RESTRICTEDWORLD TRADE
ORGANIZATIONS/WPDR/M/11
7 June 2001
(01-2812)
Working Party on Domestic Regulation
REPORT ON THE MEETIN G HELD ON 11 MAY 2001
Note by the Secretariat
1. The Working Party on Domestic Regulation (WPDR) held its eleventh meeting on 11 May.
The agenda for the meeting is contained in Airgram WTO/AIR/1539.  Discussion focused primarily
on the organization of work, based on a Chairperson’s Note.  Members agreed to continue giving
priority to necessity and transparency issues, in re gard to the development of regulatory disciplines,
but to also begin discussion of equivalency and te chnical standards.  They agreed to revise the
informal Checklist of Issues for WPDR  to add these concepts.
(a) Organization of Work
2. The Chairperson initiated discussion by noting that, at the formal WPDR meeting on
20 March 2001, as well as at the informal meeting of 14 March, several delegations shared their initial
thoughts on how the Working Party’s on-going work should be carried forward.  Since becoming
Chairperson, he had circulated a Note on this subject, distributed as Job No. (01)/59, dated
27 April 2001, in the interest of initiating a dialogue among Members.  The Note was intended to helpthe Working Party consider how its on-going work could be structured in the most efficient and
productive way, in terms of the issues which might n eed to take priority and of how to allocate time
among them, while taking into account the concerns and constraints of small delegations.
3. When considering the road ahead, the Chairperson noted, it would be useful for the Working
Party to bear in mind the precise parameters of the Working Party’s mandate which is contained in
Article VI:4 and complemented by the Decision on Domestic Regulation .   He observed that, over the
previous year or so, the discussions in the Working Party had focussed mainly on issues related to the
development of horizontally applicable disciplines on domestic regulation.  Such discussions had been
considerably helped by an informal Checklist of Issues  which was developed by the Secretariat.  This
Checklist  had been used as the basis for the discussion of substantive issues at recent meetings and
had helped to focus discussions on some of the key questions that the Working Party would need to
consider.
4. As could be seen from the Note, he had raised a number of questions about how Members
could try to organise future work, building upon prev ious discussions in this area.  For example, he
noted that the Checklist , as currently drafted, focused only on transparency  and necessity , and did not
address two concepts on which domestic regulation disciplines could be based, but which the
Working Party put to one side a little over 18 months ago - namely, equivalence  and international
standards .  He also noted that the Checklist , as it had developed, did not tend to address the content
and structure of the Accountancy Disciplines  - disciplines that Members had already agreed to -
something which might assist the Working Party as it continued to consider the possible scope,
content and structure of horizontally applicable disciplines on domestic regulation.
5. The Note then raised the question as to whether Members were prepared to see the Checklist
revised, to re-introduce the concepts of equivalence  and international standards , so that Members can
fully appreciate the potential scope of their work.  He also thought that it might assist discussions ifthe revised Checklist  touched upon the content and structure of the Accountancy Disciplines .  HeS/WPDR/M/11
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stated that any such revision could be done under his responsibility and should be seen as being
completely without prejudice to any Member’s position.
6. The Chairperson further noted that he tended to see the work on professional services and
horizontal disciplines as not being mutually exclusive.  In his view, the work in both areas of the
Working Party’s mandate could benefit from adopting a more unified approach in future work.
Indeed, the work in both areas could usefully complement one another.  He observed that the Decision
on Domestic Regulation  did not envisage the Working Party setting up two different work
programmes, but instead that work on the development of any disciplines pursuant to Article VI:4
would encompass the development of general disciplines for professional services.  Members should
therefore feel free to introduce, or draw upon, the contributions on professional services in continuing
discussions on more horizontal disciplines.
7. Following the introduction by the Chairperson, Members intensively discussed in informal
mode the issues raised in the Chairperson’s Note regarding the organization of work of the WPDR.
Some of the main themes raised were:  recognition of the parameters of the Working Party’s mandate,
contained in Article VI:4 and complemented by the Decision on Domestic Regulation ;  recognition of
the importance of Members’ right to regulate, as confirmed by the GATS Preamble;  recognition that
the work on professional services and the creation of horizontal disciplines were not mutually
exclusive, but complementary;  and, lastly, acknowledgement  that, until specific guidance had been
received by the Special Session in respect to work on domestic regulation in the context of the current
negotiations, the Working Party would continue its existing work.
