International Bar Association INTERNATIONAL TRADE in LEGAL SERVICES COMMITTEE Research Paper: Liberalisation of Trade in Legal Services - FTAs and beyond GATS commitments Prepare for the Committee by: Stefano Moritsch*Graduate Institute of International and Development Studies, Geneva, Masters of International Law and Fellow at TradeLab.

Table of Contents Executive Summary....................................................................................................................... 3 1.Legal Services in FTAs – State of play, recent agreements and timid liberalisation .......... 5 1.1 A few considerations on the legal architecture of FTAs ........................................................ 6 1.1.1 Similarities and differences between GATS and FTAs: The ‘positive list approach’ vs the ‘negative list approach’ ...................................................................................................... 6 1.1.2 Types of MFN clauses to be found in FTAs ................................................................... 8 1.2 The nature of the offerings in legal services that WTO members conceded in their FTAs .. 9 1.3 Specific provisions affecting legal services in recent FTAs ................................................ 12 1.3.1 Provisions on regulatory cooperation in professional services, including licensing, certification of professional services suppliers and Mutual Recognition Agreements (MRAs) ................................................................................................................................................ 12 1.3.2Provisions on the movement of natural persons ............................................................ 14 2.Trade in Legal Services and Mega-Regional Trade Agreements......................................... 17 2.1 Trade in Services Agreement (TiSA) .................................................................................. 17 2.2Trans-Pacific Partnership (TPP) ........................................................................................... 17 2.3 Trans-Atlantic Trade and Investment Partnership (TTIP) ................................................... 17 1.2 The nature of the offerings in legal services that WTO members conceded in their FTAs 18 1.1.1 Similarities and differences between GATS and FTAs: The ‘positive list approach’ vs the ‘negative list approach’ .................................................................................................... 19 Conclusions .................................................................................................................................. 19 References..................................................................................................................................... 21 Annex I - List of countries granting additional commitments in legal services through FTAs ....................................................................................................................................................... 25 Annex II- FTAs covering trade in legal services, broken down by provision ....................... 37

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Liberalisation of Trade in Legal Services FTAs and beyond GATS commitments Stefano Moritsch*1

Executive Summary Trade in legal services has been steadily increasing in line with the globalisation process. As international business expands and economic actors engage in international transactions, the demand for reliable multi-jurisdictional legal services also increases. Multinational enterprises, financial institutions and other entities involved in international trade need all the more legal advisory services covering the jurisdictions of the multitude of countries in which they operate. It follows that liberalisation of trade in legal services becomes a fundamental tool to ensure the stability as well as the growth of the international trade system. Indeed, the rise of Foreign Legal Consultants (FLCs) goes hand in hand with the furtherance of economic integration. This, more recent, category of foreign lawyers focuses almost exclusively in providing advisory services facilitating transnational commercial and financial operations as well as representative services in international arbitration. They are less and less interested in more traditional forms of legal services such as criminal law, family law of the host country, notary services etc. What they aim at is rather the possibility of practising home country, third country and international law across different jurisdictions. Taking into account the important role played by FLCs in guaranteeing the good health of the global trading system, it is consequently important to investigate how States and custom territories worldwide allow such lawyers to operate in their markets. This report does exactly that. It outlines the modalities through which countries are liberalising their legal services markets through their Free Trade Agreements (FTAs). The report analyses in particular those FTAs which include additional commitments in trade in legal services to those that are granted by World Trade Organization’s (WTO) members under the General Agreement on Trade in Services (GATS). It aims at providing an overview of the nature of those offerings which, albeit limited, can generate a great impact on how foreign lawyers can access different markets. Furthermore, the report looks at three main ‘mega-regional’ trade agreements which are currently being negotiated, namely the Trade in Services Agreement (TiSA), the Trans-Pacific Partnership (TPP) and the Trans-Atlantic Trade and Investment Partnership (TTIP). Relying on publicly available information, it attempts to foresee how these trade dealings may have an impact on the legal services sector. Some main points are emphasised: 1) Every FTA constitutes a unicum. As such, in order to fully understand an agreement’s impact on trade in legal services, one has to investigate every agreement individually and in its entirety (substantive provisions on services, annexes and schedule of commitments). Nonetheless, a certain degree of generalisation is feasible and common regulatory patterns affecting trade in legal services can be highlighted. 2) Only a minority of FTAs provide for commitments in legal services that go beyond the offerings that countries have made in the multilateral context of the WTO; 3) Within the realm of ‘GATS+’ offerings in FTAs, only a handful of commitments have been made by countries that did not schedule any commitment at the WTO;

*Graduate Institute of International and Development Studies, Geneva, Masters of International Law and Fellow at TradeLab. The views expressed in this report represent exclusively those of the author. Page 2 ME_126796307_1 (W2007)

4) A large number of FTAs, especially recent ones, include specific provisions on regulatory cooperation in professional services, including licensing, certification of professional services suppliers and Mutual Recognition Agreements (MRAs). These can be particularly effective when they require professional bodies associations to engage in debate and standard setting activities that are subsequently referred back to the FTAs ad hoc working groups; 5) A considerable number of FTAs include detailed provisions aimed at facilitating the temporary entry of foreign lawyers who engage in fly in fly out services supply. 6) Publicly available information concerning legal services in the TiSA, TPP and TTIP is not extensive. However, through various negotiating documents, fact sheets and submissions on behalf of private entities, it is possible to at least foresee some of the main issues affecting legal services that will figure in these agreements. 1.

Legal Services in FTAs – State of play, recent agreements and timid liberalisation

The Doha negotiation round at the WTO is still embroiled in a two decade-long stalemate. WTO members have thus reduced their multilateral efforts in Geneva and opted to further liberalise their markets on a bilateral or plurilateral basis, through the negotiation of FTAs. Pursuant to GATS Art. V, WTO member States are allowed to grant preferential treatment in trade in services through the negotiation and subsequent establishment of economic integration agreements without the need to extend automatically and unconditionally such trade preferences to other WTO members. In this sense, FTAs constitute a permitted carve-out from the Most Favoured Nation (MFN) obligation. In 2014, the International Bar Association (IBA) published a comprehensive database categorising information, broken down by country, about trade in legal services regulations. Every country profile in the database includes, amongst others, data on GATS commitments, FTAs to which a country is a party and whether it grants preferential treatment in trade in legal services. This section builds on the information contained in the IBA database and integrates it with data from fifteen recent FTAs covering trade in legal services.2 The aim is to provide a clear understanding as to how and to what extent countries are granting trade partners access to their legal services markets. Particular attention is paid to FTAs’ commitments in legal services that go beyond scheduled GATS commitments (GATS+). Although such efforts towards further liberalisation can be described as timid,3 they are certainly not negligible. In addition, a growing number of agreements contain specific provisions impacting, directly or indirectly, trade in legal services. They include: detailed provisions on regulatory cooperation in professional services, comprising licensing, certification of professional services suppliers and mutual recognition agreements (MRAs) of qualification and experience; rules dealing with service supply via movement of natural persons (mode 4 in GATS parlance) including independent professionals, intra-corporate transferees (ICTs) as well as contractual service suppliers (CCS); provisions for the creation of FLCs mechanisms; and rules and commitments on association and partnership between local and foreign law firms. Following a brief analysis of the legal architecture of FTAs, this section summarises the nature of GATS+ commitments offered in FTAs by type of 2

These are mainly FTAs that have been notified to the WTO pursuant to GATS Art. V(7)(a). They are, in chronological order: New Zealand – Taiwan FTA (ANZTEC) of 01 December 2013; Singapore – Taiwan FTA (ASTEP) of 19 April 2014; EU – Ukraine FTA (DCFTA) provisionally into force since 27 June 2014; European Free Trade Area (EFTA) – Gulf Cooperation Council (GCC) FTA of 01 July 2014; Iceland – China FTA of 01 July 2014; Switzerland – China FTA of 01 July 2014; The accessions of Costa Rica and Panama to the EFTA – Central American States FTA of 19 August 2014; EU – Georgia FTA of 01 September 2014; EU – Moldova of 01 September 2014; Korea – Australia FTA (KAFTA) of 12 December 2014; Canada – Korea FTA (CKFTA) of 01 January 2015; Eurasian Economic Union (EAEU) of 01 January 2015; Japan – Australia (JAEPA) of 15 January 2015; China – Australia FTA (ChAFTA), not yet into force and still to be notified to the WTO; Canada – EU FTA (CETA), not yet into force and still to be notified to the WTO.

