WTO: South Africa withdraws objection to implementation of Services Domestic Regulation Plurilateral

Peter Ungphakorn has reported a small bit of good news in the world of WTO plurilaterals - with South Africa withdrawing its objections to 54 WTO Members implementing the Services Domestic Regulation Joint Initiative (Services DR JI).

The Services DR JI finished negotiations in December 2021 and had picked what was hoped to be the smoothest path for implementation. In essence, each participant in the Services DR JI submitted unilateral improvements to their schedules of commitments under the GATS. These cross referred to a ‘reference paper’ that set out the results of the negotiation. This had two benefits:

1. The new commitments would benefit all WTO Members, even those that hadn’t participated in the negotiations and weren’t going to be bound by the Services DR JI themselves; and

2. The certification process for GATS services schedules improvements, while not crystal clear in parts (see S/L/84 and S/L/80), has only limited scope for objections and ultimately recourse to independent adjudication if needed. See this helpful explanation on why attempts to block the changes were unlikely to succeed given the focus in the procedures is on ensuring Members provide ‘compensation’ for withdrawing commitments (which is not quite relevant here given these are new commitments being undertaken).

However, despite the hopes of this being an easy first outing for the recent plurilateral initiatives, this was not to be the case.

In February last year, both South Africa and India lodged objections to the changes that were light on detail, but noted that:

South Africa considers that further information and clarifications are required in order to assess the legal basis and the effect of the proposed modifications, particularly their interaction with Members' existing rights and obligations under the General Agreement on Trade in Services and the Marrakesh Agreement Establishing the WTO.

Accordingly, South Africa hereby notifies its objection to the certification of the schedules of specific commitments of the Members listed in the annex to this communication. This objection should be read in conjunction with the paper WT/GC/W/819/Rev.1 circulated at the request of India, South Africa, and Namibia. South Africa notes that further clarifications may be needed on other aspects of the schedules submitted for certification by the Members concerned, and therefore reserves the right to seek such clarifications.

It would now seem that - at least for South Africa - the concerns were able to be resolved with some clarifications and reformatting. Kazakhstan’s new schedule shows what has changed, with the key elements being:

• Making clear this process does not set any sort of precedent for plurilateral initiatives more generally, with an explicit statement that “the present certification does not create a precedent for incorporating outcomes in the WTO, including from the Joint Statement Initiatives”.

• Affirming that the new ‘additional commitments’ “do not diminish the rights nor alter the obligations under the [GATS] of WTO Members that are not undertaking these additional specific commitments” nor do they “diminish any obligations under the [GATS] of WTO Members undertaking these additional specific commitments.”

• The additional specific commitments are “without prejudice to the development of any necessary disciplines pursuant to paragraph 4 of Article VI of” the GATS. Under Article VI(4) of GATS Members are able to develop disciplines on “qualification requirements and procedures, technical standards and licensing requirements” - this has only resulted in one such discipline, on accountancy in 1998. India/South Africa have previously said the Services DR JI has usurped this work by negotiating cross-cutting disciplines.

• Instead of cross-referring to the ‘reference paper’ that the Services DR JI had negotiated (following, e.g., the approach taken for the Telecommunications Services Reference Paper), Kazakhstan now pastes the contents of the previous reference paper into its schedule and refers to that instead (see below). I suspect this helps to make the new commitments look less like a ‘plurilateral’ (which, according to South Africa/India, were illegitimately and improperly launched), and more akin to unilateral improvements of services commitments (which, as noted above, are difficult to object to):

  

  

With less than a week to go before the WTO’s 13th Ministerial Conference, this is a welcome bit of news for the Services DR JI. Of course, India’s objections to the Services DR JI appear to still be outstanding, and India has always taken a very prominent and strong position on the illegitimacy of the initiatives as a whole, which may make it harder for it to backtrack (although South Africa had also signed up to many of India’s previous statements). The ‘fixes’ in this case are also not possible for the next two ‘Joint Statement’ plurilaterals (on Investment Facilitation and E-Commerce), both which are aiming for inclusion in Annex 4 (Plurilateral Trade Agreements) of the Marrakesh Agreement, requiring consensus approval from all WTO Members and clearly taking the form of Plurilateral Trade Agreements.