RESTRICTEDWORLD TRADE
ORGANIZATIONS/WPDR/M/8
17 November 2000
(00-4945)
Working Party on Domestic Regulation
REPORT ON THE MEETING HELD ON 2 OCTOBER 2000
Note by the Secretariat
1. The Working Party on Domestic Regulation held a formal meeting in the afternoon of
2 October 2000, together with an informal session in the morning.  The agenda for the meeting is
contained in Airgram WTO/AIR/1391.  Debate in th e informal session concerned the substantive
issues identified in the informal Secretariat Checklist of Issues for WPDR .  The formal session
focused on Members' domestic consultations with professional services organizations, as well as the
issue of Secretariat consultations with international professional organizations.
(a) Discussion of Concepts Relating to the Development of Regulatory Disciplines
2. The Chairperson observed that Members had a good discussion at the informal meeting that
morning.  As these discussions could not be completed in the morning session, Members agreed to
resume them after the conclusion of the formal meeting.  A summary of these discussions, preparedunder the responsibility of the Chairperson, is attached as an Annex.
3. The Chairperson then noted that, since the pr evious WPDR meeting, two delegations had
circulated communications:  these were Australia in S/WPDR/W/8, dated 15 September, and Korea in
document S/WPDR/W/9, dated 27 September.
4. The representative of Australia stated that his delegation's paper contained two proposals,
regarding necessity and transparency, based on the precedents of the TBT and SPS agreements, the
accountancy disciplines, and GATS Ar ticle III.  On necessity, the paper proposed a concisely worded
necessity test, based on Article 5 of the SPS agreement.  In this regard, Australia favoured a short,
non-exhaustive list of legitimate objectives, building on those listed in the accountancy disciplines.
He said rules on necessity and transparency complemented each other, i.e. necessity provisionsimposed disciplines while transparency provisions provided information.  Australia did not believe
that transparency measures alone would be sufficient.  The representative also stated that the
disciplines to be developed should be on a horizontal, rather than sectoral, basis for several reasons:  it
would improve efficiency;  ensure consistency of process across all sectors;  and reduce the risk of
"regulatory capture" by sectoral interests.
5. The representative of Korea noted that, in the previous WPDR meeting, Korea had made an
intervention to seek clarification on the different wordings used in WTO discussions of the necessity
test, i.e. "least trade restrictive", "not more trade restrictive than necessary", "not more burdensome
than necessary", and the proportionality test.  At the request of other Members, this intervention wasnow presented in written form. The main finding by Korea was that proportionality looked at "means-
end" test, while the other three examined only the existence of alternative measures.  Of these latter
three, the first two focused on cross-border trade,  while "not more burdensome than necessary"
focused on domestic procedures.S/WPDR/M/8
Page 2
6. The representative of Korea stated that the drafters of the GATS, considering that the
agreement deals with four modes of supply, appeared to have been careful in their wording.  In the
same sense, any criteria developed for the necessity test also needed to encompass the four modes.
This was the basis upon which Korea had developed its own proposal, as presented in the paper.
7. The Chairperson thanked the two delegations for their contributions, and noted that informal
discussions would continue to be necessary.  He urged Members to submit additional papers.
8. The delegate from Korea requested clarification as to whether creating sectoral versus
horizontal disciplines was related to the existence of specific commitments in a Member's schedule.
The delegation of Canada stated that the scope of application was an issue for negotiations, and that
there were several options, including horizontal application, application only where specific
commitments were taken, or application in the form of a reference paper.  The delegation of Hong
Kong, China then enquired about the wording used in the Checklist  with respect to the issues of scope
and the necessity test.  At the request of the Chairperson, the Secretariat replied that it was intended to
provide the widest range of possible options, i.e. there was not only the issue of whether the
disciplines would be conditional upon the existence of specific commitments, but also whether thedisciplines would be applicable on a horizontal or sectoral basis.
(b) Development of General Disciplines for Professional Services
9. Discussions under this agenda item, again held in informal mode, opened with an introduction
by Korea of their written report on consultations with domestic professional services organizations(S/WPDR/W/10, dated 2 October), followed by other Members' verbal reports.
