RESTRICTED
WORLD TRADE S/WPPS/W/9
11September 1996
ORGANIZATION(96-3501)
Working Party onProfessional Services
THE RELEVANCE OFTHE DISCIPLINES OFTHE AGREEMENTS ON
TECHNICAL BARRIERS TOTRADE (TBT) AND ON
IMPORT LICENSING PROCEDURES TOARTICLE VI.4
OFTHE GENERAL AGREEMENT ONTRADE INSERVICES
Note bytheSecretariat
Table ofContents
I. SCOPE OFARTICLE VI.4 AND THE TBT AND IMPORT LICENSING
AGREEMENTS ............................................2
II. IMPLICATIONS FOR SERVICES OFTHE MAIN ELEMENTS OFTHE
TBTAGREEMENT .........................................4
(i) Legitimate policy objectives ...............................4
(ii) Assessment ofwhether aregulation ismore trade-restrictive thannecessary .5
Qualification requirements ...........................5
Licensing requirements .............................6
Technical standards ................................6
(iii) Useofinternational standards ..............................7
(iv) Notification requirements .................................8
(v) Application ofconformity assessment procedures and their mutual
recognition ..........................................9
III. MAIN ELEMENTS OFTHE AGREEMENT ON IMPORT LICENSING
PROCEDURES ............................................10
IV. SUMMARY AND CONCLUSIONS ...............................12
(i) Agreement onTechnical Barriers toTrade ......................13
(ii) Agreement onImport Licensing Procedures .....................14S/WPPS/W/9
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1. Thisnotehasbeenprepared upon therequest oftheWorking Party onProfessional Services
atitsinformal meeting on22May1996. Itraises whatappear tobethemain issues concerning the
relevance oftheAgreements onTechnical Barriers toTrade (TBT) andImport Licensing Procedures
tothedevelopment ofdisciplines relating toqualifications, technical standards andlicensing pursuant
toparagraph 4ofArticle VIoftheGATS. Thenotefocuses ontheapplicability ofthenormative
approaches ofthetwoAgreements tothecategories ofmeasures covered byArticle VI:4withparticular
reference totheaccountancy sector. Itbuilds onanearlier introductory paper bytheSecretariat1which
outlines howanumber ofbasic concepts andprinciples aremade operational inthetwoagreements.
Thenotedoesnotrepresent anexhaustive account oftheissues thatneedtobeaddressed inthiscontext,
norisitmeant tobeanauthoritative interpretation oftheprovisions oftheGATS.
2. Thenoteconsists offoursections. Thefirstprovides abriefdescription ofthescope ofGATS
Article VI:4andoftheTBTandImport Licensing Agreements. Thesecond isadescription ofthe
keyelements oftheTBTAgreement andananalysis oftheirapplicability tothemeasures referred
toinArticle VI.Thethirdsection examines therelevance ofthedisciplines oftheImport Licensing
Agreement totheGATS requirement thatlicensing procedures should notinthemselves constitute a
trade restriction. Thefourth andfinalsection attempts tosummarize themain issues which emerge
from thepaper andwhich mayrequire further consideration anddiscussion byMembers.
I. SCOPEOFARTICLEVI.4ANDTHETBTANDIMPORTLICENSINGAGREEMENTS
3. Paragraph 4ofArticle VIoftheGATS callsupontheCouncil forTrade inServices todevelop
anydisciplines necessary toensure thatmeasures relating toqualification requirements andprocedures,
technical standards andlicensing requirements andprocedures donotconstitute unnecessary barriers
totradeinservices. Measures falling within thescope ofArticle VI.4. areintended toserve regulatory
orother public policy objectives. Their purpose isnottorestrict trade, andiftheyhaveincidental
restrictive effects ontrade, Article VIrequires thatthese effects should betheminimum compatible
withachievement ofthedesired policy objective. Norshould Article VI.4measures havediscriminatory
effects, asbetween foreign anddomestic services andservice suppliers.2Measures arelegitimate under
Article VIsolongastheymeet therequirements ofParagraph 4.3Bycontrast, measures intended
torestrict trade and/or todiscriminate between national andforeign suppliers aredealt withunder
Article XVI, Article XVII andtheAnnex onArticle IIExemptions.
4. Itisusefultodistinguishbetweenthedifferentcategoriesandsub-categoriesofmeasurescovered
byArticle VI:4:
- Qualification requirements: these comprise substantive requirements which a
professional service supplier isrequired tofulfil inorder toobtain certification ora
1Seedocument S/WPPS/W/6 Background Information ontheAgreement onTechnical Barriers toTrade
andtheAgreement onImport Licensing Procedures .
2Ofcourseitispossiblethatadomesticregulationwhichisnotintendedtodiscriminateagainstforeignsuppliers
could dosoinpractice. Insuchcases, where there isarelevant scheduled commitment thenational treatment
obligation could beinvoked indispute settlement tosecure reform ofthemeasure.
3ThreerequirementsarestatedinArticleVI:4,whicharenotintendedtobeexhaustive,andmustbe:(i)based
onobjective andtransparent criteria; (ii)nomore burdensome thannecessary toensure thequality oftheservice;
and(iii)inthecaseoflicensing procedures, notinthemselves arestriction orthesupply oftheservice.S/WPPS/W/9
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licence. Theynormally relate tomatters suchaseducation, examination requirements,
practical training, experience orlanguage requirements.
- Qualification procedures: these areadministrative orprocedural rulesrelating tothe
administration ofqualification requirements. They include procedures tobefollowed
bycandidates toacquire aqualification, including theadministrative requirements to
bemet.Thiscovers interaliawhere toregister foreducation programmes, conditions
toberespected toregister, documents tobefiled, fees,mandatory physical presence
conditions,alternativewaystofollowaneducationalprogramme(e.g.distancelearning),
alternative routes togainaqualification (e.g.through equivalences) andorganizing
ofqualifying examinations, etc.
