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WTO Adopts New Plurilateral Agreement on Domestic Services Regulation

The World Trade Organization (WTO) on Tuesday adopted an agreement on domestic services regulation that aims to lower trade costs to the tune of about $150 billion per year.

The services domestic regulation agreement entered into force at the 13th Ministerial Conference in Abu Dhabi.

As many as 72 countries, including major economies such as the United States (US), Canada, Japan, China, United Kingdom, and Switzerland are part of the plurilateral agreement. These countries represent more than 90 per cent of global services trade.

India, however, is not a part of the agreement and has been opposing the plurilateral pact.

India, in principle, has been against plurilateral pacts on platforms such as the WTO as it believes that it may dilute its multilateral trade framework.

Till now, countries such as India, and South Africa have been questioning the legality of the plurilateral agreements at the WTO on services regulation, investment facilitation, and e-commerce.

The WTO Director General (DG) hailed India and South Africa for lifting their objections to the plurilateral initiative.

“It also has the first-ever commitment in a WTO agreement to ensure discrimination between men and women when they seek permits to supply services. Kudos to India, South Africa, and the EU for successfully brokering a deal to allow incorporation of this agreement into the WTO rule book,” WTO DG Ngozi Okonjo-Iweala said on X.

The new agreement aims to mitigate the “unintended trade-restrictive effects of measures relating to licensing requirements and procedures, qualification requirements and procedures, and technical standards.”

The larger idea is to make the regulatory environment more conducive to business and lower trade costs for services suppliers seeking to access foreign markets. This will particularly help small businesses and women entrepreneurs.

This is because trade costs for services are twice as compared to that of goods, which is a result of cumbersome procedures and regulatory divergence across nations.

According to the Organisation for Economic Co-operation and Development (OECD) and WTO research, through the implementation of services domestic regulation, economies can lower trade costs by around $150 billion, with gains in financial services, business services, communications, and transport services.

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