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Services Domestic Regulation
Members: 70/164
Open Initiative
Status: Successfully Concluded

Selling services like engineering or legal advice across borders requires receiving a range of permissions and authorisations. To do so, businesses may need to comply with licensing, qualifications and technical standard requirements. If navigating the bureaucracy to get these is excessively onerous, unpredictable, or expensive it can keep legitimate competition out of the market.

The WTO Joint Initiative on Services Domestic Regulation sets out common rules requiring best practice regulatory approaches that allow domestic policy objectives to be realised – without adverse consequences on services trade.

The full text of the specific rules agreed can be found here and we provide provision by provision explanations here. 

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About this Plurilateral
The Business Case for Rules

Business groups in many countries have been calling for the harmonisation of rules and disciplines on domestic services for at least the past two decades. Exporting companies often cite the lack of transparency around regulations and market entry requirements to be the most significant barriers to services trade.  Issues such as transparency on licensing regimes, who to speak to, costs, application procedures, online access and appeals processes are some of the many issues obstructing the flow of services trade. Companies view a uniform set of rules in this area as vital for encouraging trade in services across borders, especially for developing countries and MSMEs.   On 26 November 2021 the OECD and WTO released a joint brief entitled “Services domestic regulation in the WTO: Cutting red tape, slashing trade costs, and facilitating services trade.” It found that implementing the provisions of the Domestic Services Regulations Agreement would:

  • improve the business climate
  • lower trade costs and lead to other trade benefits, with annual savings as high as USD 150 billion globally
  • facilitate services trade by creating more modern rules; and
  • generate widespread gains beyond the participants because the concessions would be offered by the parties to all WTO members on a most-favoured nation basis.

The full brief can be found here, while a shorter factsheet on it is here.  The proponents of the SDR initiative have also prepared and circulated this factsheet to explain their rationle and goals.

Scope and Rules
Scope

This plurilateral is focused on the rules and regulations governments put in place to manage the import of services (not goods) from abroad. It aims to make the bureaucracy and procedures services exporters have to comply with more transparent, predictable and non-discriminatory. Importantly, this plurilateral is not a market access negotiation. In other words this negotiation did not seek to address situations where a certain form or mode of service is categorically banned from importation (for example, if foreign lawyers aren’t allowed to represent your citizens before your legal system). Instead, the negotiations focused exclusively on the bureaucracy firms have to navigate in order to legally offer services which are in principle permitted for sale across the relevant borders.

Rules

The new rules or ‘disciplines’ the parties to this plurilateral have agreed to sign up to are here.  The proponents say these disciplines are intended to provide member countries with the ability to accommodate varying regulatory practices – all with a view to limiting trade restrictiveness – and encouraging them to extend this approach to other sectors. In other words, the disciplines do not dictate what a regulation or measure should be, but rather establishes guidelines and parameters within which governments retain the flexibility to regulate for their specific local context and policy objectives. In addition, developing countries party to this plurilateral will also have the flexibility to use transitional periods and delays in applying certain provisions and Least Developed Countries are exempt from them altogether.

Examples of Disciplines in the Services Domestic Regulation Plurilateral
TRANSPARENCY
  • Publish and make available information required to comply with requirements and procedures for authorization, including through electronic means;
  • Establish appropriate mechanisms for responding to enquiries from service suppliers;
  • Engage stakeholders by publishing proposed laws and regulation, providing opportunity for comments from interested persons, and considering comments received.
LEGAL CERTAINTY AND PREDICTABILITY
  • Establish indicative timeframes for processing applications;
  • Process applications in a timely manner;
  • Provide information on the status of applications;
  • Allow applicants to correct minor deficiencies in incomplete applications and identify additional information required;
  • Inform applicants of reasons for rejection of applications and allow resubmission;
  • Allow authorization once granted to enter into effect without undue delay;
  • Allow reasonable time between publication of laws and regulations and date of required compliance by service suppliers;
  • Hold examinations at reasonably frequent intervals.
REGULATORY QUALITY AND FACILITATION
  • Require applicants to approach only one competent authority to obtain authorization;
  • Permit submissions of applications at any time throughout the year, or at least, allow reasonable periods of time for submission
  • Accept electronic applications and authenticated copies of documents;
  • Ensure that authorization fees are reasonable, transparent and do not in themselves restrict the supply of service;
  • Support professional bodies wishing to establish dialogues on issues relating to recognition of professional qualifications;
  • Ensure that competent authorities reach their decisions in a manner independent from services suppliers;
  • Consolidate relevant information on a single online dedicated portal;
  • Develop technical standards through open and transparent processes;
  • Base measures relating to authorization on objective and transparent criteria;
  • Ensure that procedures are impartial, adequate and do not unjustifiably prevent fulfilment of authorization requirements;
  • Ensure that authorization measures do not discriminate between men and women

 

Legal Practicalities
How will this agreement interact with existing WTO rules?

The Services Domestic Regulation Agreement is a plurilateral, which means it does not enjoy the support of the full WTO Membership and so cannot be adopted by the WTO as a new multilateral treaty like the Agreement on Trade Facilitation (TFA). Instead, participating members have agreed to incorporate the agreement as a set of new commitments in their General Agreement on Trade in Services (GATS) schedules. Schedules are documents, unique to each member, annexed to WTO agreements. They list the specific commitments, obligations and exemptions that member has agreed to take on toward all other WTO members. For example, the services schedule of one member might say that it has agreed to allow foreign vessels equal access to its ports for commercial purposes, while another member’s might say that it reserves the right to discriminate against foreign owned providers of electricity services. To adopt the Services Domestic Regulation Agreement the parties it will amend their GATS schedules to incorporate its rules, likely with a short entry linking to the Agreement’s Reference Paper. This will mean the rules and disciplines contained in the paper become a legal obligation for these members in how they treat the servives suppliers of any other WTO member (even ones not party to the plurilateral).

