RESTRICTED
WORLD TRADE S/WPPS/W/4*
14November 1995
ORGANIZATION
(95-3530)
Original: English Working Party onProfessional Services
COMMUNICATION FROM THE OECD
Work intheareaofprofessional services
Asagreed bymembers oftheWorking Party onProfessional Services, theSecretariat is
circulating information presented bytheOECD Secretariat atthemeeting heldon19October. The
information covers:
A. Scope andresults ofthesurvey onactivities andregulations onaccess forprofessional
services intheOECD area
B. TheOECD categorized inventory ofmeasures affecting tradeinprofessional services
C. Report ontheSecond OECD Workshop onProfessional Services
____________
A. SCOPE AND RESULTS OFTHE SURVEY ONACTIVITIES AND REGULATIONS
ONACCESS FOR PROFESSIONAL SERVICES INTHE OECD AREA
I. Background tothesurvey
1. AtthefirstOECD Workshop onProfessional Services, which tookplace inSeptember 1994,
participants expressed strong interest inOECD 'ssupport forfurther promotion ofliberalisation in
professional services, notably byimproving transparency andanalysis ofrulesandregulations applying
inthissector. Oneideaputforward wastheestablishment oftables showing therelationship between
professions/professional titles, activities andregulation onaccess across theOECD area.
2. Accordingly, andwiththeapproval oftheCommittee onCapital Movements andInvisible
transactions (CMIT), theSecretariat decided tolaunch asurvey onthese issues, inorder toobtain the
necessary information fromMember countries. Thetables established onthebasisofthesurvey results
were toshow asclearly aspossible, foreachOECD country:
(i) theconditions ofaccess toaprofession and/or aprofessional titleineachcountry,
including information onwhether access isregulated bygovernment authorities orby
theprofessions, andwhether thisisdoneatthenational oratthesubnational level;
____________
*English only.S/WPPS/W/4
Page2
(ii) thescope ofactivities exercised byeachprofession, bringing outalsothecases where
anactivity isexercised bymore thanoneprofession;
(iii) theamount towhich access totheexercise ofaspecific activity isregulated, oreven
themonopoly ofoneormore specifically defined professions.
3. Itwasagreed thatthissurvey would beconfined todomestic regulatory requirements concerning
theaccountancy, legal, engineering andarchitectural professions. Thesurvey wasnotintended todeal
specifically withforeign professionals 'access tothemarket (although thedomestic conditions onaccess,
segmentation andprofessional monopolies reflected inthissurvey alsohaveconsiderable importance
toforeigners seeking topenetrate themarket). Measures specifically affecting international trade in
professional business services arecategorized anddiscussed indocument DAFFE/INV/PROF(95)2.
4. Thisnoteisbased ontheresponses of20Member countries tothequestionnaire (Austria,
Austria, Belgium, Canada, Denmark, Finland, France, Germany, Italy, Japan, Mexico, Netherlands,
NewZealand, Norway, Portugal, Spain, Switzerland, Turkey, United Kingdom, United States). All
answers were incorporated intables. These tables havenotbeenreproduced heresince delegations
willreport additional information onthosesections which wereincomplete. Forabetter understanding,
thereader willfindsome methodological explanation andblank tables reproduced intheannex atthe
endofSection A.
II. Main findings ofthesurvey
5. Based ontheresponses tothesurvey, mostcountries seem tohavesimilar provisions which
ruleaccesstothedifferentprofessionalservicesunderconsideration.Withineachprofession,similarities
canalsobenoticed. Differences areessentially tobereported between theprofessions.
6. Analysis oftheresponses indicates thatgovernment regulations established atnational level
generally governs access totheprofessions under consideration. These rules, established toassure
standards ofcompetence, performance, technical behaviour andaccountability, foresee thatservices
berendered byindividuals having attended theuniversity (orequivalent) forseveral years. Inaddition,
provisions frequently prescribe thataprofessional exam sanction theaccomplishment ofpractical
experience. Membership inprofessional bodies isprimarily compulsory inthelegalprofession, and,
although toasomewhat lesser extent, foraccountants.