8. Members agreed to revise the informal Checklist of Issues for WPDR , under the responsibility
of the Chairperson, to include questions related to equivalency and international standards, and to
reflect the Working Party’s most recent discussions.  Priority, however, would continue to be given to
issues related to transparency and necessity.
(b) Discussion of Concepts Relating to the Development of Regulatory Disciplines
9. Members, in keeping with the suggestions made above regarding the organization of work,
agreed at the suggestion of the Chairperson not to engage in detailed discussions of the specific items
under consideration until the next Working Party meeting, when the revised Checklist will beavailable.  Three delegations then presented new papers, related primarily to the issues of necessity
and transparency.
10. The representative of the European Comm unities introduced their paper, S/WPDR/W/14
dated 1 May 2001, noting that it focused on necessity and transparency.  On the issue of scope, she
said there should be no overlap between domestic regulatory measures under Article VI and measures
under Articles XVI and XVII.  Therefore, there was a need to differentiate between these measures.She thanked the Secretariat for its work in this regard.  The representative said that general provisions
on necessity should be horizontal in nature, to ensure coherence across sectors, with possible
additional provisions to address sector specificities.  The concept of proportionality could be useful
for assessing the trade impact of a measure, and in ternational standards could be useful in respect to
necessity provisions.  A listing of legitimate objectives was not required.  The accountancy disciplineswere useful in respect to transparency provisions, and she emphasized the strong link between
necessity and transparency while stating that transparency measures alone were not sufficient.
11. The delegation of Australia introduced their paper, S/WPDR/W/15 dated 3 May 2001, noting
that it shared Australia’s experience regarding regu latory impact analysis (RIA), as promised at the
previous WPDR meeting.  A set of principles and policy recommendations could be found on the
OECD website ( www.oecd.org/puma/rereform) .  A necessity test was a fundamental part of
Australia’s RAI procedures, and included the requirement to consider international trade aspects ofS/WPDR/M/11
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proposed regulatory measures, while not undermining regulatory autonomy.  The RIA process had
especially benefited small and medium-sized enterprises.
12. The delegation of Japan introduced their paper, which was circulated at the meeting and
subsequently distributed as Job No. (01)/77, dated 28 May 2001, noting that it included six categories
of conceptual measures for enhancing transparency:  publication of measures;  notifications to the
WTO;  responding to queries and complaints;  establishing standards for applying measures;
publicizing the standards for applying measures; and procedures for receiving public comments.
Japan did not wish to impede creation of high-standard provisions on transparency, but stated that
such factors as the merit and administrative burden of provisions needed to be considered.
13. The representative of Brazil noted that the EC paper reflected a revised stance on legitimate
objectives, and shifted the discussion on criteria for the necessity test to the consideration of
proportionality.  He asked whether the EC could give information on their jurisprudence regarding
proportionality.  He said caution was required with respect to the question of sectoral necessity
provisions.
14. The representative of Chile had two concerns regarding the EC paper.  On scope, she said
there appeared to a certain overlap between Article VI and XVI/XVII measures, e.g. in the case of
limits on the number of licenses granted.  On legitimate objectives, Members should continue to
consider a listing.  On Japan’s paper, she questioned whether establishing standards for transparency
was a subject that should be addressed by the Working Party.
15. The representative of Canada asked whether the EC was seeking guidelines, or actual
disciplines, in respect to a horizontal necessity test.  His delegation continued to have concerns on
proportionality, especially regarding measures that were regarded as disproportionate.  They were also
interested in more information on both jurisprudence and the issue of separate necessity tests forsectors.
16. The representative of Korea agreed that it was important to make a distinction between
Articles XVI/XVII and VI measures.  On paragraph 13 of the EC paper, he hoped that prudential
measures would be duly respected.  Regarding proportionality, he said Members should be careful in
respect to introducing new criteria for necessity.  For sensitive issues, Members should not be too
specific in listing legitimate objectives.  He look ed forward to EC jurisprudence information, and said
that information from Members on standards would be useful.  The accountancy disciplines struck a
balance between administrative burden and transparency provisions regarding prior comment.  On
Japan’s paper, he asked if new notification obligations were envisaged, saying that Korea felt the
existing obligations were sufficient.
