MC13’s new service regulations aim to cut global trade costs by over $125 billion

ABU DHABI/ WAM

The entry into force of new disciplines on services domestic regulation, announced at the World Trade Organisation (WTO) 13th Ministerial Conference (MC13) in Abu Dhabi on 27th February, is expected to lower trade costs by over US$ 125 billion worldwide.
The announcement was made at an event attended by Director-General Ngozi Okonjo-Iweala, Dr. Thani bin Ahmed Al Zeyoudi, UAE Minister of State for Foreign Trade and MC13 Chair, and participating members in the Joint Initiative on Services Domestic Regulation, represented by Costa Rica’s Foreign Trade Minister, Manuel Tovar, and the European Commission’s Vice-President Valdis Dombrovskis.
WTO members participating in the initiative began incorporating the new disciplines on good regulatory practice into their existing services commitments once the disciplines were successfully concluded in December 2021. The certification process for these disciplines has now been completed for 52 WTO members, with more expected to be finalized in the coming weeks.
The disciplines seek to mitigate unintended trade-restrictive effects of measures relating to licensing requirements and procedures, qualification requirements and procedures and technical standards. They seek to make the regulatory environment more conducive to business and can help particularly micro, small and medium-sized enterprises as well as women entrepreneurs.
The disciplines will be applied on a “most-favoured nation” principle, meaning that they will benefit all WTO members. New research by the WTO finds that their implementation will help to reduce services trade costs by 10 percent for lower-middle income economies and 14 percent for upper‑middle income economies, with overall savings of US$ 127 billion. If all WTO members implement the disciplines, large welfare and trade increases are projected, especially for developing economies. By 2032, global real income is projected to increase by at least 0.3 percent, representing US$ 301 billion and global service exports are expected to rise by 0.8 percent, amounting to US$ 206 billion.
Welcoming the entry into force of the disciplines, Director-General Okonjo-Iweala said, “Services are the largest generator of jobs – particularly for women and young people, and they have in most recent years been the biggest driver of commercial growth. It is therefore high time that recognized good regulatory practices on services trade have come within the ambit of the WTO. The implementation of the disciplines holds huge potential for developing economies.”
For his part, Dr. Al Zayoudi said, “The implementation of this outcome will significantly reduce red tape and facilitate services trade. It will enable services exporters to trade with confidence. While goods, manufacturing and commodities will always play a role in the economy, much of our future prosperity will rely on exports of services. The open and transparent nature of this achievement represents the WTO at its best.”
Costa Rica’s Foreign Trade Minister Manuel Tovar, whose country coordinates the initiative, said, “This is the first outcome on services trade in more than 25 years – a much-needed update to the WTO rulebook. It is very significant because WTO members accounting for more than 92 percent of world services trade are committed to implementing these practices. Members participating in this outcome come from various levels of development, from different regions with different regulatory capacity and approaches – but they all see it as a way forward in updating the WTO rule book, making use of the rules and procedures agreed under the General Agreement on Trade in Services. This demonstrates that it is possible to make progress in the WTO’s negotiating pillar, to find compromise among committed members to support and strengthen the multilateral trading system.”
“This outcome represents our collective efforts and demonstrates that common ground can be found in the WTO, even when there are divergent views,” noted the European Commission’s Vice-President Valdis Dombrovskis. “The disciplines address a long-standing request from our business community for transparent and efficient authorisation procedures and cater for the needs of modern services trade. They will drastically improve the way that our businesses are treated on the ground, in 72 countries across the globe,” he added.
The disciplines are incorporated in participating members’ schedules of services commitments and will be applied on a “most-favoured nation” principle, meaning that they will benefit all WTO members.