The Principle of Necessity in the WTO – Lessons for the GATS Negotiations On Domestic Regulation

Abstract

The negotiations relating to domestic regulations in services are entering their final phase. While the implementation of their results will depend on overcoming the current stalemate in the Doha negotiating round, it becomes increasingly clear that Members will want to capitalize on the progress made in this area regardless of the fate of the Doha round. Whereas important principles of good governance and transparency are being ‘multilateralized’ through these negotiations, WTO Members appear reluctant to endorse in the final text of these negotiations a necessity test. Necessity is a principle of constitutional value within the WTO, well-known from long-established case-law under Article XX GATT, requiring that WTO Members avoid creating unnecessary barriers to trade by choosing those domestic measures which have the least trade-restrictive effect possible. Who’s afraid of necessity? This Note aims to discuss this very question drawing lessons from older and more recent interpretations given to the concept of necessity under the WTO agreements.

Keywords: WTO, GATS, trade in services, domestic regulations, the principle of necessity, necessity test

JEL Classification: F13, F53, K33, L88