7. Despitethefactthatself-regulatoryregimesareapparentlyrareandmembershipinaprofessional
association isnotalways required, professional organisations mayplayamajor role. Inmany cases,
government rulesonqualification, access totheprofession, standards etc.are,infact,elaborated by
professional bodies andthenendorsed bypublic regulatory authorities. Domestic professional
associations sometimes enjoy ahighdegree ofautonomy inthisrespect.
8. Different professionals aresometimes designated within aservice industry toprovide specific
activities. Thisapplies inparticular inaccounting andlegal services, inwhich alarge number of
activities areregulated andreserved tospecific practitioners.S/WPPS/W/4
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1. Accountancy services
9. Theservices rendered byaccountants varyonlyslightly between OECD Member countries.
Coreactivities include traditional accounting (with theexception ofPortugal), audits (statutory ornon
statutory) andauditing ofmergers orcontributions inkind, andtaxadvice. Mostcountries alsoreported
thataccountants mayprovide management consultancy services, investment advice oractasexpert
witnesses. Some countries reported thatpublic sector audit, insolvency practice, taxrepresentation
arenotexercised byaccountants andnearly allrespondents indicated thataccountants donotprovide
legalservices.
10. There seems tobeacorrelation between thestatus ofanactivity anditsregulation. Statutory
audit andaudit ofmergers andofcontributions inkindareregulated inalmost allthecountries that
haveindicated whether anactivity isornotregulated, andare,simultaneously, reserved bylawto
accounting professionals. Other activities, suchasnonstatutory audit ormanagement consultancy
arehardly regulated inanycountry andaregenerally reported asnotbeing reserved tospecific
practitioners.Exceptionstothisobservationarelegaladviceandlegalrepresentation,whichareregulated
inmore thanhalftherespondent countries andarereserved inmostcountries tothelegalprofessionals.
11. Despite these similarities, itneeds tobestressed thataccounting services arelessregulated
insomecountriesthaninothers.Somereportingcountries,forinstanceGermany,NorwayandPortugal,
regulate more heavily thanFinland, theNetherlands andNewZealand. Only Switzerland reported
thatallactivities arefree.
2. Legal services
12. Legal practitioners seem tobetheexclusive providers oflegal services inmost countries.
Thisisreflected intheorganisation ofthisprofession andintheregulation ofitsactivities. Clear
exceptions tothisobservation areFinland andSweden, where legalservices arenotregulated andcan
alsobeprovided bylaymen. Itshould benoted, however, thatinboththesecountries thetitle"Advocat"
isprotected.
13. Althoughdifferentorganisationalpatternsemerge,legalservicesareprovidedwithinmostOECD
countries bydifferent legal practitioners. Forexample, some countries make adistinction between
lawyers allowed torepresent clients inCourts andlegalprofessionals -notaries -thathavetheright
torecord Acts(notably France, Germany, Mexico, Netherlands, Portugal, Switzerland). Another or
additionaldistinctionfrequentlymaderelatestopractitionersresponsibleforpatentlaw(interaliaAustria,
Germany, NewZealand, United States). Finally, anumber ofcountries mentioned foreign lawyers,
whoaremostly entitled toadvise onmatters predominantly regulated byforeign law,sometimes also
international law(Australia, Canada, Germany, Japan, Mexico, NewZealand, United Kingdom, United
States).
14. These professional distinctions alsoimpact ontheregulation oflegalactivities. Indeed, the
majority ofMember countries (ofthose whoresponded tothatquestion) indicated thatlaws/regulations
often stipulate whoisauthorised toexercise particular activities andthatmany ofthese activities were
reserved bylawtofullyintegrated lawyers. Withtheexception ofFinland andSweden, "representation
inCourt" and"recording ofActs" arereserved inallcountries. Advice onmatters predominately
regulated bydomestic laworadvice andrepresentation onpatent lawarealsofrequently regulated
andreserved. Activities thatarelessregulated and/or notreserved tolawyers are"Insolvency practice"
and"management consulting".S/WPPS/W/4
Page4
3. Engineering1andarchitectural services
15. Withcertain exceptions, theactivities ofengineers orarchitects arerelatively seldom regulated
bylaworreserved tospecific practitioners inOECD countries. OnlyMexico andJapan reported that
almost allengineering andarchitectural services areregulated. Several countries reported thatnolegal
provisions applied withregard toaccess totheprovision ofengineering services (Australia, Denmark,
Finland,Switzerland,UnitedKingdom)orconcerningarchitecturalservices(Denmark,Finland,Norway).
