Services Domestic Regulation Negotiations Concluded Successfully in Geneva on 2 Dec 2021

·   40 Majors including US, EU, Russia, Japan, China come together in a Plurilateral frame at WTO

·   India including South Asia, Malaysia, Indonesia, South Africa out of Grouping

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Heads of Geneva delegations from the 67 WTO members participating in the Joint Initiative on Services Domestic Regulation announced on 2 December the successful conclusion of negotiations aimed at slashing administrative costs and creating a more transparent operating environment for service providers hoping to do business in foreign markets.

The declaration notes the conclusion of the negotiations on new disciplines relating to domestic regulation for services that seek to improve the business climate, lower trade costs and cut red tape so as to facilitate services trade worldwide. It also welcomes the schedules submitted by WTO members participating in the negotiations spelling out how each participant will incorporate the new disciplines into its existing services commitments. In the declaration, participants commit to certifying the new commitments within 12 months.

Director-General Ngozi Okonjo-Iweala praised participants for achieving an outcome that will benefit the participants, businesses in the services sector and the WTO.

“This is the first set of rules on services in 24 years. It addresses a dynamic and fast-growing segment of global output. This agreement has been completed despite the postponement of MC12. It will save businesses, especially small businesses, USD 150 billion annually in costs according to WTO and OECD research. It upgrades WTO rule making. It shows the WTO is up and moving!” said Dr Okonjo-Iweala.

The new disciplines — covering licensing and qualification requirements and procedures as well as technical standards — seek to make the domestic processes regulating the authorization to supply a service clearer, more predictable and more transparent and not unduly burdensome. The outcome of these negotiations will be applied on a “most-favoured nation” basis, meaning that it will benefit the full WTO membership.

The finalization of the negotiations was gavelled by the WTO ambassadors of Costa Rica (Gloria Abraham Peralta), Australia (George Mina) and the European Union (João Aguiar Machado). The declaration can be accessed and the full list of participants in the negotiations is available.

Highlighting the benefits of improving regulatory services regimes to boost growth and development — particularly for a developing country like Costa Rica — H.E. Ms Abraham Peralta stressed: “The implementation of the domestic regulation disciplines will further help us in this endeavour to ensure transparency, legal certainty and opportunity to comment on new regulations to the foreign companies that trust us with their operations and that have a fundamental role in the diversification and sophistication of Costa Rica's services sector.”

“This outcome marks a historic update to the WTO’s rulebook — the first new set of services rules agreed in over a quarter of a century,” H.E. Mr Mina said. “It also represents an important building block in our plurilateral rule-making agenda — to advance work on issues of interest to groups of members and address modern business challenges — which is a very necessary ongoing component of this organisation’s work.”

H.E. Mr Aguiar Machado said: “The clear rules on transparency and authorisation in the area of services – that were agreed as part of this initiative — will facilitate trade in services significantly. … Delivering on the WTO services agenda is a long overdue objective we all have. … Today, we prove [that a] large and diverse group of WTO members can work together towards a common objective, overcome their differences, show flexibility and agree on tangible results that are important for businesses and consumers.”

Research by the WTO and the Organisation for Economic Co-operation and Development (OECD) suggests that the reduction in trade costs from implementing the new disciplines could amount to USD 150 billion annually globally, with particularly important gains for financial, business, communications and transport services. Dr Okonjo-Iweala noted that the outcome seeks to address the trade bottlenecks identified by businesses and welcomed the support expressed by the business community throughout the negotiations. 

The provision on non-discrimination between men and women is the first of its kind to be included in a WTO negotiated text and seeks to boost women's participation in services trade. “This agreement also breaks new ground in that, for the first time in the WTO's history, members will commit to ensuring non-discrimination between men and women in their services regulations,” said DG Okonjo-Iweala, praising the participants for “exploring new ways of supporting women's economic empowerment”.

DG Okonjo-Iweala called on participants “to continue to engage with other WTO members to enlarge participation in the coming months” and stressed that operationalizing the technical and capacity assistance measures would “help give more members the confidence to sign up”.