On The Necessity Test Of GATS Domestic Regulation

The necessity test is the key and crux in determining whether a Member's domestic measures comply with the obligation of domestic regulation provided in General Agreement on Trade in Services. Given the different characteristics between the trade in services and goods, due to the invisibility and diversity the traditional regulatory methods on trade in goods could not work effectively on services trade. Under this scenario, domestic regulatory measures have become the significant approach for Members realizing their national policy objectives. Nevertheless, domestic regulatory measures tend to be abused and result in the obstacle hindering the liberalization of services trade. Therefore, the appropriate delineation of the boundary of domestic regulation should be the prerequisite for striking a balance between the autonomy of domestic regulation and the liberalization of services trade. Moreover, the necessity test on domestic regulation has been regarded as the crucial tool and inevitable mechanism to determine whether a domestic measure complies with the obligation specified in GATS. From this respect, great implications could be found both theoretically and realistically from the deep and systematic research on the necessity test with respect to domestic regulation. The profound understanding on the necessity test could provide China much help in dealing with the disputes in services trade actively, as well as in avoiding becoming the target which other Members attack by detailed study before introducing certain domestic measure.This thesis combines the research methods in historical, text and comparative prospects and tries to outline the evolution of the necessity test of domestic regulation. Additionally, this thesis would, by systematic analysis on the provisions of domestic regulation in GATS, focus on three aspects comprehensively: the structure of the provisions of domestic regulation, the object of the necessity test and its general standard. The priority of this thesis is, by comparative and case-oriented study, to explore the various determining elements as well as the way of analysis in regard to the necessity test of domestic regulation. Finally, by examining the proposals of improvement from many Members concerning the necessity test of domestic regulation, this thesis would advance some strategies from both international negotiation and domestic administration for China. The first part of this thesis would analyze the background and development of the domestic regulation from the historical prospect, explore the achievement accomplished by the domestic regulation negotiations under the GATS, and provide some brief assessment on the duty and current status of the Working Party on Domestic Regulation.The second part of this thesis would employ the text analysis as the research method. At the beginning, the structure of the provisions of domestic regulation in GATS would be discussed in detail. The overview of the domestic regulation obligation would be given and the role of the necessity test in the whole provision would be addressed by detailed examination of every provision in terms of domestic regulation. Second, this part would carry out deep study on the objects of the necessity test on domestic regulation and determine the coverage of the necessity test with a view to provide a basis for analysis on the content of the necessity test. Finally, in accordance with the provisions of domestic regulation in GATS, the general standard of the necessity test would be abstracted. In order to clearly advance the substance of the necessity test, this part would make some critical analysis on the principle of proportionality and comparative study on'not more trade-restrictive than necessary'and'not more burdensome than necessary'.The third part of this thesis would take a comparative research approach, by comparative study on the relevant systems and cases with respect to the GATT1947, SPS, TBT and GATS. Generally, the necessity test on domestic regulation in GATS has more similarity with the mechanisms stipulated in SPS and TBT, but to a large extent differentiates with the necessity test in the General Exception under GATT1947 and GATS. Through the in-depth analysis of the cases concerning the necessity test, the core elements and the approach of reasoning considered by the dispute settlement body would be explored in order to provide a useful reference for an accurate grasp of the necessity test on GATS domestic regulation.The forth part mainly addresses possible proposals with respect to amendments to the necessity test on domestic regulation in GATS. After comparative analysis on the proposals put forward by the Members, this part would point out the direction of future development and potential problems and suggest that the future negotiation should be carried out on the basis of the specific commitment made by Members, taking the horizontal approach and effectively respecting the benefits of developing Members.The fifth part would, combined with the analysis aforementioned, propose the strategy that China should take to cope with the necessity test on domestic regulation. Specifically, according to the above case study, this part would explore the concrete and feasible measures that China should employ in the aspects of international negotiation and domestic administration aiming to maximize the maintenance of China's trade benefits.