Can this process be blocked?

After a schedule is modified in any way, it must be notified to the membership and subsequently certified by the WTO Director-General. Certification represents the WTO secretariat’s confirmation that a version of the schedule is the definitive reflection of a member’s commitments. Any WTO member can object to this certification being issued by informing the Director-General and asking that it be put on hold. Some debate exists about legitimate grounds for a hold, how long a hold can be maintained, whether it can be challenged, and the legal status of a schedule which has been notified. However, members can and do at times operate with their schedules uncertified, sometimes for years at a time. Therefore, while members objecting in principle or in substance to the Services Domestic Regulation Agreement could potentially block or delay certification of its formal inclusion within the schedules of the parties and thus in WTO law, it seems unlikely this would materially impact the implementation of this agreement by the participating WTO Members.

Membership

WTO Members currently participating in the Joint Initiative on Services Domestic Regulation: Albania; Argentina; Australia; Austria; Bahrain, Kingdom of; Belgium; Brazil; Bulgaria; Canada; Chile; China; Colombia; Costa Rica; Croatia; Cyprus; Czech Republic; Denmark; El Salvador; Estonia; Finland; France; Georgia, Germany; Greece; Hong Kong, China; Hungary; Iceland; Ireland; Israel; Italy; Japan; Kazakhstan; Korea, Republic of; Latvia; Liechtenstein; Lithuania; Luxembourg; Malta; Mauritius; Mexico; Moldova, Republic of; Montenegro; Netherlands; New Zealand; Nigeria; North Macedonia; Norway; Paraguay; Peru; Philippines; Poland; Portugal; Romania; Russian Federation; Saudi Arabia, Kingdom of; Singapore; Slovak Republic; Slovenia; Spain; Sweden; Switzerland; Separate Customs Territory of Taiwan, Penghu, Kinmen and Matsu; Timor-Leste; Thailand; Turkey; Ukraine; United Arab Emirates; United Kingdom; United States and Uruguay.  

Key Documents

The following official documents relating to the Services Domestic Regulation plurilateral have been released publicly:

Schedules of specific commitments – Revision

Date: 02 December 2021

Document: INF/SDR/3/Rev.1

Our summary: This revised document contains a list of the Schedules of Specific Commitments concerning services domestic regulation disciplines. 

Reference Paper on Services Domestic Regulation

Date: 26 November 2021

Document: INF/SDR/2

Members: All Services Domestic Regulation Parties

Our summary: This document contains the new rules agreed in the plurilateral so that all a party needs to do in order to signal it is now bound by them is to modify their schedule of commitments under the General Agreement on Trade in Services (GATS) to include a reference ot it.  

 

News

  • WTO - New commitments for domestic regulation of services move step closer to entry into force Following the successful conclusion of negotiations in December 2021 on a set of disciplines aimed at cutting trade costs for service providers, participants in the Joint Initiative on Services Domestic Regulation submitted to the WTO on 20 December 2022 their improved schedules of commitments for certification. This is the final step required to give these commitments legal effect.

  • WTO - Services domestic regulation negotiations on track for MC12 outcome WTO members participating in the Joint Initiative on Services Domestic Regulation finalized preparations for the 12th WTO Ministerial Conference (MC12) at their meeting on 18 November, paving the way for a positive outcome at MC12 which starts later this month. The Philippines became the 66th WTO member to join the initiative.

  • WTO - Participants make headway in finalizing negotiations on services domestic regulation at MC12 As negotiations on services domestic regulation move into their final stages, WTO members have submitted 24 schedules of services commitments — representing commitments from 50 members — the chair, Jaime Coghi (Costa Rica), told participants at a meeting on 4 November. Participants also continue to draft a ministerial outcome document for the 12th Ministerial Conference (MC12) to be held at the end of November.

  • WTO - Participants on track to conclude negotiations on services domestic regulation at MC12 Australia, Canada and the United States submitted their draft services schedules outlining how they will incorporate the new disciplines on domestic regulation for trade in services into their existing commitments at a meeting on the Joint Initiative on Services Domestic Regulation on 25 October. Eleven other participants indicated they were on track to submit their schedules by the 29 October deadline set by the chair Jaime Coghi Arias of Costa Rica.

  • WTO - Participants in domestic regulation talks conclude text negotiations, on track for MC12 deal Participants in the negotiations on services domestic regulation concluded text-based discussions at their 27 September meeting, paving the way for conclusion of the negotiations by the 12th Ministerial Conference (MC12) at the end of November. This agreement represents a breakthrough for the negotiations, the coordinator, Jaime Coghi Arias of Costa Rica, noted. The only element pending is the finalization of members’ schedules of commitments, with participants aiming to complete this process by MC12.

  • WTO - US joins services domestic regulation talks, participants move closer to MC12 outcome The United States announced it is joining the negotiations on services domestic regulation at a meeting of the initiative’s participants on 20 July. Over one-third (64) of WTO members are now working towards establishing new disciplines regarding licensing and qualification requirements and procedures for services suppliers as well as technical standards. An outcome is eyed for the 12th Ministerial Conference (MC12), taking place the final week of November.

  • WTO - Participants in services regulation talks outline steps taken to implement new disciplines Brazil, China, Costa Rica and the United Kingdom presented how they are implementing services domestic regulation disciplines at the national level at a virtual meeting of the negotiations on services domestic regulation on 10 June. Participants also welcomed the UK’s draft schedule of commitments, which indicates how it aims to incorporate in its WTO commitments the disciplines under negotiation regarding licensing and qualification requirements and procedures as well as technical standards for services suppliers.

