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Working Party on Domestic Regulation    
 
SERVICES-RELATED REGULATORY CHALLENGES FACED BY DEVELOPING COUNTRIES  
NOTE BY THE SECRETARIAT1 
1  INTRODUCTION 
1.1.  At the request of the Working Party on Domestic Regulation, this Note discusses 
development-related challenges and issues that arise from regulating services sectors and modes of supply. It is intended to supplement earlier wo rk by the Secretariat on "Regulatory Issues in 
Sectors and Modes of Supply" (S/WPDR/W/48) and builds upon the discussion of the importance of 
the domestic regulatory environment as a context for trade. As in the earlier Note, the focus will primarily be on those regulations under the mandat e of the Working Party on Domestic Regulation, 
namely licensing and qualification procedures and requirements, and technical standards. In some 
cases, studies and descriptions of challenges faced in regulation may go beyond these measures. 
These have been included for the purpose of completeness, as the literature often does not make such a fine-grained distinction, and do not suggest that they are under the scope of Article VI:4. 
1.2.  It should be noted that the Note does no t seek to discuss the relative merit of private or 
public provision of services, nor does it seek to prescribe any particular model for regulation. This Note by no means pretends to be an exhaustive study of regulatory issues faced by developing 
countries but does attempt to provide a broad over view of the development-related challenges and 
opportunities that may arise. It is thus envisaged that Members will use this background Note to bring their own specific experiences, or contribu te additional development perspectives, to the 
discussions, as appropriate. 
1.3.  The Note is divided into 3 sections. The fi rst, examines the challenges faced by developing 
countries in establishing appropriate regulatory frameworks and institutions that best harness the gains from trade. The second section discusses tr ade and development implications that may arise 
from the absence of appropriate regulatory and institutional frameworks. The third section 
provides some concluding observations. 
1.4.  It should be noted that no judgement is intended on what might constitute restrictions, 
problems or barriers that are incompatible with the provisions of the GATS. Nor does the 
discussion in this Note imply any judgement, direct or indirect, on the need for, or content of, any particular regulation, rule, procedure or administrative action. 
2  THE SERVICES REGULATORY CHALLENGE: OPPORTUNITIES AND CONSTRAINTS FACED 
BY DEVELOPING COUNTRIES 
2.1.  The services economy has been undergo ing a major transformation over the last 
three decades, moving away from a model where se rvices were provided often as a function of 
government to one where services are provided  on a competitive and commercial basis. The 
degree of change, however, varies across regions and sectors. Historically, several infrastructural and social services, such as in telecommunications, transport and public utilities, as well as 
essential consumer services like education and health were directly provided by government 
entities, usually in monopoly situations.  
                                               
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. S/WPDR/W/51 
 
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  2.2.  In many of these sectors, governments ha ve progressively moved back from their role of 
primary supplier and have increasingly had to take on new roles as the supervisor or regulator of competitive markets. On the other hand, in othe r sectors, where there has always been strong 
private sector involvement, technology and market globalization has made the task of regulation 
ever more complex with the emergence of either new services or the involvement of an expanded 
range of private actors. 
2.3.  The shift towards private or joint public-private provision of services has often resulted in 
more and not less regulation and has been descri bed as the rise of the so-called "regulatory 
state".
2 Indeed, the experience of OECD countries has been that the regulation of services markets 
has expanded at the same time as sectors were privatised and opened up to competition.3 In 
developing countries the establishment of new regulations, laws, contracts, institutions, regimes 
and processes have also been an important feature of infrastructure reforms associated with 
telecommunications, transport and public utilities.4 Liberalization of services markets has thus 
required greater emphasis on formulating new regulation or re-regulation to ensure regulatory 
quality and efficiency, and transparent processes, as well as appropriately mandated regulatory 
bodies. 
2.4.  Through the regulatory framework, governments may wish to increase welfare by correcting 
market distortions, minimizing the impact of externalities and preventing anti-competitive 
practices. Regulations may also be used to ensure that societal values such as environmental protection, health and safety, universal access, and the like, are attained. Consumer protection assumes particular importance in services markets. Services are intangible and non-storable, and 
their supply often requires an interaction between the supplier and consumer. This implies that 
users frequently cannot easily assess the quality of the service until they have consumed it. Governments may seek to avoid that service suppliers exploit such information asymmetries. 
Unlike goods, it is difficult if not impossible to subject services to any form of ex ante  physical 
testing. Thus regulations will often be attached  to the competence and conduct of the service 
supplier.
5 This explains why in services there is often greater emphasis on the qualification 
requirements of the service supplier as a way to indirectly control the quality of the services 
provided. 
2.5.  In the context of developing countries, in addition to the foregoing, a frequently cited concern 
is the need for some form of government interventi on to ensure that markets contribute to poverty 
reduction and help bring about inclusive and sustainable development.6 This policy objective may 
sometimes be pursued through regulation which aims to ensure that services are available to all citizens at equitable conditions, no matter their location or income. In the case of infrastructure 
services, for instance, universal service obligations may sometimes require expansion of the 
network to remote areas or a ffordable pricing for poorer segments of the population. 
2.6.  At the same time, it has been well noted in economic literature that regulation may be 
captured by special interest groups, and thus flourish for reasons totally unrelated to addressing 
market failure or development needs.
7 Rather, in such a situation, regulation may primarily serve 
to sustain the advantage of certain groups who are intent on promoting their own economic rents without making any contribution to productivity. Governments and its regulatory bodies are thus 
subject to lobbying by special interest groups seeking to ensure that privileges and rents 
                                               
2 Majone, G (1997), "From the positive to the regulato ry state: causes and consequences of change in 
the mode of governance", Journal of Public Policy, 17 (2), 136-67; Glaeser, E and Shleifer, A (2003), "Rise of the Regulatory State", Journal of Economic Literature, Vol.XL, June 2003, pp.401-425. 
3 Blundell, J and Robinson, C (2000 ),"Regulation without the State. The Debate Continues", 
Readings 52, London: Institute of Economic Affairs. 
4 Eberhard, A (2007), "Infrastructure Regulation in Developing Countries: An exploration of hybrid and 
transitional models", Working Paper No . 4, 200, Public-Private Infrastructur e Advisory Facility, available online 
at www.ppiaf.org 
5 See WTO (2012a), "Technical Standards in Se rvices", Note by the Secretariat S/WPDR/W/49, 
3 September 2012. 
6 UNCTAD (2011), "Services, development and trade: the regulatory and institutional dimension", Note 
by the Secretariat TD/B/C.I/MEM.3/11, 15 December 2011, p.7; Cook, P, Kirkpatrick, C, Minogue, M, and Parker, D (2004) (eds), Leading Issues in Competition, Regulation and Development , Edward Elgar, 
Cheltenham, UK, p.11. 
7 See for instance, Stigler, G (1971), "The theory of economic regulation", Bell Journal of Economics and 
Management, 2, 3-21; Peltzman, S (1976), "Toward a more general theory of regulation", Journal of Law and 
Economics, 14, 109-48. S/WPDR/W/51 
 
