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Addressing Regulatory Barriers in Cross-Border Services Trade

This symposium discusses the relevance and challenges of regulatory issues in cross-border services trade, as well as possible means of addressing these barriers. It covers topics such as qualification requirements, residency-related requirements, data privacy/protection laws, and enforcement of regulations.

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Addressing Regulatory Barriers in Cross-Border Services Trade

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  1. WTO Symposium on Cross-Border Supply of ServicesRegulatory Issues Related to Cross-Border Trade 29 April 2005 Thomas Chan, Deputy Representative, Hong Kong, China

  2. Outline • Relevance and challenges of regulatory issues; impact of regulatory issues on cross-border services trade. • Relevance of on-going negotiations under Article VI:4; elements to address regulatory barriers in cross-border services trade. • Other possible means of addressing regulatory barriers to cross-border services trade.

  3. Regulatory Issues in Cross-Border Services Trade (1) • Generally more liberal MA regimes in Mode 1/2 • Liberal MA commitments in Mode 1/2 (?) Source: WTO Secretariat, S/C/W/99, 3 March 1999. • Liberal NT commitments in Mode 1/2 (?)

  4. Regulatory Issues in Cross-Border Services Trade (2) • Regulatory regime often not mode-specific • Size and sophistication of suppliers • Supply of services to multiple regulatory regimes • Physical distance between regulators and suppliers • Jurisdictional issues • Regulatory feasibility

  5. Regulatory Issues in Cross-Border Services Trade (3) • Qualification requirements (education, training, experience, language, etc.) and recognition • Restriction on means of supply • Residency-related requirements • Procedures requiring physical presence/ electronics documents not accepted • Data privacy/protection laws/regulations

  6. Regulatory Issues in Cross-Border Services Trade (4) • Measures targeting extra-territorial service suppliers - indemnity, withholding tax, etc. • Other labour measures - wage parity, social security, etc. • Enforcement of regulations • Availability of legal remedies • Visa issues

  7. Article VI:4 & Cross-Border Services Trade (1) • Regulations should be transparent to service suppliers, at all levels of governments and non-governmental bodies involved as regulatory authorities, and applicable to work visa or permit requirements and procedures • Application of regulations should be objective and impartial (Article VI:1) • Regulatory requirements and procedures should be not more trade-restrictive or burdensome than necessary to achieve regulatory objectives

  8. Article VI:4 & Cross-Border Services Trade (2) • Mechanism should be available for taking into account foreign qualifications requirements and technical standards • As a norm, residency requirement should not be a pre-requisite for supply of service, qualification, certification, or examination leading to such • Fulfillment of requirements and procedures by electronic means should be allowed (licensing, certification, compliance, etc.)

  9. Article VI:4 & Cross-Border Services Trade (3) • Question: • Are mode-specific regulatory disciplines necessary for cross-border services?

  10. Questions for Regulators • Is it necessary for cross-border services to be regulated? What are the policy objectives to be achieved by regulating cross-border services? • Is it technically feasible to regulate cross-border services? Are there differences between Mode 1 and Mode 2? Are there alternatives to direct regulation that could achieve the same objectives? • Is it necessary for cross-border services to be subject to the same regulatory requirements and standards as applied to services supplied domestically?

  11. Further Thoughts (1) • Regulatory co-operation • International standards • Equivalence and recognition • General equivalence: • For services suppliers subject to regulations in home country, where regulatory co-operation exist and/or international standards are being applied, could there be a general presumption of competence? • Harmonization of Mode 1/2 requirements: • To the extent that the same regulatory objectives apply to services supplied through Mode 1 and Mode 2, could there be a general principle that the same regulatory requirements and procedures could be applied to both Mode 1 and Mode 2 supply of services?

  12. Further Thoughts (2) • Location-specific services: • e.g. postal/courier/express, telecommunications*, construction, distribution*, financial services*, transport* (* - part of the sector) • Non-location-specific services: • e.g. professional services*, business services, computer and related services, R&D services, other business services

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