  • WTO - Participants in services domestic regulation talks share national practices WTO members participating in the negotiations on services domestic regulation shared how they are implementing disciplines at the national level when they met virtually on 10 May. The objective of the talks is to increase transparency and predictability of authorization procedures to reduce the costs of doing business and facilitate international services trade.

Analysis and Articles

  • OECD - Services Trade Restrictiveness Index: Policy trends up to 2021 This report highlights the key outcomes of the 2020 OECD Services Trade Restrictiveness Index (STRI) update. The OECD’s quantification of services regimes across countries and over time seeks to provide a source of data for academic research on drivers of and impediments to services trade. The global regulatory environment became more restrictive in 2020 across all
    services sectors covered by the STRI. Moreover, the pace of tightening has also been
    accelerating compared to previous years. The COVID-19 pandemic may have acted as
    a catalyst, although several tightening measures were planned already before the
    pandemic.

  • OECD - Services Trade Restrictiveness Index: Policy trends up to 2020 The report shows that barriers to services trade are rising: New OECD data demonstrates an accelerated shift towards increasing trade restrictive measures across most services sectors. The level of services trade restrictions in 2019 as measured by the OECD was 30% higher. At the same time, the pace of services trade liberalisation slowed by 60% compared to 2018.

  • ESF - Position Paper on WTO Disciplines on Services Domestic Regulation In this Paper the ESF suggests a non-exhaustive list of provisions that should be included in WTO disciplines, with notably provisions on transparency, on the authorisation processes, and on the independence of the regulatory bodies; and calls on the largest number of WTO members to adopt the disciplines in their own national GATS Schedule of Commitments.

  • OECD - Services Trade Policies and the Global Economy This book synthesises recent work by the OECD analysing services trade policies and quantifying their impacts on imports and exports, the performance of manufacturing and services sectors, and how services trade restrictions influence the decisions and outcomes of firms engaged in international markets.

[Text] Joint Initiative on Services Domestic Regulation

This document found at INF/SDR/2 contains the full text of the Services Domestic Regulation agreement. The parties to this plurilateral signal their commitment to abide by these rules through a reference to this document in their GATS Schedule.   For more information on how this works, see the Legal Practicalities section. Below,  you will find the legal text of this document alongside explanations in orange italics of what the text might mean in layman’s terms. These explanations were written by the GTP team are should not be seen as legally binding or a definitive reflection of what the proponents intended. 

SECTION I - PREAMBLE, COVERAGE AND DEVELOPMENT

Preamble

This preamble outlines the general principle of the agreement including its legal underpinnings (Article VI of the General Agreement on Trade in Services).  Paragraphs 3, 5 and 6 make it clear that this agreement should not be read as requiring any specific regulatory changes and that Members retain all their rights under the GATS and specifically the right to regulate as necessary to achieve their policy objectives.  Paragraphs 2 and 4 speak to the unique challenges faced by developing countries and developing country suppliers in establishing domestic services regulatory regimes and in meeting the requirements of foreign regimes when exporting services.

  1. Members have agreed to the disciplines on Services Domestic Regulation in this Reference Paper (“disciplines”) with the objective of elaborating upon the provisions of the General Agreement on Trade in Services (“Agreement”), pursuant to paragraph 4 of Article VI of the Agreement.[1]
  2. Members recognize the difficulties which may be faced by service suppliers, particularly those of developing country Members, in complying with measures relating to licensing requirements and procedures, qualification requirements and procedures, and technical standards of other Members and in particular, the specific difficulties which may be faced by service suppliers from least-developed country Members.
  3. Members recognize the right to regulate, and to introduce new regulations, on the supply of services within their territories in order to meet their policy objectives.
  4. Members further recognize the existence of asymmetries with respect to the degree of development of services regulations in different countries, especially in the case of developing and least-developed country Members.
  5. The disciplines shall not be construed to prescribe or impose any particular regulatory provisions regarding their implementation. 6.  The disciplines shall not be construed as diminishing any obligations of Members under the Agreement.
[1] Members recognize that further disciplines may be developed pursuant to paragraph 4 of Article VI of the Agreement.

Sectoral Coverage and Scheduling Modalities

These provisions outline how members will give legal effect to the agreement (by inscribing the details in Section II of their GATS Schedules) and encourages them to further notify additional sectors to which the agreement might but does not have to apply. Paragraph 9 provides members the option of opting out of the provisions requiring no discrimination between men and women in the regulatory and other measures covered by this agreement. 

7.  Members shall inscribe the disciplines in Section II in their Schedules as additional commitments under Article XVIII of the Agreement. Members may choose to inscribe the alternative disciplines in Section III for their commitments in financial services.

8.  The disciplines inscribed pursuant to paragraph 7 of this Section apply where specific commitments are undertaken. In addition, Members are encouraged to inscribe in their Schedules additional sectors to which the disciplines apply.

9.  Members may exclude the discipline set out in paragraph 22 (d) of Section II and paragraph 19 (d) of Section III from the additional commitments scheduled under paragraph 7 of this Section.

Development

Paragraph 10 gives developing country members the option of delaying the entry into force of any specific commitments in this agreement for up to seven years, either fully or as they pertain to certain service sectors or sub-sectors. A developing country member may also subsequently request further time and members are encouraged to positively consider such requests. Developing country status is self-designated at the World Trade Organization and there is no agreed criteria or threshold to be a developing country.  Paragraph 11 makes the entire agreement optional for Least Developed Countries (LDC) until up to 6 months before their graduation from LDC status at which point they can use the up to seven year implementation flexibilities outlined in paragraph 10 if they so choose. Unlike developing country status, LDC status has a defined set of criteria. The full list of LDC WTO members can be found here. Paragraph 12 encourages but does not mandate developed members and more affluent developing country members to provide aid for trade and capacity building assistance related to this agreement to developing countries and least developed countries.  Transitional Periods for Developing Country Members

10.  A developing country Member may designate specific disciplines for implementation on a date after a transitional period of no longer than 7 years following the entry into force of these disciplines. The scope of the designation may be limited to individual services sectors or subsectors. The transitional periods shall be inscribed in the respective Schedules of specific commitments. A developing country Member requiring an extended transitional period for implementation shall submit a request in accordance with relevant procedures.[2] Members shall give sympathetic consideration to granting such requests, taking into account the specific circumstances of the Member submitting the request.