17. The delegate from Switzerland said that fundam ental questions remained regarding the listing
of legitimate objectives and, therefore, a list was not indispensable.  On transparency, administrative
burden was a concern, and emphasis should be given to implementation of existing obligations.
Necessity and transparency were a priority, and work on these issues should proceed in parallel.
18. The representative of the United States stated that the papers from the EC and Japan appeared
to contemplate significant new restrictions on regulators.  He agreed with the approach in paragraph 6
of the EC paper to leave open the possibility for sectoral provisions, and wished to hear more about
the EC view on the guidelines issue.  His delegation was examining the question of overlap between
Articles XVI/XVII and VI measures, and he asked for further elaboration of the statement inparagraph 8 that VI measures were of a predominately qualitative nature.  He questioned the accuracy
of the statement in paragraph 12 that certain self-regulatory measures should also be subject to
disciplines.  On paragraph 16, the representative asked for clarification of the view that the necessity
test would not restrict the regulatory freedom of Members to meet national policy objectives.  In
respect to proportionality, he asked if the recent application in the EC was representative of how theyS/WPDR/M/11
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believed this principle should be applied in the GATS.  On listing legitimate objectives, he asked why
the EC had changed position.  Regarding paragraph 23, he asked if the EC had examples of relevant
criteria consistent with avoiding creation of an unpredictable mandate for dispute settlement.  On
paragraph 25 regarding transparency he asked whether the EC viewed the sets of measures applicable
under Articles III and VI:4 as synonymous.  On paragraph 28, he welcomed the EC view that priorconsultations on regulation could be useful, and noted that all WTO Members had already agreed on
prior comment on goods standards.  On Australia’s earlier paper (S/WPDR/W/8), the representative
asked whether Australia believed the necessity test should be applied differently between measures
covered under specifically listed objectives versus non-listed objectives.  With respect to the five
proposed transparency provisions (paragraph 8) to be applied to domestic regulation, he asked
whether this term was synonymous with the GATS definition of measures.  On S/WPDR/W/15, he
asked whether Australia felt the GATS should include provisions similar to those described in thepaper.
19. The delegate from Paraguay appreciated the mention in the EC paper of developing countries,
but noted that no specific provisions in this regard were actually included.  He noted his delegation
had previously expressed concern over listing legitimate objectives.  On paragraph 23, like the US, hewished to have examples of relevant objectives.  He agreed with paragraph 28, and with the statement
in paragraph 29 on implementing Arti cle III.  On paragra ph 33, he agreed the work on necessity and
transparency should proceed in parallel.
20. The representative of Argentina agreed with paragraph 3 of the EC paper on the right to
regulate, but said the issue should be seen in its broader context.  On paragraph 12, he asked what sort
of self-regulatory measures it referred to, and whether it included measures in sectors not covered by
scheduled commitments.  Regarding paragraph 17 on proportionality, he asked if there was some
contradiction with the preceding paragraph on regulatory freedom.  On paragraph 18, he asked for
addition comments in respect to international standards.  On transparency, he said Members should bemindful of administrative overload, and not confuse the goal with the instruments used.  Regarding
Australia’s paper on regulatory barriers, he found the listing of typical barriers to be very important,
and said it should precede the drafting of disciplines.
21. The delegation of Australia expressed doubts on the last sentence of paragraph 7 in the EC
paper, i.e. that measures subject to scheduling under Article XVI and XVII do not fall under the scope
of Article VI:4, saying there was no evidence in GATS for this interpretation.  Australia believedscheduled measures should also be subjected to VI:4 disciplines.  On paragraph 12, the delegation
said that self-regulatory measures should be subject to horizontal disciplines.  Also, horizontal
disciplines should be applicable to all sectors, and not only those with specific commitments.  On
proportionality, they asked for additional information, including on how this could be measured.
Concerning the US comments on S/WPDR/W/8, it was noted this was a policy paper rather than alegal document.  On S/WPDR/W/15, the delegation said Australia was simply sharing its national
experience, not advocating the use of RIA by everyone.  RIA was an example of achieving objectives
in a not-too-burdensome manner.