3

WTO (2010) Council for Trade in Services, Legal Services - Background Note by the Secretariat, S/C/W/318, 19. Page 3

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provisions impacting legal services and information on FTAs included in the IBA database together with fifteen additional agreements which have been recently negotiated. The annexes I and II attached to the report integrate this information in two tables. Annex I provides detailed information on GATS+ commitments and provisions impacting trade in legal services in FTAs. It breaks down data by country and includes a brief summary of the substantive provisions as well as concessions on legal services that have been made through FTAs. Annex II divides instead the FTAs by GATS+ commitments and specific provisions applicable to legal services. 1.1 A few considerations on the legal architecture of FTAs When embarking on a comparative analysis of multiple FTAs, it is important to note that every FTA constitutes a unicum and the provisions found in one agreement can differ from those of other agreements. Consequently, it is always opportune to analyse FTAs individually. For the purposes of the current study, which is broad in nature, we rather focus on common regulatory patterns that are replicated, if not literally, at least substantially, in different agreements covering trade in legal services. Indeed, the aim here is to provide an overview of the modalities by which countries are opening-up their markets in legal services. It follows that, in order to orientate oneself considering the plethora of provisions applicable to legal services, a degree of generalisation is indispensable. This section expands on the types of provisions, most commonly found in FTAs, likely to have a regulatory impact on trade in legal services. 1.1.1

Similarities and differences between GATS and FTAs: The ‘positive list approach’ vs the ‘negative list approach’

Some FTAs follow the structure as well as the wording of the GATS almost ad litteram, whereas others adopt different terminologies and legal structures. Whereas the substantive provisions in FTAs are often similar in language and application to those of the GATS (Transparency, MFN, National Treatment, Domestic Regulations and Recognition),4 their procedural applicability may vary. What changes is the way in which parties to an FTA decide to include or exclude services sectors and sub-sectors from the scope of application of the substantive provisions of the agreement. In particular provisions referred to in the GATS as optional obligation rules, namely market access and national treatment. Legal theory has distinguished between two models of FTAs:5 1) The GATS-like FTAs or agreements adopting a ‘positive list approach’ for the inclusion of specific services. Following this approach, market access, national treatment and other optional obligations apply only to services that have been actively included by parties in their schedules of service commitments, normally annexed to the text of the agreement. Some FTAs go as far as incorporating relevant GATS provisions into their text.6 2) The North American Free Trade Agreement (NAFTA)-like FTAs or agreements adopting a ‘negative list approach’ for the application of substantive rules to specific sectors. Under this approach all the provisions of the agreement apply to each and every service sector unless specified otherwise in the parties’ list of non-conforming measures (NCMs).7 Thus, a party must specify the sectors in which it does not want to make 4 For a detailed overview of how the GATS applies to trade in legal services see: Laurel S Terry, ‘The Revised Handbook about the GATS’ http://www.ibanet.org/Document/Default.aspx?DocumentUid=9E1E0915-F3A5-4F0F-BD1C-3DAC5B2480B8. 5

Laurel S Terry, ‘From GATS to APEC: The Impact of Trade Agreements on Legal Services’ (Social Science Research Network 2010) SSRN Scholarly Paper ID 1630566 921 , 921.

6

See for instance, EFTA – Central American States FTA, Chapter 4 on Trade in Legal Services.

7

See NAFTA Art. 1108: Reservations and Exceptions. Another example is Art. 9.7 of the JAEPA FTA between Australia and Japan. Page 4

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concessions, contrary to the GATS-type approach where it must specify the sectors in which it does want to make concessions. In addition, agreements adopting the ‘negativelist’ approach generate what in legal parlance are called ‘standstill provisions’ since they create exceptions for existing lawyer regulations. This normally happens when parties schedule NCMs applicable to all sectors for existing state regulations, including on legal services.8 Another relevant difference between the GATS and FTAs concerns the applicability ratione personae of transparency rules. Even though the GATS requires Member States to publish relevant information affecting market access in their scheduled service sectors as well as establishing contact points etc, such rules apply only to governmental authorities. On the other hand, some regional agreements have expanded the addressees of transparency rules to service suppliers and service suppliers associations. In the field of legal services, the Asia-Pacific Economic Cooperation (APEC) legal services initiative and the Korea – Australia FTA serve as an example.9 A final difference between the GATS and the other FTAs is the fact that some agreements10 include a ‘local presence’ clause forbidding parties to require respective service providers to establish or maintain a representative office or any form of enterprise, or to impose residency requirements as a condition for the cross-border provision of a service.11 1.1.2

Types of MFN clauses to be found in FTAs

FTAs can have various potential effects on third countries. This hinges, in particular, on whether MFN provisions in future agreements concluded by one country have effects on the concessions granted to other countries in previous FTAs, especially plurilateral agreements.12Generally speaking, five types of MFN Clauses for Trade in Services are to be found in FTAs:13 1) No MFN: agreements without any MFN provisions: parties do not get any advantage from the MFN treatment existing in other FTA;14 2) Self-contained MFN: agreements limiting MFN treatment only amongst signatory parties. 3) This type of agreement prohibits discriminatory treatment within the FTA, but does not extend MFN treatment offered in other FTAs.15 4) Third-party exclusive MFN: agreements that include both MFN provision amongst signatories and MFN treatment provisions concerning non-parties specifically excluding other FTAs from the application of MFN treatment. Thus, a more favourable treatment that may be offered in other FTAs cannot be extended to the parties of the agreement. 8

Terry (n 4), 923.The author quotes as an example Art. 10.6 of the US – Australia FTA, read together with Australia’s schedule of NCMs.

9

Gilles Muller, ‘Trade Agreements and Legal Services: An Anatomy of the GATS and Preferential Trade Arrangements’ (2014) 9 Global Trade and Customs Journal 223,241.

10

Agreements that follow the structure of NAFTA.

11

Se for instance NAFTA, Art. 1205 or Art. 8.5 of the Singapore – Taiwan FTA (ASTEP) of 19 April 2014.

12

Muller (n 8), 233.

13

The categorisation is taken from: Sébastien Miroudot, Jehan Sauvage and Marie Sudreau, ‘Multilateralising Regionalism: How Preferential Are Services Commitments in Regional Trade Agreements?’ (Organisation for Economic Co-operation and Development 2010) OECD Trade Policy Papers .

14

A recent example is the Iceland – China FTA of 01 July 2014.

15

See for instance Articles 88 and 90 of the EU –Ukraine Deep and Comprehensive Free Trade Agreement (DCFTA). Art. 88 establishes MFN treatment amongst the party and Art.90 limits the scope of application to the current agreement, excluding existing as well as future agreements. Page 5

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Nonetheless, this type of FTA often includes rules allowing requests by parties related to the extension of MFN treatment granted in other agreements;16 5) Third-party inclusive MFN for future FTAs: agreements that extend MFN treatment granted to third countries in other FTAs, but limited in coverage to future agreements;17 6) )Full MFN: agreements that extend fully and unconditionally MFN treatment included in any other FTAs, both past and future, to parties to the current FTA.18 Depending on what type of MFN provision an FTA contains, its effect on third parties and on existing or future agreements changes. This is valid also inasmuch as legal services are concerned. 1.2 The nature of the offerings in legal services that WTO members conceded in their FTAs WTO members and other countries are increasingly favouring liberalisation of their markets through regional and bilateral agreements rather than within the multilateral framework of the WTO. There are currently more than 400 FTAs19 which have entered into force, creating a complex, intertwined network of trade dealings. When it comes to assessing the level of liberalisation of the legal services sector, it is thus fundamental to engage in a comparative analysis between the offerings that countries granted under their FTAs with those they conceded at the WTO. If one does indeed embark in such a comparative exercise, one would soon understand that three scenarios may materialise: 20 1.

