RESTRICTED
WORLD TRADE S/WPPS/W/16
24June1997
ORGANIZATION(97-2628)
Original: Spanish Working Party onProfessional Services
COMMUNICATION FROM BRAZIL, CHILE, COLOMBIA AND MEXICO
Thefollowing communication, dated 24June1997, hasbeenreceived from thedelegations
ofBrazil, Chile, Colombia andMexico withtherequest thatitbecirculated forconsideration by
Members atthemeeting tobeheldon26June1997.
_______________
I. GENERAL
1. Atthemeeting oftheWorking Party onProfessional Services (WPPS) heldon15May, the
Chairman invited delegations topropose guidelines forthework provided forintheDecision on
Professional Services adopted attheMarrakesh meeting inApril 1994andfortheachievement ofthe
objectives defined bytheMinisters attheSingapore Ministerial Conference inDecember 1996.1
2. Weconsider itappropriate todistribute thisdocument which contains preliminary ideas to
stimulate discussion onthetypeofdisciplines thatwould berelevant totheaccountancy sector. The
ideas contained inthisdocument constitute apreliminary appraisal which could bemodified asand
when abetter understanding isobtained oftheissues involved inthediscussion ofpotentially applicable
disciplines. Atthesame time, theyarewithout prejudice totheindividual positions adopted inthe
course ofthedetailed study ofthese subjects.
3. TheDecision onProfessional Services identifies aseries ofaspects intheaccountancy sector
towhich theWPPS should givepriority consideration. They arethefollowing:
(a) "developing multilateral disciplines relating tomarket access soastoensure that
domestic regulatory requirements are:(i)based onobjective andtransparent criteria,
suchascompetence andtheability tosupply theservices; (ii)notmore burdensome
thannecessary toensure thequality oftheservice, thereby facilitating theeffective
liberalization ofaccountancy services;
(b) theuseofinternational standards and,indoing so,itshallencourage thecooperation
with therelevant international organizations asdefined under paragraph 5(b)of
Article VI,soastogivefulleffect toparagraph 5ofArticle VII;
(c) facilitating theeffective application ofparagraph 6ofArticle VIoftheAgreement by
establishing guidelines fortherecognition ofqualifications".
1Thework oftheWorking Party onProfessional Services comes within theregulatory framework ofthe
General Agreement onTrade inServices (GATS).S/WPPS/W/16
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4. With regard totheuseofinternational standards, itmayberecalled that,inparagraph 17of
theReport totheGeneral Council bytheCouncil forTrade inServices (S/C/3) ontheactivities of
thelatter'ssubsidiary bodies in1996, itisstated that"themainroleoftheWorking Party inthisarea
istokeeptrack ofwork going onelsewhere andencourage cooperation withrelevant international
organizations". Inthisconnection, theSingapore Ministerial Declaration encouraged the"successful
completion ofinternational standards intheaccountancy sector" bytheinternational organizations
mentioned therein, WT/MIN(96)/DEC.
5. Moreover, inconnection withaction tofacilitate theeffective implementation ofparagraph 6
ofArticle VIoftheGATS, theWPPS recently concluded itswork withtheadoption ofnon-binding
"guidelines formutual recognition agreements orarrangements intheaccountancy sector", S/L/38.
6. Consequently, inthematter ofpriority tasks, theWPPS should tackle thequestion ofthe
development ofmultilateral disciplines referred toinparagraph 2(a)oftheDecision. There areanumber
ofSecretariat studies2andopinions expressed bydelegations indifferent contexts, which willbemost
helpful fordealing withthisaspect oftheDecision.
7. Weconsider thatdocuments S/WPPS/W/9 andS/WPPS/W/11 aretwoparticularly important
points ofreference formoving ourwork forward. Inourview, thefirstofthese documents sums up
themain disciplines andexisting elements oftheAgreements onTechnical Barriers toTrade andon
ImportLicensingProcedureswhichcouldberelevanttothedevelopmentofdisciplinesintheaccountancy
sector.
8. Document S/WPPS/W/11 gives anoverview ofthevarious factors atwork intheregulation
oftheaccountancy sector, based onarepresentative sample ofWTO Members. Thecombined reading
ofthese documents enables ustoidentify those aspects thatarerelevant totheaccountancy sector,
those which arenotapplicable andtheelements thataremissing fromtheWTO Agreements inforce.
9. Areading ofthese documents shows thattheharmonization oflegislation isnotaworkable
option. Ontheother hand, thetaskofdeveloping disciplines should betackled inamanner sufficiently
flexible tocover thedifferent ways ofregulating thevarious aspects ofaccountancy services
(qualifications, licences andtechnical standards), withdueaccount being taken, inparticular, ofthe
legitimate general policy objectives itiswished toachieve.
