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What is the WTO Joint Initiative on Services Domestic Regulation?
In December 2021, New Zealand alongside 66 other World Trade Organization (WTO) Members announced the conclusion of negotiations of the plurilateral Joint Initiative on Services Domestic Regulation (the Joint Initiative). Negotiations had been ongoing since the WTO 11th Ministerial Conference, held in Buenos Aires in 2017, when 59 WTO Members announced their intention to negotiate services domestic regulation rules. Today, the Joint Initiative has 72 WTO Member participants. See a full list of Members involved(external link).
Services sectors can be regulated in a number of ways such as through licensing, technical standards, or requiring certain qualifications in order to be authorised to operate in a market. This type of regulation is known as the “domestic regulation” of services. While these regulations are legitimate, if poorly designed they can also make trade difficult.
For example, an accountant who may be thinking of working in an offshore market might need particular qualifications and/or a licence in that market before they can begin work. Domestic regulation rules aim to make sure that processes are impartial, transparent and fair, so that the accountant is able to apply for the license or qualification to do business without too much difficulty.
In some instances, these types of regulatory requirements can be time consuming and force businesses to pay large compliance costs. They can reduce New Zealand exporters’ ability to operate efficiently and competitively in export markets. Rules on how services domestic regulation is designed are commonly found in many of New Zealand’s free trade agreements, but the existing World Trade Organization (WTO) rules that apply to a wider range of economies have until now been less developed.
The Services Domestic Regulation Joint Initiative creates a set of rules to ensure the regulations and requirements to export services into an off-shore market are transparent, predictable, and efficient for services exporters.
Where is the process at?
Since February 2024, the Services Domestic Regulation disciplines have entered into force and become legally binding for 49 of the 72 WTO members who joined the JSI, including New Zealand.
As a country with well-established administrative processes, New Zealand did not need to change any legislation or practices to meet the requirements of the WTO services domestic regulation disciplines. New Zealand exporters will benefit from more transparent and fair rules for authorisation to supply services in overseas markets. See the official update from the WTO(external link).
The Members taking part in this initiative have agreed that the domestic regulation rules will apply on a Most Favoured Nation basis. This means that the rules apply to all Members of the WTO, and all will benefit (regardless of whether they intend to make commitments or not). This should encourage other Members to eventually sign up to the rules and apply them in their domestic legislation.
What is in the rules?
The Services Domestic Regulation Joint Statement Initiative includes rules on:
- reducing the number of applications required for authorisation
- allowing applications to be made at any time
- allowing electronic applications and acceptance of copies
- processing of applications
- fees
- assessment of qualifications
- independence from regulators
- making information available to the public
- transparent development of regulatory processes
- flexibilities for developing and least-developed country Members
- a voluntary provision for Members that choose to implement it, which would require domestic regulation measures to not discriminate on the basis of gender