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  stemming from regulation are maintained. In such cases, even when regulatory intervention is 
warranted on public policy grounds, governments may be "bought" into relying on those measures that benefit the interests of a few at the expense of the general good. The complexity and diversity 
of services regulation also implies that regulators who are less experienced or less resourced might 
be more easily "captured" by special interest grou ps even if they intend to act in pursuit of the 
"public interest".
8 
2.7.  With the market-oriented transformation of  services sectors, establishing appropriate and 
effective regulatory and institutional frameworks has thus become one of the biggest challenges 
faced by governments. Very generally all regula tory bodies need to address two fundamental 
issues.9 Firstly, to regulate effectively, the competent authority will need to be able to obtain the 
necessary information on market practices, costs and revenues of service suppliers, consumer 
demand, changes in technology affecting the sector, the macroeconomic environment, and so on. 
Inevitably, the regulator will know less about th e market environment and business practices than 
the firms or individuals operating within it. Those who are regulated will also have insider 
knowledge which they might not reveal. Secondly, there is the challenge of ensuring that the 
regulatory body is not subject to political or commercial capture. In other words, mechanisms are needed to avoid that regulations and decisions fa vour any particular group at the expense of the 
general economic good. 
2.8.  Overcoming these problems requires considerable resources, expertise and strong political 
commitment on the part of the government. In this re spect, it is also important to note that one of 
the GATS most important conceptual bases is  the distinction between liberalization and 
de-regulation. Apart from market access and national treatment measures, which are subject to 
scheduling, trade liberalization under the GATS does not impinge on governments' ability to regulate. This is because the Agreement distinguishes between three types of measures: 
(i) quantitative restrictions on the entry of, or outputs by, the service supplier including legal form 
requirements and foreign equity limits; (ii) discrimination against foreign services and service suppliers through the modification of conditions of competition in favour of own nationals; and 
(iii) domestic regulations. Measures in categories (i) and (ii) are defined as market access and 
national treatment limitations that are to be reduced or eliminated through successive rounds of negotiations.
10 Domestic regulations in category (iii) are not considered 'trade restrictions' as such, 
but the GATS acknowledges that they may neve rtheless have trade restrictive effects and 
mandates the establishment of relevant disciplines under Article VI:4. 
2.9.  Thus, under the GATS, "liberalization" in sectors where commitments are made, means 
granting market access (Article XVI) and national  treatment (Article XVII). These provisions have 
a defined legal scope that applies only to six types of market-access restrictions and any form of 
national treatment discrimination. Apart from that, governments and regulators have the autonomy to decide the shape and content of th e remaining regulatory framework. Indeed, the 
Preamble of the GATS affirms that: 
"Recognizing  the right of Members to regulate, and to introduce new regulations, on 
the supply of services within their territories in order to meet national policy objectives and, given asymmetries existing with respect to the degree of development 
of services regulations in different countries, the particular need of developing 
countries to exercise this right". 
2.10.  The GATS explicitly recognizes the challenges faced by developing countries. While it does 
not directly provide guidance on how to pursue a sound regulatory approach, the Agreement does 
contain a number good governance provisions . These include obligations on transparency 
(Article III), as well as on domestic regulation (Article VI). The latter contains a general obligation 
on the availability of judicial, arbitral or administrative tribunals or procedures for review of 
decisions at the request of an affected serv ice supplier, and appropriate remedies where 
                                               
8 See discussion of political economy considerations underlying regulatory intervention in WTO (2012b), 
"World Trade Report 2012, Trade and public policies: A closer look at non-tariff measures in the 21st century", 
pp.75-76. 
9 Cook, et.al (2004), op.cit, pp.8-10. 
10 Articles XVI (market access) and XVII (national treatment), and Article XIX (progressive 
liberalization) of the GATS. See also discussion on when  a services measure can be considered to be a "trade 
restriction" in the WTO (2012b), op.cit, pp. 78-79. S/WPDR/W/51 
 
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  justified.11 Where the procedures are not independ ent of the agency entrusted with the 
administrative decision concerned, Members have to ensure that procedures in fact provide for an objective and impartial review.
12 For sectors where specific commitments are taken, there are 
additional obligations to ensure that all measures of general application are administered in 
a reasonable, objective and impartial manner; that the competent authority informs applicants of 
the decision concerning the application or its status; and that there are adequate procedures to verify the competence of professionals of any other Member.
13  
2.11.  These principles share much in common with  the elements commonly cited in the literature 
on regulation and development as "good practices".14 These include the design of objective, 
criteria-based and transparent rules, which redu ce the scope for discretionary decision making, 
and the establishment of institutions empowered with an independent mandate.15 The discourse on 
regulation has also seen calls for generating benefits through regulatory reform and audits, with 
some of them addressing the impacts that regu latory policies have on trade and investment.16 Key 
questions raised in an UNCTAD study have been the economic impact of regulation, the potential 
economic and trade costs of regulatory measures ; the need for an efficient, transparent and 
impartial design of regulation; and whether the policy objective could be achieved through other 
means or in a manner that might lessen its restrictive impact on trade or investment.17 Such an 
approach encourages the adoption of market access friendly regulation, where feasible, that is 
supportive of both trade liberalization and privatization. 
2.12.  While regulatory issues are faced by all governments, developing countries do have 
particular structural weaknesses that should be taken into account. It has been noted by 
researchers in the field of regulation that many regulatory agencies in developing countries are still 
quite fragile or non-existent. It is generally well recognized that it takes time and resources to build governance, management and organizational systems, as well as to develop new professional 
capacity.
18 Yet, for liberalization to produce the expect ed efficiency gains without compromising on 
quality and other policy objectives, effective regulation or re-regulation and enforcement is often needed. The Diagnostic Trade Integration Studies (DTIS), which are undertaken in the context of 
the Enhanced Integrated Framework, have, for inst ance, identified the importance of an enabling 
policy and regulatory framework, efficient institut ions and good governance as building blocks for 
addressing supply-side constraints.
19 Although the DTIS studies were undertaken for specifically 
least developed countries, the general conclusion that regulation may impose cost-raising 
restrictions on services providers or it may erect entry barriers is shared by other studies on other 
countries.20 An important finding has been that cost-raising non-discriminatory regulations not 
only deter foreign suppliers, but also inhibit the competitiveness of local firms. Various studies 
based on the OECD product market regulation in dices have also found that regulatory barriers 
have a negative effect on the local services sectors' export performance.21 
2.13.  How to address the regulatory challenge from the perspective of developing countries is 
a subject that remains at a nascent stage and is beyond the scope of this Note. Nevertheless, 
                                               
