Costs relating to TFiS, other than _prima facie_ trade barriers, can be classified as follows arising from (see Table 2): i) accessing information on applicable rules and requirements; ii) associated certification/conformity assessment procedures, where applicable, including absence of time frames for rendering regulatory decisions, or excessive timeframes for decisions; and iii) uncertainty or variability in the administration (governance) of (i) and (ii) (Hoekman, 2017). Box 2 illustrates the importance of regulatory decisions (governance) for investors.

**Table 2. Defining the Scope of Trade Facilitation in Services: An Illustration**

|**Mode of**<br>**supply**<br>**affected**|**Core of TFiS measures**|**Overlapping Areas**|**Outside Scope of TFiS:**<br>**Direct Trade Barriers**|
|---|---|---|---|
|**Horizontal**|• Streamlined administration of<br>regulations: efficient,<br>expeditious, time bound,<br>transparent, unambiguous,<br>non-discriminatory, based on<br>established criteria<br>• Transparency-related<br>provisions: publication;<br>opportunity to comment<br>before entry into force;<br>enquiry/contact points;<br>notifications, etc.|• Disciplines on charges and fees:<br>reasonable, cost-based, transparent<br>application; adequate time period<br>between publication and<br>implementation<br>• Opaque, expensive and time-<br>consuming procedures for securing<br>licenses, visas, and work permits,<br>fees<br>• Subjectivity in relation to the<br>determination of eligible categories<br>of natural persons<br>• Recognition-related concerns|• Quantitative<br>restrictions|
|**Mode 3**<br>**Mode 4**|• Administration of measures:<br>procedures and timelines from<br>service suppliers, as well as for<br>appeal and review; single<br>window facilities|• ENTs: absence of clarity on the<br>criteria on which ENTs are based for<br>Modes 3 and 4<br>• Requirements and procedures for<br>the establishment of a commercial<br>presence|• Legal entity (including<br>JV requirements)<br>• Participation of foreign<br>capital<br>• ENTs|

Source: authors based on (Working Party on Domestic Regulation 27 September 2016) (Facilitating Trade in Services, Workshop on Trade Facilitation in Services March 23, 2017) Note: ENTs: Economic Needs Test, are not precisely defined in the context of WTO. Broadly speaking, ENTs refer to market access measures as defined by Art. XVI of the General Agreement on Trade in Services. For a detailed discussion on Economic Needs Test in the GATS context see **S/CSS/W/118,** 30 November 2001.

# **Box 2. Lessons from Grievance Management Pilot Projects at the WBG**

<mark>The WBG has piloted a conflict management mechanism in more than eight countries which has generated evidence. The WBG developed an institutional conflict management mechanism, called SIRM (Systematic Investor Response Mechanism), to respond to the needs of governments by setting up a minimum institutional</mark> infrastructure to coordinate state-wide responses to investor grievances.

<mark>The most common issues identified by the SIRM pilots are sudden/arbitrary regulatory changes (60%), followed by contract breaches (22%) and expropriation (18%), which confirms the findings of MIGA/EIU 2009-2013 surveys and the 2017 GIC Survey. Regarding which types of agencies generate grievances, the SIRM pilots confirm the critical role that specialized and subnational regulatory agencies play in generating most of the conflicts. Among the 39 contentious cases, specialized agencies were involved in 64% (25) of cases and subnational agencies for 15% (6) of them. The pilots also show that grievances arise in all sectors, with service sector cases counting for 46% of the total, followed by primary/extractive industries (36%) and manufacturing</mark> (18%).

<mark>Source: Echandi and Sauve (2019)</mark> 7