Professional Services and the GATS Impact of the WTO multilateral liberalization of trade in services on professional services Hamid Mamdouh, February 2004

GATS Commitments on Professional Services (number of schedules) Engineering Services 58 Accounting, Auditing and Bookkeeping 56 Architectural Services 50 Legal Services 45 Taxation Services 34 Integrated Engineering Services 32 Urban Planning and Landscape Architecture 33 Medical and Dental Services 38 Veterinary Services 26 Midwives, Nurses, Physiotherapists 15

Trade Barriers & Domestic Regulation n Market Access (Article XVI) –quantitative restrictions n National Treatment (Article XVII) –discriminatory measures n Domestic Regulation (Article VI) –qualitative requirements - regulatory autonomy of Members subject to GATS rules aimed at minimising trade restrictive effects (Article VI:1&4)

Trade in professional services n Cross-border supply –Legal advice over the Internet n Consumption abroad –Legal services received in other countries or over the Internet n Commercial presence –Foreign offices of law firms n Movement of natural persons –Lawyers practising abroad individually or through an established foreign law firm

Ministerial Decision on Professional Services n April 1995 n Established the Working Party on Professional Services (WPPS) n Required the immediate implementation of GATS Article VI:4 n Gave priority to the accountancy sector (i.e as a “test case”)

WPPS Work on Accountancy n Mandate under the Ministerial Declaration had three parts: –1)Establishment of guidelines for the recognition of qualifications; –2)Concentration on the use of international standards; –3)Development of disciplines on domestic regulation.

Creation of MRA Guidelines n 28 May, 1997: WTO Council for Trade in Services adopted the voluntary Guidelines for Mutual Recognition Agreements in the Accountancy Sector. n In addition to a reminder of Article VII notification requirements, the Guidelines give recommendations on the form and content of MRAs in accountancy.

Development of Disciplines n 14 December, 1998: WTO Council for Trade in Services adopted the mandatory Disciplines on Domestic Regulation in the Accountancy Sector n Applicable to Members with specific commitments in accountancy n No immediate legal effect n Standstill provision applicable to all WTO Members

Disciplines on Domestic Regulation in Accountancy - in Brief 3Do not address measures subject to scheduling under Articles XVI and XVII of the GATS 3Necessity test To ensure that measures are not more trade- restrictive than necessary to fulfil a legitimate objective. Legitimate objectives are, inter alia, the protection of consumers, the quality of the service, professional competence, and the integrity of the profession

Accountancy Disciplines - in Brief (Cont.) 3Transparency provide information on competent authorities provide information on activities regulated, licensing requirements and procedures, qualification requirements and procedures; and technical standards inform the rationale behind measures in relation to legitimate objectives (upon request) endeavour to provide opportunity for prior comment before adoption of new measures

3Licensing requirements consideration of less trade-restrictive alternatives to residency requirements fees charged shall reflect administrative costs 3Licensing procedures authorities shall not require more documentation than strictly necessary prompt acknowledgement of receipt of applications Accountancy Disciplines - in Brief (Cont.)

3Qualification requirements: account to be taken of qualifications acquired in the territory of another Member 3Qualification procedures: verification of an applicant's qualifications within a reasonable time-frame 3Technical standards: must fulfil legitimate objectives Accountancy Disciplines in Brief (Cont.)

Applicability to Other Professional Services? Accounting, Auditing and Bookkeeping Taxation Services Legal Services Architectural Services Engineering Services Integrated Engineering Services Urban Planning and Landscape Architecture Medical and Dental Services Veterinary Services Midwives, Nurses, Physiotherapists

Negotiating Proposals in the CTS Special Session (as of Feb. 2004) n Norway’s proposal on Business Services includes some professional services n Seven general proposals on Professional Services: Canada, Chile, Columbia, EC, Japan, Kenya and Switzerland n Two proposals on Legal Services: Australia and the U.S. n Two proposals on Accountancy Services: Australia and the U.S. n One proposal on Architectural Services: Australia n One proposal on Engineering Services: Australia

Negotiating Proposals in the CTS: Issues Raised in Professional Services n National treatment and market access: seek improvements in the quantity and quality of commitments. Seek the elimination of nationality and citizenship requirements, and alternatives to permanent residency requirements. n Facilitating entry under mode 4: seek improvements in the coverage for the temporary entry and stay of foreign professionals. n Recognition of credentials: encourage the recognition of foreign qualifications and the development of mutual recognition agreements. n Domestic Regulation: continue develop general disciplines with the possibility of developing specific disciplines for individual professions. Work on regulatory issues should be based on international standards.

Can Professional Services go on line? GATS Commitments (by number of governments)