However,itshouldbenotedthatthetitle"architect"isprotectedinthesomecountries(Finland,Norway,
United Kingdom).
16. Engineering services thataremostly regulated andreserved tospecific practitioners are"design
andplanning" aswellas"obtention ofpermits". "Request forconstruction permit" and"technical
control ofcertification" areindicated tobemostly reserved toarchitects. "Topographic determination,
demarcation, landsurveying", reported toberegulated inthelargest number ofcountries, isgenerally
reserved tosurveyors.
17. Control ofprofessional standards inthese more technical professions probably tendtotake
placemorethrough object-related regulations, norms andstandards (building regulations, safety norms,
etc.).
1Meant toinclude allProfessional Engineering Services ("engineering consultancy", "engineering design").
They donotinclude Construction Engineering Services, which arenotprofessional services, butconstruction
services (seeGATS Sectoral Classification List).S/WPPS/W/4
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ANNEX
1.Methodological notes which have been addressed toOECD Member Countries
1. Please tryandanswer ourquestions inaccordance withthestandardized tables andthe
following instructions, evenifyoufinditdifficult attimes orfeelitdoesnottakealways account
ofallthespecifics ofthesituation ofaprofession inyourcountry. Thiskindofcomparative tables
willonlygiveaclear, accessible overview overtheentire OECD areaifallaccept tosimplify toa
certain extent, inorder tofittheircountry 'sindividual situation intoastandardized matrix. Ifyou
believe thatitisindispensable fortheproper reading ofyourcountry 'ssituation tomake certain specific
points, youmay, however, addfootnotes onaseparate sheet, which should, ifpossible, notexceed
halfapageperprofession.
2. Werealizethatthecompletionofthesetablesmayposeparticularproblemsforfederalcountries
where regulation mayvaryfromstatetostate. Please bearinmindthatthemainpurpose ofthisexercise
istogiveasaccessible aspossible anoverview overtheOECD area;thismayimply sacrificing some
details. Wewould therefore askyoutogeneralize asmuch aspossible inyourreplies. Forinstance,
ifthenumber ofyears ofpractice required forobtaining aprofessional titlediffers fromstatetostate,
indicate ageneral range. Where regulation onlyexists inasome states, butnotinall,suchasthat
establishing theprofession offoreign legalconsultant intheUS,youshould include allfactsrelating
tothatprofession inthetable, butindicate inafootnote thatitdoesnotapply inallStates.
3. Intheextreme left-hand column ,youshould listtheprofessions which, inyourcountry, play
amajor roleinthefieldofactivities concerned. Usually, therewillbesomething likeacoreprofession
-CPAs intheaccountancy field, attorneys inthelegalfield, etc.-,plusanumber ofother professions
which intervene inthatsector aswell. Wewould appreciate itifyoucould indicate thetitleinitsoriginal
language, withatranslation inEnglish orFrench (orbothifpossible).
4. Inthesecond column -Item 1-youshould telluswhether theprofessional title/designation
isprotected ornot,and,ifso,whether access tothetitle,i.e.theconditions under which thetitlemay
beobtained andusedare
- regulated atthenational, oratthesubnational (states, provinces, level;
- subject togovernment regulation, ortoself-regulation byprofessional
orders/associations.
5. Item2inthethirdcolumn isinasense acomplement toItem1:youareasked toverybriefly
summarize therequirements tobeadmitted tothefullexercise oftheprofession inquestion. This
comprises threequestions: howmany years ofhigher education, ifany,arerequired; howmany years
ofpractical training/experience, ifany,arerequired; isaprofessional exam required ornot.Where
access toaprofession/professional titleisnotregulated, qualifications mayofcourse vary; inthatcase
youshould justindicate themost common background forthese professions.