- Licensing requirements: these aresubstantive requirements, other thanqualification
requirements, withwhich aservice supplier isrequired tocomply inorder toobtain
formal permission tosupply aservice. They include measures suchasresidency
requirements, fees,establishment requirements, registration requirements, etc.
- Licensing procedures: these areadministrative procedures relating tothesubmission
andprocessing ofanapplication foralicence, covering suchmatters astimeframes
fortheprocessing ofalicence, andthenumber ofdocuments andtheamount of
information required intheapplication foralicence.
- Technical standards: thesearerequirements which mayapply bothtothecharacteristics
ordefinition oftheservice itself andtothemanner inwhich itisperformed. For
example, astandard maystipulate thecontent ofanaudit, which isakintodefinition
oftheservice; another standard maylaydown rulesofethics orconduct tobeobserved
bytheauditor.
5. Thebasic requirement inArticle VI:4isthatdomestic regulatory measures inservices should
notbeformulated orapplied insuchawayastocreate unnecessary trade barriers resembles thecore
disciplines oftheTBTAgreement, which hasestablished, forthefirsttime, internationally accepted
rulesgoverning thedrafting, adoption andcertification ofproduct standards. TheAgreement 'sobjective
istoensurethattechnicalregulations,voluntarystandardsandconformityassessmentproceduresadopted
forreasons ofsafety, health, consumer andenvironmental protection, orforother purposes, donot
constitute unnecessary obstacles totrade.
6. Under theTBTAgreement technical regulations laydown product characteristics andtheir
production methods; compliance withthem ismandatory. Voluntary standards alsospecify product
characteristics, butcompliance withthem isnotmandatory. Conformity assessment procedures are
measures applied todetermine whether relevant requirements pertaining totechnical regulations or
standards arefulfilled. There areclear similarities between these three types ofmeasures andthose
coveredbyArticleVI:4oftheGATS.TechnicalstandardsinthesenseofArticleVI:4wouldpresumably
cover both technical regulations andvoluntary standards inthesense oftheTBT Agreement.
Qualification requirements intheGATS arealsoanalogous totechnical regulations inthattheyset
mandatory standards forthequalifications demanded ofservice suppliers. Similarities canalsobeseen
betweenconformityassessmentproceduresundertheTBTAgreementandcertainqualificationprocedures
under Article VI:4inthatbothembody administrative andprocedural rules which aimatverifying
compliance withsubstantive mandatory regulations.S/WPPS/W/9
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7. TheAgreementonImportLicensingProcedurescoversadministrativeproceduresusedinimport
licensing regimes which require alicence asaprior condition ofimportation. TheAgreement is
concerned onlywithprocedural requirements andnotatallwiththeobjectives orcriteria ofthelicensing
regime. Thedisciplines oftheAgreement which address non-automatic import licensing require that
import licensing procedures donotconstitute restrictions inaddition tothose which theyadminister
(e.g.quantitative restrictions). Similarly, theaimofdeveloping anymore detailed GATS rules on
licensing would betoensure thatlicensing procedures inservices, likeimport licensing procedures
forgoods, aretransparent, predicable, impartially administered andnotmore burdensome thanstrictly
necessary.
II. IMPLICATIONS FOR SERVICES OF THE MAIN ELEMENTS OF THE
TBT AGREEMENT
8. Thedisciplines oftheTBTAgreement aimatstriking abalance between thefreedom ofMember
countries toadopt andimplement regulations which aredeemed necessary toachieve legitimate policy
objectives andensuring thatsuchmeasures donotconstitute unnecessary barriers totrade. Article VI:4
oftheGATS isbased onthesame normative approach, requiring thatdomestic regulatory measures
donotconstitute unnecessary barriers totrade inservices. Thispartofthenotedescribes fivekey
elements oftheTBTAgreement andexplores theirapplicability intheArticle VIcontext.
(i) Legitimate policy objectives
9. TheAgreement laysdown thattechnical regulations shallnotbemore trade-restrictive than
necessary tofulfil alegitimate objective, taking intoaccount therisks non-fulfilment would create.
Inassessing suchrisks, anumber ofcriteria arecitedasrelevant, including available scientific and
technical information, related processing technology andintended end-uses ofproducts. Thisisnot
intended tobeanexhaustive list. Inaddition, technical regulations shall notbemaintained ifthe
circumstances orobjectives giving risetotheiradoption nolonger exist, orifchanged circumstances
orobjectives canbeaddressed inalesstrade-restrictive manner.
10. Article 2:2oftheAgreement contains anindicative listofwhatareconsidered legitimate policy
objectives. These include: national security requirements, theprevention ofdeceptive practices and
theprotection ofhuman health orsafety, animal orplant lifeorhealth, ortheenvironment. This
approach implies thatother policy objectives maybeconsidered legitimate, butwhattheyareandthe
procedure bywhich theymaybeidentified assuchisleftopeninthedrafting oftheprovision.4
11. Animportant question facing theWorking Party iswhether thesame approach ofavoiding
anexhaustive delineation ofpublic policy objectives would beappropriate inGATS. Atpresent, little
inArticle VIdirectly addresses theobjectives ofregulatory interventions. Article VI:4(b), however,
states thatdomestic regulatory requirements mustbenotmore burdensome thannecessary "toensure
thequality oftheservice". Members oftheWorking Party might wishtoconsider whether itisdesirable
toidentify anyfurther "legitimate policy objectives". Ofparticular relevance intheArticle VI:4context
isthequestion whether anysuchobjectives would bedefined atageneral levelapplicable toallservices
sectors, orwould beidentified atasector specific level. Forexample, ensuring thequality ofservices
issurely avalid general objective, while inthecaseofaccountancy more specific objectives might
alsobeelaborated.