10. The Chairperson, noting Members were somewhat delayed in concluding domestic
consultations, asked whether the Secretariat should start compiling a synthesis of the replies to date, to
be revised periodically as new reports become available.  Following informal discussions, Membersagreed to request the Secretariat to begin the compilation.
11. On the parallel issue of Secretariat consultations with international professional services
organizations regarding the accountancy disciplines, some delegations felt the domestic consultations
should be completed first, despite the fact that the initially agreed deadline to complete consultations
had expired.  Members were able to accept the Chairman's suggest that the Secretariat listing of
international organizations to be consulted, containing organizations selected by Members, be revisedto remove regional organizations not open to all WTO Members.
12. The Chairman concluded this item by stating that, from the reports received, there was
general support for the applicability of the accountancy disciplines to other professional services.  At
the same time, many professions indicated additional specific disciplines would be needed toaccommodate their requirements.  The Secretariat was requested to prepare a synthesis of results to
date of Member consultations with domestic professional services organizations, indicating both the
number of replies received and the fact that the results were preliminary, as well as a revised list of
international professional services organizations.
(c) Request for Observer Status from the International Association of Insurance Supervisors
13. The Chairperson noted, as he had at the last Working Party meeting, that a request for
observer status had been received from the Internat ional Association of Insurance Supervisors (IAIS).
This request was contained in Job No. 779, dated 10 February 2000.  The Association had alsorequested observer status from the Committee on Financial Services.  At the last meeting, Members
had again agreed that further reflection was required, and they decided to save the issue for the current
meeting.S/WPDR/M/8
Page 3
14. The delegation of Pakistan drew Members' attention to paragraph 18 of the minutes of the
previous WPDR meeting, saying his delegation fully supported what was stated there, and that
Members should again defer from taking a decision.
15. The Chairman then asked Members if this item should be temporarily removed from the
agenda.  The delegations of Pakistan and Malaysia  responded positively.  The representative of Hong,
Kong, China stated that this item should be removed, but only in respect to the IAIS and the agenda of
the Working Party.
16. The Chairperson stated that this item would be taken off the agenda until further notice.
(d) Date of Next Meeting
17. The Chairperson again noted that Members had requested that meetings of subsidiary bodies
be grouped close to meetings of the Council.  In accordance with this request, he suggested that the
next Working Party meeting be held on Thursday, 29 November, just after the next Council meeting.The suggestion was approved by Members.S/WPDR/M/8
Page 4
ANNEX
SUMMARY OF INFORMAL DISCUSSION ON THE CHECKLIST OF ISSUES FOR WPDR
General issues
One Member stated that consideration should be given to the temporary nature of GATS
Article VI:5.  The Secretariat was asked to comment,  and stated that Article VI:5 would need to be
addressed following the creation of regulatory disciplines under Article VI:4.
1. Examples of actual regulatory issues:
Members agreed to have the Secretariat list examples of the kinds of measures that would be
addressed by disciplines under GATS Article VI:4, based on contributions by Members and a review
of the Working Party on Professional Services accountancy materials by the Secretariat.  The
Chairman noted that the elaboration of this list would not preclude parallel discussions among
Members on the same issue.
2. Linkage between transparency and necessity:
Delegates referred to both the advantages (increased accountability) and disadvantages
(additional administrative burden) of greater transparency.  Several delegations stated that greater
transparency in the regulatory process could contribute to ensuring that regulations would not be more
trade restrictive than necessary.  However, some also said that transparency alone had its limits, and
therefore could not be a substitute for regulatory disciplines.  The Chairperson asked the delegationsgiving comments to further elaborate their viewpoints in subsequent discussions.
Necessity
3. Legitimate objectives:
Most Members making comments favoured the creation of a concise, non-exhaustive,
illustrative list of legitimate objectives.  They felt a listing of "non-legitimate objectives" would be toolimiting, and was undesirable.  One Member stated that priority should be given to the creation of
specific disciplines, and the listing of legitimate objectives should come afterward.  Another
delegation said the determination of legitimate objectives rested solely with Member governments.
