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

Market Access (Article XVI)

– quantitative restrictions

National Treatment (Article XVII)

– discriminatory measures

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

Cross-border supply– Legal advice over the Internet

Consumption abroad– Legal services received in other countries

or over the Internet

Commercial presence– Foreign offices of law firms

Movement of natural persons– Lawyers practising abroad individually or through

an established foreign law firm

Ministerial Decision on Professional Services

April 1995 Established the Working Party on

Professional Services (WPPS) Required the immediate implementation of

GATS Article VI:4 Gave priority to the accountancy sector (i.e

as a “test case”)

WPPS Work on Accountancy

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

28 May, 1997: WTO Council for Trade in

Services adopted the voluntary Guidelines for

Mutual Recognition Agreements in the

Accountancy Sector.

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

14 December, 1998: WTO Council for Trade in Services adopted the mandatory Disciplines on Domestic Regulation in the Accountancy Sector

Applicable to Members with specific commitments in accountancy

No immediate legal effect Standstill provision applicable to all WTO

Members

Disciplines on Domestic Regulation in Accountancy - in Brief

Do not address measures subject to scheduling under Articles XVI and XVII of the GATS

Necessity 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.)Transparency

• 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

Licensing requirements • consideration of less trade-restrictive alternatives to residency requirements

• fees charged shall reflect administrative costs

Licensing procedures • authorities shall not require more documentation than strictly necessary

• prompt acknowledgement of receipt of applications

Accountancy Disciplines - in Brief (Cont.)

Qualification requirements:

• account to be taken of qualifications acquired in the territory of another Member

Qualification procedures:

• verification of an applicant's qualifications within a reasonable time-frame

Technical 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)

Norway’s proposal on Business Services includes some professional services

Seven general proposals on Professional Services: Canada, Chile, Columbia, EC, Japan, Kenya and Switzerland

Two proposals on Legal Services: Australia and the U.S.

Two proposals on Accountancy Services: Australia and the U.S.

One proposal on Architectural Services: Australia One proposal on Engineering Services: Australia

Negotiating Proposals in the CTS: Issues Raised in Professional Services 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.

Facilitating entry under mode 4: seek improvements in the coverage for the temporary entry and stay of foreign professionals.

Recognition of credentials: encourage the recognition of foreign qualifications and the development of mutual recognition agreements.

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.

Number of Offers by Sector(as of January 2004)

0

5

10

15

20

25

30

35

Sectors

Num

ber o

f Offe

rs

Developed

Developing and in Transition

Types of Improvements, per SectorProfessional Services

Jan. 2004

0123456789

Sectors

Num

ber o

f offe

rs

New commitments

Improvements to existing

74

39

72

25

67

5164

33

60

15

Full Commitment Cross Border Supply

Can Professional Servicesgo on line?

GATS Commitments(by number of governments)