6. Inthenextcolumn, Item3isintended toshow where professionals areobliged tobeMembers
ofaprofessional association/order/self-regulatory body. Such membership maybeacondition for
being allowed toexercise, specifically asregards regulated activities (seeItem4),and/orforusing
aprotected professional title.S/WPPS/W/4
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7. Please notethat,when defining inItem4thescope ofactivities ineachofthefourprofessional
fields, wehaveattempted togeneralize thesituation asfaraspossible, soastoaccommodate awide
range ofdifferent countries. Wetrustthattheactivities listed cover adequately thesituation inyour
country aswell, i.e.describe allthemainactivities within aprofessional field. Subheadings defining
activities under Item4should, forthatpurpose, beinterpreted aswidely aspossible.
8. Youareexpected tomark, foreachoftheprofessions which youhaveinscribed intheextreme
left-hand-column, which oftheactivities listed under Item4itexercises. Wewould alsoliketoknow
whether anactivity isregulated ornot."Regulated" inthiscontext means thatthereisalaw/regulation
which stipulates whoisauthorized toexercise thatparticular activity. Ifthisisthecase, youshould
enter "regulated" inthetopboxofthatactivity. Ifitisnotthecase, enter "notregulated" asshown
intheexamples.
Furthermore, withregard toeachprofession youhavelisted intheextreme left-hand column,
youshould putintherelevant boxunder Item4adouble cross (xx),where anactivity must, according
tolaw/regulation, onlybeexercised bytheprofession(s) inquestion, andasingle cross (x)where an
activity is,inpractice, exercised byacertain profession, butisnotreserved tothatprofession asa
matter oflaworregulation. Adash(-)would indicate thatanactivity isnotexercised bythatprofession,
either voluntarily orbecause itisprecluded bylaw/regulation from doing so.S/WPPS/W/4
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- residency requirements, i.e.thelackofpossibilities toprovide services without
establishing; thisshould include, afortiori, nationality requirements;
- issues relating torecognition offoreign qualifications, or,more generally, toways
andmeans ofproviding foreign professionals withaccess toalocalqualification.
7. Onallthese, andother major issues participants might identify, ideas should beputforward
onhowtoarrive atalessburdensome regulatory approach, without neglecting theneedtoprotect the
consumers andmaintain highstandards. These could thenformthestarting point foranalytical studies
in1996, which might recommend totheThird OECD Workshop onprofessional services in1996
guidelines foradoption.
II. Thestructure oftheinventory
8. Inorder topresent theabundant material inaclearandaccessible way,theSecretariat decided
toclassify measures under approximately twenty categories, grouped inthree parts. Thestructure
oftheInventory isthusasfollows:
Group I:Accountancy services (including, inparticular, auditing)
Group II:Legal services
Group III:Engineering services (i.e.engineering consultancy anddesign)
Group IV:Architectural services.
9. Todetermine coverage ofservices within these groups, participants should referfirsttothe
tables on"Professions, activities andregulations within theOECD area" [DAFFE/INV/PROF(95)...].
Incaseofdoubt, theprinciple isthatnodeparture wasintended fromtheGATS sectoral classification
list,based inturnontheUNCentral Product Classification (CPC) list.
10. Within eachGroup, categories ofmeasures arepresented inthree parts, numbered A-C:
PartA: Measures primarily relevant tofirms
PartB: Measures primarily relevant tonatural persons
PartC: Measures equally relevant tofirms andnatural persons
11. Within eachPart,youwillfindsixorseven categories ofmeasures, numbered 1to6or7.
Taking Groups, PartsandNumbers together, eachmeasure canbeidentified. Forinstance, arestriction
onfee-setting foraccountants would beclassified incategory I.C.7.
12. Information hasbeenrecorded intables, examples ofwhich foraccountancy arereproduced
onpages 15to17.Youwillhavebefore youatotalof12tables, three foreachprofessional group.