The issue of horizontal- versus sectoral-level listings of legitimate objectives was generally thought to
be an issue for negotiation.
4. Scope of the necessity test:
Nearly all the delegations making comments felt that GATS Article VI:4 did not extend
beyond the five items listed.  The definitions in paragraph 4 of S/C/W/96 were generally felt to be
acceptable, but could be reviewed if necessary.  Some delegations said any horizontal disciplines
should only be applicable to sectors where specific commitments have been made;  other delegations
felt this was also an issue for negotiation.
5. Criteria for the necessity test:
The Chairman noted that new documents on this topic had been submitted by Members.
Several delegations said they had begun domestic analyses of the implications of the differences inS/WPDR/M/8
Page 5
terminology.  One Member asked where the burden of proof would lie in respect to necessity.
Another expressed concern over the Working Part y attempting to define terms whose application
extended beyond services trade and should be defined by panels or the Appellate Body.  The
Secretariat was asked whether it had previously compiled information on the jurisprudence relating to
the application of necessity in the WTO.  The Secretariat replied that such material could be prepared.A question was raised concerning whether there was a difference between restrictiveness and
burdensomeness in the context of Article VI:4.  The Secretariat replied that there was a difference,
and that a measure could be more burdensome than necessary, but not to the point of being trade
restrictive and vice-versa.
6. "Third aspect" of the necessity test:
One delegation said that consideration must be give to the criteria to be used in applying the
"third aspect" (i.e. the idea that a measure that has the effect of restricting trade can be considered"necessary" only if there is no alternative measure less restrictive of trade which may be reasonably
available to a Member to achieve the same policy objective);  another delegation said that the "third
aspect" could be excessively burdensome considering the vast scale of services sectors.  The reply
was made that the "third aspect" was in fact a means for examining alternatives to particular
regulations.
Transparency
7. Definition of regulations:
One delegation stated it wished to clarify that legislative processes were excluded from
consideration by the Working Party as one of the  types of regulation to which prior comment
requirements could be applied.  Other delegations agreed, but felt there may be no need for a newdefinition, as regulations were already included under the GATS term "measure" as defined in
Article XXVIII.  One delegation stated that their only legislative mechanism for prior comment was
for standards under the TBT and SPS agreements.  Another delegation said that Members should
consider whether regulations as defined under the GATS were equivalent to those as defined under
the TBT and other WTO agreements, and whether notification requirements should only apply inareas where no international standards existed.
8. Transparency objectives:
Several delegations urged caution in regard to further transparency obligations, and asked
Members to consider costs as well as benefits.  They noted this item was related to item 12 of the
Checklist concerning administrative burden.  One delegation stated that dual standards of notification,
e.g. between different levels of government, could not be permitted in regard to transparency
provisions.
9. Prior comment provisions:
A number of Members opposed the creation of any prior comment provisions, saying they
were unnecessarily burdensome, especially for sub-national entities.  Some delegations stated that
prior comment provisions as part of the law-making process were not permitted under their domestic
legislation.  One Member observed that the accountancy disciplines have a "best endeavours" clause,and said this could be repeated. Other Members said caution was required, and that the definitional
and prior comment issues needed to be examined in greater detail.S/WPDR/M/8
Page 6
10. Notifications related to prior comment provisions:
One delegation said that notifications in government gazettes should be the minimum
requirement, with Internet listings also encouraged, but that notifications to the WTO were not
required.  Others, as noted above, opposed the creation of any prior comment provisions.
11. Compliance with existing notification requirements:
Several delegations stated that the notification requirements under GATS Article III were not being
observed, and needed strengthening.  Other delega tions were opposed, stating that Members already
had difficulty meeting existing requirements.  One delegation said there seemed to be some confusion
among Members concerning the differences in the transparency criteria of Article VI and of
Article III.
Note:  Comments on item 12 (Administrative burden) and item 13 (Appropriate levels of
transparency) of the Checklist were made in the context of discussion of other items.  No separate
comments were made.
__________