11 Article VI:2 of the GATS. 
12 Ibid. 
13 Article VI:3 and 6 of the GATS. 
14 See for instance, Lafont, Jean-Jacques (2005), "Regulation and Development", Cambridge University 
Press, Cambridge; Eberhard, A (2007), op.cit; and "APE C-OECD Integrated Checklist on Regulatory Reform" 
available at http://www.oecd.org/regreform/34989455.pdf 
15 Mamdouh, H (2010), "Services liberalization, negoti ations and regulations", paper presented at the 
Liberalisation of Trade in Services Conference conven ed by the Cordell-Hull Institute and hosted by the 
Australian Department of Foreign Affairs and Trad e, in Sydney, Australia, December 10-12, 2010. 
16 UNCTAD (2010), "Implication of International Trad e and Trade Agreements for Primary Health Care: 
the case of services", Geneva. 
17 Ibid. 
18 See for instance, Eberhard, A (2007), op.cit. 
19 See for instance, WTO (2004) "Assistance to Address Supply-Side Constraints", Note by the 
Secretariat, WT/COMTD/LDC/W/33 and Add.1, 26 May 2004 and 28 February 2005. 
20 See for instance, inter alia , WTO (2012b), op.cit,pp.122-126; and Kox, H and Nordås, Hildegunn K 
(2006), "Services trade and domestic regulation", OECD Trade Policy Working Paper No 49. 
21 See for instance, Kox, H and Hildegunn, K (2006) ibid. It should be noted that the measure of 
domestic regulation used in this study is however broa der than the categories under Article VI:4 of the GATS. 
The PMR indices mainly cover developed countries, and few large emerging markets. Economic literature that 
looks specifically at the effects of licensing and qualification requirements and procedures, and technical standards in services  is very limited. S/WPDR/W/51 
 
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  two important and inter-related aspects of the problem can be discerned, namely the rule-making 
machinery, and the design and mandat e of the implementing institutions.22 The latter, in 
particular, raises significant issues of political mandate, resources and capacity. Proper sequencing of the regulatory framework and the opening of sectors to market competition have also frequently 
been cited as an important consideration and challenge for developing countries.
23 The sections 
below take a closer look at the issues that may arise under each of these aspects. 
2.1  Rule-making and regulatory practices 
2.14.  With respect to the development of rules,  one of the challenges to be addressed is the 
formulation of rules that can help improve the business environment and to the maximum extent possible, reduce the scope for discretionary deci sion-making. This often calls for rules to be 
coherent, clearly stated and drafted, and based on objective criteria. Another related issue is the 
choice of legal instrument, whether rules should be contained in general legislation or in other 
forms of regulation, decrees or administrative guidelines. This can be an important consideration for effective application and should take into account the need for possible future flexibility to 
adjust in the light of market and technological developments. 
2.15.  Services sectors are typically regulated at all levels of government, be it central, regional or 
local. Non-governmental bodies may also be part of the regulatory framework when they exercise 
powers delegated to them by the State. Thus , apart from the content of the rules, the 
jurisdictional interface between central and sub-central government levels, as well as non-governmental bodies, need to be taken into consideration. Ideally, all regulatory bodies should act in a coherent and complimentary way. These challenges are, of course, not unique to 
developing countries, but they may pose greater difficulty due to financial and human resource 
constraints. In addition to the governmental interf ace, each service sector has its specificities and 
technical complexities. Thus, while some regulations are applied across all services sectors, others 
may be sector-specific. Again, ensuring coherence between general and sector-specific regulation, 
as well as the intersection with other regulatory fields, such as competition and investment policy, can pose a significant challenge for rule-making.  Moreover, the ever-changing nature of markets 
and technologies, which is a key feature of several services sectors, can easily render the 
regulatory regime outdated, and demand continuous  and systematic fine-tuning of the regulatory 
framework.
24 
2.16.  On regulatory practices, there has been si gnificant work on the importance of transparent 
rules and streamlined processes for improving th e business environment. The World Bank "Doing 
Business" reports have been tracking such reforms and regulatory practices, of which transparency 
is a key factor, around the world for the last 10 years.25 The indicators measure the procedures, 
time and cost required to complete a transaction in accordance with relevant regulations. The 
surveys have found that the economies which rank highest on the ease of doing business are not those where there is no regulation—but those where governments have managed to create rules 
that facilitate interactions in the marketplace without needlessly hindering the development of the 
private sector. One of the key findings being that economies which rank high tend to combine efficient regulatory processes with strong legal institutions that protect property and investor rights.  An effective regulatory environment has in turn been found to boost trade performance. 
2.17.  While these surveys capture more than se rvices sector enterprises they help provide 
a general indicator of the cost and complexity of regulatory processes on businesses in a particular economy. In this regard, the latest "Doing Business" report for 2013 has found that business-
related regulatory practices have been slowly converging as economies with initially poor 
performance narrow the gap with better performers. Among the 50 economies with the biggest improvements since 2005, the largest share—a th ird—are in Sub-Saharan Africa. For these and 
many other developing countries, it nevertheless remains a significant development challenge to 
                                               
22 See, Mamdouh, H (2010), op.cit. 
23 Majluf, L and Zarrilli, S (2007), "Challenging Conven tional Wisdom: Development implications of trade 
in services liberalization", UNCTAD Trade, Poverty and Cross-Cutting Deve lopment Issues Study Series No.2; 
and UNCTAD (2010), op.cit. 
24 WTO (2012c) "Background Note for the Workshop on Aid for Trade and Services", Note by the 
Secretariat WT/COMTD/AFT/W/34, 29 June 2012. 
25 See the website http://www.doingbusiness.org  S/WPDR/W/51 
 
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  continually ensure that regulations and procedures evolve in accordance with market and 
technological developments.  
2.18.  Box 1 below provides an example of how some of these challenges are being addressed in 
projects supported by "Aid for Trade". Although, su ch initiatives are part of a wider programme of 
regulatory reform aimed at improving the overall business and investment climate, service 
suppliers stand to benefit given the prevalence of licensing and qualification requirements in their 
sectors. 
Box 1 Aid for Trade Case Study: Kenya Business Regulatory Reform Unit (BRRU) 
 
One of the key priorities of the Kenyan Government is to transform Kenya into a competitive 
investment destination. Excessive, inaccessible and burdensome licensing practices have been 
identified as major and tangible impediments in the achievement of this goal and broader 
economic development. In response to this chal lenge, the Government of Kenya launched a review 
and reform of business licences and permits starti ng from 2005, with recognized positive results 
and increased interest in regulatory reforms. 
 