22. The representative of Hong Kong, China on pa ragraph 13 of the EC paper, asked why they
felt measures under GATS Article XIV and XIVbis should be excluded from regulatory disciplines.
She noted the existing necessity provision in this Article, and said her delegation believed regulatory
disciplines could be useful in this regard.  On paragraph 17, she asked whether it was appropriate that
regulatory objectives should not be questioned.  She agreed with the EC’s view on the link between
transparency and necessity.  On Australia’s paper, she said it demonstrated ways of giving effect tothe necessity test.
23. The representative of Canada said the Australian and EC papers demonstrated the importance
of transparency, and that transparency provisions could enhance the efficiency of regulatory measures
by improving their credibility and legitimacy.  She said there was a need separate the issues ofS/WPDR/M/11
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domestic consultation and notifications to the WTO.  Canada agreed with paragraph 13 of the EC
paper that issues related to financial services should be dealt with in that context, i.e. in the
Committee on Trade in Financial Services.
24. The representative of Malaysia stated that the development of rules on domestic regulation
should not in any way affect the financial services prudential carve-out.  On proportionality, he said
the concept seemed possibly subjective.  Paragraphs 14 and 16 of the EC paper he found confusing,
and he said that perhaps Members needed to go sector-by-sector on the necessity test.   He stated that
disciplines should be applicable only where commitments have been made, and that an illustrative list
of legitimate objectives might not be necessary.  On Japan’s paper, he believed Article III was already
comprehensive.  On prior comment, he questioned whether the provision in the accountancy
disciplines would be acceptable to some other professional services.  On Australia’s listing (Job No.(01)/69, dated 10 May 2001), he said that some of the barriers listed might be considered by certain
Members as legitimate restrictions.
25. The representative of Uruguay comment on the EC paper, saying he agreed with paragraphs 2
and 3 on the right to regulate.  Regarding paragraph 15, he had noted in the previous meeting that
Article VI:1 seemed to clearly imply that regulato ry disciplines applied only to specific commitments.
On paragraph 28, he agreed with the 2nd and 3rd sentences, and therefore there was no need to
impose prior comment provisions.
26. The delegation of Japan stated that, in regard to Chile’s earlier question, items 4 and 5 of
Japan’s paper were closely related.  Especially when seen from the point of view of services suppliers,
it was difficult to envisage how measures could be published without some standards for their
application.  Otherwise, there would be a lack of transparency.  On Korea’s point, the mention of
stricter obligations under item 2 referred to the implementation of Article III.  With respect to
paragraph 20 of the EC paper, Japan did not exclude creating a listing of legitimate objectives.  Onparagraph 29, Japan agreed on the importance of implementing the existing Article III obligations.
27. The representative of Poland, in regard to paragraph 15 of the EC paper, observed that Poland
had long stated that the issue of the applicability of disciplines should be given increased priority.
Regarding the minutes of the previous meeting, he said paragraph 39 did not fully reflect Poland’s
view that, in the summary of discussions on the Checklist , the topic of the scope of the necessity test
should be moved to the General Issues section of the Checklist .  The representative clarified that
Poland did not have the intention to prejudge the issue of applicability of the future disciplines when
agreeing with Uruguay's request concerning  the addition of the proposed statement.
28. The representative of Indonesia stated that he agree with paragraph 3 of the EC paper on the
right to regulate.  On paragraph 13, he shared Malaysia’s concern with respect to prudential measures.
On paragraph 17 on proportionality, he asked for additional information.  Concerning paragraph 18,
he agreed with the EC in respect to the applicati on of international standards, and noted this was an
important issue for developing countries.  On paragraph 28, he concurred with the EC on the need to
respect the differences in Members’ regulatory systems.  On paragraph 29, he agreed that new
notification requirements would only add to the existing administrative burden of Members, inparticular of developing countries.
29. The delegate from Mexico asked the Secretariat to comment on the objectives intended by the
drafters of Article VI:5.  The Secretariat replied that the drafters of the GATS had attempted to legally
define restrictions to trade in services.   They were not, however, able to fully define the scope of the
non-discriminatory, non-quantitative restrictive measures not captured by Articles XVI and XVII, an
example of which were minimum capital requirements.  For this reason, they created the work
programme as envisaged under Article VI:4.  They also created Article XVIII, which allowed
Members to negotiate solutions to specific problems and address restrictions not captured by ArticlesS/WPDR/M/11
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XVI and XVII.  Article VI:5 was an effort to operationalize the objectives stated in VI:4, the most
important of which was the necessity test.
