New Zealand and the World Trade Organisation

WTO Services Negotiations - July 2006 Update: Negotiation of Disciplines on Domestic Regulation

Members of the WTO are currently negotiating disciplines (rules) on domestic regulations affecting trade in services, based on the mandate in GATS Article VI(4) (see below)

As part of the agreement reached by Ministers in Hong Kong in December 2005, WTO members were called on to develop legal text for disciplines (rules) on domestic regulations affecting trade in services. [Link to Services-related extracts from the Hong Kong Ministerial Declaration (188KB)]

Disciplines on domestic regulation are multilateral rules that seek to ensure that certain types of domestic regulation (namely qualification requirements and procedures, technical standards and licensing requirements and procedures) are not used explicitly or implicitly as unnecessary barriers to trade.

Misuse of domestic regulation in respect of qualifications, licensing requirements, procedures and technical standards can constitute a significant barrier to New Zealand's service exporters. These vary from disguised restrictions on trade, such as licensing requirements that include criteria unrelated to quality and which are intended to favour local incumbents over foreign suppliers, to unjustifiable red tape eg processing delays and difficulty gaining recognition of qualifications required to provide a service.

New Zealand's preparation for its GATS market access offers (which are essentially offers to commit not to restrict the size of a services business or market and not to discriminate against foreign suppliers) is based on the Ten Guiding Principles adopted by Cabinet in 2003. Although the issues relating to domestic regulation differ from those in the market access negotiations, New Zealand's approach to the domestic regulation negotiations will reflect the directions set in these guiding principles; in particular, New Zealand will not pursue disciplines that would require any changes to its substantive regulatory policy settings. Rather, the objective is to encourage other countries to move towards New Zealand's levels of regulatory integrity and transparency.

Any potential obligations that come about through these negotiations would apply only to services sectors in which members have chosen to make specific GATS market access commitments. For New Zealand, this means that areas such as health and public education would not be affected by disciplines on domestic regulation.

Ongoing consultation with interested parties in New Zealand is an important part of ensuring that priorities and perceived risks are reflected in New Zealand's position as the negotiations progress. The Ministry of Foreign Affairs and Trade would, therefore, welcome views on this, or any other aspect of the WTO GATS negotiations: please contact us on tnd@mft.govt.nz

For reference, Article VI (Domestic Regulation), General Agreement on Trade in Services (GATS) is entered below.

Article VI

Domestic Regulation

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.
2. a) Each Member shall maintain or institute as soon as practicable judicial, arbitral or administrative tribunals or procedures which provide, at the request of an affected service supplier, for the prompt review of, and where justified, appropriate remedies for, administrative decisions affecting trade in services. Where such procedures are not independent of the agency entrusted with the administrative decision concerned, the Member shall ensure that the procedures in fact provide for an objective and impartial review.
   
   b) The provisions of subparagraph (a) shall not be construed to require a Member to institute such tribunals or procedures where this would be inconsistent with its constitutional structure or the nature of its legal system.
3. Where authorization is required for the supply of a service on which a specific commitment has been made, the competent authorities of a Member shall, within a reasonable period of time after the submission of an application considered complete under domestic laws and regulations, inform the applicant of the decision concerning the application. At the request of the applicant, the competent authorities of the Member shall provide, without undue delay, information concerning the status of the application.
4. With a view to ensuring that measures relating to qualification requirements and procedures, technical standards and licensing requirements do not constitute unnecessary barriers to trade in services, the Council for Trade in Services shall, through appropriate bodies it may establish, develop any necessary disciplines. 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 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.
5. a) In sectors in which a Member has undertaken specific commitments, pending the entry into force of disciplines developed in these sectors pursuant to paragraph 4, the Member shall not apply licensing and qualification requirements and technical standards that nullify or impair such specific commitments in a manner which:
   • does not comply with the criteria outlined in subparagraphs 4(a), (b) or (c); and
   • could not reasonably have been expected of that Member at the time the specific commitments in those sectors were made.
   
   b) In determining whether a Member is in conformity with the obligation under paragraph 5(a) account shall be taken of international standards of relevant international organizations[1] applied by that Member.
6. In sectors where specific commitments regarding professional services are undertaken, each Member shall provide for adequate procedures to verify the competence of professionals of any other Member.

[1] The term "relevant international organizations" refers to international bodies whose membership is open to the relevant bodies of at least all Members of the WTO.