4IftheAgreement were toprovide anexhaustive listing ofpolicy objectives, itwould implicitly determine
thelegitimacy ofallinterventions defended onpublic policy grounds. Thetradition ofGATT hasbeentoavoid
questioning thenon-trade objectives ofgovernments, except inArticle XXwhere anexhaustive listofgrounds
fordeparting from GATT obligations isprovided.S/WPPS/W/9
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(ii) Assessment ofwhether aregulation ismore trade-restrictive thannecessary
12. Article 2:2oftheTBTAgreement requires thattechnical regulations shallnotbemore trade
restrictive thannecessary tofulfil alegitimate objective. Ameasure thathastheeffect ofrestricting
tradecanbeconsidered "necessary" onlyifthereisnoalternative measure lessdisruptive oftradewhich
aMember mayreasonably beexpected toemploy toachieve thesamepolicy objective. Asnoted above,
Article VI:4isalsoframed interms ofanobligation toavoid creating unnecessary obstacles totrade.
TheWorking Party might wishtoconsider whether itwould bedesirable toelaborate further upon
thisnotion, either inageneral orasector-specific context. Some considerations thatmight berelevant
ineachoftheregulatory domains covered byArticle VI:4aresetoutbelow astheyapply tothe
accountancy sector.
- Qualification requirements
13. Qualification requirements areoftenconsidered toconsist ofthreemaincomponents: education,
examinations andexperience. Intheaccountancy sector, forexample, education refers tothebody
ofknowledge acquired byaccountants covering subjects suchasaudit, general accounting, costand
management accounting, analysis offinancial statements, taxlaw,lawofinsolvency, etc.Accountants
alsoneedtodemonstrate thattheyhavepassed anexamination ofprofessional competence covering
boththeoretical knowledge andevidence oftheability toapply thatknowledge inpractice. Inmost
countries there arealsorequirements thatinorder tobeauthorized topractice accountants musthave
completedacertainperiodofapprovedandsupervisedpracticalexperienceinanappropriateprofessional
context.
14. There canbesignificant differences between countries inthelevelofqualification requirements
pertaining totheabove three areas. Such differences, which maymake itdifficult forforeigners to
meettherequirements, areoften non-discriminatory andsimply reflect thecomplexity oftheeconomy
inquestion orthenature ofthefunctions required ofaccountants under national law. Incases where
qualification requirements maybeconsidered tohaveadiscriminatory effect (forexample, those which
specify thatinorder tobecertified, studies mustbeundertaken atspecific educational institutions or
thatprior residency must havebeenundertaken within thecountry concerned fordefined periods),
itshould beborne inmind thattheGATS national treatment provision (insectors where scheduled
commitments havebeenmade) inprinciple provides recourse forassessing whether requirements which
maynothavebeendrawn upwiththeintention ofexcluding foreign practitioners dodiscriminate in
practice.
15. Inthelightofthepotentially broad application ofArticle XVII oftheGATS, Members ofthe
Working Party might wishtoconsider whatisentailed byensuring thatnon-discriminatory qualification
requirements should notbeunnecessarily burdensome. Indoing so,itshould beborne inmind that
qualifications maynecessarily andproperly varyfrom country tocountry -interms ofthecontent,
length andrigour ofeducational andexamination systems aswellasofthenature andextent ofrequired
experience -andthatitisunlikely tobepossible toreach acommon, detailed definition ofwhat is
overly burdensome forallcountries withrespect toaparticular service. Nevertheless, Members might
findituseful toexamine afewobvious examples whatcould beconsidered tobemore burdensome
thannecessary. Inthisregard, Members might wishtoconsider whether itwould beuseful tomake
provision foraconsultation process inwhich theywould beabletomeetanddiscuss differences over
issues forwhich specialised, technical information maybenecessary, analogous totheprocedures for
technical expert groups inArticle 14andAnnex 2oftheTBTAgreement.S/WPPS/W/9
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- Licensing requirements
16. Licensing requirements arewidely usedinregulating services activities. Accountancy services
arenoexception. Apart from therequirement thataforeign accountant possesses thenecessary
qualifications, anumber ofother licensing requirements maybeimposed bythecompetent authorities.
These mayinclude anationality condition, anestablishment orresidency requirement, membership
ofalocalprofessional association, subscription toaprofessional indemnity insurance, andevidence
ofsound moral andfinancial standing. Itwillbenoticed thatinthisillustrative list,reference ismade
toanationality requirement which imposes aprecondition ontheforeign supplier thatisnotrelated
totheability tosupply theservice. Sucharequirement, which amounts todiscrimination against foreign
suppliers, issubject tothemarket access andnational treatment provisions ofArticles XVIandXVII
respectively. Article VI:4, ontheother hand, isconcerned withthose requirements which donot
discriminate between service suppliers ofother Members norinfavour ofservice suppliers ofnational
origin.
17. Forthepurpose ofdeveloping anynecessary disciplines onlicensing requirements under
Article VI:4, theessential question seems tobehowtheWorking Party could make useoftheTBT
approach whereby legitimate public policy objectives areidentified andageneral rulelaiddown that
domestic measures shallnotbemore trade-restrictive thannecessary tofulfiltheobjective. Inrelation
totheaccountancy sector, Members haveidentified anumber ofbroad policy objectives -including
safeguarding thepublic interest, protecting theconsumer andensuring thequality oftheservice -which
apply tomostandperhaps allofthelicensing requirements which havebeenmentioned. Inthelight
ofthese objectives, itwould seem reasonable tosuggest thatMembers examine thepossibility of
developing amultilateral consultation process (referred toinparagraph 15)through which licensing
requirements felttobeunnecessarily onerous maybeexamined.
- Technical standards
18. There isnodefinition oftechnical standards intheGATS butthework carried outinthe
accountancy sector would suggest thatstandards intheareaoftrade inservices apply notonlytothe
technical characteristics oftheservice itself (e.g. specifying methods offinancial reporting) butalso
totherulesaccording towhich theservice mustbeperformed (e.g.defining thewayacompetent auditor
should perform anaudit including thetypeofchecks hemustperform, thewaythework should be
documented andsoon).Thisdistinction isakintothatmade intheTBTbetween product standards
andstandards relating toproduction andprocess methods. Inprinciple, alltechnical standards are
meant toserve legitimate policy objectives, aconcept thathasalready been codified intheTBT
Agreement andisalsoinherent intheunderlying logicofArticle VI:4. Also, thepotentially restrictive
effect ofsuchstandards iswellrecognized inbothtradeingoods andtradeinservices. Consequently,
themainobjective ofanydisciplines ontheuseofsuchmeasures isbound tobethesameinbothcases,
namely toensure thatsuchmeasures donotconstitute unnecessary trade barriers.
