World Trade Organisation Joint Statement Initiative on Services Domestic Regulation
On December 2, 2021, Canada along with 66Footnote 1 other World Trade Organisation (WTO) Members endorsed a Declaration announcing the conclusion of negotiations for the Joint Statement Initiative on Services Domestic Regulation (JSI DR).This is the first successful WTO outcome on services in more than 20 years.
- Negotiations on services domestic regulation conclude successfully in Geneva
- Declaration on the Conclusion of Negotiations on Services Domestic Regulation (PDF)
The Reference Paper on Services Domestic Regulation (PDF) proposes new concrete trade rules to provide greater transparency and predictability in the regulatory environment for services and lead to better economic performances. The initiative has the potential to help address the challenges faced by Canadian service providers, and especially micro, small and medium enterprises (MSME) who are typically less equipped to navigate opaque and costly requirements procedures. The agreement also includes the first binding provision on non-discrimination between men and women within the WTO framework. This provision represents a key milestone in Canada's leadership promoting women's economic empowerment and a significant step towards making trade rules more inclusive.
The JSI DR disciplines reinforce good regulatory practices. While Canada's domestic practices already exceed the agreed minimum standard, these new WTO rules will undoubtedly support Canadian services exporters in markets that Canada has no bilateral free trade agreements, as transparency and predictability play a major part in overall trade openness and ease of doing business. An Organisation for Economic and Cooperation and Development (OECD) studyFootnote 2 estimates that JSI DR disciplines could reduce services trade costs by around 7% on average in the Asia-Pacific Economic Cooperation (APEC) region and 6% for the G20, which translates to total trade cost savings in the range of USD 75 billion for APEC economies and USD 140 billion for the G20.
Participants have agreed to inscribe the disciplines of the Reference Paper as "additional commitments" in their respective existing Schedules of Specific Commitments under the WTO General Agreement on Trade in Services (GATS). These new disciplines will apply on an most favored nation basis, and will apply to the sectors where specific commitments have already been taken by participants (except in a few cases, where certain participants have taken on additional sectoral coverage). Subject to the completion of any required domestic procedures, Participants intend to submit their modified schedules for certification within the WTO by the end of 2022. Participating Members will continue to have meetings at the WTO to monitor the process until the entry into force of the outcome.
These negotiations were conducted in an open and inclusive process, wherein any interested Members could participate; the ability to join the Initiative remains open to all Members following the conclusion of negotiations.
In the context of services negotiations at the WTO, the term domestic regulation is used to refer to measures related to an authorization to supply a service, such as a licensing requirement or procedure, other than those disciplined by the Market Access and National Treatment articles of the WTO GATS. The GATS, which entered into force in 1995, does not include finalized rules on domestic regulations, but instead contains a mandate for future negotiations on the matter.
While maintaining the ability of a Member to regulate in the public interest, enhanced rules on domestic regulation have the potential to facilitate increased trade in services. These potential rules could ensure, for example:
- that licensing authorities are transparent with respect to the criteria they consider when evaluating an application
- that the requirements related to that application are clear
- that all applications are processed in a timely manner
When rules are not applied in a transparent and predictable manner, a services supplier can be effectively blocked from accessing a particular market by opaque and arbitrary actions on the part of a foreign licensing authority, even where the sector in question is fully committed under the GATS.
WTO multilateral negotiations aimed at achieving disciplines on domestic regulation took place over several years after the operationalization of the GATS, but a successful outcome was not reached. In 2017, a group of Members, including Canada, co-sponsored a first Joint Ministerial Statement affirming the importance of good regulatory practice to trade in services and called on Members to intensify work towards concluding a set of disciplines. In May 2019, Canada and 59 other Members participating in the open negotiations adopted a second Joint Ministerial Statement, recognizing the progress made and targeting an outcome at MC12 in June 2020. Due to the COVID-19 pandemic, MC12 was first postponed to November 30 – December 3, 2021. While MC12 was subsequently postponed once again due to ongoing public health considerations, JSI participants decided to formalize conclusion on December 2, as originally planned, and instructed officials to pursue agreed next steps.
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