10. TheWPPS should focus onissues which haveabearing onthedisciplines applicable tomeasures
affecting thevarious aspects ofaccountancy sector regulation (qualifications, licences andtechnical
standards), particularly inthose cases where Members have undertaken specific commitments
(Article VI).
11. Infact,theworkcarried outbytheSecretariat intheaccountancy sector shows that,foravariety
ofreasons ranging from differences ineducational systems, systems oflawandcultural identity to
questions ofanethical nature, itisnotpossible tosaywhatmeasures -apart from those referred to
inArticles XVIandXVII -arenotapriori consistent withthecriteria ofobjectivity andtransparency,
notmore burdensome thannecessary toensure thequality oftheservice and,inthecaseoflicensing
procedures, notinthemselves arestriction onthesupply oftheservice (Article VI.4).
12. Afurther reduction inthetrade barriers thatmight beimplicit innational regulations would
constitute afavourable outcome tothework oftheWPPS. However, theDecision onProfessional
Servicesonlyreferstodevelopingmultilateraldisciplinesrelatingtomeasures-otherthanthoseprovided
2Seeinparticular S/WPPS/W/6, S/WPPS/W/9 andS/WPPS/W/11.S/WPPS/W/16
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forinArticles XVIandXVII -thatcould constitute obstacles totrade inaccountancy services, and
suchmeasures could beanalysed inthefuture inthelightofthedisciplines developed within theWPPS.
ThiswouldcontributetomoreconcreteprogressintheworkoftheWorkingParty,makingitunnecessary
todraw upalistofmeasures thatare"notpermitted" andhence -bydefault -ofmeasures thatare
"permitted".3
13. Thiswould facilitate thefuture adoption bytheWTO Members ofnewregulatory frameworks
based onmeasures inharmony withthese disciplines, which could beadopted andimplemented in
therespective legislative systems atacostcommensurate withtheaimspursued andconsistent with
thevarious existing real-life situations.
14. Forexample, thesituation might arisewhere aparticular measure inspecific circumstances
is"more burdensome thannecessary", buttheavailable alternative measure(s) which might beapplied
initsplace is/are tooonerous tobeimplemented bythecountry inquestion. Situations ofthiskind,
andpossible variations, areextremely difficult toidentify inevery detail. Itwould therefore appear
tobemore appropriate toconcentrate onanapproach which would givetheGATS thenecessary tools
togoondealing withthedifferent situations, asandwhen theyarise, inaccordance withthecontexts
inwhich theyemerge, instead oftackling particular measures thatareconsidered tobebarriers totrade.4
II. PROPOSALS CONCERNING THESCOPE OFDISCIPLINES INTHEACCOUNTANCY
SECTOR
15. Indeveloping disciplines adistinction should bemade between, ontheonehand, theobjectives
itisdesired toachieve andthemeans ofachieving them and,ontheother hand, theprocedures for
administering them insuchawaythattheyarenotinthemselves arestriction onthesupply ofthe
service. Atthesame time, itmight beappropriate, when assessing whether thisrequirement hasbeen
met,toconsiderthecostswhichmightbeincurredbyaMembermaintainingtheseregulationsinadopting
andapplying otherregulatory options, andwhether theyareproportional (inkeeping) withtheobjectives
pursued.
16. These disciplines could provide fortreatment formally different from thataccorded tolike
services andservice suppliers oftheMember itself (Article XVII).
17. Qualifications andlicences intheaccountancy sector
18. Withregard tothemeasures relating toqualification requirements5,itdoesnotseemnecessary
fortheWPPS toaddress these questions aswell, since theyconcern aspects which largely reflect the
different existing educational, legalandcultural systems about which itisnotpossible tomake value
judgements likethose implicit inconcepts suchas"notmore burdensome thannecessary toensure
3Document S/WPPS/W/2 contains alistofpossible general andspecific restrictions ontrade inaccountancy
services.SomeofthegeneralmeasuresaresubjecttodisciplinesundertheGATS.Anumberofspecificmeasures
arealsodealt withinsome articles oftheGATS (e.g. those relating tonationality), while others areapplied
onanon-discriminatorybasisaspartandparceloftheregulatoryframew orksandareaimedatachievingimportant
general policy objectives.
4Thisisallthemore necessary ifitisborne inmind thatthefuture agenda oftheWPPS mayhave totake
upthematter ofother professional services.
5Defined as"substantive requirements which aprofessional service supplier isrequired tofulfil inorder
toobtain certification oralicence. They normally relate tomatters suchaseducation, examination requirements,
practical training, experience orlanguage requirements", S/WPPS/W/9.S/WPPS/W/16
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thequality oftheservice". Consequently, thesemeasures aresomething given andare,basically though
notexclusively, subject tothetransparency andnon-discrimination requirements forming partofthe
present provisions oftheGATS.