These tables areintended toprovide anoverview ataglance. Theycontain necessarily verygeneralized
assessments. "x"willindicate whether anymeasure atallexists inagiven category. Butitmaybe
ameasure ofverylimited effect aswellasatotalrestriction. "-"willindicate thatnomeasure atall
exists inthatcategory. "n.a." indicates cases where acategory isnotapplicable: forinstance, where
anationalityrequirementpreventsforeignnationalsfromprovidinglegalservicesaltogether,thecategory
onrecognition ofqualifications would bemarked "n.a.". Finally, thesimultaneous appearance of"x/-"
hasonlybeenadmitted where, inacountry withafederal system ofgovernment, theregulatory situation
varies from onestate/province totheother.S/WPPS/W/4
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IV. Principal results andissues fordiscussion
19. Itis,atthisstage, andwithin thelimited timeavailable between thereception ofreplies from
Member countries andtheissuing ofthisfirstdraftoftheInventory fortheWorkshop, almost impossible
todrawanyspecific conclusions fromthesurvey. Below aresetout,however, some firstimpressions,
aswellasquestions Workshop participants maywanttodiscuss inthelightofresults ofthesurvey:
(i) Variations between professions
20. There isaclear dividing linebetween accountancy andlegal services ononeside, and
engineering andarchitectural services ontheother side. Regulation affects foreign suppliers toamuch
higher degree inthefirstthaninthesecond group, withengineering probably being thesector where
access forforeign professionals andfirms isleastdifficult. Thismaynotnecessarily betheresult of
services being more sophisticated, ortheconsumer being inneedofmore protection asregards the
firstgroup. Rather, national differences maybelesspronounced inthesecond, "technical" group of
professional services. Andwhere theyexist, theymaybeexpressed more often intechnical norms,
thaninrequirements attached totheprofessional himself.
(ii) Country differences
21. While itisverydifficult togeneralize, access forservice providers tends tobesomewhat
more regulated inSouthern Europe, Austria andJapan. Onecould probably count among themore
liberal countries overall regarding tradeinprofessional services theSwitzerland, theUnited Kingdom,
theNetherlands and,withsome restrictions, Sweden andAustralia.
(iii) Restrictions onincorporation
22. Measures limiting orexcluding therighttoincorporate forprofessionals arenotinfrequent
intheaccountancy andlegal sector, lesssoforarchitects andvirtually non-existent forengineers.
They usually apply inanon-discriminatory manner. Buttheyhavethepotential toparticularly affect
foreign firms'access tothemarket, sincetheyrestrict theirability toestablish subsidiaries andbranches.
Participants maywanttothink about approaches which would takeaccount oftheconsumer 'sinterest
inensuring sufficient liability, while permitting professionals toassociate intheform theyfind
economically most advantageous.
(iv) Investment/ownership restrictions
23. Restrictions ontherighttoown, orinvest in,afirmproviding accountancy orlegalservices
abound. Again, theytendtobeexpressed innon-discriminatory terms andtiedtotherequirement
ofholding alocallicense. This, however, virtually excludes foreign investment. While there may
beaconsumer protection argument intying ownership toacertain degree ofprofessional qualification,
thequestioniswhetherrequirementsonaninvestor/ownerneedtobeasstrictasrequirementstopractice.
Totakeapractical example fromtheaccountancy sector: Whynotconsider thepossibility tolet,for
instance, apractice authorisation fromanymember bodyofIFAC besufficient toinvest inaccounting
firms inanother country?S/WPPS/W/4
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standards, toensure hisliability etc.Participants intheWorkshop might findit,however, interesting
toexamine those countries which feeltheycanachieve thesame purpose while allowing fortheright
tonon-establishment.
(ix) Measures tofacilitate temporary oroccasional practice
29. Suchmeasures areanimportant element inthesearch foralternative regulatory approaches
toresidency requirements. They needtoaddress twodifferent issues: qualification andtemporary
entry.Anumberofcountrieshaveaddressedthequalificationproblemthroughthecreationoftemporary
licensing procedures; thisisparticularly thecaseforCanada andtheUnited States. Possibilities for
temporary entry andstayinorder tosupply services arenotfrequent; theyhaveoftennotbeenincluded
inGATS horizontal commitments onmovement ofpersons.