Participation of Least-Developed Country Members

11.  Least-developed country Members shall inscribe the disciplines pursuant to paragraph 7 of this Section in their Schedules of specific commitments, no later than 6 months in advance of their graduation from least-developed country status. Least-developed country Members may, at that time, designate transitional periods pursuant to paragraph 10 of this Section. Least-developed country Members are nonetheless encouraged to apply these disciplines before their graduation, to the extent consistent with their individual implementation capacity.

Technical Assistance and Capacity Building

12.  Developed and developing country Members, in a position to do so, are encouraged to provide specific technical assistance and capacity building to developing and in particular least-developed country Members, upon their request and on mutually agreed terms and conditions, aimed, inter alia, at:

(a)  developing and strengthening institutional and regulatory capacities to regulate the supply of services and to implement these disciplines, especially provisions and sectors to which transitional periods apply;

(b)  assisting service suppliers of developing and in particular least-developed country Members to meet the relevant requirements and procedures in export markets;

(c)  facilitating the establishment of technical standards and facilitating participation of developing and in particular least-developed country Members facing resource constraints in the relevant international organizations; and

(d)  assisting, through public or private bodies and relevant international organizations, service suppliers of developing and in particular least-developed country Members in building their supply capacity and in complying with domestic regulation.

 

[2] Relevant procedures include requests for a Waiver in accordance with paragraph 3 (b) of Article IX of the Marrakesh Agreement, or invocation of Article XXI of the GATS.

SECTION II – DISCIPLINES ON SERVICES DOMESTIC REGULATION

Scope of the Disciplines

These paragraphs define this agreement as covering specifically those government rules, procedures, standards and requirements which businesses must meet in order to sell services into their territory, and make it clear that the agreement does not apply to those sectors the member has carved out of its GATS obligations in its existing GATS schedule. 

  1. These disciplines apply to measures by Members relating to licensing requirements and procedures, qualification requirements and procedures, and technical standards affecting trade in services.
  2. These disciplines do not apply to any terms, limitations, conditions, or qualifications set out in a Member’s Schedule pursuant to Articles XVI or XVII of the Agreement.
  3. For the purpose of these disciplines, “authorization” means the permission to supply a service, resulting from a procedure to which an applicant must adhere in order to demonstrate compliance with licensing requirements, qualification requirements, or technical standards.

Submission of Applications

This requires members to make a good faith effort to ensure that an applicant looking to sell services into their territory need speak to only one ministry or department in order to obtain the authorisation to do so. 

4.  Each Member shall, to the extent practicable, avoid requiring an applicant to approach more than one competent authority for each application for authorization. If a service is within the jurisdiction of multiple competent authorities, multiple applications for authorization may be required.

Application Timeframes

This requires that a member ensures that if supplying a service to them requires a specific authorisation or permit, applications for such permits are either open all year round or for at least for a reasonable length of time each year. In other words it prohibits a government keeping the window of opportunity for permit or authorisation applications so small that it becomes a barrier to trade. 

5.  If a Member requires authorization for the supply of a service, it shall ensure that its competent authorities to the extent practicable permit submission of an application at any time throughout the year.[3] If a specific time period for applying exists, the Member shall ensure that the competent authorities allow a reasonable period for the submission of an application.

 

[3] Competent authorities are not required to start considering applications outside of their official working hours and working days.

Electronic Applications and Acceptance of Copies

This requires members to accept electronic documents and copies instead of originals from applicants seeking authorisation to sell a service into their territory, wherever doing so is practicable and not a risk to the integrity of the process. The provisions here are not absolute obligations, and a member could still reject electronic format documents or copies if resource constraints preclude their processing them or if doing so would increase the risk of fraud or otherwise imperil the authorisation process. 

6.  If a Member requires authorization for the supply of a service, it shall ensure that its competent authorities:

(a)  taking into account their competing priorities and resource constraints, endeavour to accept applications in electronic format; and

(b)  accept copies of documents, that are authenticated in accordance with the Member’s domestic laws and regulations, in place of original documents, unless the competent authorities require original documents to protect the integrity of the authorization process.

Processing of Applications

These paragraphs and sub-paragraphs create obligations about how authorities interact with applicants and applications to sell services into their territory. With some caveats, it requires that such authorities be transparent about timing, share information about the progress of an application, any delays in considering it and inform the applicant promptly if their application is successful. It also requires authorities inform any unsuccessful applicants if their application is incomplete or unsuccessful, providing reasons why and the opportunity to supply any missing information or resubmit their application without being automatically rejected solely for having previously unsuccessful in applying.  Many of these obligations include the qualifier ‘to the extent practicable’ which does provide members with the option not to comply if doing so would be unreasonable or unfeasible. 