Countries, custom territories and regional groups negotiated FTAs covering legal services. However, their commitments represent merely a specular reflection of those commitments made in GATS schedules. This applies especially to countries that have scheduled few or no commitments, such as India and Brazil;

2.

FTAs covering legal services contain commitments which are in line with WTO members’ current offerings under the Doha Development Agenda (DDA). These represent the vast majority. In particular, important services exporters such as Australia and the European Union (EU), have reflected their DDA commitments in their FTAs, with only few exceptions.21

3.

Finally, the most relevant scenario to this study concerns the case of FTAs which include commitments in legal services going beyond those negotiated within the WTO context.22

The FTAs pertaining to the third category are only a small minority. Of all the agreements quoted in the IBA database,23 the WTO-WB database,24 together with a selection of fifteen 16

See for instance Switzerland – China FTA (2014), Art. 8.3.

17

The North American Free Trade Agreement (NAFTA), for example, grants MFN treatment to service providers from both parties and non-parties. See NAFTA Art. 1203.

18

An example is the recent Canada – Republic of Korea FTA which in Art.9.3 states: ‘Each Party shall accord to service suppliers of the other Party treatment no less favourable than that it accords, in like circumstances, to service suppliers of a nonparty’.

19

WTO website: https://www.wto.org/english/tratop_e/region_e/region_e.htm.

20

WTO (2010) Council for Trade in Services, Legal Services - Background Note by the Secretariat, S/C/W/318, 19.

21

Australia made extra commitments in its recent agreements with China, Korea and Japan. The EU added offerings in movement of CSS and independent professionals in its recent FTAs with Canada, Ukraine, Moldova and Georgia.

22

See also the table in Annex I.

23

BA, Global Regulation and Trade in Legal Services Report 2014, available at http://www.ibanet.org/PPID/Constituent/Bar_Issues_Commission/BIC_ITILS_Map.aspx. Page 6

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recently notified agreements,25 only 22 include additional commitments (GATS+) in legal services.26 Only a handful contain offerings in legal services on behalf of WTO members that did not schedule any commitment under the GATS. Amongst these, Singapore made limited commitments in foreign and international law in its agreements with Australia, Costa Rica, Taiwan, Korea, Peru, TSEP (Chile, New Zealand) and the US. 27 However, it reserved the right to maintain or adopt any measure affecting the supply of legal services in the law of Singapore.28 Another example is that of Korea, which has granted access to its legal services market only through FTAs, most notably with the Association of Southeast Asian Nations (ASEAN), Australia, Canada, Chile, the EFTA, the EU, India, Peru, Turkey, and the US. The recent agreement with Australia granted concessions in consultancy in Australian as well as international law through the establishment of commercial presence, joint venture law firm as well as movement of natural persons.29 Also, the recent Eurasian Economic Union (EAEU) treaty30 between Russia, Kazakhstan, Belarus and Armenia aims at establishing a single services market between the parties in sectors approved by the Supreme Council in a progressive liberalisation effort. The Union incorporates the Common Economic Space and Commonwealth of Independent States agreements which removed all restrictions in legal services, except for notary services and criminal law. A further example is given by the European Free Trade Area (EFTA) agreement with the Gulf Cooperation Council (GCC) where Qatar, Kuwait and Bahrain scheduled commitments in foreign and international law. Finally, Pakistan has made limited concessions in legal service in its FTA with China.31 The remaining FTAs cover additional concessions by members that have already scheduled legal services under the GATS. For example, Switzerland offers additional commitments in international commercial arbitration services, legal advisory services as well as mediation and extra-judicial conciliation services in its FTAs with China32 and the GCC.33 China, for its part, has given additional concessions in its agreements with Hong Kong34 and Australia. In the former, Hong Kong law firms are permitted to enter into alliances with local Mainland law firms, Hong Kong residents are permitted to take the bar exam in mainland China as well as obtaining a Mainland practising licence. In the latter (not yet into force) Australian law firms will be allowed 24

WTO/WB I-TIP Database on Services in GATS and RTAs, available at https://itip.wto.org/services/(S(3vx2huokezvi31wteqcbwolc))/default.aspx.

25

See the list above at note 2. Information about these FTAs has been retrieved from the WTO Regional Trade Agreements Information System, available at http://rtais.wto.org/UI/PublicMaintainRTAHome.aspx.

26

See Annex II - FTAs covering trade in legal services, broken down by provisions.

27

For a discussion on terminology in legal services sectors and sub-sectors, see Gilles Muller, Liberalization of Trade in Legal Services (Wolters Kluwer Law & Business 2013). See also International Bar Association (IBA), Resolution in Support of a System of Terminology for Legal Services for the Purposes of International Trade Negotiations, 2003.

28

List of Singapore FTAs available at http://www.fta.gov.sg/.

29

DFAT, ‘KAFTA Fact Sheet: Trade in Services’ http://dfat.gov.au/trade/agreements/kafta/fact-sheets/Pages/fact-sheettrade-in-services.aspx.

30

Eurasian Economic Union (EAEU) of 01 January 2015. See in particular Art.5 of Annex 16.

31

Free Trade Agreement Between The Government Of The Islamic Republic Of Pakistan and

The Government of the People’s Republic of China, signed at Islamabad on 24th November, 2006, available at http://www.commerce.gov.pk/PK-CN(FTA)/Pak-China_FTA_Agreement.pdf. 32

Switzerland – China FTA of 01 July 2014, schedule of Switzerland.

33

European Free Trade Area (EFTA) – Gulf Cooperation Council (GCC) FTA of 01 July 2014

34

Mainland and Hong Kong Closer Economic Partnership Arrangement (CEPA), 29 June 2003, available at https://www.tid.gov.hk/english/cepa/legaltext/cepa_legaltext.html. Page 7

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to establish commercial associations with Chinese law firms in the Shanghai Free Trade Zone (SFTZ). The associations will permit to offer Australian, Chinese and international legal services, without restrictions on where clients may be located. One paramount case of preferential treatment in legal services within a regional trading bloc, remains, to this day, that constituted by the European Economic Area (EEA), between the EU and some EFTA countries, as well as the EU bilateral agreements with Switzerland. These dealings are implemented through a set of EU legislative acts35 that permit EEA and Swiss lawyers to provide cross-border services freely within the EEA, to establish and provide legal services in host as well as home country and international law and to requalify as a host country lawyer. Finally, quite a few recent agreements establish GATS+ commitments for the temporary movement of natural persons supplying legal services. In particular, recent EU FTAs with Canada, Georgia and Moldova all provide for access to CSS and independent professionals in the field of legal services. Moreover, Australia’s agreements with Japan and China also allow increased mobility for lawyers, including professional secondments between law firms, and through cooperation between major legal professional bodies in the respective countries. The GCC countries grant visa exceptions amongst members for lawyers and a recent New Zealand FTA with Taiwan allows the entry of independent professionals in the field of international and foreign law, subject to qualification and experience requirements.36 1.3 Specific provisions affecting legal services in recent FTAs 1.3.1

Provisions on regulatory cooperation in professional services, including licensing, certification of professional services suppliers and Mutual Recognition Agreements (MRAs)

A significant number of FTAs address the issues of regulatory cooperation in the field of recognition, covering overtly professional services and thus legal services. Although phrased mostly in best endeavours format, such provisions can have, in the long run, an extensive impact on the pragmatic aspects of liberalisation of trade in legal services. That much is true if we consider that ‘paper commitments’ contained in schedules under the GATS or under FTAs do not serve as a comprehensive indicator of the openness of the legal market in a given country. Indeed, in the field of legal services, domestic regulations, which are not to be listed into a country’s schedule of commitments, can create insurmountable bulwarks for lawyers to access a foreign market. Regulations that are most likely to create obstacles to trade legal services relate especially to licensing and certification requirements (recognition), double deontology as well as conditions for lawyers’ requalification. 37 It follows that exhortative provisions calling for enhanced cooperation and standard development activities related to recognition have a very high potential, if properly implemented, to increase transparency in domestic regulations and ultimately remove practical obstacles for the international supply of legal services. That is particularly true when FTA provisions encourage relevant professional bodies, such as Bar associations, to engage in discussions aimed at 35

Establishment Directive for Lawyers (98/5/EC); Lawyers' Services Directive (77/249/EC); Framework Services Directive (2006/123/EC); Professional Qualifications Directive (2005/36/EC).

