Negotiating professional services in trade agreements
Professional services is one of the most dynamic and fastest growing export sectors. Through trade negotiations, Australia seeks to improve conditions for professional service providers to enter, operate and expand in foreign markets. Outcomes for the professional services sector are delivered through: market access commitments; trade rules that address “behind-the-border” barriers; as well as through cooperation on recognition of qualifications. Contemporary trade agreements are evolving to better meet the needs modern business.
Australia’s objective in services market access negotiations is to lock in current policies to provide business certainty – particularly in negotiations with open, like-minded partners like the United Kingdom – as well as to open up new commercial opportunities for services providers. Sounds simple enough, right? Not always.
The internationalisation of services trade challenges the traditional ‘positive listing’ model for scheduling trade commitments by sector and mode of supply as under the WTO General Agreement of Trade in Services (GATS). How would you classify advice provided by an Australian accountant from Dubai airport to a London-based client seeking to invest in the United States? We need to ensure that trade commitments are comprehensive enough to provide commercial benefits now and into the future.
That’s why Australia prefers ‘negative list’ agreements under which parties commit to provide access on equal terms with local providers except where they list a reservation. This approach enables service providers and regulators to more easily identify what’s covered and importantly what’s not covered. ‘Negative list’ agreements also contain mechanisms to capture future market reforms. If we cannot secure FTA commitments to remove trade barriers, we can at least ensure that once restrictions are lifted they won’t be brought back. In Australia’s experience, such provisions have particular value for professional services where many trading partners are gradually removing residual barriers like foreign equity caps.
Unfortunately, it’s not always possible to convince our trade partners to take a ‘negative list’ approach. The tendency of many governments is not to deviate from previous trade agreements. So sometimes we have to get creative. For example in the Trade in Services Agreement (TiSA) negotiations we used a combined positive/negative list and developed a Legal Services Model Schedule to assist parties to differentiate commitments on domestic law, foreign law and international law. This resulted in significantly improved commitments for transnational legal services, while enabling parties to protect any domestic sensitivities.
Services trade negotiations are not just about market access. Most contemporary trade barriers, particularly in the professional services sector, are “behind-the-border” measures. Australia seeks to include strong disciplines on Domestic Regulation in our FTAs to promote regulatory best practice and to remove excessive red tape for professionals. This includes: rules to ensure clear and transparent rule-making; reasonable, impartial and objective administration practices; and trade-promoting disciplines on licensing, qualification requirements and technical standards. These negotiations can be politically sensitive and much effort goes into clarifying that such commitments do not require regulatory harmonisation.
Australia also seeks to include provisions that facilitate trade in specific sectors. For example, we advocate for Legal Services rules that encourage trade partners that regulate the practice of foreign law to do so in a way that is least restrictive, including by: accommodating fly-in, fly-out; services provided over the internet; and by allowing foreign lawyers and local lawyers to work together to provide fully integrated transnational legal services.
Australian FTAs also include a framework for recognition of qualifications. This includes procedures to facilitate cooperation between professional services bodies, as well as provision for specific mutual recognition or equivalence outcomes where appropriate. Through the FTA process we identify areas where there is shared interest in improving mutual recognition and outcomes can often be delivered before an FTA is concluded.
Other FTA chapters – Financial Services, Investment, Electronic Commerce, and Temporary Entry for Business Persons – are also important to ensuring a facilitative environment for professional services trade.
Each FTA is different and negotiating priorities evolve with changing business practices. We rely on input from business, professional organisations and civil society to understand where the opportunities lie with each trading partner and where to concentrate our efforts to maximise the benefits for Australian professionals.
Deanna Easton is Counsellor in the Australian mission to the WTO in Geneva.