Dec 21, 2009

How to reconcile national regulatory autonomy with free trade?

The WTO regime aspires to walk the tightrope between progressively liberalizing world trade and preserving well-intentioned regulatory diversity. This is a difficult task for the WTO adjudicating bodies and current services disputes confirm as much, notably when it comes to origin-neutral measures which nevertheless adversely affect trade. WTO Members are currently negotiating the adoption of rules (so-called 'Disciplines on domestic regulation') which will purportedly ensure that origin-neutral measures are not unduly trade-restrictive. In a recent TILEC discussion paper, TILEC member Panagiotis Delimatsis analyses the
Disciplines with a critical eye and draws rudimentary parallels with the EU Services Directive. The author argues that the Disciplines can only be successful if they incorporate certain proxies which could be easily used by the WTO judiciary in the resolution of conflicts. Other than strengthening the rules relating to regulatory transparency, the paper proposes a 'necessity test' drawn from the GATT/WTO history, which is tailor-made to free trade in services and, therefore, is likely to gain the 'mass support' of WTO members. Absent this type of proxies, the disciplines are doomed to fail.