36

See Annex I for detailed information.

37

Alison Hook, ‘Sectoral Study on the Impact of Domestic Regulation on Trade in Legal Services’, OECD-World Bank background paper for the Sixth Services Experts Meeting Domestic Regulation and Trade in Professional Services, 2008, 3. Page 8

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developing mutually acceptable standards and criteria for licensing and certification of professional service suppliers.38 The ‘model provision’ is found in the NAFTA. It contains a Professional Services Annex (Annex 1210.5), which includes a General Provisions section (Annex 1210.5 Section A) and a Foreign Legal Consultants section (Annex 1210.5 Section B). These sections encourage parties “to consult relevant bodies in order to develop mutually acceptable standards and criteria for licensing and certification of professional services providers and to offer recommendations on mutual recognition”. Subsequent to the NAFTA, the US has negotiated eight other FTAs all including a similarly framed provisions and establishing joint working groups on professional services. 39 In the context of the US – Singapore FTA, the latter attached a side letter on legal services granting recognition of law degrees obtained in the US.40 Several other FTAs follow the same regulatory scheme. For instance, the EAEU treaty provides for mutual recognition of education and professional titles.41 In addition, Australia has included provisions addressing legal services on the basis of potential future MRAs in its agreements with Korea, Chile, US and Singapore. The Korean agreement contains an Annex 7A in professional services inviting the parties to cooperate in various matters regarding recognition, licensing and certification. Furthermore, lawyers admitted in New Zealand are given special status in that they may qualify for mutual recognition under the Trans-Tasman Mutual Recognition Arrangement.42 Australia’s FTA with Japan includes an Annex 8 on recognition and the China agreement provides for cooperation between major legal professional bodies in the respective countries.43 Some of the latest FTAs negotiated by the EU include frameworks for the mutual recognition throughout the territories of professional qualifications and determines the general conditions and guidelines for the negotiation of profession-specific agreements (MRAs). They also establish specific transparency and non-discrimination provisions in licensing and qualification conditions, whilst promoting cooperation amongst professional bodies.44 Noteworthy is also the APEC Legal Services Initiative (LSI)45 which, albeit being a soft law instrument and thus not legally binding per se, has had a positive impact in promoting cooperative efforts in the region. The initiative aims at increasing transparency by facilitating discussions and creating an online database that lists domestic regulations governing foreign legal practice. The inventory covers information on APEC members’ regulatory frameworks on ‘fly in, fly out’ practice, rules on law firms’ partnerships, and full and limited licenses to practice law.46

38

For a study on the increasingly important regulatory impact at the international level of private orderings and non-State standard setting activities, see Joost Pauwelyn, Ramses Wessel and Jan Wouters (eds), Informal International Lawmaking (2012).

39

Terry (n 4), 878. US agreements with Israel, Chile, Singapore, Australia, Morocco, Bahrain, Oman, and Peru.

40

US – Singapore FTA of 01 January 2004, side letter on legal services available at https://ustr.gov/sites/default/files/uploads/agreements/fta/singapore/asset_upload_file702_4051.pdf.

41

Eurasian Economic Union (EAEU) of 01 January 2015. See in particular Art.8 of Annex 16.

42

Trans-Tasman Mutual Recognition Arrangement (TTMRA) of 1 May 1998, available at http://dfat.gov.au/geo/newzealand/Documents/ttmra.pdf.

43

DFAT, ChAFTA Fact Sheet, Trade in Services, available at http://dfat.gov.au/trade/agreements/chafta/factsheets/Pages/fact-sheet-trade-in-services.aspx

44

EU FTAs with Canada, Ukraine, Georgia and Moldova.

45

Completion Report for APEC Legal Services Initiative, 2011/SOM1/GOS/006, 3 March 2011, at 2–3.

46

Pasha L Hsieh, ‘Liberalizing Trade in Legal Services under Asia-Pacific FTAs: The ASEAN Case’ [2015] Journal of International Economic Law jgv011, 160. Page 9

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Finally, the agreements negotiated by the EFTA with Hong-Kong and the GCC as well as the Swiss FTA with Japan, all include similar exhortative provisions on mutual recognition. 1.3.2

Provisions on the movement of natural persons

A last, yet fundamental, category of FTA provisions can have particular bearing on the free exchange of legal services across jurisdictions. This is a specific provision governing the movement of natural persons for the supply of a service. Under the GATS, mode 4 commitments (i.e. those involving the temporary entry of natural persons) are the rarest to be found in members’ schedules, probably because they touch upon politically sensitive issues such as labour laws and immigration regulation.47 Yet a substantial share of the world exports in legal services occurs through mode 4.48 As a consequence, FTAs which regulate directly such modes of service supply may generate a particularly beneficial impact on trade in legal services. Of the agreements analysed for the purpose of this study, twelve include ad hoc rules aimed at facilitating the temporary entry of service suppliers.49 A seminal example is provided by some recent EU FTAs. The agreements with Ukraine, Georgia and Moldova contain specific provisions on movement of CSS and independent professionals in international and foreign law.50 They require parties to “allow the supply of services” by CSS and independent professionals subject to some qualification, experience and other requirements.51 The EU treaty with Canada established a similar regulatory pattern in its chapter X, entitled “Temporary Entry and Stay of Natural Persons for Business Purposes”.52 Along the same lines, the Chinese agreement with Australia aims at facilitating increased mobility for Australian and Chinese lawyers, including professional secondments between law 47

WTO (2009), Council for Trade in Services, Presence of Natural Persons (Mode 4) - Background Note by the Secretariat, S/C/W/301.

48

See for instance the survey realised by the Australian International Legal Services Advisory Council, concerning Australian exports of legal services over the 2006-2007 financial year. The survey valued services exported through the 'fly in-fly out' method as accounting for 17.5 per cent of total Australia's legal services export income.

49

See Annex II for a list of FTAs.

50

Respectively, Art. 101 on CSS, Art.102 on Independent Professionals of the EU- Ukraine FTA; Art.91 on CSS, Art.92 on Independent Professionals of the EU – Georgia FTA; Art.217 on CSS, Art. 218 on Independent Professionals of the EU – Moldova FTA.

51

For example Art.92.2 of the EU – Georgia FTA, which is replicated ad litteram in the other two agreements, reads: “ The commitments undertaken by the Parties are subject to the following conditions: (a) the natural persons must be engaged in the supply of a service on a temporary basis as self-employed persons established in the other Party and must have obtained a service contract for a period not exceeding 12 months; (b) the natural persons entering the other Party must possess, at the date of submission of an application for entry into the other Party, at least six years professional experience in the sector of activity which is the subject of the contract; (c) the natural persons entering the other Party must possess: (i) a university degree or a qualification demonstrating knowledge of an equivalent level ( 1 ) and (ii) professional qualifications where this is required to exercise an activity pursuant to the laws, regulations or other legal requirements of the Party where the service is supplied; (d) the entry and temporary stay of natural persons within the Party concerned shall be for a cumulative period of not more than six months or, in the case of Luxembourg, 25 weeks in any 12-month period or for the duration of the contract, whichever is less; (e) access accorded under the provisions of this Article relates only to the service activity which is the subject of the contract and does not confer entitlement to exercise the professional title of the Party where the service is provided.”

