WTO Agenda for Professional Services

1
WTO Agenda for Professional Services

• Negotiating Priorities for the
• Doha Round
• By Robert Vastine
• President, U.S. Coalition of Services Industries
• www.uscsi.org

2
What is CSI?

• Private sector organization
• Founded 1982
• To bring services trade into global legal
  framework
• To educate about role of services in US economy
• To advocate services trade liberalization
• Legislative and Executive Branches
• Foreign Governments
• International organizations
• Entirely funded by its members

3
CSI Goals

• Liberalize cross-border trade
• Obtain rights to establish
• and national treatment
• Promote transparency and best practices in
  domestic regulation
• Improve freedom of movement of key business
  personnel
• Improve understanding of importance of services
  economy
• Including better statistics
• Premise trade and investment liberalization is
  good for the liberalizing country
• It may also be good for foreign providers

4
CSI Advisory Role to Government

• Principal private sector advisor on services
  trade objectives
• For negotiations in all forums
• Government calls on CSI
• Needs to know market conditions
• Trade/investment barriers
• Accepts that the goal of trade negotiations is to
  create market opportunities for business
• But CSI more frequently initiates contacts
• To ensure priorities being obtained
• Mainly agree, but freely disagree with government

5
CSIs Global Networks

• CSI has worked hard to build global alliances
• Financial Leaders Group
• Takes active role in WTO negotiations
• Coalition of Global Services Associations
• CSI, European Services Forum, Japan Services
  Network, Hong Kong Coalition of Service
  Industries, Australia Services Roundtable,
  Colombia Coalition of Services, Singapore
  Coalition, Chile Services Coalition
• Organized mission to the WTO in March
• Letter to Director General Supachai delivered on
  June 25 in Geneva by Global Services Coalition
  leaders

6
CSIs Global Networks (Continued)

• Global Services Network
• Almost 700 businessmen, academics/others
  interested in services trade liberalization
• www.globalservicesnetwork.com
• Friends of Services
• 6300 contacts
• CSI created the World Services Congress, first
  held in 1999 in Atlanta and repeated in Hong Kong
  in 2001
• Pleased to support CISIC

7
Importance of Open Trade in Professional Services

• Professional services are basic intellectual
  capital necessary for knowledge based 21st
  century economies
• Accounting is essential underpinning for business
• sound financial markets
• management of complex business organizations
• Architectural and engineering services are
  essential to physical infrastructure
• Legal services required for protection of
  investments, intellectual property, corporate
  structure, dealmaking
• Consulting services enable all forms of business
  services, viz., market analysis, IT services

8
Domestic Regulation in Professional Services WTO
Role

• GATS intends to ensure that qualification
  requirements and procedures, technical standards,
  and licensing procedures are not unnecessary
  trade barriers
• WTO does not promote the creation or destruction
  of domestic regulation
• GATS explicitly recognizes Members
  rights/obligations to regulate

9
WTO Efforts in Professional Services

• Working Party on Professional Services
  established in 1995
• Replaced by the Working Party on Domestic
  Regulation in 1999
• Services Council adopted voluntary Guidelines for
  Mutual Recognition Agreements in the Accountancy
  Sector in 1997,
• Confirm Article VII notification requirements
• Recommend the form and content of MRAs in
  accountancy

10
WTO Disciplines on Domestic Regulation in
Accountancy 1998

• The Disciplines stipulate
• Necessity test
• Measures not more trade-restrictive than
  necessary
• Transparency
• To provide information on regulated activities,
  licensing and qualification requirements, and
  rationale behind sectoral measures
• Opportunity for prior comment
• Licensing requirements and procedures
• Authorities shall not require more documentation
  than necessary
• Acknowledgement of receipt of applications
• Qualifications requirements and procedures
• Qualifications acquired abroad are to be taken
  into account
• Verification within a reasonable time-frame
• Technical standards should fulfil legitimate
  objectives

11
Transparency Important to Professional Services
Trade

• Regulatory authorities procedures for
  determining qualifications, recognizing prior
  experience/education, etc., often NOT transparent
  
• Independent Regulators
• Independent regulators improve quality of
  regulation in all services including professional
• Can more easily require transparency

12
Importance of Transparency (Continued)

• Licensing Transparency
• Regulators must make non-discriminatory licensing
  decisions without delay
• Licensing decisions in writing
• The reasons for rejection must be explained
• Unclear licensing criteria in freight forwarding
• Applicants should have the opportunity
• to supplement their applications
• to re-apply
• to appeal denied applications

13
Further Steps to Open Chinas Professional
Services

• China making great efforts to implement its WTO
  commitments
• But significant trade barriers remain such as
• qualification requirements
• nationality and residency requirements
• restrictions on the form of commercial presence
• restrictions on movement of key business
  personnel
• Accountancy services
• CPAs of partnerships and incorporated accounting
  firms should be licensed with the Chinese
  authorities
• New regulations should take into account the WTO
  recommendations for sectoral disciplines and
  international practices

14
Further Steps to Open Chinas Professional
Services (Continued)

• Legal services
• The 2002 Administrative Regulations on
  Representative Offices of Foreign Law Firms in
  China stipulate an economic needs test for the
  establishment of local law offices
• The Regulations came into effect without public
  comment
• Residency requirement remains
• Law firms should be able to provide legal
  consulting services
• Architectural and engineering services
• Commercial presence is currently allowed only in
  the form of joint ventures
• Registration requirements remain
• These trade restrictions are typical in other
  Member countries
• should be addressed at the current WTO
  negotiations

15
Negotiating Objectives in Professional Services

• WTO members should make, or improve, their
  commitments on professional services
• WTO members should agree to commit to basic GATS
  rules for the four modes of supply for
  professional services.
• Mode 1 is important because professional services
  are supplied electronically
• Mode 3 is also very important
• Foreign professional services firms should be
  able to establish commercial presence
• And enjoy full national treatment
• They should of course comply with local
  regulations
• so long as these are reasonable and not
  discriminatory
• are applied on a national treatment basis

16
Chinas Participation in the Doha Round

• China has submitted its services offer
• Very helpful contribution to progress in WTO
  Services negotiations
• WTO services negotiations have moved slowly
• China could take a leadership role in the Doha
  Round
• Generally Chinas commitments are better than
  many other members
• It should seek to obtain similar commitments from
  other Members
• Substantial liberalization of services will bring
  big payoff
• Removing all services barriers would generate
  1.2 trillion in additional global welfare