19. AsintheTBTagreement,ArticleVIofGATSdoesnotattempttodeveloporformulatetechnical
standards. Standards areformulated anddeveloped inresponse tochanging legal, social andeconomic
environments and,reflecting sometimes widely differing circumstances around theworld, quite
properly varyfromcountry tocountry. Intheaccountancy sector ,forexample, countries withextensive
technicalstandardsaregenerallyreluctanttorecognisetheworkdoneincountrieswithmarkedlydifferent
standards. Thefinancial statement ofacompany audited inacountry ofthelattercategory willgenerally
havetobere-audited bylocal professionals inacountry oftheformer category inorder tocomply
withthelocallegalrequirements. Oneofthepurposes ofthework intheWorking Party istoensure
thatthepreparation andapplication ofsuchstandards donotunnecessarily restrict trade infulfilling
theirobjectives.UsefulguidanceisofferedbytheTBTagreement,whichhasestablishedrulesgoverning
allstages ofstandards-related activities -drafting, adoption andcertification -anditwould seemS/WPPS/W/9
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reasonabletoassumethatthecoreprinciplesoftheTBTagreement,includingthenecessityorleast-trade-
restrictiveness test,would berelevant fordeveloping disciplines designed toprevent theuseoftechnical
standards inservices becoming more burdensome thannecessary. Members maywishtoconsider
whether themainobjective ofthework oftheWorking Party withrespect totechnical standards should
belimited tothecreation ofrules togovern intergovernmental consultations overtechnical barriers
inservices trade, orwhether itshould aimatdeveloping disciplines which would cover allstages of
thestandards process. Atanyrate,afirststepmight betoconsider whatatechnical standard isin
services, andwhataworking definition should cover.
(iii) Useofinternational standards
20. TheTBTAgreement usesinternational standards asabenchmark fordetermining whether a
measure ismoretraderestrictive thannecessary. Itstates inArticle 2:4thatwhere relevant international
standards existortheircompletion isimminent, Members mustusethem, ortherelevant partsofthem,
asabasis fortheirtechnical regulations except when theywould beanineffective orinappropriate
means offulfilling legitimate objectives. Factors thatmight justify national departures frominternational
standards include fundamental climatic orgeographical factors ortechnological problems.
21. TheTBTAgreement establishes arebuttable presumption thatnational technical regulations
donotcreate unnecessary trade barriers iftheirpurpose isthefulfilment ofalegitimate objective and
theyaredrafted inconformity withrelevant international standards. Inorder toreduce unnecessary
obstacles totrade, Members areencouraged touserelevant international standards withaview to
harmonizing theirtechnical regulations, standards andconformity assessment procedures onaswide
abasis aspossible. International standards aredefined broadly under theTBTAgreement andcover
bothstandards prepared bytheinternational standardization community which arebased onconsensus,
aswellasdocuments thatarenotbased onconsensus. Inaddition, Members areobliged toparticipate
actively "within thelimits oftheirresources" inthework ofappropriate international standardizing
bodies.
22. ArticleVI:5oftheGATSprovidesthatindeterminingwhetheraMember'sdomesticregulations
areinconformity withtheArticle VI:4criteria, account shallbetaken ofinternational standards of
relevant international organizations applied bythatMember. Furthermore, according toGATS
ArticleVII:5,whereverappropriate,Membersshallworkincooperationwithrelevantintergovernmental
andnon-governmental organizations towards theestablishment andadoption ofcommon international
standards forthepractice ofrelevant services trades andprofessions. Thecurrent provisions inthe
GATS donotgoasfarastheTBTagreement inlaying down ageneral obligation onMembers touse
international standards when theyareavailable, thereby establishing arebuttable presumption thatany
measurewhichisconsistentwithinternationalstandardswouldbeconsiderednottocreateanunnecessary
obstacle totrade. Nevertheless, theGATS obligations inthisareadoseemtopointinasimilar direction.
23. Inthecourse ofitsdeliberations onaccountancy, asector inwhich anumber ofinternational
standards forpractice andqualification havebeenestablished, theWorking Party hasreceived briefings
anddocumentation onthedevelopment andpromotion ofinternational standards inaccounting, auditing,
education andethics. Taking theexample ofinternational accounting standards, Members havebeen
madeawarethattheInternationalAccountingStandardsCommittee,incooperationwithotherprofessional
andregulatorybodies,hasdevelopedinternationalaccountingstandardsandisatthesametimeimproving
existing standards andissuing newones. Thegeneral impact ofthework sofarhasbeentofoster
agreater awareness among Members oftheuseofinternational standards asabasis forfinancial
disclosure andreporting requirements aswellasforother regulatory purposes.S/WPPS/W/9
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24. TheWorking Party'sfocus is,ofcourse, onhowtoavoid anyunnecessary trade-distorting
effects ofstandards, forexample through disparities indifferent national standards orinsufficient
information ontechnical requirements relating tostandards. Given theinformation thathasbeen
generatedintheWorkingParty,wouldMembersfeelthattheyhaveasufficientbasistodrawpreliminary
conclusions regarding theapplicability oftheTBTapproach onusing international accounting standards
asabenchmark fordetermining whether national standards maybemore burdensome thannecessary
toachieve alegitimate policy objective? Ifsuchanapproach were tobeconsidered appropriate in
thecontext ofpossible disciplines ontechnical standards inaccountancy, therewould beother related
questions toaddress. These include whether theuseofinternational standards should bemandatory,
andwhether suchusewould establish arebuttable presumption thatthemeasure inquestion doesnot
constitute anunnecessary obstacle totradeinservices. ATBTtypeapproach inthesector could mean,
forexample, laying down ageneral obligation onMembers touseInternational Accountancy Standards
assuch, orasabasis fortheirownstandards onfinancial reporting, oreventorequire companies
toreconcile theirfinancial statement withinternational accountancy standards whenever thestandards
usedaredifferent.