52

See in particular Art.8 on CSS and Independent Professionals. Page 10

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firms in Australia and China (intra-corporate transferees).53 On the other hand, the agreement between China and Iceland merely encourages the parties to publish information concerning visa and work permit requirements.54 Lastly, the Taiwanese agreement with New Zealand also includes an annex on the temporary entry of business people. It allows the entry of independent professionals in the field of international and foreign law, subject to qualification and experience requirements.55 2. Trade in Legal Services and ‘Mega-Regional Trade Agreements’ This section provides an account of the priorities expressed by leading negotiators and interest groups (i.e. bar associations) in ‘mega-regional’ trade agreements with regard to trade in legal services. Drawing from publicly available information, the aim is to present the Parties’ negotiating goals on market access, mobility, recognition, best practice regulations as well as licensing and approvals. 2.1 Trade in Services Agreement (TiSA) TiSA is a trade agreement currently being negotiated by 23 members of the WTO.56 At the time of writing, there is no publicly available draft text. Nevertheless, various sources convey the idea that the agreement will most likely contain commitments in line with those made by parties under the GATS and the DDA, including legal services. A first major negotiating issue likely to be faced regards the distinction that some parties want to see between full-licensing for practising host country law and limited licensing for home country and international law. If this issue is quite thorny in the context of the DDA negotiations, TiSA parties seem to be more like-minded and prone to adopt such a distinction.57 Another important matter regards the type of MFN clause in the agreement. It is likely that parties will try to avoid free-riding by non-participants thus limiting the scope of the MFN to the TiSA and excluding its application to existing or future agreements with third parties.58 With regard to specific commitments, some parties would probably push for the adoption of a terminology that reflects the IBA resolution and departs from the United Nations’ Central Product Classification (CPC) scheme. Consequently, commitments would be possibly made in host country law, in foreign country law as well as international arbitration. Those countries which have a long history of liberalisation in legal services, such as Australia, the EU and the US, will most likely push to achieve the following:59 i) ii) iii) iv)

Limited licensing for FLCs in foreign and international law, including arbitration; Exclusion of residency requirements; Avoiding limitations on partnerships and associations between foreign and local firms; Allowing foreign law firms to employ local practitioners;

53

DFAT, DFAT, ChAFTA Fact Sheet, Trade in Services (n 55).

54

Iceland – China FTA, Annex VIII on movement of natural persons supplying services.

55

New Zealand – Taiwan FTA, Annex 6 “Temporary Entry of Business Persons”.

56

Australia, Canada, Chile, Chinese Taipei (Taiwan), Colombia, Costa Rica, European Union, Hong Kong, Iceland, Israel, Japan, Korea, Liechtenstein, Mexico, New Zealand, Norway, Pakistan, Panama, Paraguay, Peru, Switzerland, Turkey and the United States.

57

Law Council of Australia, Trade in Services Agreement Submission to DFAT, 17 April 2014, 4. Available at http://dfat.gov.au/trade/agreements/Documents/law-council-of-australia.pdf

58

Ibid., 6.

59

Ibid., 8,9,10,11,12. Page 11

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v)

Facilitating the supply of legal services in foreign and international law under mode 4 (fly in fly out). 2.2 Trans-Pacific Partnership (TPP)

The TPP stems from the Trans-Pacific Strategic Economic Partnership Agreement (P4) between Brunei, Chile, New Zealand and Singapore which entered into force in 2006.60 Currently, 12 parties are taking part at the negotiations which commenced in Australia in 2010.61 At present, no draft of the agreement is publicly available and the information concerning legal services are scarce. Nonetheless, it is known that the agreement will adopt a ‘NAFTA-like’ negative-list approach whereby members will apply the substantive provisions of agreements related to trade in services, unless they actively exempt service sectors and sub-sectors in their schedules.62 As the agreement follows the NAFTA-type structure we can expect it to resemble other post-NAFTA FTAs negotiated by the US. It is likely that the US and Australia will lead the negotiations in legal services and will lobby for partners to adopt very liberal commitments, in line with those that they grant under the DDA and other FTAs, especially since many negotiating parties have already concluded, at least on a bilateral basis, FTAs amongst themselves covering legal services.63 In addition, the TPP will most likely include provisions addressing mutual recognition of professional qualifications and best practice regulations for foreign lawyers. It will probably contain provisions on movement of natural persons aimed at processing immigration documents expeditiously, minimising fees and transparency and encouraging further cooperation.64 2.3 Trans-Atlantic Trade and Investment Partnership (TTIP) The TTIP is a comprehensive trade agreement covering both goods and services between the EU and the US. The economic relationship between the US and the 28 countries of the EU is the biggest in the world, accounting for approximately half of global GDP.65 Contrary to the other two mega-regional agreements analysed in this report, the EU has maintained a relatively open approach to the TTIP negotiations. As such, various papers on the EU’s negotiating priorities in trade in services are available. In addition, the German newspaper “Die Zeit” has leaked a draft version of the services chapter.66 Although many changes may still occur, these documents provide useful guidance on what type of impact the agreement may have on legal services. Firstly, the agreement seems to adopt a GATS-like positive list approach, following the structure of many other EU FTAs. The draft contains specific provisions addressing the temporary 60

Trans-Pacific Strategic Economic Partnership Agreement, 2006, available at http://www.mfat.govt.nz/downloads/tradeagreement/transpacific/main-agreement.pdf.

61

Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, the United States and Vietnam.

62

Ian F. Fergusson, Mark A. McMinimy, Brock R. Williams, The Trans-Pacific Partnership (TPP) Negotiations and Issues for Congress, Congressional Research Service, 20 March 2015, available at https://www.fas.org/sgp/crs/row/R42694.pdf, 18.

63

See for instance the commitments made by TPP countries in Annex I of the report.

64

DFAT, ‘Trans-Pacific Partnership Agreement’, http://www.dfat.gov.au/trade/agreements/tpp/Pages/trans-pacificpartnership-agreement-tpp.aspx.

65

European Commission Website: http://ec.europa.eu/trade/policy/in-focus/ttip/about-ttip/.

66

TTIP, trade in services chapter draft, 27 February 2014, available at http://www.bilaterals.org/?eu-us-fta-ttip-eu-draftproposal. Page 12

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movement of natural persons which may allow increased ‘fly in, fly out’ supply of legal services, especially by CSS and independent professionals.67 It remains to be determined, however, whether the parties will extend the applicability of these provisions to legal services under their schedules. Secondly, the TTIP will almost certainly contain exhortative provisions on matters related to recognition similar to those that have been dealt with extensively in section 1.3.1.68 What remains to be seen is if, and to what extent, the parties will go beyond their GATS and DDA commitments in legal services. Some EU member States which already operate in the US legal market, i.e. UK, will certainly push for additional commitments on lawyers’ registration, recognition and rules of establishment of commercial presence under different US States.69 Conclusions 1) Every FTA constitutes a unicum. As such, in order to fully understand an agreement’s impact on trade in legal services, one has to investigate every agreement individually and in its entirety (substantive provisions on services, annexes and schedule of commitments). Nonetheless, a certain degree of generalisation is feasible and common regulatory patterns affecting trade in legal services can be highlighted. 2) Only a minority of FTAs provide for commitments in legal services that go beyond the offerings that countries have made in the multilateral context of the WTO; 3) Within the realm of ‘GATS+’ offerings in FTAs, only a handful of commitments have been made by countries that did not schedule any commitment at the WTO; 4) A large number of FTAs, especially recent ones, include specific provisions on regulatory cooperation in professional services, including licensing, certification of professional services suppliers and Mutual Recognition Agreements (MRAs). These can be particularly effective when they require professional bodies associations to engage in debate and standard setting activities that are subsequently referred back to the FTAs ad hoc working groups; 5) A considerable number of FTAs include detailed provisions aimed at facilitating the temporary entry of foreign lawyers who engage in fly in fly out services supply. 6) Publicly available information concerning legal services in the TiSA, TPP and TTIP is not extensive. However, through various negotiating documents, fact sheets and submissions on behalf of private entities, it is possible to at least foresee some of the main issues affecting legal services that will figure in these agreements.

