RESTRICTED  
  
S/WPDR/M/60  
 
31 March 2014  
(14-1979)  Page: 1/6  
Working Party on Domestic Regulation    
 
 REPORT OF THE MEETING HELD ON 25 FEBRUARY 2014 
NOTE BY THE SECRETARIAT1 
The Working Party on Domestic Regulation (WPDR)  held a meeting on 25 February 2014, chaired 
by Ms. Viràg Halgand Dani of Hungary. The agenda for the meeting was contained in airgram 
WTO/AIR/4247 dated 14 February 2014. An annotated agenda for the meeting was circulated in JOB/SERV/175 dated 14 February 2014. The agenda was adopted with the addition of an item 
under 'Other Business' on the appointment of  the new Chairperson of the Working Party. 
 1  ITEM A - DEVELOPMENT OF REGULATORY  DISCPLINES UNDER GATS ARTICLE VI:4 
1.1.  The Chairperson noted that there were tw o sub-items under this point of the agenda. The 
first was the technical discussion of issues su bmitted by Members, while the second was the 
discussion of regulatory issues.  
1.1  Discussion of technical issues submitted by Members  
1.2.  As on past occasions, the Chairperson pr oposed that the technical discussion be undertaken 
in informal mode so as to allow for an easier and more open exchange of views. To structure the 
discussions, she proposed that Members first provide any additional comments on questions 
addressed at the last meeting on 28 October 2013  concerning the "introduction", "institutional 
provisions" and "legal form and implementation". These were questions 1 and 91 - 93 in the list of technical issues. She then informed Members that all informal summaries and annotated agendas pertaining to the discussions had been compiled into one single document with the symbol number 
JOB/SERV/173. She recalled that the purpose of this document is to help Members keep track of 
the discussions and to make it easier to conduct any follow-up work that might be considered necessary. It may also be supplemented, as appropriate, so as to reflect any future comments 
and/or contributions from Members. She also drew  Members' attention to the second "reflections" 
note submitted by a group of Members with thei r thoughts on what might be drawn from the 
technical discussions conducted from March to October 2013.  
1.3.  Discussions on these topics continued in informal mode. 
1.2  Discussion of regulatory issues 1.4.  The Chairperson then reverted to formal mode for the discussion of the Secretariat Note on 
Regulatory Issues.2 She first opened the floor for any a dditional comments on the subject of 
development, as well as the sectors discussed at the previous meeting, namely maritime transport 
services, road transport services, logistics services, distribution services, postal and courier services. There were no further comments on these areas. The Chairperson proceeded to open the 
floor comments on financial services, tourism services, environmental services, energy services, 
health services and mode 3. 
                                               
1 This document has been prepared under the Secret ariat's own responsibility and without prejudice to 
the positions of Members and to their rights and obligations under the WTO. 
2 "Regulatory Issues in Sectors and Modes of Supply", S/WPDR/W/48 of 13 June 2012 and Add.1 dated 
30 April 2013;  and "Services-Related Regulatory Challe nges faced by Developing Countries", S/WPDR/W/51 
13 March 2013. S/WPDR/M/60 
 
