Report on the Latest Draft Disciplines on Domestic Regulation

Clinic: Graduate Institute, Spring 2009

Executive Summary

Full report available here.

Since 2001, the Working Party on Domestic Regulation has been engaged in the negotiating process for future disciplines under GATS Article VI:4. While there has been plenty of progress, many questions still persist before the final draft becomes a reality.

The biggest hurdle remains in finding the appropriate balance between the liberalization objectives of the GATS and respect for member countries' sovereign policy space. The issue plays out in many forms in the draft disciplines, notably in terms of the express inclusion of the right to regulate (RtR). Developing and LDCs Members were actively pushing for the explicit inclusion of the RtR in the paragraphs of the draft. RtR language used in the latest draft conditions regulate true freedom upon compliance with other GATS obligations which effectively dilutes the legal value of the RtR provision.

Use of the terms "national policy objectives" provides more flexible policy space than that of "legitimate policy objectives" but it is still open to challenges in the absence of either general exceptions or a positive list clearly delineating what would qualify under the provision. Along the same topic, ambiguity surrounds what the Universal Service Obligation (USO) members can maintain in the absence of a clear definition of what might be included. USO provisions are undermined, the same way the RtR is, due to the primacy given to compliance with GATS commitments. In keeping with the spirit of GATS and other WTO agreements, the future disciplines have tackled the developmental needs of the developing and LDC countries especially through the use of mandatory language for technical assistance. However, the requirement for assistance to be on mutually agreed terms might impede the provision. Additionally, it is imperative to address in detail how extensions to phase-in periods will be renewed and following what criteria. Finally, technical assistance to LDCs from the application of future disciplines cannot be understood on a quid pro quo basis. Although exempt from the disciplines, LDCs still maintain their right to receive technical assistance in keeping with the WTO agreements as a whole and the GATS in particular.

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