67

Ibid., Article 25 Intra-corporate transferees, business visitors and graduate trainees, Article 27 Contractual Service Suppliers, Article 28 Independent Professionals.

68

Ibid., Article 30 Conditions for licencing and qualification, Article 31 Licencing and qualification procedures, Article 32 Mutual recognition.

69

‘TTIP and Cross-Border Legal Services’ . Page 13

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References Alison Hook, ‘Sectoral Study on the Impact of Domestic Regulation on Trade in Legal Services’, OECD-World Bank background paper for the Sixth Services Experts Meeting Domestic Regulation and Trade in Professional Services, 2008. Andrew T Guzman and Joost Pauwelyn, International Trade Law (Wolters Kluwer Law & Business 2012). DFAT, ‘ChAFTA Fact Sheet: Trade in Services’ http://dfat.gov.au/trade/agreements/chafta/fact-sheets/Pages/factsheet-trade-in-services.aspx. DFAT, ‘KAFTA Fact Sheet: Trade in Services’ http://dfat.gov.au/trade/agreements/kafta/fact-sheets/Pages/factsheet-trade-in-services.aspx. DFAT, ‘Trade in Services Agreement’, . DFAT, ‘Trans-Pacific Partnership Agreement’, . EU, ‘TTIP Fact Sheet on Services’, http://trade.ec.europa.eu/doclib/docs/2015/january/tradoc_152999.2%20Services.pdf. GATS: General Agreement on Trade in Services, Apr. 15, 1994, Marrakesh Agreement Establishing the World Trade Organization, Annex 1B, THE LEGAL TEXTS: THE RESULTS OF THE URUGUAY ROUND OF MULTILATERAL TRADE NEGOTIATIONS 284 (1999), 1869 U.N.T.S. 183, 33 I.L.M. 1167 (1994). Gilles Muller, ‘Trade Agreements and Legal Services: An Anatomy of the GATS and Preferential Trade Arrangements’ (2014) 9 Global Trade and Customs Journal 223. Gilles Muller, Liberalization of Trade in Legal Services (Wolters Kluwer Law & Business 2013). Hook, Alison, Sectoral Study on the Impact of Domestic Regulation on Trade in Legal Services, OECD 2006. Ian F. Fergusson, Mark A. McMinimy, Brock R. Williams, The Trans-Pacific Partnership (TPP) Negotiations and Issues for Congress, Congressional Research Service, 20 March 2015, available at https://www.fas.org/sgp/crs/row/R42694.pdf IBA, ‘IBA Engages with Trade in Services Agreement Negotiators’ http://www.ibanet.org/Article/Detail.aspx?ArticleUid=e74529cf-9784-4000-a482-1377b33fb474. International Bar Association (IBA), Resolution in Support of a System of Terminology for Legal Services For the Purposes of International Trade Negotiations, 2003. International Bar Association (IBA), Resolution of Transfer of Skills and Liberalization of Trade in Legal Services, 2008. Joost Pauwelyn, Ramses Wessel and Jan Wouters (eds), Informal International Lawmaking (2012). Julie Barker, ‘North American Free Trade Agreement and the Complete Integration of the Legal Profession: Dismantling the Barriers to Providing Cross-Border Legal Services, The’ (1996) 19 Houston Journal of International Law 95. Laurel S Terry and others, ‘Transnational Legal Practice 2008’ (Social Science Research Network 2009) SSRN Scholarly Paper ID 1424010 http://papers.ssrn.com/abstract=1424010. Laurel S Terry, ‘But What Will the WTO Disciplines Apply To? Distinguishing Among Market Access, National Treatment and Article VI:4 Measures When Applying the GATS to Legal Services’ (Social Science Research Network 2004) SSRN Scholarly Paper ID 591964 http://papers.ssrn.com/abstract=591964. Laurel S Terry, ‘From GATS to APEC: The Impact of Trade Agreements on Legal Services’ (Social Science Research Network 2010) SSRN Scholarly Paper ID 1630566 http://papers.ssrn.com/abstract=1630566. Laurel S Terry, ‘The Revised Handbook about the GATS’ http://www.ibanet.org/Document/Default.aspx?DocumentUid=9E1E0915-F3A5-4F0F-BD1C-3DAC5B2480B8. Law Council of Australia, Trade in Services Agreement Submission to DFAT, 17 April 2014, available at http://dfat.gov.au/trade/agreements/Documents/law-council-of-australia.pdf

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Massimo Geloso Grosso, ‘Managing Request-Offer Negotiations under the GATS: The Case of Legal Services’ (OECD Publishing 2004) OECD Trade Policy Paper 2 https://ideas.repec.org/p/oec/traaab/2-en.html. Pasha L Hsieh, ‘Liberalizing Trade in Legal Services under Asia-Pacific FTAs: The ASEAN Case’ [2015] Journal of International Economic Law jgv011. Paul D Paton, ‘Legal Services and the GATS: Norms as Barriers to Trade’ (2003) 9 New England Journal of International and Comparative Law 361. Sébastien Miroudot, Jehan Sauvage and Marie Sudreau, ‘Multilateralising Regionalism: How Preferential Are Services Commitments in Regional Trade Agreements?’ (Organisation for Economic Co-operation and Development 2010) OECD Trade Policy Papers http://www.oecd-ilibrary.org/content/workingpaper/5km362n24t8nen. US International Trade Commission, U.S.-Singapore Free Trade Agreement: Potential Economywide and Selected Sectoral Effects, Inv. TA2104-6 (DIANE Publishing). WTO (1998), Legal Services; Background Note by the Secretariat, Document S/C/W/43, 6 July. WTO (2002), Negotiating Proposal: Legal Services Classification Supplement; Communication from Australia, Document S/CSS/W/67/Suppl.2, dated 11 March. WTO (2003), Classification of Legal Services, Communication from the European Communities, Document S/CSC/W/39, dated 24 March. WTO (2005), Results of Secretariat Consultations with International Professional Services Associations, Informal Note by the Secretariat, Revision, Document JOB(03)/126/Rev.6, 15 September. WTO (2005a), Joint Statement on Legal Services; Communication from Australia, Canada, Chile, the European Communities, Japan, Korea, New Zealand, Singapore, Switzerland, the Separate Customs Territory of Taiwan, Penghu, Kinmen and Matsu, and the United States; Document TN/S/W/37; S/CSC/W/46, dated 22 February. WTO (2009), Council for Trade in Services, Presence of Natural Persons (Mode 4) - Background Note by the Secretariat, S/C/W/301. WTO (2010) Council for Trade in Services, Legal Services - Background Note by the Secretariat, S/C/W/318. Databases IBA, Global Regulation and Trade in Legal Services Report 2014, http://www.ibanet.org/PPID/Constituent/Bar_Issues_Commission/BIC_ITILS_Map.aspx. WTO/WB I-TIP Database on Services in GATS and RTAs, https://itip.wto.org/services/(S(3vx2huokezvi31wteqcbwolc))/default.aspx. WTO Regional Trade Agreements Information System, http://rtais.wto.org/UI/PublicMaintainRTAHome.aspx.

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Annex I – List of countries granting additional commitments in legal services through FTAs70 Country/ Custom Territory / Regional Bloc

APEC

Armenia

Agreements with:

GATS+ Commitments / Specific provisions on Legal Services

APEC LSI (softlaw instrument)

The initiative aims at increasing transparency by facilitating discussions and creating an online database that lists domestic regulations governing foreign legal practice. The inventory covers information on APEC members’ regulatory frameworks on ‘fly in, fly out’ practice, rules on law firms’ partnerships, and full and limited licenses to practice law.

