CYIL 2013

BREGT NATENS – JAN WOUTERS CYIL 4 ȍ2013Ȏ shall develop necessary disciplines to ensure that such domestic measures are not unnecessarily trade restrictive. The WPDR was established to do so and Draft Disciplines were put forward as a starting point for further negotiations. 8 Since 2001, these negotiations have been incorporated in the DDA. Pending results, Article VI:5 includes a standstill obligation for new regulations using a ‘nullification or impairment’ test, explicitly rejecting a necessity test 9 which is the first contentious issue in the negotiations addressed here. Three other issues are examined subsequently. First, there is discussion on the addition of a necessity test. The text of Article VI:4 (b) appears to require that regulatory requirements are not more burdensome than necessary to ensure the quality of the service. Hence, in order to justify a measure on grounds of its impact on the quality of the service, it must also be necessary. Moreover, the text implies that the quality of the service is the only justifiable policy goal (see infra ). However, it is clear from the WPDR Progress Report of 2011, which comments on negotiation progress based on the Draft Disciplines, that negotiators have not reached an understanding on the necessity test. Fundamental differences remain between the Members, and the WPDR has referred to this issue as one of the most difficult subjects in the negotiations. 10 The lack of agreement is also obvious from the text of the Draft Disciplines, in which various very varied alternatives to the necessity test have been inscribed. These alternatives range from introducing a necessity test with one justifiable policy goal to explicitly recognizing regulatory autonomy for the broad category of undefined public policy objectives. More fundamentally, Members do not even agree as to whether a necessity test should be added or not. For example, the EU, the United States, and Brazil are hesitant to include a horizontal necessity test and seem to focus on transparency disciplines and procedural requirements for licensing and qualification instead. 11 A related issue is the addition of justifiable policy objectives to the necessity test. Paragraph 2 of the Draft Disciplines does not explicitly mention any policy goals. This is likely to be interpreted as referring to just one policy goal i.e. the quality of the service as referred to in Article VI:4 (b). 12 Again, however, there was no agreement among Members on this draft provision and three alternatives were added to the 8 S/L/70, Decision on Domestic Regulation (Adopted by the Council forTrade in Services 26 April 1999); the latest version of this draft is the 2007 Second Revision, Draft Disciplines on Domestic Regulation Pursuant to GATS Article VI.4, Informal Note by the Chairman, Room Document, 20 March 2009. 9 Joel P Trachtman, ‘Lessons for the GATS from Existing WTO Rules on Domestic Regulation’ in Aaditya Mattoo and Pierre Sauvé (eds), Domestic Regulation & Service Trade Liberalization (World Bank & Oxford University Press 2003) 66; Joost Pauwelyn, ‘Rien ne Va Plus? Distinguishing Domestic Regulation from Market Access in GATT and GATS’ (2005) 4 World Trade Review 131, 138. 10 S/WPDR/W/45, Disciplines on Domestic Regulation Pursuant to GATS Article VI:4 (Progress Report by the Chairman of the Working Party on Domestic Regulation 14 April 2011) 14. 11 JanWouters and Dominic Coppens, ‘GATS and Domestic Regulation: Balancing the Right to Regulate and Trade Liberalization’ in Kern Alexander and Mads Andenas (eds), The World Trade Organization and Trade in Services (Martinus Nijhoff 2008) 222. 12 Markus Krajewski, National Regulation and Trade Liberalization in Services (Kluwer Law International 2003) 144.