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  1.3  Financial services 
1.5.  On financial services, the Chairperson noted that the Committee on Trade in Financial 
Services had also been discussing this sector and that the Working Party would in due course be 
receiving a report from the Chairman of that body. Members also had the opportunity to raise any 
issues in the Working Party should they so wish. In this regard, she drew attention to the 
communication from South Africa on non-banking financial services, which was contained in JOB/SERV/179. 
1.6.  The representative of South Africa introduced the informal note contained in JOB/SERV/179. 
The report provided an overview of the regula tory framework currently governing non-banking 
financial services in South Africa. Six areas were covered in the report, namely financial services providers, capital markets, collective investme nt schemes, pension funds, insurance and credit 
rating agencies. The delegate noted that as the document had just been circulated most Members 
would probably not have reviewed it in detail and she therefore looked forward to receiving comments at the next meeting.  
1.7.  The representative of Canada expressed appreciation for the report's support towards 
transparency, which can promote trade by impr oving understanding of domestic regulatory 
requirements including those applicable to cross-border financial services providers. The delegate 
suggested that the report from South Africa should also be discussed in the Committee on Trade in 
Financial Services given the expertise available in that body. 
1.8.  The representative of United States asked if any of the measures described in the report 
were discriminatory in nature. In other words, did the measures discriminate against foreign 
providers of non-banking financial services, or were they regulations of a prudential or general 
nature. 
1.9.  The representative of South Africa confirmed that there were no discriminatory measures. 
1.10.  The representative of Brazil stressed that discussions on financial regulation required a high 
level of technical expertise. Therefore, debates on regulatory issues with a bearing on trade in 
financial services should always be mindful of and draw on the work conducted at specialized 
international organizations, such as the Financial Stability Board, the Bank of International 
Settlements and the International Monetary Fund. Regarding the Secretariat Note, while paragraph 193 adequately recognizes the rationale for the adoption of barriers to entry and other regulations in financial services, subsequent paragraphs of the Note seem to contradict what has 
become consensus among financial regulators on "best regulatory practices", especially in the light 
of the ongoing financial and economic crisis.  
1.11.  In paragraph 194, the Note expressed the view that excessively burdensome licensing and 
qualification requirements and procedures, as well  as standards, might distort competition. From 
Brazil's standpoint, it would be virtually impossible to establish ex-ante  whether a Member's 
applicable requirements were too burdensome. The Lehman Brothers collapse had been a telling 
example in this respect. Before its bankruptcy, which triggered the global financial crisis, Lehman 
Brothers had been considered to be a non-systemically important financial institution. Paragraph 195 lists situations and measures that might be particularly burdensome and hamper trade in financial services. Item (e), for example,  mentions the lengthy duration for the approval 
of new products as a burdensome requirement. In  the view of Brazil, financial regulators must 
require that new financial services and service providers be fully analyzed and subjected to 
prudential regulation and proper authorization. In financial services, a grey area might exist 
between new services and new ways of delivering existing services. This uncertainty affected 
services classification as well.  
1.12.  Item (j) sustained that restrictions on advertising might render the conduct of business 
difficult, especially over the Internet. Brazil und erstood that financial regulators shall protect 
consumers by assuring that financial services advertising provides accurate information, such as full risk disclosure and descriptions of applicable  fees and charges. In addition, initiatives to 
promote financial inclusion requires that efforts be made to foster financial education, especially to 
avoid over-indebtedness. Finally, it would be crucial that the objective of financial inclusion do not 
neglect regulatory requirements by way of pa yment systems security and risk management. S/WPDR/M/60 
 
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  1.13.  The contention made in item (k) that unreasonably high levels of minimum registered 
capital by international standards to open a bank, for example, may be excessively restrictive to trade in financial services was of special concern. Existing international standards may not be sufficient to guarantee the stability of the financial system. The international response to the 
financial crisis, including the development of the International Regulatory Framework for Banks 
(Basel III) by the Basel Committee of Banking Supervision, made clear that the previous international regulatory architecture had been inadequate. Notwithstanding the importance of 
internationally agreed standards, Brazil believed that financial regulators need broader discretion 
to adopt higher standards if, and when, they deem  it necessary to attain legitimate regulatory 
goals. The crisis highlighted the social and economic consequences that could arise from an inadequately regulated financial system. These consequences can heavily damage world trade. 
Concerning item (o), in Brazil’s regulatory practi ce the appointment of persons of responsibility in 
a bank for senior management positions requires the assessment of and assurance of not only adequate qualifications, but also of honesty, integrity and reputation. 
1.4  Environmental services 
1.14.  The Chairperson introduced the sections in the Note on environmental services, contained in 
paragraphs 177 to 184. Issues raised in the Note  include: the lack of appropriate regulatory 
frameworks; inefficient administrative processes; insufficient information regarding licensing and 
certification procedures, and tendering processes; unnecessary delays in processing applications and informing applicants; and weak or inconsistent enforcement of environmental regulation.  
1.15.  The representative of the European Union recognized the importance of liberalizing 
environmental services, as it can be of great benefit to all parties involved. As set out in the 
Secretariat Note, this liberalization should go hand in hand with a reinforcement of the legal framework because of the characteristics that some of these services have and their potential 
impact on a large part of the population. This reinforced legal framework should guarantee fair and 
transparent access to the market for service prov iders and at the same time ensure that they 
operate in the general interest and in a well-defined regulatory context in compliance with 
economic, social and environmental objectives. This was particularly important for the 
liberalization of infrastructure environmental se rvices. The regulatory framework should prevent 
anti-competitive behaviour, safeguard the public interest and contribute to social objectives.  
1.5  Energy Services 
1.16.  On energy services,  the Chairperson highlighted that the section in the Note was contained 
in paragraphs 170 to 175. She stated that the energy supply chain was subject to a wide variety of 
regulations which pursue various public policy objectives. Issues raised in the Note include: the 
lack of adequate regulatory frameworks; opaque  frameworks and administrative systems; poor 
regulatory transparency which reportedly provid es scope for corruption; arbitrary business and 
licensing practices; and unpredictable policy/regime changes. 
1.17.  The representative of Australia described the reform that has taken place over the last 
decade to improve the regulatory environment for Australian energy-related services. These 
reforms impact networks that transport convey energy to consumers such as electricity wires and gas pipelines. The reforms have resulted in the creation of two new statutory bodies. Firstly, the 
Australian Market Energy Commission was established with responsibilities for rule making, such 
as establishing the criteria for applicants to obtain licence. Secondly, a national independent regulator known as the Australian Energy Regulato r was also established. In implementing these 
reforms, the Australian government took note of the importance of independent regulatory 
decision making to ensure that robust licensing requirements are applied. It is for the Australian Energy Regulator to assess whether to authorize the energy distributor following three key criteria: 
ensuring minimum organizational and technical capacity are established; ensuring that the 
distributor has the financial resource to ensure the financial viability of the distributor; and the suitability of the distributor to hold a distribution  authorization. The regulatory reforms were made 
in respect of confusing and different regimes which had existed across Australia's states and 
territories. The reforms also had the effect of increasing transparency of opaque procurement 
practices related to private purchases of energy. S/WPDR/M/60 
 
