RESTRICTED  WORLD TRADE  
ORGANIZATION  S/WPDR/M/48 
17 March 2011 
 (11-1354) 
Working Party on Domestic Regulation  
  
 
REPORT OF THE MEETING HELD ON 18 FEBRUARY 2011 
 
Note by the Secretariat
1 
 
 
1. The Working Party on Domestic Regulation (WPD R) held a meeting on 18 February 2011.  
The meeting was chaired by Mr. Ahmad Mukhtar (Pakis tan).  The agenda for the meeting is contained 
in Airgram WTO/AIR/3695, dated 8 February 2011, and was adopted .  An annotated agenda for the 
meeting was circulated in advance and can be found in WTO/AIR/3695. 
A. D EVELOPMENT OF REGULATORY DISCIPLINES UNDER GATS  ARTICLE VI:4 
2. As an introduction to the formal mee ting of the Working Party, the Chairman  addressed two 
topics.  First, he provided Members his impression  of the paragraph by paragraph reading of the 
Chair's March 2009 text, also known as the 'sweep ing exercise', which had taken place on 10 and 
11 February 2011.  Second, the WTO Secretariat was requested to introduce the update of the Note by 
the Secretariat on "Necessity Tests in the WTO" as contained in document S/WPDR/W/27/Add.1 and 
Corr.1.  
3. With regard to the paragraph by paragraph reading of the Chair's March 2009 text, the 
Chairman recalled that the Members agreed at th eir informal meeting in January 2011 that the 
Working Party had to enter into an intensified dr afting phase.  The Chairman indicated that, on 10 and 
11 February 2011, a small group of Members, co nstituted on an opt-in basis, had undertaken a 
'sweeping exercise' of the Chair's March 2009 text, w ith a view to identifying parts of the draft that 
were stabilized and those on which further work might  be required.  The Chairman considered that 
delegations showed a good and constructive spirit when engaging in  this exercise.  He had seen an 
effort to close gaps and, in a few cases, proposals that had been on the table for a long time had been 
removed.  The Chairman pointed to the Chairman's Consultative Note in which each of the paragraphs 
of the Chair's March 2009 text as well as st anding drafting proposals were reproduced.2  He indicated 
that this Consultative Note served as a working pape r to guide the Members in  their future work, but 
was without prejudice to the positions of Memb ers or the eventual outcome of discussions. 
4. With regard to the updated Note by the S ecretariat on "Necessity Tests in the WTO", the 
Chairman indicated that he would organize a fo cused informal discussion on the subject of the 
"necessity test", as had been requested by several  delegations.  He then gave the floor to the 
representative of the Secretariat to introduce the update of the Note.  
5. The representative of the Secretariat  indicated that the updated Note on "Necessity Tests in 
the WTO" took the form of an Addendum.3  Therefore, it needed to be read in conjunction with the 
old Note.  The Addendum followed a similar struct ure as the old Note and presented new information 
                                                      
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 See Chairman's Consultative Note, RD/SERV/46, 17 February 2011. 
3 See Working Party on Domestic Regulation, "Necessity  Tests" in the WTO. Note by the Secretariat. 
Addendum, S/WPDR/W/27/Add.1, 17 January 2011 and Corr.1  S/WPDR/M/48 
Page 2  
 