30. The delegate from Mexico stated his appreciation for the mention in the EC paper of the right
to regulate, and asked for more information regarding proportionality and self-regulation.  On the
issue of horizontal versus sectoral disciplines, he noted that most regulatory measures were horizontal
in their coverage.  Concerning paragraphs 27 and 28, he appreciated the EC’s on prior consultation.
On paragraph 29, he agreed that the objective was to avoid additional administrative burden, and said
the main problem was the non-implementation of existing obligations.
31. The representative of the European Communitie s said her answers were preliminary, and
divided into four groups.  On legitimate objectives, she agreed there was a shift in position.  As a
result of the Working Party discussions, the EC believed an illustrative list could have legal
implications and, therefore, was not indispensable.   Regarding Articles VI and XVI/XVII, she stated
that, in paragraphs 7 and 8 of the EC paper, the reference to Article VI should be slightly amended to
read Article VI:4.  The EC believed that VI:4 measures did not need to be scheduled, and could be
newly introduced or revised at any time.  The representative observed that further consideration wasneeded with respect to the issue of measures covered under Articles VI:4 and XVI/XVII.  With
respect to the questions on paragraph 8 and the nature of VI:4 measures, the EC believed these were
predominately, but not exclusively, of a qualitative rather than quantitative nature.  Regarding
proportionality, the EC intended it to be only one of  several possible approaches to assessing the trade
impact of a measure.  The wording in paragraph 17 was open to further discussion.  The EC believedthe adequacy, or proportionality, of a measure played an important role in evaluating its necessity.
The representative noted all EC jurisprudence wa s publicly available on the CELEX database, and
stated that the application of proportionality in the EC was guided by the objectives of the single
market, and therefore of a different context from the GATS.  On the issue of horizontal versus sectoral
disciplines, she observed that the Decision on Domestic Regulation  referred to both types.  She agreed
that horizontal disciplines should be a priority, but stated that, following the creation of horizontal
provisions on necessity, it might be necessary to create certain sector-specific provisions as well.  On
the issue of self-regulation, she said the EC paper referred only to legal authority delegated by
governments.
32. The representative of Canada said the EC responses were helpful.  In particular, the issue of
scope of coverage should be further explored by the Working Party.  He said it would be difficult to
imagine that Article VI:5 would be applicable to measures scheduled under Articles XVI and XVII.  It
was critical that the Working Party reach a consensus on these issues.  The delegate from Hong Kong,
China said she hoped the EC could also answer thei r question on exceptions under Article XIV.  The
representative of the European Communities replied that Article XIV measures were not included, as
these could legally violate GATS obligations.  She also noted the EC had no intention to undermine
the prudential carve-out.
33. The Secretariat presented the informal paper, Examples of Measures to be Addressed by
Disciplines under GATS Article VI:4 , circulated as Job. No. (01)/62, dated 10 May 2001.  It was noted
that they had been asked to draw upon two sources of information, submissions by delegations andmaterials from the previous Working Party on Professional Services (WPPS).  In consideration of
their usefulness to the current discussions, the Secretariat had included under Part B of the Annexes
measures covered by the accountancy disciplines that were relevant to other sectors.  Although it had
been unavoidable to exercise certain judgements in preparing the Note, as stated in paragraph 3, these
were not intended to represent any authoritative interpretations;  it was stressed that the only purposeof the Note was to facilitate discussions among Members.  The Secretariat also pointed out that the
Note was intended to address only non-discriminatory measures.
34. The Chairperson concluded this agenda item by stating that Members had very useful
discussions, which would be reflected in the minutes of the meeting.  The discussions indicated thatS/WPDR/M/11
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Members had given considerable thought to the issues raised in the papers presented, and this would
be an excellent basis for further work.