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  1.18.  The Chairperson introduced the sections in the Note on tourism services, health services 
and mode 3. There were, however, no interventions by Members.  
1.19.  The Chairperson thanked Members for their comments and views. She noted that the 
Working Party had come to the end of the provisio nal schedule for the discussion of the regulatory 
issues Note. However, she proposed that in keeping with usual practice that the agenda item will 
be kept open for the next meeting for additional contributions from Members. The Chairperson highlighted that under "future work" she would like to hear from Members on how to follow-up on 
the discussions on regulatory issues. She propos ed that the Working Party take note of the 
statements made. It was so agreed. 
2  ITEM C - FUTURE WORK 2.1.  The Chairperson recalled that at the last meeting, it was agreed that the Working Party would 
have a dedicated discussion on Members' experiences with domestic regulation disciplines in 
services regional trade agreements (RTAs). The purpose of the exercise, as described in the 
annotated agenda circulated for this meeting, would be to have a Member-driven discussion of 
how disciplines have, or are being, addressed in RTAs. This could include sharing details of the 
different types of domestic regulation provisions in such agreements, commonalities or differences 
with those under negotiation pursuant to the mandate of Article VI:4, as well as experiences with 
the negotiation and implementation of such disc iplines. Each Member would remain free to share 
any other issue or experience which it considered relevant.  
2.2.  In order to allow for an efficient preparation and organization of the discussion, the 
Chairperson suggested the following steps. First, Members with written contributions should 
submit them to the Secretariat at least 3 weeks before the meeting for circulation to the 
membership. Second. at the meeting, Members wi th written contributions would be asked to 
introduce their main points. Should Members wish to use PowerPoint to make their presentations, 
they are requested to let the Secretariat know in  advance of the meeting, so that appropriate 
arrangements can be made. Third, in order to make the discussion as interactive as possible, these presentations will be followed by interv entions and statements from the floor where 
delegations will be given the opportunity to raise questions or make comments.  
2.3.  The discussion would be conducted in info rmal mode and a Chairman's informal summary 
would be prepared capturing the main points di scussed. As this would be expected to be a 
discussion based on views and experiences of Members, the Chairperson strongly encouraged 
delegations to circulate statements, presentations and any other additional information in writing, 
if possible before the meeting. This would allow for a more focused discussion. The submissions would not need to be circulated as formal documents, unless the Member wishes to do so. The 
Chairperson proposed that the dedicated discussion be undertaken at the Working Party meeting 
envisaged for the week of 5 May 2014. This shou ld give Members ample time to prepare their 
contributions.  
2.4.  The representative of Australia agreed entirely with the Chairperson's proposal on the 
organization of the dedicated discussion. Her delegation believed that it would be valuable to 
examine how other trade agreements have dealt with the issues which this Working Party has 
been grappling with and to learn from them. Australia looked forward to contributing to this 
discussion on the commitments which it has made in RTAs, and the approaches and policies used. 
Australia encouraged other Members to contribute to this discussion. 
2.5.  The representative of Chile noted that they  had a very broad experience of RTAs. Domestic 
regulations has always been at the centre of these negotiations. For these reasons, and in the 
same way as expressed by Australia, Chile would be very keen to engage and be active participants in the dedicated discussion.  
2.6.  The representative of New Zealand recalle d that as they had expressed at the previous 
meeting they saw a great deal of value in holdin g a discussion of Members' RTA experiences with 
domestic regulations. New Zealand shared the sa me views as those conveyed by Australia and 
Chile. The practical parameters proposed by the Chairperson for organising this dedicated 
discussion were useful and sensible. New Zealand looked forward to participating actively in this 
discussion. The delegate, however, felt that the Secretariat Note from 2005, as mentioned in the S/WPDR/M/60 
 