  regarding jurisprudence in relation to four elem ents:  first, the objectives behind the measure under 
consideration; second, the level of attainment of the objective; third, the necessity of the measure 
itself and; fourth, the question of burden of proof.  In presenting the information about the jurisprudence, the Secretariat had tried to make a clear distinction between situations where the 
"necessity test" in question was contained in an ex ception provision and situations where such test 
was contained in a normative standard.  He clarifie d that such a distinction was made for the purpose 
of the discussions in the Working Party, which co ncerned a possible "necessity test" in a normative 
standard rather than in an exception.  
6. He then drew attention to the concluding rema rks noted that the rema rks sought to extract 
some elements from the jurisprudence, which might be particularly helpful for the discussions in the 
Working Party.  In the concluding remarks, it was emphasised that in all cases, panels and the 
Appellate Body had not questioned the necessity of the objective itself or the level of attainment of 
the objective.  Further, it was emphasised that the examination of the jurisprudence showed that the 
analysis of the availability of alternative measu res generally included two elements:  first, the 
difficulties faced by the regulator to implement th e alternative measure; and second, the practical 
effectiveness of such alternatives.  Next, it was emphasised that the burden of proof always rests upon 
the party who asserts the affirmative of a particular claim or defence.  In case of a normative standard, the burden of proof would lie with the complainant w ho is asserting that there has been a violation.  
Finally, it was stressed that the review of the juri sprudence showed that there is always room for 
Members that draft an agreement to give guidance fo r future panels or Appellate Body rulings with 
respect to how to conduct a "necessity test".  As was indicated in the Addendum, Article 5.6 of the 
SPS Agreement was an example of how Members can give specific guidance and provide a way 
forward for panels and the Appellate Body in applying a "necessity test". 
7. The Chairman
 then opened the floor to comments on bot h the paragraph by paragraph reading 
that took place on 10 and 11 February and th e Secretariat Note on the "necessity test". 
8. The representative of the United States  expressed his thanks for the updated Note on 
"necessity tests".  He noted that the reasons for c oncerns by the United States with regard to the 
"necessity test" in domestic regulation disciplines we re well known.  He repeated that the United 
States did not support such a test in the disciplines.  He stressed that Members should not underestimate the damage such a test  would pose to the right to regulate and the threat such a test 
would pose to the dispute settlement system.  The representative of the United States noted that this 
concern was shared by a number of other Members and thus was not an issue to which only the 
United States was opposed. 
9. The representative of Hong Kong China
 thanked the Chairman for the very successful small 
group consultations, where delegati ons had explored areas of convergence as well as differences.  The 
Chairman's Consultative Note constituted a sound summary of the drafting options that Members 
should consider.  From the discussions on the Chair' s March 2009 text, he had the impression that for 
some paragraphs, there was a common understandi ng and agreement on the intention of these 
paragraphs while there was still divergence on the choice of words to reflect that intention.  For other 
paragraphs, there was no concurrence of in tention but nevertheless a good understanding and 
appreciation of other Members' reasons for their positions with regard to these paragraphs.  With 
regard to the "necessity test", the representative st ated very clearly that Hong Kong China was highly 
supportive of such a test and that the perceived conflict between the "necessity test" and the right to 
regulate was not an insurmountable one.  
10. The representative of Australia  expressed her appreciation for the way in which the Chairman 
had managed the "sweeping exercise" and for la ying down the outcome of the discussion in the 
Consultative Note.  She noted that it was the firs t time, in a long while, where the text had been 
considered in its entirety.  She nevertheless noted th at a large amount of work still had to be done and  S/WPDR/M/48 
 Page 3 
 
 
  that many paragraphs in the text could not be prop erly reviewed without considering their relationship 
with other parts of the text.  On the "necessity t est", she welcomed the Note of the Secretariat and 
stressed that some time had to be devoted in the future work programme to a discussion on this 
delicate and conceptually challenging part of the disciplines.  Finding convergence did not mean finding the lowest common denominator and could not mean lowering ambition to meet the most 
defensive interests in the negotiation.  She noted th at, even if special and differential treatment was a 
necessary and important element of the disciplines,  differentiated disciplines could not mean that 
there should be two sets of disciplines.  The discip lines were negotiated pursuant to obligations in the 
GATS that all Members had undertaken. 
11. The representative of Brazil
 thanked the Chair for the "sweep ing exercise".  He also thanked 
the Secretariat for the updated Note on "necessity  tests".  His delegation had expressed some 
reservations on the analysis undertaken in an info rmal gathering of Ambassadors, especially on the 
fact that the objective of the measure at stake had never been questioned by the Appellate Body. 
12. The representative of Switzerland  considered the paragraph by paragraph reading of the 
Chair's March 2009 text to be a very useful exercise .  With regard to the "necessity test", he thanked 
the Secretariat for the updated Note.  He considered  it an excellent document that was very clear and 
easy to understand.  From a negotiation point of view, the representative was convinced that it would prove to be very useful.  On the same topic, the representative referred to another document on 
"necessity tests", circulated by the delegation of  Switzerland.  The document was contained in 
RD/SERV/34 and was dated 19 January 2011.  In th at document, Switzerland had summarised the 
"necessity tests" that existed and had also provide d some ideas concerning a "necessity test" in 
relation to the disciplines on domestic regulation.  He  reiterated that Switzerland was in favour of a 
"necessity test" irrespective of how it was drafted or what format it took, because his delegation was of the opinion that such test was an inevitabl e part of the disciplines on domestic regulation. 
13. The representative of Japan
 had found the 'sweeping exercise' to be very comprehensive and 
constructive.  The most difficult point for Japan in the negotiations was the "necessity test".  He noted 
that Japan had submitted a proposal4 with a view to bridging the gap between the proponents and the 
opponents.  The proposal also contained a specific language suggestion, but this was not included in 
the Chairman's Consultative Note. 
14. In response, the Chairman  noted that the Consultative Note w as 'work in progress' and that the 
document by Japan would be taken into account during the future drafting sessions. 
15. The representative of the European Union  thanked the Chairman for the useful 'sweeping 
exercise'.  He saw merit in continuing work in sm all groups.  He also thanked the Secretariat for the 
updated Note on the "necessity test".  The European  Union did see merit in a horizontal mechanism 
and believed compromise language could be found that  reconciled the need to pursue certain policy 
objectives, on the one hand, and the need to prevent abuse of measures with a protectionist effect, on 
the other hand.  In this regard, he recalled that the European Union had presented a proposal a number 
of years ago regarding the proportionality principle.  
16. The representative of New Zealand  thanked the Chairman for th e 'sweeping exercise', which 
she considered to be very successful.  However, much work still had to be done as there were 
relatively few areas of the text that could be consid ered to be completely stabilized.  She agreed with 
the representative of Hong Kong China that there were generally two sets of issues.  First, there were 
those paragraphs on which the Members generally seemed  to agree and were stable with regard to the 
intention, but for which some differences were still outstanding with regard to drafting.  Second, there 
were those paragraphs where there was no agreed in tention.  She also agr eed with the representative 
                                                      