25. On-going work bytheaccountancy profession intheareaofinternational qualifications and
educational guidelines could haveimplications forthework onqualification requirements. IFAC is
involved inthepreparation ofethical standards aswellasinternational education guidelines which cover
continuing professional education; education andtraining requirements foraccounting technicians;
pre-qualification education, testofprofessional competence andpractical experience ofprofessional
accountants; andprofessional ethics. Members might wishtoconsider whether theseguidelines could
beusedasinternational standards forthepurposes ofassessing whether andtowhatextent qualification
requirements might beconsidered tobeunnecessary obstacles totrade interms ofArticle VI:4.
26. TheWorkingPartyhas,inconformitywithitsmandate,focuseditsworkonbetterunderstanding
theuseofinternational standards intheaccountancy sector. Members might wishatsome point to
examine theimplications ofother global standards. Thebestknown international standards arethe
ISO9000 series, which aregeneric guidelines forquality management andquality assurance inboth
manufacturing andservices industries. Anexamination ofsuchwidely recognized international quality
assurancestandardsmaybehelpfulinassessing,amongotherthings,thetraderestrictivenessoflicensing
processes forservice suppliers.
(iv) Notification requirements
27. TheTBTAgreement stipulates thatifMembers donotavailthemselves ofrelevant international
standards, orifsuchstandards donotexist, certain procedural requirements mustbemetinthose cases
where theintended technical regulation maybeexpected tohaveasignificant effect ontrade. These
include therequirement thatprospective standards mustbenotified tootherMembers through theWTO
Secretariat atasufficiently earlystageintheirdrafting (generally atleastsixtydayspriortotheirformal
adoption) soastoallow reasonable timeforother Members tomake comments. Suchcomments must
betaken intoaccount before theadoption oftheregulations orconformity assessment procedures.
28. Article IIIoftheGATS (Transparency) contains anumber ofobligations suchaspublishing
ormaking publicly available information onmeasures ofgeneral application andtheestablishment
ofenquiry points toprovide specific information onservices regulations tootherMembers uponrequest.
However, theonlynotification requirement Article IIIcontains isinparagraph 3,where Members
arerequired tonotify new,orchanges toexisting, regulations which significantly affect tradeinsectors
covered bytheirspecific commitments. Arelevant question toconsider forthepurpose ofdeveloping
disciplinesunderArticleVI:4iswhethermoresubstantialtransparencyrequirementsshouldbeelaborated
inrelation tocertain types ofservices regulations, particularly bywayofnotification. Forexample,
shouldallregulationsrelatingtoqualificationrequirements,technicalstandardsandlicensingrequirementsS/WPPS/W/9
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benotified totheWTO? Orshould sucharequirement cover onlycertain sub-categories ofthose
regulations? Also, should sucharequirement cover allservices sectors, orshould itcover onlysectors
andsub-sectors where specific commitments areundertaken? Should certain regulations
(e.g.qualification requirements and/or technical standards) benotified prior totheiradoption sothat
other Members oftheWTO would havetheopportunity tocomment? Andifso,towhatextent would
thenotifying Member beexpected totakesuchcomments intoaccount inthedrafting oftheregulation
inquestion? Needless tosay,theanswers tothese questions might notbethesame forallcategories
ofmeasures covered byArticle VI:4, norforallservices sectors.
(v) Application ofconformity assessment procedures andtheir mutual recognition
29. Under theTBTagreement, conformity assessment refers toanydirect orindirect procedure
todetermine thattechnical regulations orstandards aremet. Suchprocedures mayrelate tosampling,
testing andinspection; evaluation, verification andassurance ofconformity; registration, accreditation
andapproval; oranycombination oftheabove.
30. Inviewofthefactthatmultiple testing, inspection andcertification ofproducts exported to
different countries increases business costsanduncertainty, andcreates unnecessary barriers totrade,
theTBTAgreement laysdown detailed ruleswithrespect toconformity assessment procedures. In
essence, therules require thatcentral government bodies accord access totherelevant procedures to
thirdcountry suppliers onanon-discriminatory basis. Furthermore, theprocedures themselves should
notbecome unnecessary tradeobstacles, meaning thattheyshallnotbemore strictorbeapplied more
strictly thanisnecessary togivetheimporting Member adequate confidence thatproducts conform
withtechnical regulations orstandards. Members arerequired toensure thatconformity assessment
procedures areundertaken andcompleted asexpeditiously aspossible, thatinformation requirements
arelimited towhat isnecessary toassess conformity, andthatthesiting offacilities usedtoassess
conformity isnotsuchastocause unnecessary inconvenience toapplicants.
31. Article 6oftheTBTAgreement encourages Members toenter intonegotiations onmutual
recognition agreements forconformity assessment andonacceptance oftheresults, ofconformity
assessment procedures inother Members whenever possible, provided suchprocedures areconsidered
adequate andoffer anassurance ofconformity equivalent totheirownprocedures. TheAgreement
recognises thatprior consultations maybenecessary inorder toarrive atamutually satisfactory
understandingregardingthecompetenceoftherelevantconformityassessmentbodies.Inthatconnection,
relevant guidelines orrecommendations issued byinternational standardizing bodies aretobetaken
intoaccount.
32. TheTBTrules governing certification ofconformity withstandards were drafted inpartas
aresponse tothegrowing complexity ofconformity assessment systems inmany countries, which
increasingly imposed duplicative ordiscriminatory requirements forproduct certification andquality
assurance. Similar duplication discrimination orredundancy inthefieldofservices would presumably
prove justasinhibiting oftrade. Much workwould appear tobeneeded todevelop abasicunderstanding
ofthevarious procedures being usedbyMembers indifferent service sectors toassess conformity with
particular standards. Inthecaseofaccountancy services, theassessment oftheconformity oftheservice
oroftheservices supplier withestablished standards isgenerally notperformed onanapriori basis
byanyauthority. Itistheaccountant himself whodeclares thathehasbehaved according toethical
rules andthattheservice complies withtherequisite technical standards. Whenever checks are
implemented, theyoccur aposteriori andareconducted bytherelevant professional bodies which,
aspartoftheirremit, oftenmonitor thequality withwhich theirmembers perform theirwork, including
adherence tostandards. Itseems thatthetrend inthissector istowards closer supervision of
professionals, asschemes likepeerreview andquality control programmes become more widespread.