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  annotated agenda, was outdated. With the passing of time the Note would not be likely to reflect 
Members' best practices or their most recent approaches in RTAs. On the other hand, it would not be necessary to ask the Secretariat to prepare a new Note as this would delay what has been shaping up to be a very useful discussion. More over, the Chairperson's proposed approach would 
leave Members free to highlight the experiences that they believe to be relevant. 
2.7.  The representative of the United States supported the proposal, and agreed that it would be 
very useful to have a dedicated discussion on RT As. However, he cautioned against limiting the 
discussion to just Article VI:4. A number of RTAs deal with a broader range of regulatory issues 
that would include for example telecommunications and other areas. The Secretariat Note, as mentioned by New Zealand, was most probably no longer current but the United States would not wish to delay the dedicated discussion while waiting for a new Note. Maybe, such an update could 
be prepared after the dedicated discussion.  
2.8.  The representative of Hong Kong, China supported the approach proposed by the 
Chairperson.  Hong Kong, China looked forward to contributing actively to this discussion and to 
learning from the experiences of other Members.  
2.9.  The representative of the European Union joined others in supporting the dedicated 
discussion on domestic regulation in RTAs. The European Union agreed with the approach and 
practical organization outlined by the Chairperson in the annotated agenda, namely to have a 
discussion and debate in an informal mode. However, the discussion should focus on the sharing of experience and not on qualitative assessments of domestic regulation provisions in a given RTA. 
The purpose of the exercise should not be to  see who has the "best" or "worst" domestic 
regulation provisions in its RTA. Like any other provisions in an RTA, domestic regulation 
provisions are per definition the result of a negotiation between parties. The final result as written 
down in a RTA, therefore do not necessarily reflect a Member’s true domestic regulation ambitions. 
Bearing this in mind, Members could have an open exchange of views on their respective bilateral 
domestic regulation experiences and the European Union would certainly be willing to share its own experience with other Members, both stemming from its internal market and from its bilateral 
trade agreements. 
2.10.  The Chairperson expressed appreciation fo r Members' very useful suggestions and support 
for the dedicated discussion. She stressed that the key element to make this discussion a success 
would be Members' contributions. The Working Party therefore counted on their active 
participation and inputs. The caveats and parameters for the discussion were duly noted by the 
Chairperson. It was so agreed that the dedicated discussion on domestic regulation in RTAs would be organized for the next meeting of the Working Party currently scheduled for the week of 5 May 
2014.  
2.11.  The Chairperson also drew Members' attention that, barring further contributions which are 
welcome at any time, the Working Party had concluded its initial review of the work programme of 
both technical and regulatory discussions. Members should already be thinking of how to move 
forward. A couple of items were still on the tabl e, such as the submission from South Africa on 
non-banking financial services, and the second 'ref lections' paper from a group of Members. Some 
Members have signalled their intent to revert to these items with comments. However, in 
preparation for the next cluster, the Working Party needed to have a serious consideration on how 
it should move forward, where more time should be devoted and what should be the focus. The Chairperson signalled that she would try to drive a process of consultations on future work, she 
also encouraged Members to approach her with their ideas.  S/WPDR/M/60 
 
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  3  ITEM D - OTHER BUSINESS 
3.1.  The Chairperson made a statement on the appointment of the new Chairperson to Working 
Party on Domestic Regulation.  According to the rules of procedure for meetings of the Council for 
Trade in Services (document S/L/15), which also a pply to the Working Party, the election of the 
Chairperson would be expected to take place at the first meeting of the year and to take effect at 
the end of the meeting. As consultations on th e appointments of Chairpersons to Councils and 
Committees in the WTO were still under way, the handover of the Chairmanship of Working Party 
would take place at the beginning of the next meeting, currently scheduled for the week of 
5 May 2014. The meeting was adjourned.  
 
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