4 See Necessity Tests: Points of Consideration, RD/SERV/41, 9 February 2011. S/WPDR/M/48 
Page 4  
 
  of Australia that convergence was not about finding the lowest common denominator in the 
negotiations.  Her delegation appreciated the update d Note on "necessity tests".  The update, as well 
as the original Note had informed the drafting of the New Zealand proposal on "necessity tests".
5  The 
issue required focused discussions.  In particular, there was a need for technical discussions of 
proposals rather than mere repetition of political stat ements.  The question to be asked was:  "Where 
are the precise difficulties in drafting a test with which we are all familiar and how does this present a 
problem in the services context?"  The representative noted that all Members had to be in a position to 
engage in substantive discussions on a 'without prejudice' basis. 
17. The representative of Mexico  thanked the Chairman for his efforts to intensify work on 
drafting domestic regulation disciplines and agreed that  there was still a lot of work to be done.  The 
representative noted that, besides the Chair's March 2009 text, there were several proposals by on the 
table which needed to be looked at in greater detail. 
18. The representative of Chinese Taipei  considered that the 'sweep ing exercise' was a success. 
He welcomed the Chairman's Consultative Note and thought it was very constructive and useful, since 
it laid down all possible options on the table.  On th e issue of "necessity", he thanked the Secretariat 
for the updated Note and agreed that a dedi cated discussion on the "necessity test" was needed. 
19. On the same note, the representative of Colombia  found the exercise undertaken by the 
Chairman to be extremely fruitful.  With regard to the "necessity test", he considered that the updated 
Note produced by the Secretariat as a step forward in the construction of such a test.  He stressed that 
his delegation was very interested in developing strong disciplines.  Therefore, it was crucial that 
elements, such as the "necessity test", were integr ated.  Various language options, that might satisfy 
the interests of Members, thus needed to be considered. 
20. Like other Members, the representative of Korea  expressed his appreciation for the small 
group consultations convened by the Chairman.  Hi s delegation strongly supported the exercise, as 
well as the Chairman's Consultative Note.  His dele gation would be interested in contributing to the 
drafting work by participating in the small groups, esp ecially with regard to the "necessity test", as 
well as the paragraphs on licensing and qua lification requirements and procedures. 
21. The representative of Argentina  thanked the Secretariat for the updated Note on "necessity 
tests".  He noted that such documents were very important for Members, especially for developing country Members.  He also expressed gratitude to  the Secretariat for having responded to specific 
questions from the delegations.  As  highlighted in the Note, "necess ity tests" contained in various 
WTO Agreements and in different provisions in pa rticular agreements could not necessarily be seen 
as interchangeable.  Therefore, his delegation belie ved that it would be difficult to reach specific 
conclusions about the relevance of the existing provisions and about their appropriateness for the 
negotiations undertaken in the Working Party.  He al so stressed that Members have a right to establish 
new regulations on the supply of services in thei r territories, as stated in the GATS preamble.  
22. Like other delegations, the representative of India
 found the 'sweeping exercise' a useful one.  
With regard to the "necessity t est", the representative of India  thanked the Secretariat for the updated 
Note.  India supported the "necessity test", but his delegation was conscious that the right to regulate needed to be balanced with such test. 
23. The representative of Barbados
 expressed, on behalf of the SVEs, her appreciation for the 
exercise that had been undertaken  with regard to the Chair's Ma rch 2009 text and considered the 
Chairman's Consultative Note to be a tangible outcom e of the work.  She stated  that, in addition to a 
                                                      