7.  If a Member requires authorization for the supply of a service, it shall ensure that its competent authorities:

(a)  to the extent practicable, provide an indicative timeframe for processing of an application;

(b)  at the request of the applicant, provide without undue delay information concerning the status of the application;

(c)  to the extent practicable, ascertain without undue delay the completeness of an application for processing under the Member’s domestic laws and regulations;

(d)  if they consider an application complete for processing under the Member’s domestic laws and regulations,[4] within a reasonable period of time after the submission of the application ensure that:

(i)  the processing of the application is completed; and

(ii)  the applicant is informed of the decision concerning the application, [5] to the extent possible in writing; [6]

(e)  if they consider an application incomplete for processing under the Member’s domestic laws and regulations, within a reasonable period of time, to the extent practicable:

(i)  inform the applicant that the application is incomplete;

(ii)  at the request of the applicant, identify the additional information required to complete the application, or otherwise provide guidance on why the application is considered incomplete; and

(iii)  provide the applicant with the opportunity [7] to provide the additional information that is required to complete the application;

however, if none of the above is practicable, and the application is rejected due to incompleteness, ensure that they so inform the applicant within a reasonable period of time; and

(f)  if an application is rejected, to the extent possible, either upon their own initiative or upon request of the applicant, inform the applicant of the reasons for rejection and, if applicable, the procedures for resubmission of an application; an applicant should not be prevented from submitting another application [8] solely on the basis of a previously rejected application.

8.  The competent authorities of a Member shall ensure that authorization, once granted, enters into effect without undue delay, subject to applicable terms and conditions. [9]

[4] Competent authorities may require that all information is submitted in a specified format to consider it “complete for processing”. [5] Competent authorities may meet this requirement by informing an applicant in advance in writing, including through a published measure, that lack of response after a specified period of time from the date of submission of an application indicates acceptance of the application or rejection of the application. [6] “In writing” may include in electronic form. [7] Such opportunity does not require a competent authority to provide extensions of deadlines. [8] Competent authorities may require that the content of such an application has been revised. [9] Competent authorities are not responsible for delays due to reasons outside their competence.

Fees

This requires that any fees related to receiving authorisation to sell a service aren’t unreasonable, opaque, baseless, arbitrary, or so high that they become a barrier to actually selling the service. 

9.  Each Member shall ensure that the authorization fees charged by its competent authorities are reasonable, transparent, based on authority set out in a measure, and do not in themselves restrict the supply of the relevant service. [10]

 

[10] Authorization fees do not include fees for the use of natural resources, payments for auction, tendering or other non-discriminatory means of awarding concessions, or mandated contributions to universal service provision.

Assessment of Qualifications

Where someone must pass a test in order to qualify to sell a service, this obliges members to make sure such tests are held at reasonably frequent intervals and that applications are open for a reasonable amount of time so that inability to schedule or sit an exam does not become a barrier to exports. They are also encouraged but not obliged to accept applications for tests online, and to otherwise make use of the internet to make sitting the test more convenient. 

10.  If a Member requires an examination for authorization for the supply of a service, that Member shall ensure that its competent authorities schedule such an examination at reasonably frequent intervals and provide a reasonable period of time to enable applicants to request to take the examination. Having regard to the cost, administrative burden, and the integrity of the procedures involved, Members are encouraged to accept requests in electronic format to take such examinations, and to consider, to the extent practicable, the use of electronic means in other aspects of examination processes.

Recognition

This is a soft obligation encouraging but not compelling members to support any efforts by willing professional qualifying bodies (such as legal bar associations) to have discussions toward recognizing one another’s qualifications. 

11.  Where professional bodies of Members are mutually interested in establishing dialogues on issues relating to recognition of professional qualifications, licensing or registration, the relevant Members should consider supporting the dialogue of those bodies where requested and appropriate.

Independence

This requires that any administrative authority which issues licences or permission to sell a service be fully independent from businesses that also sell that service type. For example, this would prevent a government outsourcing the issuing of plumbing licences to a large provider of plumbing services. 

12.  If a Member adopts or maintains measures relating to the authorization for the supply of a service, the Member shall ensure that its competent authorities reach and administer their decisions in a manner independent from any supplier of the service for which authorization is required. [11]

 

[11] For greater certainty, this provision does not mandate a particular administrative structure; it refers to the decision-making process and administering of decisions.

Publication and Information available

This is a transparency provision requiring members to publish in writing the information relevant to obtaining, keeping, updating and renewing permission to sell a service into their territory. It aims to ensure members are fully open about what businesses can expect in terms of fees, requirements, standards and procedures as they navigate the process. 

13.  If a Member requires authorization for the supply of a service, further to Article III of the Agreement, the Member shall promptly publish, [12] or otherwise make publicly available in writing, the information necessary for service suppliers or persons seeking to supply a service to comply with the requirements and procedures for obtaining, maintaining, amending and renewing such authorization.

Such information shall include, inter alia, where it exists:

(a)  the requirements and procedures;

(b)  contact information of relevant competent authorities;

(c)  fees;

(d)  technical standards;

(e)  procedures for appeal or review of decisions concerning applications;

(f)  procedures for monitoring or enforcing compliance with the terms and conditions of licenses or qualifications;

(g)  opportunities for public involvement, such as through hearings or comments; and

(h)  indicative timeframes for processing of an application.

[12] For purposes of these disciplines, “publish” means to include in an official publication, such as an official journal, or on an official website. Members are encouraged to consolidate electronic publications into a single portal.

Opportunity to Comment and Information before Entry into Force

These paragraphs require governments to, wherever possible, provide advance notice of any changes that may impact foreign service suppliers covered by this agreement, explain the purpose and practical implications of the upcoming changes and provide adequate opportunities for impacted firms to comment.  Members also agree to, wherever possible, allow a reasonable amount of time to pass between publishing the text of a law or regulation and having it enter into force and become binding. This is a caveated provision, meaning a member could still implement a law immediately if there was a pressing reason to do so without being in violation of their obligations. 

