be interesting to hear if any Member had used the MRA Guidelines developed earlier for professional services. Another Member raised the issue of the additional requirements to demonstrate equivalence imposed by Members on professionals holding foreign qualifications, and said that the issue which needed to be further discussed was whether these additional equivalency requirements were more burdensome than necessary. A third Member noted that the concept of equivalency was already reflected in the accountancy disciplines.
The Chairperson then noted that the second of the “new” topics was international standards. As was the case for equivalence, the revised Checklist posed a very short question for the Working Party to consider in relation to international standards – namely, did Members think that international standards were relevant to the Working Party’s work on Article VI:4 disciplines. At the last meeting, he had stated that a lot of the information that had been discussed under professional services could inform and help the work on the development of generally applicable disciplines. It was noticeable that several Members’ papers referred to the same international body – the International Union of Architects – when discussing the question of international standards.
Summary of informal discussions
Following discussions by Members, the Chairperson noted that Members had a useful exchange of thoughts on international standards, including their applicability and relevance to the work of the WPDR. He concluded by stating that Members would revert to this and the previous item in more detail at the next meeting, taking note of the comments made during the discussion.
(ii) Development of Disciplines for Professional Services
The Chairperson noted that the second main item for the meeting concerned the development of disciplines for professional services. At the previous meeting, one delegation was concerned that professional services had languished, and thought that Members might “jump start” the work on
professional services by first focusing on a smaller grouping of professions. The choice of architects, engineers, and land surveyors was due to the fact that consultations in these sectors seemed to be further advanced. It was emphasized that this suggestion was an initial idea, and not a formal proposal.
As he had highlighted in this Note, he did not see the work on professional services and more horizontal disciplines as being mutually exclusive, but rather complementary. He would therefore welcome any initiatives that would see the work on professional services and on the development of more horizontal disciplines being brought together more effectively. He noted that the work in both areas of the Working Party’s mandate could benefit from adopting a more unified approach. He emphasized, however, that the ultimate decision as to how the Working Party approached the work on professional services in the future was in the hands of the Members. To assist in this process, he suggested that Members took another look at the Synthesis paper (Synthesis of Results to date of the Domestic Consultations in Professional Services (Fourth Draft), Job(01)/145), dated 26 September 2001) that was prepared by the Secretariat as this encapsulated the reports that the Working Party had received from Members and might help Members when they considered how the work on professional services could be better advanced.
The Chairperson also noted that, since the last meeting, two delegations, Switzerland and Thailand, had submitted written reports on their domestic consultations, circulated as documents S/WPDR/W/16, dated 4 September 2001, and S/WPDR/W/18, dated September 2001. He then asked Switzerland and Thailand to introduce their reports.
Summary of informal discussions
The Chairperson summarized discussions by stating that Members had a very useful exchange, with several themes emerging from the discussion. One point was that the work under this agenda item and under the previous agenda item was mutually supportive, as shown by the links with earlier discussion of concepts relating to the development of disciplines. Members also noted there was much useful information in the Synthesis, but that the level of reporting was still quite low. Members were again urged to complete their domestic consultations.
On the proposal to “jump start” the work on professional services, a number of Members were open to the idea, but others highlighted that the time was not ripe for sectoral work. The Chairperson concluded by observing that the Secretariat background paper S/C/W/97 was still relevant to this agenda item, and provided additional context.
(b) Annual Report on the Activities of the Working Party to the Council for Trade in Services
The Chairperson next noted that Members had come to the time of the year when each of the subsidiary bodies provided an annual report to the Council for Trade in Services on their activities for the past year. A draft had been prepared by the secretariat and this had been circulated as S/WPDR/W/17, dated 21 September. He noted that the draft would obviously need to be updated in para 2 to take into account Thailand’s recent contribution, and then opened the floor to comments from delegations.
Following comments from Members, the annual report was adopted, with amendments, by the Working Party.