Domestic Regulation and Cross Border Trade in Services Joel P. Trachtman The Fletcher School of Law

1
Domestic Regulation and Cross- Border Trade in
ServicesJoel P. TrachtmanThe Fletcher School
of Law and Diplomacy

• WTO Symposium on Cross-Border Supply of Services
  
  
• 28-29 April 2005

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Cross-Border Trade in Services as a Challenge to
Regulation

• Territorial limits of enforcement jurisdiction
• Responses
• Enforcement cooperation
• Harmonization and recognition
• Requirement of establishment
• Exclusion
• The right to regulate (4th preamble)

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Regulation as a Challenge to Cross-Border Trade
in Services

• Regulatory protectionism
• Discriminatory regulation
• De facto
• De jure
• Unnecessary regulation
• Unnecessarily heterogeneous regulation

4
Existing GATS Disciplines on Domestic Regulation

• Transparency (III, VI2, VI3)
• Market Access (XVI)
• National Treatment (XVII)
• VI1 VI4 VI5
• Accountancy Disciplines
• Financial Services
• Telecoms Reference Paper

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Article XVI after Gambling

• Can apply to qualitative regulation
• Compare relationship between GATT III and GATT
  XI
  
• Overlap with GATS Article VI?
• Limited to foreclosure of entire means of
  delivery? Or is any qualitative regulation that
  has quantitative effect covered?
  
• Occasion for interpretation under Article XI2 of
  WTO Charter?

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Scheduling Article XVI Commitments after Gambling

• Qualitative measures should be scheduled under
  Article XVI
  
• Especially if may foreclose a means of delivery
  as that term is used in Gambling
  
• But even if it does not foreclose an entire
  means of deliverymay be zero quota on some
  portion of service, or may be understood to
  reduce quantity of service and therefore covered
  under XVI
• Limits of the AB opinion are unclear
• In the past, some states have felt there was no
  overlap between Article VI and XVI

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National Treatment

• treatment no less favourable than that it
  accords to its own like services and service
  suppliers (can be different)
  
• Like services and like service providers
• How to read Art. XVII? In disjunctive
• Asbestos examine competitive relationship
• Or like risks approach?
• Treatment no less favourable defined with
  reference to conditions of competition

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The Limitations of Anti-Discrimination

• Difficult to apply
• The like products problem
• Inefficiency without discrimination
• Supplemented for goods in TBT and SPS
• Link to regulatory reform
• Link to domestic motivations for reform
• Domestic producers may have adapted to
  inefficient regulation

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Scope of GATS VI

• VI1reasonable, objective, and impartial
  administration in committed sectors
  
• VI4CTS to develop disciplines as to
  qualification requirements and procedures,
  technical standards and licensing requirements
  
• Ensure against unnecessary barriers
• VI5in committed sectors, pending VI4
  disciplines, prohibition of nullifcation or
  impairment under certain circumstances

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GATS VI5

• Requires nullification or impairment
• See Kodak-Fuji
• Complaining party must show nullification
  legitimate expectations
  
• And
• Not based on objective and transparent criteria,
  or
  
• More burdensome than necessary to ensure the
  quality of the service, or
  
• In the case of licensing, itself a restriction

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The Weakness of GATS VI5

• A standstill, at bestburden on GATS VI4
• A grandfathering advantage for developed
  countries?
  
• Compare to SPS and TBT requirements of
  proportionality

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The VI4 Work Program

• Accountancy Disciplines
• Other sectors
• Horizontal? Japanese proposal. Equivalent to TBT
  and SPS?
  
• Horizontal with possibility of sectoral?
• Linked to specific commitments
• See NAFTA coverage of goods and services together
  in Chapter IX

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1998 Accountancy Disciplines

• Strengthen necessity discipline
• Broadened concept of legitimate objectives
• Take account of equivalency of education,
  experience and examination requirements
  
• With respect to technical standards, take account
  of internationally recognized standards
  
• Prepared by relevant international
  organizations open to all WTO members

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Recognition and Equivalence

• Relation of equivalence to necessity
• MFN issues
• GATS VII requires opportunity for other
  members
  
• Inclusion in disciplines
• GATS VI6verifying competence in professional
  services

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Role of International Standards

• Participation by developing countries
• Compare VI4 work program
• Relation to VI5(b) take account of
  international standards of relevant
  international organizations

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SPS/Codex Interfunctional Networking?

• WTO goods law defers to standards set by Codex,
  International Office of Epizootics and
  International Plant Protection Convention
  
• SPS 3.1 members shall base their SPS measures
  on international standards
  
• SPS 3.2 if conform to international standards,
  presumed consistent with SPS Agreement
  
• Relevance to services?
• Semi-soft law easier to make insulates WTO from
  criticism
  
• Expertise

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International Standards

• Deference to functional organizations?
• In financial services, FATF, Basle Committee,
  IOSCO, IAIS, OECD
  
• Not relevant international organizations
• How do they differ from the WTO Committee on
  Financial Services?
  
• Toward integrated inter-functional
  decision-making

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Horizontal versus Sectoral

• Possibility of request-offer negotiations on
  regulatory barriers
  
• Relate to LAN Computers decision
• GATS XVIII commitments
• Relation to commitments
• Horizontal as general
• Judicially applied
• Negative integration
• Sectoral can be more specific
• Legislatively formulated
• Positive integration

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Conclusion