(c) Development of General Disciplines for Professional Services
35. The Chairperson noted that, due to the lack of time, there had been no discussion under this
item at the previous meeting.   At the November formal meeting, however, several Members made
verbal reports regarding their domestic consultations .  These reports were followed by two papers:
the first was from Mexico, circulated as S/WPDR/W/12, dated 9 March 2001; and the second was by
Canada, circulated as S/WPDR/W/13, dated 16 March 2001.  No additional reports on Members’
consultations were received.
36.  The Chairperson then asked for Members’ comments on two informal Secretariat papers, the
second draft of the Synthesis of Results to Date of the Domestic Consultations in Professional
Services (Job No. 7667/Rev.1, dated 16 March 2001), and the fourth draft of International
Organizations in Professional Services  (Job No. 2139/Rev.4, dated 16 March 2001).  The
representative of Poland said that, in the Synthesis paper, Poland’s consultations should be added to
the midwives, nurses, physiotherapists and para-medical category on page 4.  The results of Poland’sconsultations with these professions were the same as those with the medical and dental professions.
The representative of Uruguay said that, on page 6 concerning Uruguay’s consultations with
university professionals, an addition should be made stating they believed it was important to continue
the consultations with professional organizations.  The representative of Hong Kong, China thanked
Canada and Mexico for their earlier papers.
37. The representative of Canada asked Members whether that the International Organization for
Standardization (ISO) should be added to the listing of international organizations.  The delegate from
Mexico supported Canada’s suggestion.  The representative of the European Communities  also
agreed.  The representative of the United States enquired what the ISO role was in respect to
professional services.  The Secretariat replied that while general standards, such as ISO 9000 and
perhaps ISO 14000, were applicable to professional services, they were not aware of many specificstandards created to date.  The representative of Canada stated they thought the ISO should
nonetheless be involved, due to the overall role of the ISO in respect to international standards.
38. The Chairperson concluded by recognizing the earlier contributions from Canada and
Mexico, as well as the interventions made during the meeting.
(d) Date of Next Meeting
39. Members agreed to hold the next formal meeting in early July, in connection with the meeting
of the Council.S/WPDR/M/11
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ANNEX
INFORMAL SUMMARY OF DISCUSSIONS ON THE CHECKLIST OF ISSUES FOR WPDR
(As requested by Members at the WPDR meetin g of 29 November, this informal summary of
discussions has been continually updated on the Chairperson’s responsibility to reflect the
current views of Members on th e topics addressed in the Checklist of Issues for WPDR (Job No.
5067, dated 17 August 2000).   Like the Checklist, this summary does not prejudge the scope or
content of the issues discussed, nor the ability of Members to raise other related issues.
General issues
Members agreed that the work on professional services and the creation of horizontal
disciplines were not mutually exclusive activities, but instead complementary.  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 w ould need to be addressed following the creation of
regulatory disciplines under Article VI:4.  One delegation asked the Secretariat to comment on the
objectives intended by the drafters of Article VI:5.  The Secretariat replied that Article VI:5 was aneffort to operationalize the objectives stated in VI:4, the most important of which was the necessity
test.  Several Members stated that the development of rules on domestic regulation should not in any
way affect the financial services prudential carve-out.
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 (WPPS) accountancy materials by the Secretariat.  The
Secretariat paper was to list specific measures not already found in the accountancy disciplines, which
were also not XVI/XVII measures. The Chairman noted that the elaboration of this list would not
preclude parallel discussions among Members on the same issue.  The Secretariat subsequentlypresented the informal paper, Examples of Measures to be Addressed by Disciplines under GATS
Article VI:4 , circulated as Job. No. 01/62, dated 10 May 2001.
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.  Others  said that both transparency and necessity were important:
transparency alone had its limits, and therefore could not be a substitute for regulatory disciplines.
Some delegations said Members should instead focus on deciding the contents of the regulatory
disciplines to be developed.
Some Members said the focus of transparency should be the central government level, while
others disagreed and noted that most restrictions were to be found at the sub-national levels.   Onedelegation said differences in legal frameworks should be considered.  Another delegation said
Members should not distinguish between types of measures, as the same requirements could be
implemented via a variety of legal mechanisms.  A third delegation said that Members should be
careful not to prejudge what kinds of disciplines were needed.S/WPDR/M/11
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3. Scope of GATS Article VI:4
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.  A number of delegations said any horizontal
disciplines should only be applicable to sectors where specific commitments have been made;  otherdelegations felt this was also an issue for negotiation.  Some delegations said that, in accordance with
GATS Article VI:1, any horizontal disciplines should only be applicable where specific commitments
have been made.  One Member stated that the issue of the applicability of disciplines should be given
increased priority.