A Business Regulatory Reform Unit was established to permanently keep track of all regulatory 
regimes and licensing in Kenya and ensure that ne w regulations, licenses, fees and charges do not 
create unnecessary burdens on business and meet in ternational best practices. The Unit is also 
expected to liaise with Regulators to ensure that  all future regulations with respect to licensing 
conform to international best practice. 1,325 separate business licenses, fees and user charges 
were identified in Kenya. Since then, action has been taken to simplify or eliminate most of these 
licenses. In total, 379 licenses have so far been simplified, while 315 licenses were eliminated.  
 
Among the key activities are establishing a Business Regulation Law, currently the Business 
Regulation Bill, that will legally establish a high profile Regulatory Reform Committee that will 
spearhead the reform process, with the assist ance of the Business Regulatory Reform Unit 
(BRRU); and the supervision and screening of the quality of new licensing regulations through 
a Regulatory Impact Assessment (RIA) system. 
 
Source : Aid for Trade website, http://www.oecd.org/countries/kenya/46982094.pdf  
 
 
2.19.  There are currently very few "Aid for Trade" projects which specifically addresses services related-domestic regulatory challenges. It is thus difficult to draw generalized lessons from their 
experiences.
26 That being said, the Kenyan regulatory reform project described in Box 1 
highlighted the following challenges as affecting the pace of reform. These include: conflicting interests between government departments and regulators in-charge of various critical aspects of 
licensing; fear of reforms and change in administrative processes, which poses a threat to lax 
institutions that would not want to move away from their comfort zones; delays in passing regulations through the Parliamentary process; the cost of carrying out the various activities is 
expensive and requires extensive planning and budgeting; and resources may fall short in some 
periods and thus delay the process.
27 
2.2  The institut ional framework  
2.20.  Not only do developing countries face the challenge of formulating appropriate rules and 
streamlining regulatory procedures, there is the key issue of the accompanying institutional 
framework. As the shift towards private or public-private provision of services has come later to developing countries, there is often less experience with the role and function of a regulator as 
                                               
26 WTO (2012c) op. cit. The "Background Note for the Workshop on Aid for Trade and Services" lists a 
total of 276 case stories. Of these only a few can be said to indirectly have a services-related regulatory component, for example: Comoros bu siness services and regulatory en vironment (including for tourism); 
Malawi Business Environmen t Strengthening; Costa Rica FDI Attracti on and Participation in Global Value 
Chains; Maldives EIF support to streamline business support services; and Tanzania Business Sector Support Programme. 
27 See description of problems encountered in the Kenyan Business Regulatory Reform Unit, 
http://www.oecd.org/countries/kenya/46982094.pdf  
 S/WPDR/W/51 
 
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  distinct from that of a government ministry. In some cases, certain sectors might be operating in 
a regulatory vacuum. Often mandates of existing agencies had to be reviewed, sometimes completely changed, to reflect the new policy direction, for example from a government-controlled to a competitive market sector. The starting point is thus the mandate of a regulatory institution, 
which must be carefully drawn to reflect its objectives, functions and modus operandi , and its 
relationship to the government. 
2.21.  In this regard, one of the most used regulato ry model, particularly in infrastructure services, 
for ensuring a separation of functions has been the establishment of independent regulatory 
agencies. The purpose of independence is to ensure  that the regulator is free from commercial or 
political influence. In other words, the independent regulator is expected to pursue its stated mandate in an impartial manner without the risk of falling captive to vested interests. While 
independent, the institutional structure usually provides for an effective interface between various 
governmental institutions dealing with different regulatory frameworks of mutual relevance. The interface with private-sector institutions, think-tanks and civil-society organizations are usually 
also encouraged and facilitated. This model cannot howe ver be said to exist in all sectors. It should 
be noted that in some professional services, self-regulation is a more common model and regulatory powers are granted to professional bodies.
28 In such a situation, it is not uncommon for 
a practicing professional to also assume a decision making position in the body.29 Thus, the stress 
might be more on the impartiality of decision making and transparent processes. 
2.22.  Independence of the regulator does not me an the absence of an accountability framework. 
Rather, in virtually all models of independent re gulation, a regulatory body would be accountable 
to the legislature, the government and the public. However, the terms for such accountability are 
usually drawn in such a way so as not to compromise its independence of action. Whilst not all developing countries have fully independent regulators, it is a model which has been propagated 
extensively, particularly with respect to infrastructure services. For instance, the African Forum of 
Utility Regulators recommends that the following key principles form part of an initial framework of for utility regulation in Africa: 
"Minimum regulation necessary to achieve policy and sector objectives; 
Adherence to transparent decision-making and due process requirements;  Independent or autonomous regulation where possible  [emphasis added];  
Accountability towards government, investors and end-users; ….. 
Promotion of competition by limiting anti-competitive behaviour"….. 
30 
2.23.  Establishing an independent regulator, sh o u l d  t h a t  b e  c o n s i d e r e d  t o  b e  t h e  a p p r o p r i a t e  
model for the sector, is not without challenges. There are issues of capacity and human resources. 
A recurring challenge raised in DTIS studies is the limited technical and institutional capacity within 
government and the private sector to implement a regulatory reform process. The efficacy of all 
regulatory frameworks requires specialist skills and relevant experience, and good access to data 
and a thorough understanding of regulatory fund amentals and the operations of market actors. 
Building that professional capacity in newly esta blished regulators is a considerable developmental 
challenge particularly in view of the dynamic and innovative nature of competitive markets. Economies with a small population and a limited pool of professionals with the necessary skills to 
draw upon, may also experience a particular difficulty in ensuring that the same individual does 
not assume more than one role in the sector.  
2.24.  In the field of utility regulation, global su rveys have found that the most frequently reported 
institutional constraint was the lack of specialized skills: 30% of respondents cited insufficient 
training as a significant constraint and 61% stated that training received to date was deficient in 
                                               