14.  To the extent practicable and in a manner consistent with its legal system for adopting measures, each Member [13] shall publish in advance:

(a)  its laws and regulations of general application it proposes to adopt in relation to matters falling within the scope of paragraph 1 of this Section; or

(b)  documents that provide sufficient details about such a possible new law or regulation to allow interested persons and other Members to assess whether and how their interests might be significantly affected.

15.  To the extent practicable and in a manner consistent with its legal system for adopting measures, each Member is encouraged to apply paragraph 14 of this Section to procedures and administrative rulings of general application it proposes to adopt in relation to matters falling within the scope of paragraph 1 of this Section.

16.  To the extent practicable and in a manner consistent with its legal system for adopting measures, each Member shall provide interested persons and other Members a reasonable opportunity to comment on such proposed measures or documents published under paragraphs 14 or 15 of this Section.

17.  To the extent practicable and in a manner consistent with its legal system for adopting measures, each Member shall consider comments received under paragraph 16 of this Section. [14]

18.  In publishing a law or regulation referred to in paragraph 14 (a) of this Section, or in advance of such publication, to the extent practicable and in a manner consistent with its legal system for adopting measures, a Member is encouraged to explain the purpose and rationale of the law or regulation.

19.  Each Member shall, to the extent practicable, endeavour to allow reasonable time between publication of the text of a law or regulation referred to in paragraph 14 (a) of this Section and the date on which service suppliers must comply with the law or regulation.

 

[13] Paragraphs 14 to 17 of this Section recognize that Members have different systems to consult interested persons and other Members on certain measures before their adoption, and that the alternatives set out in paragraph 14 of this Section reflect different legal systems. [14] This provision is without prejudice to the final decision of a Member that adopts or maintains any measure for authorization for the supply of a service.

Enquiry Points

This requires members to create points of contact within their system to which businesses or individuals seeking to sell a service can address their questions about the relevant rules, regulations and requirements. 

20. Each Member shall maintain or establish appropriate mechanisms for responding to enquiries from service suppliers or persons seeking to supply a service regarding the measures referred to in paragraph 1 of this Section. [15]

A Member may choose to address such enquiries through either the enquiry and contact points established under Articles III and IV of the Agreement or any other mechanisms as appropriate.

 

[15] It is understood that resource constraints may be a factor in determining whether a mechanism for responding to enquiries is appropriate.

Technical Standards

This is a soft obligation for members to encourage the authorities in their jurisdiction which develop, or contribute to the development of, technical standards relevant to the sale of services to do so through an open and transparent process.

21. Each Member shall encourage its competent authorities, when adopting technical standards, to adopt technical standards developed through open and transparent processes, and shall encourage any body, including relevant international organizations, [16] designated to develop technical standards to use open and transparent processes.

 

[16] The term “relevant international organizations” refers to international bodies whose membership is open to the relevant bodies of at least all Members of the WTO.

Development of Measures

These are broad horizontal provisions which govern the approach governments must take in developing their rules, regulations and requirements governing the sale of services. Specifically it requires that the rules be based on transparent and objective (not arbitrary or discriminatory) criteria, that they’re impartial and aren’t so onerous or unreasonable to serve as a barrier to trade.  Paragraph 22(d) also requires members ensure that none of their rules or regulations covered by this agreement do not discriminate between men and women. However, paragraph 9 allows members to specifically exempt this from their commitments if they should so choose. 

22.  If a Member adopts or maintains measures relating to the authorization for the supply of a service, the Member shall ensure that:

(a)  such measures are based on objective and transparent criteria; [17]

(b)  the procedures are impartial, and that the procedures are adequate for applicants to demonstrate whether they meet the requirements, if such requirements exist;

(c)  the procedures do not in themselves unjustifiably prevent the fulfilment of requirements; and

(d)  such measures do not discriminate between men and women. [18]

 

[17] Such criteria may include, inter alia, competence and the ability to supply a service, including to do so in a manner consistent with a Member’s regulatory requirements, such as health and environmental requirements. Competent authorities may assess the weight to be given to each criterion. [18] Differential treatment that is reasonable and objective, and aims to achieve a legitimate purpose, and adoption by Members of temporary special measures aimed at accelerating de facto equality between men and women, shall not be considered discrimination for the purposes of this provision.

SECTION III - ALTERNATIVE DISCIPLINES ON SERVICES DOMESTIC REGULATION FOR FINANCIAL SERVICES

Scope

These provisions define the coverage of this part of the text as specifically for financial services as they’re described in the GATS Annex on Financial Services. Paragraphs 2 and 3 are identical to those found in Section II of this agreement. 

1.  These disciplines apply to measures by Members relating to licensing requirements and procedures, and qualification requirements and procedures affecting trade in financial services, as defined in the GATS Annex on Financial Services.

2.  These disciplines do not apply to any terms, limitations, conditions, or qualifications set out in a Member’s Schedule pursuant to Articles XVI or XVII of the Agreement.

3.  For the purpose of these disciplines, “authorization” means the permission to supply a service, resulting from a procedure to which an applicant must adhere in order to demonstrate compliance with licensing requirements, or qualification requirements.

Application Timeframes

This requires that a member ensures that if supplying a service to them requires a specific authorisation or permit, applications for such permits are either open all year round or for at least for a reasonable length of time each year. In other words it prohibits a government keeping the window of opportunity for permit or authorisation applications so small that it becomes a barrier to trade. It is identical to the obligation on application timeframes found in Section II. However, unlike Section II when it comes to financial services there is no obligation on members to try and ensure that applicants need only deal with one ministry or department, as there is in Section II for all other types of covered services. 

4.  If a Member requires authorization for the supply of a service, it shall ensure that its competent authorities to the extent practicable permit submission of an application at any time throughout the year. If a specific time period for applying exists, the Member shall ensure that the competent authorities allow a reasonable period for the submission of an application.