Some delegations said there should be no overlap between domestic regulatory measures
under Article VI and measures under Articles XVI and XVII, and that there was a need to
differentiate between these measures.  Another delegation said there was no evidence in GATS forthis interpretation, and that they believed scheduled measures should also be subject to VI:4
disciplines.  A third delegation said there appeared to a certain overlap between Article VI and
XVI/XVII measures, e.g. in the case of limits on the number of licenses granted.  Another Member
said they were examining the question of overlap.  One delegation noted that it would be difficult to
imagine that Article VI:5 would be applicable to measures scheduled under Articles XVI and XVII,and stated it was critical that the Working Party reach a consensus on these issues.
4. Administrative burden:
A significant number of Members agreed that the administrative burden of any regulatory
disciplines that were developed was a central consideration.  A number of delegations said that, before
creating disciplines, it was necessary to analyze wh ether regulatory disciplines would create too heavy
an administrative burden on developing countries.
Necessity
5. Legitimate objectives:
Many Members making comments favoured the creation of a concise, non-exhaustive,
illustrative list of legitimate objectives.  Many also felt a listing of "non-legitimate objectives" wouldbe too limiting, and was undesirable.  A number of delegations stated they were not necessarily
opposed to a positive list, but simply had some doubts as to whether it would actually be possible to
put together a positive list, as it could become too large or too difficult to reach a consensus on a
smaller list.  One Member said that international standards, while still not very widespread in services,
could nonetheless be referred to in this respect.   Several delegations said the determination of
legitimate objectives rested solely with Member governments.
One delegation asked what kind of function Members had in mind for a listing, and whether a
necessity test would still be required in respect to agreed legitimate objectives. A number of Members
expressed concern that a listing could potentially restrict their autonomy to regulate, and some asked
whether the existing wording of VI:4 was already sufficient.  One Member observed that the
protection of consumers was not specifically menti oned in VI:4.   Some delegations did not wish a
listing to be legally binding, but instead only provide guidance for regulators.  One delegation saidthat, for sensitive issues, Members should not be too specific in listing legitimate objectives. Another
delegation said that, according to the GATS Preamble, the national policy objectives as defined by
Members were already legitimate and, therefore, did not need further clarification.  Several Members
noted that the Appellate Body to date had never questioned the legitimate objectives set by
governments.S/WPDR/M/11
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Several delegations were of the view that Members should give more consideration to the
existing Article XIV provisions;  another delegation pointed out that VI:4 disciplines were
obligations, while XIV measures were exceptions to GATS provisions.  Several  Members stated that
priority should now  be given to the creation of specific disciplines, and the listing of legitimate
objectives should come afterward .  Other Members explicitly disagreed.   The issue of horizontal-
versus sectoral-level listings of legitimate objectives was generally thought to be an issue for
6. Criteria for the necessity test:
The Chairman noted that documents on this topic had been submitted by Members.  Several
delegations said they had begun domestic analyses of the implications of the differences in
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.  A number of
Members asked what the objectives of the necessity test would be, i.e. whether it was it intended to
discipline regulators, or to help give them guidance.
One Member said the concept of proportionality could be useful for assessing the trade
impact of a measure.   Several Members expressed concerns on proportionality, especially regarding
measures that were considered as disproportionate.  Another delegation said Members should be
careful in respect to introducing new criteria for necessity. A third delegation said the concept seemed
possibly subjective.  One Member said that general provisions on necessity should be horizontal in
nature, to ensure coherence across sectors, with possible additional provisions to address sectorspecificities.  Another Member agreed the possibility could be considered, while a third Member said
caution was required with respect to the question of sectoral necessity provisions.