28 See discussion on professional services regulation in UNCTAD (2004), Trade and Development 
Aspects of Professional Services and Regulatory  Frameworks, Note by the UNCTAD Secretariat, 
TD/B/COM.1/EM.25/2, 25 November 2004. 
29 See for instance, the description of legal services in  the Note by the Secretariat, "Regulatory Issues in 
Sectors and Modes of Supply", S/WPDR/W/48, 13 June 2012. 
30 "Framework for Utility Regulation in Africa" as quoted by Eberhard, A (2007), op. cit., p.13. S/WPDR/W/51 
 
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  that it generally lacked continuity and was poorly targeted.31 Interestingly, the same survey also 
noted that capacity constraints may be alleviated by initially limiting regulatory discretion and adopting a gradual approach to modifying or expand ing the scope of the regulator's responsibilities 
as capacity is built up for a more fully fledged agency. In other words, "second best" solutions may 
have to be adopted where local situations do not al low the implementation of "first best" practices.  
2.25.  Other challenges that have been cited in  various studies on regulation and development 
d e a l  w i t h  i s s u e s  o f  g o o d  g o v e r n a n c e  s u c h  a s  political interference, corruption, and a lack of 
transparency and participation.
32 These are, of course, generic challenges faced by any regulatory 
agency and not specific to developing countries. "Good practices" to minimize or avoid such problems, typically suggests that regulations need to take into account a number of variables. These include: the extent that they are supported by an effective legal infrastructure to reduce 
uncertainty and scope for discretion; whether there is a separation of administrative and political 
roles with decisions delegated to an independent agency rather than taken by the government; the degree of transparency and accountability of rules that specify the procedural framework; whether 
there are appropriate financial and professional re sources to ensure that regulatory agencies can 
work effectively; and the strength of oversight judicial review mechanisms.
33 Research conducted 
under the auspices of the United Nations Department  of Economic and Social Affairs has found that 
openness of an economy by itself may not be associated with higher income growth unless it is 
supported by an efficient regulatory framework conducive to private sector activities.34 The 
UNCTAD World Investment Report 2012 has also noted that without an adequate regulatory 
framework, a country will not be attractive for inve stors, because they seek clarity, stability and 
predictability.35 The Report also highlighted that regula tions must be adequately enforced by 
impartial, competent and efficient institutions.36  
2.26.  At the same time, other research on regulatory governance has also noted that in 
transferring conditions, which have usually been di stilled from developed country experiences, it is 
necessary to modify and to fit them to the many and varied political and institutional contexts of developing countries.
37 For instance, there might be a greater degree of government intervention 
to support an overarching development agenda and in certain cases a political decision might be 
made to place the needs of the poor above the requirements of economic efficiency.38 This might 
be because direct market intervention such as pric e controls and quotas might be the only feasible 
option as they are easier to administrate rath er than fully fledged regulatory frameworks and 
standards. That being said there is much existing institutional regulatory reform activity in 
developing countries, which recognizes that de velopment needs might be better served through 
more appropriate market regulation and efficient regulatory mechanisms.39 The specific challenge 
faced by many developing countries is to create  "win-win" situations by building regulatory 
institutions with the capacity to provide an environment conducive to stimulating inward investment and trade, while addressing the struct ural characteristics and developmental needs of 
the economy.
40  
                                               
31 Tremolet, S and Shah, N (2005), "Wanted! Good Regu lators for Good Regulation: An evaluation of 
human and financial resource constrai nts for utility regulation", as quoted by Eberhard, A (2007), op.cit.  
32 Lafont, Jean-Jacques (2005), op.cit.; Eberhard, A (2007), op. cit.; Cook, et.al (2004), op.cit; Amann, 
E (2006), "Regulating Development: Evidence from Africa  and Latin America", Edward Elgar, Chelthenham.  
33 These "good practice" conditions are adapted from Minogue, M and Cariño, L,  (2006), "Introduction: 
regulatory governance in developing countries", and Minogue, M (2006), "Apples and oranges: comparing international experiences in regulatory reform", pp. 73-74 in Minogue, M and Cariño, L, (eds) (2006), 
Regulatory Governance in Developing Countries , Edward Elgar, Cheltenham. 
34 Hafeez, S (2003), "The Efficacy of Regulation in Developing Countries", ST/ESA/2003/DP/31, UN 
Economic and Social Affairs, January 2003. 
35 UNCTAD (2012), World Investment Report 2012: Towards a new generation of investment policies, 
Geneva, p.109.  
36 Ibid, p.118.  
37 Minogue, M (2006), op.cit. 
38 See cases studies on institutional reform in develo ping countries, in Minogue, M and Cariño, L, (eds) 
(2006), op.cit., pp.183-299.  
39 See, for instance, Hafeez, S (2003), op.cit.  
40 Jalilian, H, et.al (2006), "Creating the condition fo r international business expansion: the impact of 
regulation on economic growth in developing countries - a cross-country analysis", in Amann, E (ed) (2006), 
op.cit.  S/WPDR/W/51 
 