(x) Restrictions onworking withlocal professionals
30. Aninterestingpossibilityforforeignprofessionalstogainaccesstothedomesticmarketwithout
necessarily having toobtain fulllocalqualifications themselves isthrough partnership/association/joint
ventures withlocalprofessionals. Or,going onestepfurther, through hiring localprofessionals. For
instance, inacountry withalocallicensing requirement forstatutory audit, butnotforotheraccountancy
activities, aforeign qualified accountant orfirmmight finditconvenient towork together withalocally
qualified accountant whocould takecareofthestatutory audit activities, while hewould focus on,
say,accounting, management consulting etc.Foraforeign legalconsultant restricted tothepractice
ofhome country andinternational law,itappears almost indispensable toassociate inonewayoranother
withafullyintegrated domestic lawyer. Alimited number ofcountries, according tothesurvey, do
notallow forsuchpartnerships. Most cases concern thelegalsector.
31. However, thisquestion waspossibly notalways fully considered byMember countries
answering thesurvey. Itappears thatatleastsome ofthem onlyregistered partnership andhiring
restrictions based onnationality, notonabsence offulllocalqualification. Complementary information
onthisissue could stillbeprovided forthefinalversion oftheInventory. Itmayalsobenoted that
certain conclusions canbedrawn fromtheownership restrictions registered inItemA.2oftheInventory.
32. Insome cases, barriers toassociation mayresult notfromrestrictions onforeign professionals
without fulllocalqualification, butfrom domestic restrictions onmultidisciplinary practices. Most
frequently, these affect associations between lawyers andaccountants. While thesurvey didnot
specifically askMember countries forinformation onthisissue, theInventory includes available details
onthis.
(xi) Public procurement andin-house services
33. Intheepublic procurement sector, anumber ofcountries pointed outthattheWTO agreement
ongovernment procurement wasapplicable andimposed international callsfortender, atleasttothe
engineering andarchitecture sectors. TheInventory contains, forsome countries, detailed information
onin-house provision ofengineering andarchitecture services, anissue which hadbeenpointed out
bytheprofession asoneoftheobstacles which affected international competition. While WorkshopS/WPPS/W/4
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I.ACCOUNTANCY SERVICES
B.MEASURES PRIMARILY RELEVANT TOFOREIGN NATURAL PERSONS
1.Nationality
requirement2.No
procedure
facilitating
temporary
entry andstay
of
professionals
tosupply
services3.
Accreditation/
licensing
requirement
forforeign
professionals
authorized to
practice in
their home
country4.Prior
residency
required for
obtaining a
license5.No
possibility for
taking account
of
qualifications
acquired by
foreign
professionals
inanother
OECD country6.Where possibilities oftaking account offoreign
qualifications exist
Full local
examination
required inall
casesLocal training [education(e)
and/or practice (p)] exceeding
12months required inall
cases
AUSTRALIA
AUSTRIA
BELGIUM
CANADA
DENMARK
FINLAND
FRANCE
GERMANY
GREECE
ICELAND
IRELAND
ITALY
JAPAN
LUXEMBOURG
MEXICO
NETHERLANDS
NEW ZEALAND
NORWAY
PORTUGAL
SPAIN
SWEDEN
SWITZERLAND
TURKEY
UNITED KINGDOM
UNITED STATESS/WPPS/W/4
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professionals, andtoexamine avariety ofapproaches designed togiveforeign professionals better
access tolocal practice, suchasfacilitated localexaminations, temporary orrestricted licences, the
ability tofreely work withlocalprofessionals and,lastbutnotleast, mutual recognition agreements
which would recognize professional competence rather thanjustacademic qualification.
7. TheOECDSecretariatwasaskedtocarryoutmoreanalyticalworkonthekeyobstaclesidentified
above. Firstresults should bepresented toaThird OECD Workshop onProfessional Services. Work
shouldcontinuetoexamineallfourprofessionsinvolvedsofar,soastodrawfullbenefitfromcomparing
different regulatory approaches across professions.
8. Analytical work should proceed byexamining issues under thefollowing three headings:
- Access tolocalpractice
- Investment-related measures
- Establishment andnationality requirements
9. Foreachofthese issues, theSecretariat willinparticular examine twoaspects:
- Whatareregulators'motivationsforadopting/maintainingaparticulartypeofrestrictive
regulation?
- Which countries haveadopted theleastburdensome regulations, howdotheydealwith
theneedtoprotect theconsumer, andwhat conclusions maybedrawn from their
experience?
10. There wasagreement thatwork should continue tobecomplementary to,andsupportive of,
theactivities WTO Working Party onProfessional Services.