Domestic Regulation and Free Trade in Services – A Balancing Act

Abstract

In the absence of border measures, protectionism in services trade takes almost exclusively the form of internal regulatory interventions. Most regulatory interventions do not however have any protectionist intent. The GATS structure creates a built-in flexibility for the purpose of ensuring that appropriate consideration is taken of the fact that countries are at different stages of their liberalization process. When developing new disciplines for domestic regulation in GATS, Members must consider whether this flexibility should extend to such disciplines or whether a necessity test for domestic regulation in GATS should simply, in itself, assimilate a certain amount of flexibility in order to safeguard legitimate national policy concerns. The amount of flexibility guaranteed by a more or less stringent balancing requirement in Article VI:4 GATS and the consequences of applying means-end and least trade restrictive criteria, derived from this provision, in a services context will ultimately depend on the future scope of Article VI:4 GATS itself.