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  3  TRADE AND DEVELOPMENT ASPECT S OF THE REGULATORY CHALLENGE 
3.1.  The economic gains from services liberalization mainly result from its effect on increasing 
competition between service suppliers in the domestic economy. Thus, what matters are improvements in overall market contestability. Unless policy reform brings about competition, 
privatization of state monopolies may only transfer monopoly rents from public to private owners. 
It also raises the perennial question of which should come first, regulations or the liberalization of services markets. Given the specific characteristics of each service sector and national differences, 
much will depend on the objectives of the reform  programme, the role that regulation is intended 
to play and the state of existing institutions. There is no "one size fits all" answer to this question. Nevertheless, it is possible to point to some general considerations.  
3.1  Internal aspects 
3.2.  In practice, it is often the privatization and subsequent trade liberalization in a particular 
sector which drives the regulatory reform agenda, and governments have developed and evolved their regulations and institutions as part of the same process.
41 In the telecommunications sector, 
for example, it was the decision by many develo ped and developing countries to liberalize the 
market which resulted in the introduction of new legislation that promoted consumer interests through disciplines on interconnection, transpar ent licensing procedures, independent regulators, 
non-discriminatory universal service obligations, etc. Indeed, it was the Reference Paper on 
telecommunications negotiated at the WTO which helped shape the regulatory environment for that sector. There can thus be strong synerg ies between trade and regulatory instruments. 
3.3.  On the other hand, "regulatory capture" (discussed in section 2 above) by special interest 
groups may obstruct the introduction of new regulations or institutions which seek to reduce the 
scope for discretionary decision making. In such a situation, institutions may have traditionally been weak and under resourced as it served certain vested interests to keep them so.  This is a 
political economic problem that can occur even without any trade opening. Regulatory fragility, 
may in turn be used as arguments against liberalization to external competitors. Unless there is strong government commitment towards reform, experience has shown that it is difficult to 
overcome "regulatory capture" and develop policies and institutions that are free from commercial 
or political interference.
42 
3.4.  Regulation is crucial in many service sectors regardless of whether the sector is open to 
trade. Such regulation is needed to ensure that  services markets work properly by addressing 
problems associated with information asymmetries, natural monopolies and externalities. In some 
service sectors, competition is unlikely with out appropriate regulation. For example, in 
telecommunications or other infrastructure-based services, regulation is important to ensure that 
new entrants can interconnect on to the network, which all operators have to use, at reasonable 
price and conditions. This will affect both domestic and foreign telecoms providers. Unless there is regulation which prevents the owner of the netw ork from exploiting its control of essential 
infrastructure, the full benefits of competitive markets will not be achieved by trade liberalization. 
Pro-competitive regulations and prudential regulations in the telecommunications and financial sector respectively have been found to be positively related to trade and investment.
43  
3.5.  At the same time, there are often concerns  that the introduction of domestic and foreign 
competition may carry risks and potential costs. For instance, if prices before liberalization were 
kept artificially low through cross-subsidisation or governmental financial support, it can be expected that when market forces are allowed to operate, prices may actually rise in the short-
term.
44 Moreover, there is a risk that private providers will "skim off" the most profitable clients 
and cease to serve certain groups of consum ers or geographical areas that are deemed 
unprofitable.45 It is also widely accepted that adequate prudential regulation and supervisory 
                                               
41 See for instance the discussion in Chaitoo, R (2008) , "Services liberalization and domestic regulation: 
Why is it important?", CUTS/FICCI Co nference on Global Partnership for Development: Where do we stand and 
where to go?, 12-13 August 2008, New Delhi, India. 
42 Lafont, J (2005); Eberhard, A (2007); Cook, et.al (2004), op.cit. 
43 Kox, H and Nordås, H (2006), op. cit.  
44 Mattoo, M, et.al (2008), "A Handbook of International Trade in Services", Oxford University Press, 
Oxford, see discussion on econ omy-wide effects, pp.10-17. 
45 Cali, M, et.al (2008), "The contribution of services to development and the role of trade liberalization 
and regulation", Overseas Developmen t Institute Working Papers, no. 298. S/WPDR/W/51 
 
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  control has to accompany financial sector liberalization.46 In short, regulatory reform entails 
adjustment costs and may require flanking policie s to deal with adjustment costs as well as 
specific regulatory capacity and institution building. Each of these concerns is a major topic of research in themselves and it is beyond the scope of this Note to fully review the associated 
literature. Nevertheless, a general principle of econom ic theory is that the "first best" choice is to 
use instruments that are closely related to the source of the problem or distortion. For instance, non-discriminatory universal service obligations in licensing conditions for all market actors might 
be a better way to widen access rather than to restrict competition in order to protect an inefficient 
monopoly supplier. Managing services reforms, which can include trade liberalization as part of the strategy, ultimately requires a careful combination of competition-related policies and regulation. 
3.2  External aspects 
3.6.  From a trade perspective, the problem is how to deal with two issues, namely situations 
where: domestic regulations rather than pursuing public policies are used as an alternate form of protectionism; and the unintended trade-restrictive consequences of national differences in 
regulatory requirements and procedural complexities  in their implementation. Much of the work in 
the domestic regulation negotiations has focused on the latter, where even if there is no protectionist intent, cumbersome and/or opaque licensing and qualification procedures, excessively 
burdensome or complex requirements, and administrative "red tape" can still hamper trade in 
services. The sheer diversity of regulatory syst ems and standards in markets internationally, 
regionally, as well as national and sub-national differences, can also significantly raise the cost of compliance for the service supplier, even in situat ions where market access and national treatment 
limitations have been removed (see Box 2).  
Box 2 Explaining the Underdevelopment and the Segmentation of Markets for 
Professional Services – Domestic Regulation 
 
In the Ugandan DTIS study, one of the importan t challenges cited was how to ensure that the 
regulatory frameworks in place do not restrict directly or indirectly competition in service markets 
and slow down their expansion in spite of th e extensive liberalization measures. An equally 
important problem was the absence of regulation, which can create a legal vacuum that actually 
constrains business growth and allows many opportunities for unfair competition and corruption. 
Furthermore, one of the problems faced by the Ugandan professional services sector was the 
highly segmented nature of the regional mark et, which did not allow economies of scale to 
develop.   
 
A key challenge of services reforms relates to putting in place an adequate regulatory framework 
that supports the effective implementation of exis ting engagements. Decisions on the nature and 
pace of reform need to be informed by careful analysis and an understanding of good practices. A 
national regulatory assessment mechanism covering all professional services sectors and 
education services should be put in place and a roadmap for action with concrete objectives and 
targets needs to be developed. 
 
In order to address market segmentation due to  domestic regulation, an important regional 
development has been the inclusion of specific chapters in the East African Common Market 
Protocol aimed at inter alia improving co-operati on between regulatory bodies, harmonization and 
mutual recognition of qualifications and standards, and facilitating registration and licensing.  
 
Source : "Draft Uganda Trade Diagnostic Study Update", prepared for the Enhanced Integrated Framework, 
December 2012 and the East African Common Market Protocol.  
 
