Hostname: page-component-848d4c4894-ndmmz Total loading time: 0 Render date: 2024-06-04T00:40:46.063Z Has data issue: false hasContentIssue false

“How Does it Feel to Be on Your Own?” - Mutual Recognition Agreements and Non-Discrimination in the GATS: A Third Party's Perspective

Published online by Cambridge University Press:  06 March 2019

Extract

Core share and HTML view are not available for this content. However, as you have access to this content, a full PDF is available via the ‘Save PDF’ action button.

The aim of this working paper is to analyze the compatibility between two relevant provisions of the General Agreement on Trade in Services (GATS) under the World Trade Organization (WTO). The first is art. VII, Recognition, which seems to allow a Member to recognize standards of one or more Members—and not of others—without violating its GATS obligations, although this freedom should not be abused. The second is the general Non-Discrimination provision as of GATS art. II, since the aim of the GATS, at least as it reads in its preamble, is to provide a multilateral framework to trade liberalization in the services market on a non-discriminatory basis. Through the following pages, I will try to explain the rationale to sign Mutual Recognition Agreements (MRAs) and their impact on the GATS system. It is true that there is a general principle of transparency and openness of the MRAs, but it is necessary to get our hands dirty with the reality and understand if and how such an openness clause works.

Type
Articles
Copyright
Copyright © 2010 by German Law Journal GbR 

References

1 See the RTA Database on the WTO website (http://rtais.wto.org/).Google Scholar

2 For a comprehensive reconstruction, please see James H. Mathis, Regional Trade Agreements in the GATT-WTO: Article XXIV and the Internal Trade Requirement (2002).Google Scholar

3 Jagdish Bhagwati, The Unilateral Freeing of Trade versus Reciprocity, in Going Alone: The case for Relaxed Reciprocity in Freeing Trade 1, 130 (2002).Google Scholar

4 Richard Baldwin, Multilateralising Regionalism: Spaghetti Bowls as Building Blocs on the Path to Global Free Trade, 29(11) World Economy, 1451–1518 (2006).Google Scholar

5 For a more detailed overview of these opinions, please see Carsten Fink, PTAs in Services: Friends or Foes of the Multilateral Trading System?, in Opening Markets for Trade in Services: Countries and Sectors in Bilateral and WTO Negotiations 113–148 (Juan A. Marchetti and Martin Roy eds., 2008).Google Scholar

6 Kalypso Nicolaïdis, Non-Discriminatory Mutual Recognition: An Oxymoron in the New WTO Lexicon?, in Regulatory Barriers and the Principle of Non-Discrimination in World Trade Law 270 (Thomas Cottier & Petros C. Mavroidis, eds., 2000).Google Scholar

7 I prefer to use the term jurisdiction rather than the term country, because, as a consequence of the European integration process, the former Westphalian equilibrium seems to have disappeared in the old continent, leaving the stage to a new emerging actor.Google Scholar

8 C 120/78 Rewe Zentral AG v. Bundesmonopolverwaltung Fuer Branntwein (I – 649).Google Scholar

9 The Treaty of Rome establishing the European Economic Community Art. 57.1, Mar. 25, 1957 [hereinafter the Treaty of Rome] (“In order to make it easier for persons to take up and pursue activities as self-employed persons, the Council shall, acting in accordance with the procedure referred to in Article 189b, issue directives for the mutual recognition of diplomas, certificates and other evidence of formal qualifications”).Google Scholar

10 Scholars usually refer to the Cassis judgement as the first case of Mutual Recognition because, while Art. 57 of the Treaty of Rome represents a call for legislative actions which may or may not take place, in the case before the European Court of Justice, such a concept was imposed to all trade in goods.Google Scholar

11 Kalypso Nicolaïdis and Gregory Shaffer, Transnational Mutual Recognition Regimes: Governance Without Global Government, 68 Mich. Rev. of Int'l Law 263, 297 (2005) (“… Managed mutual recognition can be viewed in a static or in a dynamic manner…. Dynamically, mutual recognition can be viewed as a process, involving implicit or explicit trade-offs between these dimensions to accommodate the ‘supply side’ (for example, regulators’ requirements) that may change over time. The more parties are aware of these potential trade-offs, the higher the likelihood that they will reach agreement and devise solutions acceptable to all”).Google Scholar

12 Some could question whether these agreements overlap with GATS obligations about MRAs. As GATS authorizes WTO members to sign MRAs, within the limits of art. VII (as I try to explain infra), the parties to such agreements notified them straight after its entry into force, so the problem does not occur.Google Scholar

13 Convención sobre el Ejercicio de Profesiones Liberales, Feb. 4, 1889.Google Scholar

14 See Part 2.Google Scholar

15 For a detailed overview, please see A. Beviglia Zampetti, Market Access through Mutual Recognition: The Promise and Limits of GATS Article VII, in GATS 2000: New Directions in Services Trade Liberalization 283–306 (Pierre Sauvé and Robert M. Stern eds., 2000).Google Scholar

16 Id. at 285.Google Scholar

17 See the agreement between EC and the Swiss Confederation on direct insurance other than life insurance, in OJEC (Official Journal of the European Communities) L205, Jul. 27, 1991. The agreement entered into force on January 1, 1993.Google Scholar