EAEU

The EAEU treaty aims at establishing a single services market between the parties (Art.5 of Annex 16) in sectors approved by the Supreme Council in a progressive liberalisation effort. It also provides for mutual recognition of education and professional titles (Art.8 of Annex 16). The Union incorporates the Common Economic Space and Commonwealth of Independent States agreements which removed all restrictions in legal services, except for notary services and criminal law. In the Korea, Chile, US and Singapore agreements, legal services are included on the basis of potential future mutual recognition agreements. The Korean agreement contains an Annex 7A in professional services inviting the parties to cooperate in various matters regarding recognition, licensing and certification.

Korea US Chile Australia

Singapore Japan China

Lawyers admitted in New Zealand are given special status in that they may qualify for mutual recognition under the Trans-Tasman Mutual Recognition Arrangement. The agreement with Japan adopts a ‘negative-list’ approach. Australia has not listed NCMs in legal services. The FTA includes an Annex 8 on recognition and an Annex 10 on Movement of natural persons. Parties have agreed to commence discussions between the Law Council of Australia and the Japan Federation of Bar Associations to further cooperation in legal services. The discussions will cover greater movement and recognition of each other’s lawyers, and provision of trans-national legal services in third countries. The agreement with China aims at facilitating increased mobility for Australian and Chinese lawyers, including professional secondments between law firms in Australia and China, and through cooperation between major legal professional bodies in the respective countries. It provides Lithuanian-qualified lawyers with the same rights that Belarusian lawyers have.

Lithuania Belarus

70

EAEU (Russia, Kazakhstan, Armenia)

The EAEU treaty aims at establishing a single services market between the parties (Art.5 of Annex 16) in sectors approved by the Supreme Council in a progressive liberalisation effort. It also provides for mutual recognition of education and professional titles (Art.8 of Annex 16). The Union incorporates the Common Economic Space and Commonwealth of Independent States agreements which removed all restrictions in legal services, except for notary services and criminal

The FTAs covered in this study are those that either grant GATS+ commitments or that include specific provisions affecting legal services. They comprise of the FTAs mentioned in the IBA database on trade in legal services as well as fifteen FTAs recently notified to the WTO. For an exhaustive list of all the FTAs which include commitments in legal services see the Annex IV attached to this report. Page 16

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law. The NAFTA contains a Professional Services Annex (Annex 1210.5), which includes a General Provisions section (Annex 1210.5 Section A) and a Foreign Legal Consultants section (Annex 1210.5 Section B). These sections encourage parties to consult relevant bodies in order to develop mutually acceptable standards and criteria for licensing and certification of professional services providers and to offer recommendations on mutual recognition. NAFTA Canada

EU Korea

The agreement with the EU (CETA) establishes a framework for the mutual recognition throughout the territories of professional qualifications and determines the general conditions and guidelines for the negotiation of profession-specific agreements (MRAs). It also includes specific provisions on the temporary entry of CSS, intracorporate transferees and independent professionals. The agreement with Korea encourages relevant professional bodies to discuss matters pertaining to recognition of qualifications and experience (Art.9.8). It includes an Annex 9-C establishing guidelines for the negotiation of MRAs. Finally, it calls on professional bodies to develop procedures for temporary licensing for service suppliers of the other party (Art.9.9).

CARICOM Countries

CARICOM single market

The CARICOM agreement includes commitments in legal services. CEPA: Hong Kong law firms are permitted to enter into alliances with local Mainland law firms; Hong Kong residents are permitted to take the bar exam in mainland China, and obtain a Mainland practising licence; Hong Kong residents with Mainland Chinese practising licenses are able to act for clients in non-litigation matters and litigation cases related to Hong Kong law on marriage or inheritance.

CEPA (Hong Kong ) China

Australia Iceland

The Australia FTA (not yet into force) will allow Australian law firms to establish commercial associations with Chinese law firms in the Shanghai Free Trade Zone (SFTZ). The associations will permit to offer Australian, Chinese and international legal services, without restrictions on where clients may be located. Australian-qualified lawyers will be able to practise Australian and international law. Legal practitioners qualified to practise law in third countries will also be able to practise their countries’ law. Chinese-qualified lawyers will be able to practise Chinese and international law. They will not incur in the suspension of their Chinese practising certificates. Furthermore, the agreement aims at facilitating increased mobility for Australian and Chinese lawyers, including professional secondments between law firms in Australia and China, and through cooperation between major legal professional bodies in the respective countries. The Iceland agreement includes an Annex VIII on movement of natural persons supplying services. It encourage the parties to publish information concerning visa and work permit requirements.

Costa Rica

EFTA

In the EFTA agreement, Costa Rica has made GATS+ commitments in legal services under modes 1,2,3, excluding Costa Rican law practice, legal advisory and legal documentation and certification services supplied by legal professionals entrusted with public functions, such as notaries. It maintained some nationality and residency requirements.

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EU Hong Kong Peru EFTA

Central American States (Costa Rica and Panama accession) GCC

EEA Switzerland EU

Canada Ukraine Georgia Moldova

All EFTA countries except for Switzerland are parties to the EEA with the EU. Switzerland preferred instead bilateral arrangements. They establish provisions on the free movement of lawyers. In the agreement with Hong Kong, both parties committed to develop disciplines in the area of professional services. In the agreement with Peru both parties agreed to follow an approach of mutual recognition of qualifications in order to promote trade in services. The agreement with Central American States grants GATS+ concessions in movement of natural persons (mode 4) for ICTs, CSS and independent professionals. In the agreement with GCC, Switzerland offers GATS+ commitments. It also includes two Annexes, the first on movement of natural persons and the second on recognition. The EU has comprehensive provisions covering the free movement of lawyers from EEA countries (EU plus Norway, Iceland and Liechtenstein) and Switzerland. These include the Establishment Directive for Lawyers (98/5/EC), the Lawyers' Services Directive (77/249/EC), the Framework Services Directive (2006/123/EC) and the Professional Qualifications Directive (2005/36/EC). Collectively these directives permit EEA lawyers to provide services freely cross border within the EEA, to establish and provide legal services in host as well as home country and international law and to requalify as a host country lawyer. The agreement with Canada (CETA) establishes a framework for the mutual recognition throughout the territories of professional qualifications and determines the general conditions and guidelines for the negotiation of profession-specific agreements (MRAs). It also includes specific provisions on the temporary entry of CSS, intracorporate transferees and independent professionals. The agreements with Ukraine, Georgia and Moldova contain specific provisions (respectively, Art. 101, Art.102; Art.91, Art.92; Art.217 and 218) on movement of CSS and independent professionals in international and foreign law, subject to qualification and experience requirements. They also includes specific transparency and nondiscrimination provisions in licensing and qualification conditions. Cooperation amongst professional bodies in the field of MRAs is encouraged. GCC countries grant to each other visa exemptions for lawyers.

GCC

Georgia

Hong Kong

GCC Countries EFTA

The agreement with the EFTA includes an Annex on movement of natural persons and one on recognition. Qatar and Kuwait made GATS+ commitments in home country and international law. Bahrain also made GATS+ commitments in foreign and international law.

EU

The EU agreement includes specific provisions (Art.91, Art.92) allowing the temporary entry of CSS and independent professionals in international and foreign law, subject to qualification and experience requirements. It also includes specific transparency and nondiscrimination provisions in licensing and qualification conditions. Cooperation amongst professional bodies in the field of MRAs is encouraged.

CEPA (China) EFTA

The CEPA agreement with China includes legal services and allows Hong Kong law firms that have set up representative offices in Mainland China to operate in association with Mainland law firms. Page 18

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They can share operational costs, premises, facilities and staff. However, the association cannot operate in the form of a partnership or a legal person. Hong Kong lawyers participating in such associations cannot practice Mainland Chinese law. Since January 2013, Hong Kong law firms have been able to form associations with up to three mainland law firms. All Hong Kong registered law firms and practitioners are granted special privileges in China regardless of whether they are native to Hong Kong or are foreign law firms that have set up offices in Hong Kong. In the EFTA agreement, both parties committed to develop disciplines in the area of professional services.