3.7.  Another aspect of regulatory weakness at home is the impact that it might have on services 
exports. Since regulations and institutions in many developing countries are still evolving or are not yet established, their service suppliers may not have the experience that would help them 
navigate through sophisticated regulatory systems that might be found in other countries. Thus, as 
highlighted in work undertaken by the Overseas Development Institute, weakness in the domestic 
regulatory framework does not just affect local market conditions but can adversely affect services 
                                               
46 Ibid. S/WPDR/W/51 
 
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  exports.47 In principle, as domestic service suppliers get used to operating within a modern 
standards-based regulatory framework, they will al so develop the capacity that can enable them to 
meet requirements in foreign markets and develo p potential export opportunities. Research by 
UNCTAD on professional services, has, for instance , noted the importance of establishing adequate 
regulatory frameworks for professions in developing countries in order to enhance the 
competitiveness of their service suppliers.48 Some studies on the trade effects of domestic 
regulation have found that regulation not only hampers inward investment and the inflow of 
services, but also inhibits the outward orientation of local service suppliers.49 Another finding 
based on the European Internal Market experience  has been that reducing regulatory barriers not 
only results in more trade, but first and foremost it improves the productivity and competitiveness of local firms.
50 
3.3  Regulatory co-operation  
3.8.  Increasingly, regulatory co-operation is being promoted as a way to deal with externalities 
generated by national differences in regulation and to enhance the capacity of developing 
countries. Such co-operation is often directed at improving regulators' understanding of, and 
confidence in, the standards, requirements and pr ocedures with which they may not be familiar 
with. In some cases, the regulatory divergence between jurisdictions is a direct consequence of 
differences in societal values and risks tolerance. In such cases, co-operation may also be directed 
at finding less trade-restrictive means of achieving a particular objective or on ways to assist foreign services suppliers to meet particular standards or other requirements.  
3.9.  Indeed, there is a relatively long history of  regulatory cooperation at the sectoral-level, such 
as in postal and communication, financial services, transportation, education, as well as certain 
professional services. Such cooperation has been necessary to deal with externalities that are generated by international interdependencies and which demand a coordinated regulatory 
response from different jurisdictions in order to be effective. It has also been required to allow for 
the compatibility and interoperability of different systems, measures or qualifications.  
3.10.  For example, the International Federation of Accountants (IFAC), the International 
Accounting Standards Committee (IASC) and the International Organization of Securities 
Commissions (IOSCO) set international standards for the accountancy sector. The Universal Postal Convention defines general guidelines on international postal services and regulations on the operations of letter post mail. The standards de veloped by the International Telecommunications 
Union (ITU) are fundamental to the functioning and interoperability of information, communication 
and technology (ICT) networks globally. In ed ucation, the UNESCO Regional Conventions on 
recognition of qualifications have sought to address the recognition of academic qualifications for 
academic purposes and sometimes play a role in recognising diplomas for professional purposes.  
3.11.  In the financial sector, the Basel Committee on Banking Supervision provides a forum for 
regular cooperation on banking supervisory matters  with the objective of enhancing understanding 
of key supervisory issues and improving the quality of banking supervision worldwide. A Financial 
Stability Board (FSB), which brings together national authorities responsible for financial stability in significant international financial centres, international financial institutions, sector-specific international groupings of regulators and supervis ors, and committees of central bank experts, has 
also been established. The FSB coordinates the work of national financial authorities and 
international standard setting bodies with the aim of developing and promoting the effective 
regulatory, supervisory and other financial sector policies.  
3.12.  Although not undertaken primarily for the purposes of trade, such cooperation has 
important implications for trade and development, as they can encourage greater understanding, if 
not harmonization, amongst regulators. From the perspective of developing countries, an 
important part of the regulatory challenge is also  to develop the capacity as well as to have the 
resources to participate in these diverse fora. There are risks that international standard setting or 
                                               
47 Cali, M, et.al (2008), op.cit. 
48 See UNCTAD (2004), op.cit. 
49 Nordas, H and Kox, H (2009), "Quantifying regulatory barriers to services trade", OECD Trade Policy 
Working Paper, No.85 
50 Monteagudo, J, et.al (2012), "The economic impact of the Services Directive: A first assessment 
following implementation", Euro pean Commission, DG ECFIN, Product Market Reforms Unit. S/WPDR/W/51 
 
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  regulation may by chance or by design, serve th e interests of those that have the resources to 
participate and influence the process. Whilst such concerns have been very much at the forefront 
in goods trade, there has been less discussion and aw areness of it in services trade. Some of this 
has to do with the fact that the regulation of services is less developed at the international level 
and where such instruments do exist, they tend to be sectorally focused and outside the direct 
purview of trade ministries.  
3.13.  That being said, it is interesting to note that in some of the more recent preferential trade 
agreements, attention has been given to some of the developing country-specific issues of 
appropriate regulatory frameworks, standards and procedures, as well as participation in international standard setting organizations (see Box 3). While these are but some examples drawn from outside the WTO, they help highlight how some of the challenges faced by developing 
countries in regulatory cooperation have been addressed in a trade context.  
Box 3 CARIFORUM-EC Economic Partnershi p Agreement - examples of provisions 
addressing regulatory framework challe nges faced by developing countries 
CHAPTER 5 
 
Regulatory Framework 
………. 
 
Section 7 
 
Tourism Services 
………. 
Article 113 
 
Small-and medium-sized enterprises 
 
The EC Party and the Signatory CARIFORUM States sh all endeavour to facilitate the participation of 
small- and medium sized enterprises in the tourism services sector. 
 
Article 114 
 
Mutual recognition 
 
The Parties shall cooperate towards the mutual recognition of requirements, qualifications, licenses 
or other regulations in accordance with Article 85. 
 
Article 116 
 
Environmental and quality standards 
 
The Parties and the Signatory CARIFORUM States shall encourage compliance with environmental 
and quality standards applicable to tourism services in a reasonable and objective manner, without 
constituting unnecessary barriers to trade, and shall endeavour to facilitate the participation of the 
Signatory CARIFORUM States in relevant international organisations setting environmental and 
quality standards applicable to tourism services. 
……. 
CHAPTER 7 
Co-operation 
 
Article 121 
 
Cooperation 
…… 
2. Subject to the provisions of Article 7, the Pa rties agree to cooperate, including by providing S/WPDR/W/51 
 
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  support for technical assistance, training and capaci ty building in, inter alia, the following areas: 
 
(a) Improving the ability of service suppliers of the Signatory CARIFORUM States to gather 
information on and to meet regulations and stan dards of the EC Party at European Community, 
national and sub-national levels; 
 
(b) Improving the export capacity of service su ppliers of the Signatory CARIFORUM States, with 
particular attention to the marketing of tourism and cultural services, the needs of small and 
medium-sized enterprises, franchising and the negotiation of mutual recognition agreements; 
 
(c) Facilitating interaction and dialogue between  service suppliers of the EC Party and of the 
Signatory CARIFORUM States; 
 