5 See The Necessity Test in the Disciplines on Do mestic Regulation, RD/SERV/39, 9 February 2011.  S/WPDR/M/48 
 Page 5 
 
 
  discussion on the "necessity test", a serious and fo cused discussion on "development" needed to be 
undertaken.  
24. The representative of Indonesia  considered the Chairman's Consultative Note to be a useful 
document and expressed appreciation for it.  He under lined the importance of the right to regulate for 
developing countries and the need to strengthen the chapter on development.  Indonesia was ready to 
actively participate and contribute to the drafting process. 
25. The representative of Canada  thanked the Chairman for th e 'sweeping exercise' and the 
Secretariat for the updated Note on necessity.  He note d that, in the view of his delegation, effective 
disciplines on domestic regulation were possible without a "necessity test". 
26. With regard to the 'sweeping exer cise', the representative of Bolivia  noted that the work had 
been very demanding but also constructive.  There ha d been progress but a great deal of work still had 
to be done, if Members wished to strike an ade quate balance between the interests of the various 
Members.  He also noted that the different concer ns of developing country Members needed to be 
taken into account.  With regard to the "necessity test", he had no specific comments on the updated 
Note, as his delegation was still analysing the document.  
27. The representative of Turkey  echoed the satisfaction expressed by other Members with 
respect to the 'sweeping exercise'.   She also expressed thanks fo r the updated Note on the "necessity 
test".  Turkey had major concerns with the propo sal to include a "necessity test" in the domestic 
regulation disciplines.  Her delegation considered such a test to be incompatible with right to regulate 
and believed that such mechanisms would pu t severe constraints on the policy-making of 
governments and regulatory authorities. 
28. The Chair  thanked the Members for their co-operation in the "sweeping exercise" of the 
Chair's March 2009 text and thanke d the delegations for their comments on this exercise and on the 
Addendum by the Secretariat on "necessity tests". 
B. FUTURE  WORK 
29. The Chairman introduced his ideas on future work  to deepen and inte nsify the drafting of 
domestic regulation disciplines.  He noted that he would continue to use the small group configuration 
and, for transparency, would report the discussions to the Working Party's open-ended meetings.  He 
encouraged Members to bring capital-based officials to the drafting sessions.  In terms of topics, he 
would reflect further on the inputs received during the sweeping exercise.  In this connection, he noted that he would like to commence the next round of consultations with a focused discussion on the necessity test and the development chapter of the Chair's March 2009 text.  In addition to the 
negotiations on the domestic regulation disciplines,  he reminded Members that the Workshop on 
Regulatory Practises had been scheduled for 11 Apr il 2011 and that a programme would be circulated 
by the Secretariat in due course.  
30. The delegations of Australia, US, Canada, Ne w Zealand, China, Ecuador, India, Mexico, 
Hong Kong China, EU, Brazil, Switzerland, Sout h Africa, Chinese Taipei, Colombia, Brazil and 
Turkey  expressed views on possible dates for the Chai rman's small group consultations, as well as the 
formal meeting of the WPDR.  Several common poi nts were highlighted in these interventions.  
Firstly, domestic regulation negotia tions should be held close to, but not within the market access 
week.  Secondly, in order to facilitate the particip ation of capital-based experts, meetings should, as 
much as possible be consolidated.  Delegations shoul d also be informed of forthcoming meetings as 
early as possible.  Thirdly, the topics to be discu ssed were complex and sufficient time should be set 
aside for domestic regulation.  Fourthly, while th e small group configuration was helpful, the process, 
as well as the discussions, should be transparent and in clusive, as had been th e case with the sweeping S/WPDR/M/48 
Page 6  
 
  exercise.  Fifthly, domestic regulation meetings s hould avoid, as much as possible, clashes with other 
meetings taking place at the WTO.  
31. The Chairman
 took note of all the views expressed.  He noted that the small group discussions 
would commence the week of 28 February.  As dom estic regulations had entered into an intensified 
phase of negotiations, delegations shou ld be prepared to meet frequently.  Any further consultations 
would depend on the progress made during the week of 28 February.  The formal WPDR would then 
be moved to the week of 21 March, leaving the we ek of 14 March free for market access bilaterals 
and plurilaterals.  
C. OTHER BUSINESS  
32. No items were raised under this agenda item. 
 
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