./.RESTRICTEDWORLD TRADE
ORGANIZATIONS/WPDR/W/1
19 July 1999
(99-2972)
Working Party on Domestic Regulation Original:  English
COMMUNICATION FROM AUSTRALIA
The following communication has been received from the delegation of Australia with the
request that it be circulated to Members of the Working Party on Domestic Regulation.
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1. In Australia's judgement, Members should intensify substantive work on domestic regulation
this year.  Development of disciplines on domestic regulation, as foreshadowed in Article VI.4, would
complement market access negotiations by ensuring that market access commitments are notundermined by trade-restrictive regulations.  The disciplines should be designed to minimise trade
restrictions, while preserving Member's capacities to regulate their economies appropriately.
Scope:  Types of Regulation
2. Article VI:4 lists three types of domestic regulation, namely qualification requirements and
procedures, technical standards and licencing requirements and procedures.  Members maintain
systems of domestic regulation, however, which fall outside the reasonable definitions of any of those
three types.  Rather than seek to expand the list to ensure that its coverage is comprehensive, Australia
suggests that the Working Party treat the three items  as indicative only.  Other types of regulation
could possibly include:  warranties/guarantees and participation in professional indemnity funds or
insurance;  continuing education (which might fall under licensing arrangements);  businessadvertising and marketing;  and community service obligations.
Scope:  Application
3. Australia believes disciplines developed in accordance with Article VI should apply to all
sectors, with the effect of those disciplines built up as Members expand the scope of their scheduled
commitments.  Making these disciplines strictly and immediately conditional on the scheduling of
sectors would add another layer of unnecessary complexity to the architecture of the GATS.
Necessity Test
4. The Secretariat paper (S/C/W/96) focuses on four issues to be addressed under Article VI:
necessity, transparency;  equivalence;  and international standards.  Members have accorded greater
priority to the first two in recent discussions in the Working Party on Domestic Regulation.  Work on
the necessity test is, in many respects, a prerequisite to successful work on the other three items.  Aneffective, practical necessity test is central to developing the strong disciplines that are required in the
forthcoming negotiations.
5. The necessity test will be used to determine whether measures to implement a policy
objective are the least trade-restrictive available.  In Australia's judgement, Members should draft a
necessity test which, while drawing on the concepts of Article VI:4 (a-c), is tighter and moreS/WPDR/W/1
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consistent with other WTO Agreements.  Members need to establish what would constitute a
necessary barrier to trade in services.  For example, the following definition of the necessity test in the
SPS Agreement could be revised so that it applied to services:  "a measure is not more trade-
restrictive than required unless there is another measure, reasonably available taking into account
technical and economic feasibility, that achieves the appropriate level of sanitary or phytosanitaryprotection and is significantly less restrictive to trade" (SPS Article 5, footnote).  For "the appropriate
level of sanitary or phytosanitary protection", Members could consider substituting "a legitimate
policy objective".  Although the SPS language is similar to that in TBT Article 2.2, the former is more
concise and the concepts are more relevant to services.
Transparency
6. Article III is the standing guideline for work on transparency, and its requirements should
apply to the appraisal of regulations, specifically in:
- the need for up-to-date information on enquiry points;
- notification of new and revised measures.
The disciplines on domestic regulation could, however, be strengthened by additional
requirements:
- a prior consultation obligation, such as the one envisaged in the accountancy
disciplines;
- an obligation to explain the policy rationale of a measure – especially of a new
measure – on request.
Legitimate Objectives
7. Article VI:4 does not define legitimate objectives, apart from the reference to "not more
burdensome than necessary to ensure the quality of the service".  The accountancy disciplines (in
Section II, paragraph 2) specify four legitimate objectives:  protection of consumers;  the quality of
the service;  professional competence;  and the integrity of the profession.  Further work on legitimateobjectives in domestic regulation should build on those definitions.  "Quality" could be interpreted
broadly enough to cover reliability, efficiency, comprehensiveness and like concepts.
8. Other concepts could be added as the Working Party develops its thinking on the subject.  The
Working Party could, for instance, review the continued use of nationality or permanent residencyrequirements as a condition for meeting qualification and licensing requirements for services
providers.  In addition, the Working Party might s eek to examine a framework of good administrative
practice, possibly by trying to give more specific and practical application to the scope of legitimate
public policy objectives in regulatory fields.
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