 

[19] Competent authorities are not required to start considering applications outside of their official working hours and working days.

Electronic Applications and Acceptance of Copies

This requires members to accept electronic documents and copies instead of originals from applicants seeking authorisation to sell a service into their territory, wherever doing so is practicable and not a risk to the integrity of the process. The provisions here are not absolute obligations, and a member could still reject electronic format documents or copies if resource constraints preclude their processing them or if doing so would increase the risk of fraud or otherwise imperil the authorisation process. This is identical to the provisions on Electronic Applications and Acceptance of Copies found in Section II.  5.  If a Member requires authorization for the supply of a service, it shall ensure that its competent authorities:

(a)  taking into account their competing priorities and resource constraints, endeavour to accept applications in electronic format; and

(b)  accept copies of documents, that are authenticated in accordance with the Member’s domestic laws and regulations, in place of original documents, unless the competent authorities require original documents to protect the integrity of the authorization process.

Processing of Applications

These paragraphs and sub-paragraphs create obligations about how authorities interact with applicants and applications to sell services into their territory. With some caveats, it requires that such authorities be transparent about timing, share information about the progress of an application, any delays in considering it and inform the applicant promptly if their application is successful. It also requires authorities inform any unsuccessful applicants if their application is incomplete or unsuccessful, providing reasons why and the opportunity to supply any missing information or resubmit their application without being automatically rejected solely for having previously unsuccessful in applying.  Many of these obligations include the qualifier ‘to the extent practicable’ which does provide members with the option not to comply if doing so would be unreasonable or unfeasible.  These provisions are identical to those found in the Processing of Applications provisiosn of Section II.

6.  If a Member requires authorization for the supply of a service, it shall ensure that its competent authorities:

(a)  to the extent practicable, provide an indicative timeframe for processing of an application;

(b)  at the request of the applicant, provide without undue delay information concerning the status of the application;

(c)  to the extent practicable, ascertain without undue delay the completeness of an application for processing under the Member’s domestic laws and regulations;

(d)  if they consider an application complete for processing under the Member’s domestic laws and regulations, [20] within a reasonable period of time after the submission of the application ensure that:

(i)  the processing of the application is completed; and

(ii)  the applicant is informed of the decision concerning the application, [21] to the extent possible in writing; [22]

(e)  if they consider an application incomplete for processing under the Member’s domestic laws and regulations, within a reasonable period of time, to the extent practicable:

(i)  inform the applicant that the application is incomplete;

(ii)  at the request of the applicant, identify the additional information required to complete the application, or otherwise provide guidance on why the application is considered incomplete; and

(iii)  provide the applicant with the opportunity [23] to provide the additional information that is required to complete the application;

however, if none of the above is practicable, and the application is rejected due to incompleteness, ensure that they so inform the applicant within a reasonable period of time; and

(f)  if an application is rejected, to the extent practicable, either upon their own initiative or upon request of the applicant, inform the applicant of the reasons for rejection and, if applicable, the procedures for resubmission of an application; an applicant should not be prevented from submitting another application [24] solely on the basis that an application had been previously rejected.

7.  The competent authorities of a Member shall ensure that authorization, once granted, enters into effect without undue delay, subject to applicable terms and conditions [25].

[2o] Competent authorities may require that all information is submitted in a specified format to consider it “complete for processing”. [21] Competent authorities may meet this requirement by informing an applicant in advance in writing, including through a published measure, that lack of response after a specified period of time from the date of submission of an application indicates acceptance of the application or rejection of the application. [22] “In writing” may include in electronic form. [23] Such opportunity does not require a competent authority to provide extensions of deadlines. [24] Competent authorities may require that the content of such an application has been revised. [25] Competent authorities are not responsible for delays due to reasons outside their competence.

Fees

Where there are fees or charges involved in acquiring permissions to offer financial services, this obliges members to ensure such fees and the method by which they were determined be published transparently. This is a softer obligation than that which exists for other services in Section II – Fees as there is no obligation to ensure such fees are not unreasonable or so high that they become a barrier to actually selling the service. The only obligation is to be transparent about what the fees are, and how they were derived. 

8.  Each Member shall ensure that its competent authorities, with respect to authorization fees [26] they charge, provide applicants with a schedule of fees or information on how fee amounts are determined.

 

[26] Authorization fees do not include fees for the use of natural resources, payments for auction, tendering or other non-discriminatory means of awarding concessions, or mandated contributions to universal service provision.

Independence

This requires that any administrative authority which issues licences or permission to sell a service be fully independent from businesses that also sell that service type. For example, this would make it illegal for a government to outsource licencing plumbers to a large provider of plumbing services. This provision is identical to that found in Section II of this agreement on Independence. However, the provision on Recognition found in Section II does not exist in Section III and so there is no obligation for encouraging recognition discussions among professional certifying bodies where financial services are concerned.  10.  If a Member adopts or maintains measures relating to the authorization for the supply of a service, the Member shall ensure that its competent authorities reach and administer their decisions in a manner independent from any supplier of the service for which authorization is required. [27]

[27] For greater certainty, this provision does not mandate a particular administrative structure; it refers to the decision-making process and administering of decisions.

Assessment of Qualifications

Where someone must pass a test in order to qualify to sell a service, this obliges members to make sure such tests are held at reasonably frequent intervals and that applications are open for a reasonable amount of time so that inability to schedule or sit an exam does not become a barrier to exports. They are also encouraged but not obliged to accept applications for tests online, and to otherwise make use of the internet to make sitting the test more convenient. This is identical to the provisions on Assessment of Qualifications in Section II.