Asaresult, conformity assessment procedures willneedtobeadapted tothisparticular context tobeS/WPPS/W/9
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ofanyrelevance. Inthecaseofaposteriori checks, forexample, theissue isnottheprovision of
fairaccess tosuchchecks byforeign professionals buttheprevention oftheavoidance ofsuchcontrols.
33. TheWorking Party maywishtoconsider whatfurther work isrequired inorder todetermine
theappropriateness oftheapproach oftheTBTAgreement toconformity assessment, bothatthegeneral
andsector level. More specifically, itcould beargued thatcertain qualification procedures bear
similarities toconformity assessment procedures asdefined bytheTBTAgreement. Bothrelate to
administrative andprocedural requirements which aimtoensure conformity withother rules ofa
substantive nature. Article VI:4requires thatsuchprocedures shallnotbemore burdensome than
necessary toensure thequality oftheservice andthattheyshould bebased onobjective andtransparent
criteria. Aquestion theWorking Party might wishtoconsider iswhether future disciplines under
Article VI:4should require thatqualification procedures benomorestrictorbeapplied nomorestrictly
thanisnecessary togiveassurance ofthefulfilment ofqualification requirements. Might there also
bearequirement thatqualification procedures beundertaken andcompleted asexpeditiously aspossible,
andthattheinformation anddocumentation requirements imposed onprofessionals ofother Members
belimited towhatisnecessary toassess theirfulfilment ofthequalification requirements? Also, might
therebearequirement thatthepractical andlogistical arrangements (e.g.placeandtimeofexamination)
donotcause unnecessary inconvenience toapplicants?
III. MAIN ELEMENTS OFTHE AGREEMENT ONIMPORT LICENSING PROCEDURES
34. TheAgreement onImport Licensing Procedures defines import licences inArticle 1:1as
"administrative procedures usedfortheoperation ofimport licensing regimes requiring thesubmission
ofanapplication orother document (other thanthatrequired forcustoms purposes) totherelevant
administrative body asaprior condition forimportation intothecustoms territory oftheimporting
Member ".TheAgreement contains general provisions onimport licensing, aswellasspecific provisions
applying toautomatic andnon-automatic licensing procedures. Under automatic licensing procedures,
approval ofanimport licence application is"freely granted", theintention being thatlicensing is
genuinelyautomatic,unrestrictive,non-discriminatoryandprompt.Non-automaticlicensingprocedures
areassociated withmeasures ofarestrictive character, ormeasures aimed atfulfilling aparticular public
policy goal.
35. Thegeneral provisions seektoreduce thescope fordiscrimination oradministrative discretion
withregard totheprocedures forbothtypes oflicensing. They require thatrulesforimport licensing
procedures beneutral inapplication andadministered inafairandequitable manner. Regarding
formalities anddocumentation, theAgreement requires that:
- Rules andallinformation concerning procedures must bepublished, whenever
practicable, 21daysprior totheeffective dateoftherequirement, butinanyevent
notlaterthantheeffective date. Anyexceptions, derogations orchanges intherules
orthelistofproducts subject toimport licensing must bepublished, andcopies of
thesepublicationsmustbemadeavailabletotheSecretariat.Membersmaymakewritten
observations onlicensing procedures andmustbegiven theopportunity todiscuss them
withtheMember concerned.
- Application forms andrenewal forms mustbesimple, andonlysuchdocuments and
information considered strictly necessary fortheproper functioning ofthelicensing
regime must berequired upon application foralicence.
- Applicationproceduresandrenewalproceduresmustbesimple,withareasonableperiod
allowed forthesubmission oflicence applications;S/WPPS/W/9
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- Thenumber ofadministrative bodies tobeapproached byanapplicant inconnection
withanapplication mustbelimited toone,except instrictly indispensable cases, and
inanyevent thenumber should notexceed three;
- Applications mustnotberefused forminor documentation errors andinadvertent errors
oromissions ofaminor nature must notbeunduly penalized.
36. Anautomatic licence should beissued without delay andinanycasewithin amaximum period
oftendaysafterreceipt ofanapplication. TheAgreement further stipulates theconditions thatmust
befulfilled forlicensing procedures tobeconsidered automatic. Regarding non-automatic import
licensing, theAgreement seeks toensure thatlicensing procedures donotthemselves increase the
restrictiveness ofthemeasure being applied, andthatthere istransparency inmeasures adopted. The
Agreement includes thefollowing principal rules fortheadministration andtheallocation ofnon-
automatic licences:
- Transparency withrespect totheallocation oflicences andtheadministrative details
ofthelicensing system: Allinformation relevant totheadministration allocation criteria
andfunctioning ofthelicensing system shallbepublished. Forexample, Members
using alicensing system toadminister import quotas shallpublish theoverall amount
ofquotas (inquantities and/or values) andthetimespecificity ofthequotas. Where
quotas areallocated bycountry, theMember applying therestrictions shallpromptly
informallinterestedsupplyingMembersofthequotaallocations.Overall,theAgreement
requires Members topublish sufficient information fortraders toknow thebasis on
which licences aregranted anditalsocontains rules forthenotification ofnewor
modified import licensing procedures.
- Eligibility forobtaining alicence: Eligibility forquota allocations viaimport licence
should benon-discriminatory. Anypotential importer refused alicence isentitled to
anexplanation oftherefusal andtoanappeal orareview ofthedecision inaccordance
withthenational legislation.
- Time period forprocessing applications: Licence applications shallinprinciple be
processed within 30daysifapplications areconsidered onafirst-come first-served
basis, andwithin 60daysifallapplications areconsidered simultaneously.
