Plain Language Guide: GATS Negotiations on Domestic Regulation

Working Paper on GATS Negotiations on Domestic Regulation

Abstract

The World Trade Organization is negotiating “disciplines” on domestic regulation, which is essential for both development and environmental protection.  Often ambiguous, some of the draft disciplines can be interpreted as a radical departure from the practice of most nations.  They could change the course of regulation and development, particularly within federal systems and in small and vulnerable economies, where government systems are changing. 

Three generally applicable disciplines are contained in one sentence that requires regulations to be “pre-established, based on objective and transparent criteria and relevant to the supply of the services to which they apply.”  If these terms are interpreted according to their ordinary meaning, conflicts with domestic regulations are foreseeable:
• “Pre-established” limits change.  It could mean that if governments change regulations, they could not apply them to established businesses or investments.  If so, this discipline could constrain changes in climate policy, environmental regulation of existing extraction industries, or financial regulation of existing financial institutions, particularly if those regulations are (e.g., developmental lending mandates to serve businesses that are small or owned by women).  Two companion papers expand upon this discipline:
     o  “Pre-established” Regulations and Development Permits, by Loukas Kozonis
         To read the policy paper #2 click here (30 pages, pdf, 840KB)
     o “Pre-established” Regulations and Financial Services, by Max Levin
         To read the policy paper #3 click here (22 pages, pdf, 760KB)
• “Objective” could mean “not subjective.”  It could overturn regulation based on a “public interest” standard or the subjective balancing required when there are multiple criteria for assessing the environmental, economic or community impact of a proposed oil drilling platform, power plant, mine, etc.
• “Relevant” could mean intrinsic to the service (e.g., quality to the consumer) and not what negotiators are calling “exogenous” impacts of a service on the environment, historic values, scenic vistas, etc.

The proposed discipline contains 47 other paragraphs that deserve careful attention.  For example:
• Transparency - In addition to publishing and giving notice of regulations, a transparency discipline requires governments to publish additional information about 13 elements of all existing regulations.  There is no precedent for this obligation, and there has been no estimate of its cost. 
• Procedures – Licensing procedures must be as “simple as possible,” which calls into question licenses that require hearings or other forms of citizen participation.

Each of these disciplines has multiple interpretations.  Some are benign best practices, but some are radical constraints on the policy space of most nations.  This guide explains the multiple meanings and invites the negotiators to clarify which meaning they intend.

Click here for the publication (21 pages, pdf, 1MB)