19. Inthecontext ofthedisciplines which mustbedeveloped, theMembers oftheWTO should
beencouraged toapproach these questions bilaterally through thenegotiation ofmutual recognition
agreements. Thedisciplines inArticle VIIoftheGATS should ensure thatthese procedures donot
become aform ofcovert discrimination between Members oftheWTO.
20. Licensing requirements intheaccountancy sector
- Members shalltakesuchreasonable measures asmaybeavailable tothem toensure
thatlicensing requirements arenotprepared, adopted orapplied withaviewtoorwith
theeffect ofcreating unnecessary obstacles tointernational trade. Forthispurpose,
these requirements should notbemore trade-restrictive thannecessary tofulfil a
legitimate objective, taking account oftherisksnon-fulfilment would create.
- Inpreparing, adopting orapplying licensing requirements aneffort should bemade
nottoimpose ontheforeign supplier apriorcondition unrelated toitsability tosupply
theservice.
- Suchlegitimate objectives are,interalia:theprevention ofdeceptive andfraudulent
practices, measures todealwiththeeffects ofadefault onservice contracts; ensuring
theequitable oreffective imposition orcollection ofdirect taxes inrespect ofservices
orservice suppliers ofother Members, consumer protection, ensuring thequality of
theservice.
21. Qualification andlicensing procedures intheaccountancy sector
- Rules governing qualification andlicensing procedures shallbeneutral inapplication
andadministered inafairandequitable manner.
- Therulesandalltheinformation concerning procedures forsubmission ofapplications
needed bynatural andjuridical persons inorder tobeabletosubmit suchapplications
andtheadministrative body orbodies tobeapproached shallbemade public. Any
exception, derogations orchanges inorfrom therules concerning procedures shall
bemade public.
- Theapplication and,where applicable, renewal forms shallbeassimple aspossible.
Application procedures and,where applicable, renewal procedures shallbeassimple
aspossible. Theapplicants shallbeallowed areasonable period forthesubmission
ofapplications.
- Members shalltakesuchreasonable measures asmaybeavailable tothem toensure
thatprocedures arenotprepared, adopted orapplied withaviewtoorwiththeeffect
ofcreating unnecessary obstacles tointernational trade. Thismeans, interalia,that
theprocedures forevaluating applications shallnotbemore strict orapplied more
strictly thanisnecessary toensure thattheservice suppliers fulfilthequalification and
licensing requirements, taking account oftherisksnon-fulfilment would create.
- Thecompetent authorities oftheMember concerned shall, within areasonable period
oftimeafterthesubmission ofanapplication considered complete under domestic lawsS/WPPS/W/16
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andregulations, inform theapplicant ofthedecision relating tohisapplication. At
therequest oftheapplicant, thecompetent authorities oftheMember shallprovide
information concerning thestatus oftheapplication without undue delay.
22. Technical standards intheaccountancy sector
23. Aspointed outindocument S/WPPS/W/9, before proceeding todevelop disciplines inthefield
oftechnical standards, itisnecessary toconsider whatatechnical standard inservices isandtoanalyse
thequestions relevant totheadoption ofaworking definition. Asfarasaccounting services are
concerned, itwould appear thattechnical standards dealwithquestions relating tothepresentation
offinancial reports, audits andtheircontent.
24. From apreliminary analysis ofthismaterial, itwould appear thatmeasures ofthistypeshould
fulfil thefollowing requirements:
- Members shalltakesuchreasonable measures asmaybeavailable tothem toensure
thattechnical standards arenotprepared, adopted orapplied withaviewtoorwith
theeffect ofcreating unnecessary obstacles tointernational trade. Forthispurpose,
technicalstandardsshallnotbemoretrade-restrictivethannecessarytofulfilalegitimate
objective, taking account oftherisksnon-fulfilment would create.
- Such legitimate objectives are,inter alia:theprevention ofdeceptive practices,
measures necessary todealwiththeeffects ofdefault onservices contracts; ensuring
theequitable oreffective imposition orcollection ofdirect taxes inrespect ofservices
orservice suppliers ofother Members, consumer protection, andensuring thequality
oftheservice.
- Members shallensure thatalltechnical standards adopted arepublished promptly or
made otherwise available totheinterested parties ofother Members inorder thatthe
latter maybecome acquainted withtheircontents.
25. Weconsider thatthequestions dealt withinthiscommunication andthepossible practical
application ofthese disciplines totheaccountancy sector arenewaspects which should beapproached
gradually. Inthisconnection, thediscussion ofthepossible legalform thatthese disciplines might
takeisstillpending. However, itseems thatgiven thetime-frame indicated intheSingapore Ministerial
Declaration, weshould berealistic inthisrespect ifwewishtocomplete ourtaskin1997.