37. Itcanbeseenfromtheabovethatfornon-automaticlicensingprocedures,administrativeburdens
forimporters mustbelimited towhatisabsolutely necessary toadminister themeasures towhich they
apply andshould notrestrict ordistort imports anymore thanwould beexpected fromthemeasures
themselves.
38. Asnoted above, GATS Article VI:4requires thatlicensing procedures donotinthemselves
constitute arestriction totrade inservices. Moreover, Article VI:3states thatwhere authorization
isrequired forthesupply ofaservice inrespect ofwhich acommitment hasbeenmade, thelicensing
authorities mustinform anapplicant ofthedecision regarding theapplication within areasonable period
oftime. There isalsoanobligation toinform anapplicant without undue delay ofthestatus ofthe
application. Under GATS, licensing procedures maybedesigned toadminister substantive regulatory
requirements ortraderestrictions suchasthose falling within thescope ofArticle XVI(e.g.alimitation
onthenumber ofservice suppliers). Alternatively, thegrant ofalicence maybeaformality. This
distinction isakintothatmade between non-automatic andautomatic licensing intheAgreement on
Import Licensing Procedures.S/WPPS/W/9
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39. Theparallel between what iscontained orcontemplated inGATS andtheGATT approach
isclear-above allinrelation totheconcern thatlicensing should notbecome aninstrument oftrade
restriction initsownright. Bothagreements alsoseektoensure thattheadministration oflicensing
procedures istimely, transparent andimpartial. Given these similarities, there would seem tobea
caseforexamining whether themore detailed provisions oftheAgreement might provide guidelines
forthefurther development ofArticle VIdisciplines. Members might wishtoconsider questions such
aswhether thereshould beanobligation toensure thatapplication forms should beassimple aspossible,
whether documentation andinformation requirements should beconfined towhatisconsidered strictly
necessary fortheproper functioning ofthelicensing system, whether thenumber ofadministrative
bodies tobeapproached byanapplicant inconnection withanapplication belimited, andwhether
there should beatimeframe fortheprocessing ofanapplication. Itshould benoted, however, that
while allthesequestions might berelevant todisciplines onlicensing procedures inservices generally,
insome cases thefocus mayneedtobeatthesectoral level. Forexample, theappropriate timelimit
forprocessing alicence application maywellvaryfrom sector tosector.
IV. SUMMARY AND CONCLUSIONS
40. Thispaper hasexamined keyprovisions oftheTBTAgreement andtheAgreement onImport
Licensing Procedures withaviewtoconsidering howfarthese Agreements canprovide guidance with
respect totheworkprogramme ondomestic regulation intradeinservices envisaged under Article VI:4
ofGATS. Strong similarities existbetween thebasic approach toregulatory interventions inthetwo
GATT 1994 Agreements andthatadopted orcontemplated inGATS. Atageneral level, theclearest
similarity isintheattempt oftheobjectives ofbothGATT andGATS toensure thatregulatory
interventions andprocedures aretransparent, predictable, andnomore disruptive orlimiting oftrade
thannecessary toattain thedesired policy objective. Therationale forthisapproach seems obvious,
considering theoverall aimofbothGATT andGATS topreserve andpromote anopenmultilateral
trading system. Butlessobvious arethedetails oftherequirements andprocedures necessary tocreate
anappropriate regulatory environment.
41. ThetwoGATT 1994Agreements havebeenhoned intowhattheyaretoday overmany years,
starting inthe1970s. Their detailed provisions have been developed andrefined inthelightof
experience andchanging needs. Thispaper doesnotstartfromtheassumption thateverything learned
andinstituted onthegoods sidecansimply betransposed intoaservices context, butitdoessuggest
thatintrinsicsimilaritiesbetweenGATTandGATSmakeituseful,asastartingpointfortheArticleVI:4
work programme, toconsider howfaritispossible todraw onaccumulated experience. Similarly,
theWorkingPartyonProfessionalServiceshasspentaconsiderableamountoftimeexaminingregulatory
issues intheaccountancy sector, andtheinsights accumulated through thisexercise should alsoprove
useful inthemore general context ofwork ondomestic regulation foreseen inArticle VI:4.
42. Ageneral point seems worth making about standards andlicensing-related issues inthecontext
oftradeinservices; because GATS dealswithservice suppliers aswellasservices, andbecause service
sectors areoften more intensively regulated thangoods sectors, there maybeconsiderable variation
among sectors inthenature ofregulatory interventions. There willbenatural limits totheapplicability
ofgeneral rules anddisciplines intheservices area, beyond which sectoral specificity isinevitable.
Perhaps thegreatest policy challenge istoconstruct asdetailed aregulatory framework aspossible
ofgeneral applicability, andthenbasesector-specific rules about regulatory regimes onprinciples
enunciated atthegeneral level. Thiswould clearly beconsistent withthefocus adopted inArticle VI:4.
Among theissues emerging fromthepaper thataresummarized below, asupplementary question in
many cases hastodowithidentifying theappropriate degree ofsectoral specificity. Inorder toavoid
repetition, thisparticular question hasnotbeenposed inevery casethatitisapplicable.S/WPPS/W/9
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(i) Agreement onTechnical Barriers toTrade
43. Theforegoing discussion oftheTBT Agreement focused onthree distinct aspects ofthe
agreement. These were, first,provisions dealing withtechnical regulations, standards andconformity
assessment procedures, allofwhich must bedesigned andimplemented withaview toavoiding
unnecessary barriers totrade. Second, several aspects oftheagreement designed toensure transparency
andaccountability instandard-setting (inrespect ofbothtechnical regulations andstandards) and
conformity assessment procedures wereexamined. These included notification requirements andthe
rightofMemberstocommentonintendedregulationsandstandards-relatedproceduresattheformulation
stage. Third, therewasadiscussion oftheroleofharmonization through theadoption ofinternationally
established standards, aswellasofconformity assessment procedures, asmechanisms forensuring
thatstandards andprocedures relating totheirimplementation donotbecome unnecessary obstacles
totrade.