Japan

Australia Switzerland

Australian law firms will be able to form Legal Professional Corporations under Japanese law and take advantage of expedited registration procedures for Australian lawyers residing in Japan as well as providing Australian and international legal services. The FTA includes an Annex 8 on recognition and an Annex 10 on Movement of natural persons. Parties have agreed to discussions between the Law Council of Australia and the Japan Federation of Bar Associations to further cooperation in legal services. The discussions will cover greater movement and recognition of each other’s lawyers, and provision of trans-national legal services in third countries. The agreement with Switzerland includes a specific provision on MRAs in professional services

Kazakhstan

EAEU

The EAEU treaty aims at establishing a single services market between the parties (Art.5 of Annex 16) in sectors approved by the Supreme Council in a progressive liberalisation effort. It also provides for mutual recognition of education and professional titles (Art.8 of Annex 16). The Union incorporates the Common Economic Space and Commonwealth of Independent States agreements which removed all restrictions in legal services, except for notary services and criminal law.

ASEAN Australia Canada Korea (Trade in legal services liberalised only through FTAs)

Chile EFTA EU India

Korea has made commitments in legal services in all of its bilateral free trade agreements since 2005. Korea has made automatic concessions to lawyers from countries with which it has bilateral free trade agreements. Lawyers from other countries may apply for the same treatment.

Peru Turkey US

Mexico

Moldova

NAFTA

The NAFTA contains a Professional Services Annex (Annex 1210.5), which includes a General Provisions section (Annex 1210.5 Section A) and a Foreign Legal Consultants section (Annex 1210.5 Section B). These sections encourage parties to consult relevant bodies in order to develop mutually acceptable standards and criteria for licensing and certification of professional services providers and to offer recommendations on mutual recognition.

EU

The EU agreement includes specific provisions (Art. 217, Art. 218) allowing the temporary entry of CSS and independent professionals in international and foreign law, subject to qualification and experience requirements. It also includes specific transparency and nonPage 19

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discrimination provisions in licensing and qualification conditions. Cooperation amongst professional bodies in the field of MRAs is encouraged Lawyers from Australia are given special status in that they may qualify for mutual recognition under the Trans-Tasman MRA. New Zealand

Pakistan

Russia

Australia Taiwan

China

Pakistan has made commitments to China in its FTA (it has made no commitments under the GATS) binding the level of access it provides to foreign lawyers. These commitments require a one year residency for non-nationals and makes the practice of law subject to mutual recognition of legal practitioners.

EAEU

The EAEU treaty aims at establishing a single services market between the parties (Art.5 of Annex 16) in sectors approved by the Supreme Council in a progressive liberalisation effort. It also provides for mutual recognition of education and professional titles (Art.8 of Annex 16). The Union incorporates the Common Economic Space and Commonwealth of Independent States agreements which removed all restrictions in legal services, except for notary services and criminal law.

Australia Costa Rica Korea Singapore

Peru Taiwan TPSEP US

EFTA - GCC Switzerland

The agreement with Taiwan includes an annex on the temporary entry of business people. It allows the entry of independent professionals in the field of international and foreign law, subject to qualification and experience requirements. The FTA adopts a ‘negative list approach’ and New Zealand has only reserved the right adopt or maintain any measure with respect to the provision of publicly funded legal services.

China Japan

Singapore made limited commitments (it did not made any commitment under the GATS) in legal services in its agreements with Australia, Costa Rica, Taiwan, Korea, Peru, TSEP (Chile, New Zealand) and the US. However, it reserves the right to maintain or adopt any measure affecting the supply of legal services in Singaporean law. In the agreement with Australia, Australian law firms can apply for registration as foreign law firms. In the US agreement, Singapore attached a side letter on legal services granting recognition of law degrees obtained in the US. It also allows US firms to enter joint law ventures. In the GCC and the China agreements, Switzerland offers additional commitments in international commercial arbitration services, legal advisory services as well as mediation and extra-judicial conciliation services. In Ticino canton, Swiss fiscal law services are restricted to ‘commercial fiduciaries’. The agreement with Japan includes a specific provision on MRAs in professional services.

New Zealand

The agreement with New Zealand includes an annex on the temporary entry of business people. It allows the entry of independent professionals in the field of international and foreign law, subject to qualification and experience requirements.

Thailand

Australia

Thailand has granted concessions on ownership of businesses to Australia. It has made concessions on free movement of natural persons and allowed up to 100% Australian ownership in a management consultancy business (which could be used as a vehicle for a foreign law firm, given the status of foreign lawyers in Thailand).

Ukraine

EU

The agreement with Ukraine contains specific provisions on movement of CSS and independent professionals in legal services (Art. 101 and

Taiwan

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Art.102), subject to qualification and experience requirements. It also includes specific transparency and non-discrimination provisions in licensing and qualification conditions. Cooperation amongst professional bodies in the field of MRAs is encouraged.

Australia US

Chile NAFTA

The Australian agreement includes an Annex on professional services. It requires the establishment a “professional services working group, […], to facilitate the activities listed in paragraph 1. Paragraph 1 requires the signatory countries to encourage the “relevant bodies” to develop “mutually acceptable standards and criteria for licensing and certification of professional services suppliers and to provide recommendations on mutual recognition to the Joint Committee.” The NAFTA contains a Professional Services Annex (Annex 1210.5), which includes a General Provisions section (Annex 1210.5 Section A) and a Foreign Legal Consultants section (Annex 1210.5 Section B). These sections encourage parties to consult relevant bodies in order to develop mutually acceptable standards and criteria for licensing and certification of professional services providers and to offer recommendations on mutual recognition. The US has negotiated eight FTAs subsequent to the entry into force of the GATS. All of them include an Annex on professional services.71

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Annex II – FTAs covering trade in legal services, broken down by provision Provisions relevant to legal services

Commitments in legal services beyond GATS and DDA

FTAs 1) 2) 3) 4) 5) 6) 7) 8) 9) 10) 11) 12) 13) 14) 15) 16) 17) 18) 19) 20) 21) 22)

Australia – New Zealand (MRA) Belarus – Lithuania (Belarus) Canada – EU CARICOM China - Australia EAEU EEA EFTA – Central American States EFTA – GCC (Switzerland, Qatar, Kuwait, Bahrain) EU – Georgia EU – Moldova EU – Switzerland EU – Ukraine Hong Kong – Mainland China Japan – Australia Korea – Australia Korea agreements (Korea) with ASEAN, Australia, Canada, Chile, EFTA, EU, India, Peru, Turkey, US NAFTA New Zealand – Taiwan Pakistan – China (Pakistan) Singapore agreements (Singapore) with Australia, Costa Rica, Korea, Taiwan, Peru, TSEP, US Switzerland – China (Switzerland)

Provisions on the free movement of lawyers

1) EU Directives regulating trade with EEA countries and Switzerland.

Exhortative provisions on the establishment of mutually acceptable standards for licensing and certification requirement as well as recognition

1) 2) 3) 4) 5) 6) 7) 8) 9) 10) 11) 12) 13) 14) 15) 16) 17) 18) 19) 20) 21) 22) 23)

Exhortative provisions on the establishment of FLCs mechanisms Provisions explicitly allowing association with local firms

ASEAN – Legal Services Initiative Australia – New Zealand Australia – Singapore Belarus – Lithuania Canada – EU Canada – Korea Chile - Korea China – Australia EAEU EFTA – GCC EFTA – Peru EU – Georgia EU – Moldova EU – Ukraine Japan – Australia Japan – Switzerland Korea – Australia NAFTA Pakistan – China US – Australia US – Korea US – Peru US – Singapore

1) NAFTA 2) US - Chile 1) China – Australia 2) Hong Kong – China (CEPA) 3) Japan – Australia Page 22

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Detailed provisions on professional services, including the establishment of ad hoc working groups.

4) 5) 1) 2) 3) 4)

Korea - Australia US – Singapore EFTA – Hong Kong KAFTA NAFTA US eight post GATS FTAs (Israel, Chile, Singapore, Australia, Morocco, Bahrain, Oman, and Peru.

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