(d) Addressing quality and standards needs in  those sectors where the Signatory CARIFORUM 
States have undertaken commitments under this Agreement and with respect to their domestic 
and regional markets as well as trade between the Parties, and in order to ensure participation in 
the development and adoption of sustainable tourism standards; 
 
(e) Developing and implementing regulatory regimes for specific service sectors at CARIFORUM 
regional level and in Signatory CARIFORUM States in those sectors where they have undertaken 
commitments under this Agreement; 
…. 
Source : CARIFORUM-EC Economic Part nership Agreement Legal Text 
 
3.14.  In the context of the East African Common Market, specific attention has also been given to 
regulatory co-operation on the harmonization and recognition of qualification and experience, as 
well as disciplines on regulations relating to the movement of persons, workers and capital (see Box 4). What is interesting in these initiatives is the combination of provisions which are aimed at 
not only disciplining, but also at promoting regulation, as well as participation in international 
standard setting. There also seems to be a focus on regulatory issues pertaining to sectors and modes, with emphasis given to regulatory capacity building. 
Box 4 East African Common Market - examples  of provisions to minimize impact of 
regulations on services trade 
 
THE EAST AFRICAN COMMUNITY COMMON MARKET (RIGHT OF ESTABLISHMENT) 
REGULATIONS 
………. 
 
REGULATION 9  
Registration and Licensing  
 
1. Each Partner State shall submit to the Secretariat:  
 
(a) the names of the competent authorities of the Partner State;  
 
(b) the relevant registration, permit and licensing requirements; and  
 
(c) any other relevant approvals required to undertake economic activities.  
 
2. The Secretariat shall disseminate the info rmation submitted under paragraph 1 of this 
regulation to competent authorities of the other Partner States.  
……… 
REGULATION 11  
Cooperation between Competent Authorities  
 
The competent authorities of the Partner States shall co-operate in order to:  
 
(a) share information on priority economic acti vities where the right of establishment makes a 
valuable contribution to the economic development of the Partner States;  S/WPDR/W/51 
 
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(b) simplify the processes and procedures involved in obtaining the relevant licenses and other 
relevant documents;  
 
(c) harmonise the fees to be paid for obtaining and processing necessary documents; and  
 
(d) share any other relevant information pertaining to the right of establishment.  
………. 
Source : East African Common Mark et Protocol and Annexes 
 
 
4  CONCLUDING OBSERVATIONS 
4.1.  The purpose of this Note has been to pr ovide background information on services-related 
regulatory challenges that might be faced by developing countries. Given the purpose of this 
document, which was requested to help Members in their discussions of the regulatory issues Note 
(S/WPDR/W/48), it does not seek to draw any particular conclusions. It is envisaged that, in any 
ensuing discussions, Members would complement the information provided in the Note with their own specific experiences, as appropriate. To assist further discussions, some general observations 
based on the foregoing appear pertinent: 
a. Development and strengthening of institutional and regulatory capacity to effectively 
remedy market failure, assess risks and safeguard public interests are critical to 
ensuring the smooth functioning of services  markets. In some service sectors, com-
petition is unlikely without appropriate regulation. Liberalization of services markets has thus required greater emphasis on formulating new regulation or re-regulation to ensure regulatory quality and efficiency, and transparent processes, as well as appropriately 
mandated regulatory bodies. It is useful to recall that the GATS, in its Preamble, 
recognizes "…the right of Members to regulate, and to introduce new regulations, on the supply of services within their territories in or der to meet national policy objectives and, 
given asymmetries existing with respect to the degree of development of services 
regulations in different countries, the particular need of developing countries to exercise this right". 
b. M u c h  o f  e x i s t i n g  l i t e r a t u r e  o n  a d d r e s s i ng regulatory weakness suggest that the 
challenges faced are not about having more or less regulation, but more in terms of having better regulation - that is, regulation which more effectively achieves public policy objectives with the least distortion on markets. How to best tackle such challenges 
from the perspective of developing countries is a subject that remains at a nascent 
stage. That being said, two important and inter-related aspects of the regulatory challenge can be discerned, namely the effectiveness of the rules and procedures, and 
the regulatory institutions established to implement them.  
c. Certain research on regulatory governance has noted that in transferring conditions and 
practices from developed country experiences, it is necessary to modify and to fit them 
to the many and varied political and institutional contexts of developing countries. That 
being said, often the main issues faced by developing countries are on how regulation is adopted and implemented, rather  than on the key principles of sound regulation, such as 
principles of transparency, impartiality , independence and accountability.   
d. In terms of designing and implementing regu latory frameworks, developing countries are 
considered to face particular knowledge, financial and human resource constraints. Overcoming these problems requires considerable resources and expertise, as well 
strong political commitment on the part of the government. Moreover, given the time 
that might be needed to develop and streng then institutional and regulatory capacity, 
transition periods, and the proper sequen cing of the regulatory framework and the 
opening of sectors to market competition are important considerations. Equally 
important is the avoidance of "regulatory capture" by special interest groups who may obstruct the introduction of new regulations or institutions. This is a political economic problem that can occur even without any trade opening. In practice, it is often the S/WPDR/W/51 
 
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  liberalization of market access in a particular sector which drives the regulatory reform 
agenda, and governments have developed and evolved their regulations and institutions as part of the same process. 
e. Inadequate regulatory frameworks, or their co mplete absence, may have implications on 
trade and investment, as well as inhibit the competitiveness of local service suppliers. 
Lack of experience in meeting regulatory requirements and standards may also affect 
their ability to supply foreign markets. It is worth recalling that in Annex C of the Hong 
Kong Ministerial Declaration, it was agreed in the paragraph on technical assistance that 
".. such assistance should be provided on, inter alia, compiling and analysing statistical data on trade in services, assessing interests in and gains from services trade, building 
regulatory capacity [emphasis added], particularly on those services sectors where 
liberalization is being undertaken by develo ping countries". However, while these have 
been recognized as important supply side constraints, "Aid for Trade" seems to have been an underutilized avenue for addressing them. There are currently very few 
initiatives that are aimed at specifically addressing capacity constraints in the 
development of services-related regulatory an d institutional frameworks. Similarly, there 
is relatively little on how service suppliers in developing countries can be facilitated to 
meet requirements and procedures in export markets. Finding ways to support 
regulatory capacity building and cooperation so as to complement services policy reform and minimize the effects of regulatory diversity across jurisdictions could do much to foster trade and development. 
 
__________