19 Zampetti, supra note 15, at 295.Google Scholar

20 General Agreement on Trade in Services art. VII. 2, Jan. 1, 1995 [hereinafter GATS] (“A Member that is a party to an agreement or arrangement of the type referred to in paragraph 1, whether existing or future, shall afford adequate opportunity for other interested Members to negotiate their accession to such an agreement or arrangement or to negotiate comparable ones with it. Where a Member accords recognition autonomously, it shall afford adequate opportunity for any other Member to demonstrate that education, experience, licenses or certifications obtained or requirements met in the other Member's territory should be recognized.”).Google Scholar

21 See Introduction.Google Scholar

22 Zampetti, supra note 15, at 295.Google Scholar

23 The text of GATS art. VII.3 reads ‘disguised'.Google Scholar

24 GATS art. I.3(a) (Scope and Definitions) (“… each Member shall take such reasonable measures as may be available to it to ensure their observance by regional and local governments and authorities and non-governmental bodies within its territory…”).Google Scholar

25 GATS art. VII.4(a) (“Each Member shall: (a) within 12 months from the date on which the WTO Agreement take effects for it, inform the Council for Trade in Services of its existing recognition measures and state whether such measures are based on agreements or arrangements of the type referred to in paragraph 1…”).Google Scholar

26 I made reference to the official contact points list of the WTO Secretariat.Google Scholar

27 As it is stated in GATS art. VII.4.Google Scholar

28 See TABLE 2 – Subject Matter, Annex I.Google Scholar

29 See, e.g., Gary Becker, The Economics of Discrimination (1957); Alberto Alesina & Eliana La Ferrara, Who Trusts Others?, 85 J. of Pub. Econ. 207–234 (2002); Fabian Bornhorst, Andrea Ichino, Karl H. Schlag & Eyal Winter, Trust and Trustworthiness among Europeans: South-North Comparison, CEPR Discussion Paper No. 4378 (2004).Google Scholar

30 Luigi Guiso, Paola Sapienza & Luigi Zingales, Cultural Biases in Economic Exchange?, 124 Q. J. of Econ. 1095 (2009).Google Scholar

31 See World Trade Organization – Groups in the negotiations, http://www.wto.org/english/tratop_e/dda_e/negotiating_groups_e.htm (last visited Aug. 15, 2010).Google Scholar

32 See TABLE 3 – Cultural Biases, Annex II.Google Scholar

33 By “speaking the same language[,]” we make reference to official recognized languages.Google Scholar

34 That means that in the 85% of the cases, MRAs partners either speak the same language or share the same geographic region.Google Scholar

35 See World Bank list of economies (August 2010), http://siteresources.worldbank.org/DATASTATISTICS/Resources/CLASS.XLS (last visited Aug. 15, 2010). We used such indicators because they seem to be broadly recognized and because they are the result of an affordable method of calculation of the level of development of countries.Google Scholar

36 See TABLE 4 – Level of Income - Annex III.Google Scholar

37 See Annex IV.Google Scholar

38 See Treaty of Rome (as it has been modified over the years).Google Scholar

39 European Free Trade Agreement, Jan 4. 1960.Google Scholar

40 Comprehensive Economic Cooperation Agreement between the Republic of India and the Republic of Singapore, Jun. 29, 2005.Google Scholar

41 Korea - Singapore Free Trade Agreement, Aug. 4, 2005.Google Scholar

42 Aaditya Mattoo, MFN and the GATS, in Regulatory Barriers and the Principle of Non-Discrimination in World Trade Law 80 (Thomas Cottier and Petros C. Mavroidis, eds., 2000).Google Scholar

43 See Kalypso Nicolaïdis and Joel P. Trachtman, From Policed Regulation to Managed Recognition in GATS, in GATS 2000: New Directions in Services Trade Liberalization 241 – 282 (Pierre Sauvé and Robert M. Stern, eds., 2000); see also Robert Z. Lawrence, Regionalism, Multilateralism and Deeper Integration (1996).Google Scholar

44 GATS Art. V (“This Agreement shall not prevent any of its Members from being a party or entering into an agreement liberalizing trade in services between or among the parties to such an agreement, provided that such an agreement: (a) has substantial sectoral coverage, and (b) provides for the absence or elimination of substantially all discrimination…”).Google Scholar

45 WT/DS/34/AB/R Turkey - Textiles. Google Scholar

46 The Turkey - Textiles case is not definitive about how the fundamental conditions to be satisfied in order to invoke the PTA exception have to be demonstrated. It is worth recalling, for instance, the entire § 59 of the AB's report: “We would expect a panel, when examining such a measure, to require a party to establish that both of these conditions have been fulfilled. It may not always be possible to determine whether the second of the two conditions has been fulfilled without initially determining whether the first condition has been fulfilled. In other words, it may not always be possible to determine whether not applying a measure would prevent the formation of a customs union without first determining whether there is a customs union. In this case, the Panel simply assumed, for the sake of argument, that the first of these two conditions was met and focused its attention on the second condition.”Google Scholar

47 Supra note 44.Google Scholar

48 See Section C.Google Scholar

49 Bhagwati, supra note 3.Google Scholar

50 C. Fred Bergsten, Open Regionalism (Peterson Inst. for Int'l Econ. Working Paper No. 97–3, 1997).Google Scholar

51 Richard Baldwin, A Domino Theory of Regionalism, in Expanding Membership of the European Union 25–48 (Richard Baldwin, Pertti Haaparanta & Jaakko Kiander, eds., 1995).Google Scholar