9.  If a Member requires an examination for authorization for the supply of a service, that Member shall ensure that its competent authorities schedule such an examination at reasonably frequent intervals and provide a reasonable period of time to enable applicants to request to take the examination. Having regard to the cost, administrative burden, and the integrity of the procedures involved, Members are encouraged to accept requests in electronic format to take such examinations, and to consider, to the extent practicable, the use of electronic means in other aspects of examination processes.

Publication and Information available

These obligations require Members to provide transparency on how their processes work for those who might wish to apply to sell financial services into their territory. These requirements are identical to those which apply to all services in Section II – Publication and Information available of this agreement except that for financial services there is no obligation to provide information on fees, technical standards or indicative timeframes for processing an application.

11. If a Member requires authorization for the supply of a service, further to Article III of the Agreement and paragraphs 6 and 8 of this Section, the Member shall promptly publish, [28] or otherwise make publicly available in writing the information necessary for service suppliers or persons seeking to supply a service to comply with the requirements and procedures for obtaining, maintaining, amending and renewing such authorization. Such information shall include, inter alia, where it exists:

(a) the requirements and procedures;

(b) contact information of relevant competent authorities;

(c) procedures for appeal or review of decisions concerning applications;

(d) procedures for monitoring or enforcing compliance with the terms and conditions of licenses or qualifications; and

(e) opportunities for public involvement, such as through hearings or comments.

 

[28] For purposes of these disciplines, “publish” means to include in an official publication, such as an official journal, or on an official website. Members are encouraged to consolidate electronic publications into a single portal.

Opportunity to Comment and Information before Entry into Force

These paragraphs require governments to, wherever possible, provide advance notice of any changes that may impact foreign service suppliers covered by this agreement, explain the purpose and practical implications of the upcoming changes and provide adequate opportunities for impacted firms to comment.  Members also agree to, wherever possible, allow a reasonable amount of time to pass between publishing the text of a law or regulation and having it enter into force and become binding. This is a caveated provision, meaning a member could still implement a law immediately if there was a pressing reason to do so without being in violation of their obligations.  These provisions are identical to those covering all services types in Section II – Opportunity to Comment and Information before Entry into Force. 

12.  To the extent practicable and in a manner consistent with its legal system for adopting measures, each Member [29] shall publish in advance:

(a)  its laws and regulations of general application it proposes to adopt in relation to matters falling within the scope of paragraph 1 of this Section; or

(b)  documents that provide sufficient details about such a possible new law or regulation to allow interested persons and other Members to assess whether and how their interests might be significantly affected.

13.  To the extent practicable and in a manner consistent with its legal system for adopting measures, each Member is encouraged to apply paragraph 12 of this Section to procedures and administrative rulings of general application it proposes to adopt in relation to matters falling within the scope of paragraph 1.

14.  To the extent practicable and in a manner consistent with its legal system for adopting measures, each Member shall provide interested persons and other Members a reasonable opportunity to comment on such proposed measures or documents published under paragraphs 12 or 13 of this Section. 15.  To the extent practicable and in a manner consistent with its legal system for adopting measures, each Member shall consider comments received under paragraph 14 of this Section. [30]

16.  In publishing a law or regulation referred to in paragraph 12 (a) of this Section, or in advance of such publication, to the extent practicable and in a manner consistent with its legal system for adopting measures, a Member is encouraged to explain the purpose and rationale of the law or regulation.

17.  Each Member shall, to the extent practicable, endeavour to allow reasonable time between publication of the text of a law or regulation referred to in paragraph 12 (a) of this Section and the date on which service suppliers must comply with the law or regulation.

 

[29] Paragraphs 12 to 15 of this Section recognize that Members have different systems to consult interested persons and other Members on certain measures before their adoption, and that the alternatives set out in paragraph 12 of this Section reflect different legal systems. [30] This provision is without prejudice to the final decision of a Member that adopts or maintains any measure for authorization for the supply of a service.

Enquiry Points

This requires members to create points of contact within their system to which businesses or individuals seeking to sell a service can address their questions about the relevant rules, regulations and requirements.  This provision is identical to the Enquiry Points provision in Section II.

18.  Each Member shall maintain or establish appropriate mechanisms for responding to enquiries from service suppliers or persons seeking to supply a service regarding the measures referred to in paragraph 1 of this Section. [31] A Member may choose to address such enquiries through either the enquiry and contact points established under Articles III and IV of the Agreement or any other mechanisms as appropriate.

 

[31] It is understood that resource constraints may be a factor in determining whether a mechanism for responding to enquiries is appropriate.

Development of Measures

These are broad horizontal provisions which govern the approach governments must take in developing their rules, regulations and requirements governing the sale of financial services. Specifically it requires that the rules be based on transparent and objective (not arbitrary or discriminatory) criteria, that they’re impartial and aren’t so onerous or unreasonable to serve as a barrier to trade.  Paragraph 22(d) also requires members ensure that none of their rules or regulations covered by this agreement do not discriminate between men and women. However, paragraph 9 of Section I allows members to specifically exempt this from their commitments if they should so choose. 

19.  If a Member adopts or maintains measures relating to the authorization for the supply of a service, the Member shall ensure that:

(a)  such measures are based on objective and transparent criteria; [32]

(b)  the procedures are impartial, and that the procedures are adequate for applicants to demonstrate whether they meet the requirements, if such requirements exist;

(c)  the procedures do not in themselves unjustifiably prevent fulfilment of requirements; and

(d)  such measures do not discriminate between men and women. [33]

 

[32] Such criteria may include, inter alia, competence and the ability to supply a service, including to do so in a manner consistent with a Member’s regulatory requirements. Competent authorities may assess the weight to be given to each criterion. [33] Differential treatment that is reasonable and objective, and aims to achieve a legitimate purpose, and adoption by Members of temporary special measures aimed at accelerating de facto equality between men and women, shall not be considered discrimination for the purposes of this provision.