One delegation stated that, regarding the question of whether regulatory autonomy was
constrained by the necessity test, the chapeau of the GATS, which unequivocally recognizedMembers right to regulate, was overriding.  At the same time, there were also the mandates given in
Articles VI:4 and XIX, for ensuring that regulations were not unnecessarily trade restrictive and
promoting trade liberalization, respectively. Regulatory autonomy was nonetheless preserved, as
Members were free to pursue the policy objectives suitable for their domestic environments.  While
pursuing this right to regulate, regulators needed to be mindful of their GATS commitments, as well
as the international trade implications of their regulatory options.
The Secretariat was asked whether it had previously compiled information on the
jurisprudence relating to the application of necessity in the WTO.  The Secretariat noted there was an
existing paper on this issue from the Committee on Trade and the Environment (document
WT/CTE/W/53/Rev.1, dated 26 October 1998 ), and suggested that, after examining this paper,
Members could decide whether wished to have additional work done.  The Chairperson said there wasthe question of updating, after Members had read the document.  Several Members asked for
information on EC jurisprudence regarding propor tionality, and were told all jurisprudence was
available on the CELEX database.
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.
7. "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 reasonablyS/WPDR/M/11
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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
8. Definition of regulations:
One delegation stated it wished to clarify that, in the context of transparency disciplines,
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 new definition, 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.  One representative said the“measures” mandate was clear, but that it was in the context of developing “any necessary
disciplines”.  The representative said that it was still early in the process, and that Members were
setting their sights too low if they focused excl usively on all measures in respect to transparency
disciplines.
A number of delegations were of the view that  it would not be appropriate to have some
disciplines applicable to measures, and others applicable to only a subset, i.e. regulations.  One
delegation suggested that, in such cases, Members could instead consider additional commitments in
schedules as an alternative option.  Another delegation said that some flexibility may be required in
terms of the application of specific disciplines.  A third delegation noted the different realities and
legal systems among Members, and said it was necessary to be realistic, and focus on disciplinesapplicable to all.
One 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 in areas where no international standards existed.
9. 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.
Responding to a question on the costs and benefits of transparency, one delegate said that
transparency benefited consumers and companies most, as it would assist in creating a morepredictable trading environment, and more transparent ways of doing business, but that there would
also be benefits for governments in terms of promoting foreign market access.  The delegate noted
that while transparency had costs, particularly at the sub-national levels, the use of the Internet and
other technologies could help reduce those costs.
One delegation said that not enough discussion had taken place on transparency disciplines,
including building on the variety of transparency provisions contained within the accountancy
disciplines.  Other delegations noted that the importance of transparency was explicitly recognized in
Article VI:4 (a), and that the VI:4 mandate implie d a need for additional transparency provisions.
Several delegations agreed that the most important aspect of transparency was to increasepredictability;  therefore, transparency disciplines needed to be directed towards services providers,S/WPDR/M/11
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not towards governments, and there should be no new notification requirements.  Some delegations,
however, said that Article III requirements were sufficient, and there should be no new measures.
10. Prior comment provisions:
Many  Members opposed the creation of any prior comment provisions, saying they were
unnecessarily burdensome, especially for sub-national entities.  One Member noted that the OECD
was preparing a paper on this issue. One Member expressed the view that prior comment provisions
could have similar effects to necessity provisions, and said that Members could examine and compare
the administrative burden of these two alternativ es.  Another Member asked towards whom prior
comment provisions should be targeted, and how such provisions could be made workable at the
multilateral level.
Some delegations stated that prior comment provisions as part of the law-making process
were not permitted under their domestic legislation.  Many governments, however, did publish new
measures well in advance of their entry into force.   One Member noted that all WTO Members had
already agreed on prior comment on goods standards.  Another Member observed that the
accountancy disciplines had a "best endeavours" clause, and said this could be repeated. OtherMembers said caution was required, and that the definitional and prior comment issues needed to be
examined in greater detail.
11. 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.
12. Compliance with existing notification requirements:
Several delegations stated that the notification requirements under GATS Article III were not
being observed, and needed strengthening.  Other delegations were opposed, stating that Membersalready 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.
13. Appropriate levels of transparency
One delegation asked whether the OECD had conducted work on cost-benefit analyses in
respect to transparency provisions.  The Chairperson asked the Secretariat to make an enquiry.  The
response to the Secretariat enquiry was that, although no specific cost-benefit analyses had beenconducted, some information might be available in the individual country studies.
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