Domestic regulation: What are the costs and benefits for international trade in services?

Services have been considered non-tradable and therefore outside the scope of trade policy-making until quite recently. A logical consequence is that explicit policy barriers to cross-border trade in services are rare. What segments markets for tradable services is therefore largely in the realm of domestic regulation. Both the General Agreement on Trade in Services (GATS) and a number of regional trade agreements (RTAs) aim at developing disciplines on domestic regulation. GATS Article VI states that disciplines on qualification requirements and procedures, technical standards and licensing requirements shall be established to ensure that regulation is not more burdensome than necessary to ensure the quality of the service. Such disciplines are, however, yet to be established, but a reference paper on pro-competitive domestic regulation in telecommunications has been included in a number of World Trade Organization (WTO) members’ GATS schedules of commitments, and some RTAs have quite detailed disciplines on domestic regulation in this sector.