Services are covered by multiple existing trade agreements and are the subject of current trade negotiations. At the multilateral level, the General Agreement on Trade in Services (GATS) is administered by the WTO. Expansion of the GATS is a component of the now-stalled Doha Round. Some WTO members, seeking to accelerate the pace of liberalization of services, are also negotiating a stand-alone plurilateral Trade in Services Agreement (TiSA).
In addition, both existing RTIAs as well as new ones under negotiation have chapters dedicated to liberalization of services. Services are also covered by RTIA chapters on investment, procurement, the temporary entry of foreign workers, financial services, telecommunications, e-commerce, and energy. RTIAs may include language on services from the GATS and sometimes include placeholders to insert GATS text once it has finally been agreed at the WTO.
Services are not defined in trade agreements. A UN classification system—CPCprov—is often used to make service commitments. Environmentally significant activities classified as services in this system include: site preparation for mining; prospecting; oil and gas drilling if done on a fee or contract basis; environmental monitoring; waste treatment and disposal; energy pipeline construction; and construction, operation and maintenance of wind or solar energy installations.
In environmental services such as the latter, it is arguably beneficial to draft services law that encourages commercial presence of foreign service providers, especially in countries where the domestic service providers do not have world-class expertise; entry of foreign service providers will improve the level of environmental services offered and has the potential to upgrade the capacity of domestic providers. It may also benefit the environment to encourage entry of foreign service providers in non-environmental areas such as finance, communications and transport, since environmental goods and service providers will often count on such foundational services in making their own investments. Horizontal commitments to fair process are important for such service providers.
One of the areas of negotiations in GATS, possibly in TiSA15 and in many RTIA texts is domestic regulation of services. The contemplated scope of application of the disciplines would be broad, applying to measures “relating to” licensing requirements and procedures, qualification requirements and procedures, and technical standards:
- Licensing requirements have been defined in the negotiations as the “substantive requirements…with which a natural or a juridical person is required to comply in order to obtain, amend or renew authorization to supply a service.”16
- Licensing procedures have been defined as the rules a service supplier “must adhere to in order to demonstrate compliance with licensing requirements.”17 Requirements to conduct environmental assessments and to mitigate environmental impacts from oil and gas pipeline constructions are examples of licensing requirements and procedures that would be covered.
- Technical standards have been defined as “measures that lay down the characteristics of a service or the manner in which it is supplied.”18 Waste reduction regulations in the construction industry are an example of the technical standards covered by the scope of the proposed disciplines.
The GATS negotiations, possibly the TiSA negotiations, and the language of many RTIAs in this context, are aimed at ensuring that such domestic regulations are not unduly restrictive in a way that might constitute protectionist barriers to entry. The concern, however, is that the resulting language may go too far, restricting the ability of regulators to impose useful conditions on service providers.
Option 1:Horizontal commitments to fair process
These will help attract, inter alia, providers of environmental services and providers of services on which environmentally important investments may depend (e.g., financial services, internet services).
Each Party shall respond promptly to all requests by the other Party for specific information on any of its measures of general application or international agreements which pertain to or affect this Chapter. Each Party shall also establish one or more enquiry points pursuant to Article [X] (Enquiries and Contact Points) to provide specific information to entrepreneurs and service suppliers of the other Party, upon request, on all such matters.” (EU – Singapore FTA, chapter 8, article 8.17)
How Commonly Used
Option 2:Unqualified substantive commitments to make domestic regulations not more burdensome than necessary (or similar aims)
Not recommended; drafters need to be careful not to overshoot and impair the ability of regulators to impose reasonable licencing and qualification requirements. It is not clear whether, for example, environmental impact assessments might count as such requirements. In the example text, the commitment is to make requirements as simple as possible—a high and unconditional standard.
“Licensing and Qualification Procedures:
Each Party shall ensure that licensing and qualification procedures and formalities are as simple as possible and do not unduly complicate or delay the supply of the service. …” (EU – Singapore FTA, chapter 8, article 8.20)
How Commonly Used
Option 3:Qualified substantive commitments to make domestic regulations not more burdensome than necessary (or similar aims)
May contribute to a welcoming environment for entry of service providers important to the environment. Balances the need for fair treatment and the need for effective regulatory protection, though in the example text the interpretation of “necessary” may be problematic.
“With a view to ensuring that measures relating to qualification requirements and procedures, technical standards, and licensing requirements do not constitute unnecessary barriers to trade in services, each Party shall endeavor to ensure, as appropriate for individual sectors, that any such measures that it adopts or maintains are:
(a) based on objective and transparent criteria, such as competence and the ability to supply the service;
(b) not more burdensome than necessary to ensure the quality of the service; and
(c) in the case of licensing procedures, not in themselves a restriction on the supply of the service.” (US-CAFTA-DR, article 11.8(2))
How Commonly Used
It is difficult to say what exactly is being discussed in the TiSA negotiations since the draft text is not public at the time of this writing.
WTO, Working Party on Professional Services. “The Relevance of the Discipline of the Agreements on Technical Barriers to Trade and on Import Licensing Procedures to Article VI.4 of the General Agreement on Trade in Services.” (S/WPPS/W/9) 11 September 1996, p. 3.