1. Dr Federico Ortino King’s College London/ Clifford Chance
Services in the future UK-EU FTA: Options for a 'bold and ambitious' agreement
Dr Federico Ortino
King’s College London/ Clifford Chance

2. some premises (from UK side)
‘Red lines’ exclude retaining membership in
Single Market (take back control over laws, outside CJEU jurisdiction) and
Customs Union (freedom to sign deals with third countries)
Willingness to retain membership in the WTO
Thus: Free Trade Agreement (FTA) is the remaining option:
“bold and ambitious FTA” (Art 50 letter)
“deep and special partnership”
“of greater scope and ambition than any such agreement before it (ie., financial services and network industries)”
“should prioritise how we manage the evolution of our regulatory frameworks to maintain a fair and open trading environment, and how we resolve disputes”

3. services FTAs
Around 150 FTAs including services notified to WTO Council of Trade in Services (Art V GATS)
General structure and content of these FTAs is very similar to the GATS
broad scope of application (including FDI)
limited key obligations: ‘market access’, non-discrimination, transparency, domestic regulation, recognition
State-State ad hoc dispute settlement

4. services FTAs Some differences:
broader set of disciplines including WTO+ areas such as ‘investment’, ‘competition’, ‘sustainable development’
some innovations with regard to scheduling approaches
additional level of ‘market access’ and ‘national treatment’ commitments (on average more than double v. existing GATS commitments)
with regard to regulatory barriers, most FTAs do not go beyond very bland provisions on ‘domestic regulation’ in Art VI GATS

5. services and regulatory barriers
Services trade barriers = internal regulation
Nationality discrimination (NT)
Quantitative limitations (MA)
GATS/FTAs partial NT/MA commitments across most sectors v. EU internal market full NT/MA commitments
Beyond discrimination: regulatory heterogeneity
EU deeper integration through:
broad ‘mutual recognition’ principle (rebuttable presumption subject to complex test of proportionality)
supranational coordination/ harmonisation/ regulation/ enforcement (including home State supervision)
GATS/FTAs: practically non-existent
soft transparency/ impartiality standards
permits (but does not require) mutual recognition
broad exceptions (i.e., prudential carve-out)

6. 2016 CETA & TPP novelties?
More detailed procedural standards for internal licensing/qualification processes
‘impartial process’, ‘reasonable timeframes’, ’inform the applicant of decision’ including ‘the reasons the application was rejected and timeframe for an appeal’ (Art 12.3 CETA)
Each Party shall ensure that an authorisation is granted as soon as the competent authority determines that the conditions for the authorisation have been met, and once granted, that the authorisation enters into effect without undue delay, in accordance with the terms and conditions specified therein. (Art CETA)
with a view to enhancing convergence and compatibility between the regulatory measures of the Parties, each Party shall, when appropriate, consider the regulatory measures or initiatives of the other Party on the same or related topics. (Art 21.5 CETA)
lenient/soft language (but see Ch 11 TPP Finan Serv)

7. 2016 CETA & TPP novelties?
Regulatory cooperation between parties to strengthen regulatory efficiency (and facilitate trade). Art 21.4 CETA includes:
bilateral discussion on regulatory governance, consultation and exchange of information, sharing proposed technical regulations
examining opportunities to minimise unnecessary divergences in regulations
conducting post-implementation reviews of regulations or policies
identifying the appropriate approach to reduce adverse effects of existing regulatory differences on bilateral trade and investment in sectors identified by a Party, including, when appropriate, through greater convergence, mutual recognition, and the use of international standards
Specific example in TPP Annex on Professional Services:
Each Party shall encourage its relevant bodies to establish dialogues with the relevant bodies of other Parties, with a view to recognising professional qualifications, and facilitating licensing or registration procedures.
Best endeavour language

8. 2016 TPP novelties?
Regulatory coherence to improve internal regulatory measures of general application (Ch 25 TPP)
defined as “the use of good regulatory practices in the process of planning, designing, issuing, implementing and reviewing regulatory measures” (Art 25.2)
First: encouraging parties to establish internal processes or mechanisms to facilitate the effective interagency coordination and review of proposed regulatory measures (Art 25.4)
Second: encouraging parties to follow core good regulatory practices, including conducting regulatory impact assessments when developing proposed regulatory measures and adopting clear and concise regulation (Art 25.5)
Soft/ best endeavour language & non-justiciable

9. 2016 TTIP EU proposals? draft chapter on Regulatory cooperation
‘opportunity for cooperation and consultation exchanges’
‘regulatory compatibility’ through ‘common principles, guidelines, or code of conduct’, ‘mutual recognition of equivalence or harmonization of regulatory measures’, ‘mutual recognition or reliance on each other’s implementing tools’
‘cooperation at international fora’
‘transparency and public participation’
draft chapter on Good regulatory practices
‘early information’
‘stakeholder consultation’
‘regulatory impact assessment’
‘retrospective evaluation’
stricter language

10. concluding remarks
Non-discriminatory regulatory heterogeneity is the crucial issue (spec. in services)
How ‘bold and ambitious’? Which baseline: status quo or GATS/FTAs?
Paradox: shallow v deep integration?
One concrete, bold option: full MA and NT across all service sectors (from day 1)
Everything else (ie. addressing regulatory convergence) will take time
Conclusion: let us hope transitional period will be (very) long!