Magazine article International Trade Forum

Putting Principles into Practice with WTO Domestic Regulation Disciplines

Magazine article International Trade Forum

Putting Principles into Practice with WTO Domestic Regulation Disciplines

Article excerpt

Domestic regulation of services sectors has a significant impact on services trade. World Trade Organization (WTO) members have already agreed to negotiate a set of disciplines to ensure it is not unduly burdensome. There are many good reasons why services markets need regulation, such as protecting consumers, tackling fraud and tax evasion, and making services available to all citizens at equitable rates.

At the same time, cumbersome licensing and qualification procedures, non-transparent criteria, redundant requirements and administrative red tape can impede trade. The diversity of international regulatory systems and standards can also significantly raise the costs of compliance. Procedural complexity might also serve to hide protectionist intentions and give rise to good-governance issues.

To what extent should domestic regulation be disciplined under a trade agreement and how can protectionism be distinguished from the pursuit of legitimate public policy objectives? While there are no obvious answers, services trade agreements in the 21st century will increasingly have to grapple with complex regulatory issues.

This scenario is driven by two main factors. First, as a result of autonomous liberalization by many countries, formal barriers preventing foreign suppliers from accessing their domestic markets have been significantly reduced. As those barriers come down, it is increasingly evident that what matters in services trade is not just the removal of discriminatory measures, but the overall openness of the market and the conduciveness of its regulatory environment to doing business there.

Second, today's economic system is characterized by global value chains in both goods and services, with suppliers linked across many countries. Regulatory divergence hampers the efficient functioning of production, which depends on the seamless flow of intermediate services and products across borders. …

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