Possible questions forfurther consideration
44. Some questions emerging from theforegoing discussion thatwould seem towarrant further
reflection byMembers aresummarized below. These questions arenotpresented inanyparticular
order, noraretheyintended toprejudice theviews ofMembers astowhether theseoranyotherquestions
should betaken upinthecontext ofawork programme onArticle VI:4.
(i) Would itbeuseful todistinguish between mandatory andvoluntary standards inthe
services context, inthesame manner astheTBTAgreement?
(ii) Neither theTBTAgreement northeGATS attempts toprovide anexhaustive listof
legitimate policy objectives thatwould warrant theintroduction ofstandards orlicensing
requirements. Would thefurther elaboration ofillustrative public policy objectives
under GATS serve anyuseful purpose?
(iii) BoththeTBTAgreementandGATSpredicatetheobjectiveofavoidingtraderestrictions
onthenotion of“necessity ”--thatis,ontherulethatstandards andlicensing
requirements should notconstitute unnecessary barriers totrade. Isthere anyneed
further toelaborate upon thecontent oftheconcept ofnecessity inGATS, either in
ageneral orsector-specific context?
(iv) Considerable variation islikely tobefound instandards-related policies andprocedures
intheareaofservices, particularly intheseemingly numerous areas inwhich
internationalstandardshavenotbeendeveloped.Doesthissituationjustifyconsideration
oftheestablishment ofaspecial consultative mechanism under which Members could
discuss andexplain aspects oftheirregulatory regimes upon request?
(v) NeithertheTBTAgreementnorGATSclaimscompetencewithrespecttothesubstantive
content ofstandards. TheTBT Agreement does, however, setoutdetailed rules
governing eachstageofstandards-related procedures, including drafting, adoption and
certification procedures, andvarious aspects ofimplementation. Should similar
disciplines bedeveloped inGATS todealwithstandards, including those relating to
qualification requirements?
(vi) TheTBTAgreement requires thatinternational standards (technical regulations) must
beusedunless suchstandards constitute anineffective orinappropriate means of
achieving alegitimate policy objective. Article VI:5oftheGATS requires thatdue
account betaken ofinternational standards indetermining whether aMember isinS/WPPS/W/9
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compliance withitsobligations under Article VI:5(a). Article VII:5 (Recognition) states
thatwherever appropriate, recognition should bebased onmultilaterally agreed criteria
andthatMembers should work withrelevant bodies towards common standards. Do
theGATS provisions needelaboration?
(vii) Among itstransparency provisions designed toensure adequate accountability, theTBT
Agreement requires thatifinternational standards arenotused, ordonotexist, and
acontemplated standard islikely tohavesignificant tradeeffects, thenitmustbenotified
priortoitsintroduction, andconsultations onsuchastandard mustbehelduponrequest.
Article IIIofGATS contains publication requirements inrespect ofmeasures ofgeneral
application affecting tradeinservices, andnotification requirements inrespect ofpolicy
changes affecting services inrespect ofwhich specific commitments have been
undertaken. Would itbedesirable toextend thetransparency provisions ofGATS
intheareaofstandards, tocover such requirements asprior notification and
consultation,andjustificationuponrequestofaparticularstandard?Additionally,should
anysuchrequirements beofgeneral application, orrestricted onlytothose instances
inwhich specific commitments havebeenundertaken?
(viii) TheTBTAgreement seeks toestablish procedures toensure thatconformity assessment
doesnotbecome anunnecessary barrier totrade. Would asimilar approach, involving
theestablishment ofobligations inrelation toconformity assessment procedures,
including preventing theavoidance ofsuchprocedures bedesirable inGATS?
(ix) TheTBTencourages mutual recognition ofconformity assessment procedures, much
astheGATS seeks todoinArticle VIIinrelation totheauthorization, licensing and
certification ofservice suppliers. AretheGATS provisions inneed offurther
elaboration?
(ii) Agreement onImport Licensing Procedures
45. ThefundamentalobjectiveoftheGATT1994rulesonimportlicensingistoensurethatlicensing
procedures donotinthemselves constitute abarrier totrade. Thesame policy objective isspelled
outinGATS Article VI:4(c). TheAgreement onImport Licensing gives force tothisobjective in
anumber ofways, including through minimizing thescope fordiscrimination andadministrative
discretion inlicensing decisions andprocedures, seeking toensure thattheadministrative burden of
licensing isnogreater thanwhatisessential toachieve therelevant underlying policy objective, and
requiring thatalllicensing procedures arecarried outinatimely, transparent andimpartial manner.
Possible questions forfurther consideration
46. While theGATS approach isverysimilar tothatoftheAgreement onImport Licensing
Procedures, itcurrently lacks thedetailed provisions ofthelatter Agreement. Inconsidering the
desirability ofdeveloping suchprovisions inGATS, some ofthequestions thatappear relevant for
examination arelisted below.
(i) Ifthereisacaseforestablishing eligibility criteria exanteforthegranting oflicenses,
isthere abetter wayofdoing thisthanthrough thedistinction between automatic and
non-automatic licensing? More generally, isthislatter distinction useful inthecontext
ofArticle VI:4?
(ii) Should more detailed rules bedeveloped inGATS toensure theneutral application
andequitable administration oflicensing procedures?S/WPPS/W/9
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(iii) Should rulesbedeveloped inrelation toadvance publication ofallinformation necessary
forcompliancewithlicensingrequirements?Wouldanyothertransparencyrequirements
beappropriate, suchasgeneral notification obligations additional tothose contained
inArticle III?
(iv) Should anobligation beestablished toensure thatthesimplest possible licensing
requirementsareappliedconsistentwiththeunderlyingobjectivesoflicensing,including
those relating todocumentary requirements andthenumber ofentities involved in
processing license applications?
(v) Should thenotion of“areasonable period oftime”usedinArticle VI:3ofGATS be
elaborated toinclude specific time periods, andifso,atwhat level ofsectoral
specificity?