What Do Bar Associations Need to Know About the GATS and Other Trade Agreements Bar Issues Commission Session International Bar Association Meeting, Vancouver Oct. 6, 2010 Jonathan Goldsmith (goldsmith @ccbe.eu) With assistance from Prof. Laurel S. Terry (LTerry@psu.edu)
Summary of Remarks Introduction why these agreements exist The structure and application of trade agreements to legal services The role of the IBA Other kinds of trade agreements that affect legal services Steps your bar might take in response to these developments. 2
The GATS.What s That? The GATS is a multilateral trading agreement The GATS was the FIRST world trade agreement to cover trade in services The GATS applies to legal services The GATS has 3 kinds of obligations: 1) automatic, 2) optional, and 3) future It s part of the 1994 Agreement Establishing the World Trade Organization (the WTO) 3
What is the WTO? The WTO has 153 Member States Its agreements include the GATS, GATT, TRIPS, & Dispute Resolution Agreement Headquartered in Geneva, it has 500 staff The WTO Secretariat makes no policy decisions, but writes minutes and analyses For example, in June 2010, it issued an updated legal services sector report All decisions are made by WTO Members 4
The Structure of the GATS [General Agreement on Trade in Services] Automatic obligations (e.g. Article III on transparency) Optional obligations If a sector (legal services) is listed on one s Schedule, then: except as otherwise noted, one must comply with: Article XVI (market access) and Article XVII (national treatment) Services are scheduled using Modes of Supply Mode 1 (inbound product); Mode 2 (outbound client) Mode 3 (foreign firms); Mode 4 (inbound foreign lawyer) 5
A Sample GATS Schedule 6
Scheduling Legal Services In 1994, approximately 45 Members scheduled legal services (counting the EU as one) The manner of scheduling differs These countries have agreed to comply with: Article 16 (Market Access) and Article 17 (National Treatment) EXCEPT AS OTHERWISE NOTED! 7
GATS Article 16- Market Access Except as otherwise noted NO: limitations on the number of service suppliers whether in the form of monopolies measures which restrict or require specific types of legal entity or joint venture through which a service supplier may supply a service 8
GATS Article 17: National Treatment Except as otherwise noted 1. Each Member shall accord to service suppliers of any other Member treatment no less favourable than that it accords to its own service suppliers. 2. A Member may meet the requirement of paragraph 1 by according service suppliers of any other Member, either formally identical treatment or formally different treatment to that it accords to its own service suppliers. 3. Formally identical or formally different treatment shall be considered to be less favourable if it modifies the conditions of competition in favour of services or service suppliers of the Member. 9
GATS Enforcement Mechanisms The GATS is enforced through retaliatory trade sanctions by governments, after a decision by the WTO appellate body The GATS does not create a private cause of action But there are some concerns about its effect on regulation 10
GATS Track #1 and Track #2 The GATS required two kinds of future action (plus its basic and optional obligations) Track #1: GATS Art. 19 required progressive liberalization negotiations within 5 years These talks are now known as the Doha Round Even if Doha fails, Members 1994 promises remain Track #2: GATS Art. 6:4 required consideration of any necessary disciplines In 1998, the WTO adopted Accountancy Disciplines Members are now considering draft horizontal disciplines These disciplines would apply to selected legal services measures on qualification, licensing and technical standards [ethics rules] - it s a complicated topic! 11
The IBA s Role in the WTO The WTO wants to hear from groups whose membership includes all WTO Members The IBA has taken a leading role in working with the WTO (and the UN and the OECD) Examples include the IBA GATS Handbook for Member Bars, WTO meetings, briefings 12
IBA GATS-Related Resolutions: 1998: Core Values, GATS & Deregulation 1998: Principles for Establishment of Foreign Lawyers 2001: Criteria for Recognition 2003: Resolution on GATS Terminology 2003: Resolution on GATS Accountancy Disciplines 2008: Market-Access/Skills Transfer Resolution IBA resolutions have been cited in the WTO Secretariat s Legal Services Background Notes 13
What are Some of the Other Agreements that Affect Legal Services? The GATS permits bilateral and regional FTAs As the Doha negotiations faltered, many countries focused on bilateral FTAs These type of FTAs are now a global phenomenon 14
Some FTA Examples EU FTAs: Russia, other CIS countries, Mexico, Chile, and Korea Ongoing negotiations with Euromed, Mercosur, Gulf Cooperation Council, India, Central America, Andean Pact, and ASEAN Australia FTAs: ASEAN, U.S., Singapore, Thailand, Chile, and New Zealand Negotiations with China, Japan, Korea, Malaysia, and the Gulf Cooperation Council (Saudi Arabia, Qatar, Bahrain, Oman, Kuwait, United Arab Emirates) Canada FTAs: NAFTA, Jordan, Columbia, Panama, Peru, European Free Trade Association (EFTA), Costa Rica, Chile and Israel Negotiations with the Ukraine, Turkey, Morocco, the EU, Korea, the Andean Community Countries, the Caribbean Community Free Trade Negotiations (CARICOM), the Dominican Republic, the Central America Four (CA4), India, FTAA, and Singapore India FTAs: Afghanistan, Bangladesh, Bhutan, Ceylon, Korea, Chile, Pakistan, Singapore, Nepal, ASEAN and SAFTA 15
One Regional Example: APEC 21 Countries in a forum for facilitating economic growth, cooperation, trade and investment An important forum: 40% of the world's population 54% of world GDP 43% of world trade Uses a different structure than international trade agreements: APEC operates on the basis of non-binding commitments, open dialogue and equal respect for the views of all participants. 16
The APEC Legal Services Initiative (LSI) As the Doha Round faltered, energy APEC The LSI was funded in late 2008 for 2009 4 stages: Conducting an Inventory of existing lawyer rules Capacity building workshop (7-09 in Singapore) Developing best practices Preparing a Legal Services Framework to reduce impediments in providing foreign-international law 17
What Should IBA Member Bars Be Doing? Find a person or committee willing to learn about the GATS Urge the trade representatives in your country to consult your bar about legal services trade developments Offer your views when consulted Feel free to contact the IBA WTO Working Group for assistance 18
Some Resources: 1. WTO Secretariat paper: Council for Trade in Services, Background Note by the Secretariat: Legal Services, S/C/W/ 318, (14 June 2010) http://www.wto.org/english/tratop_e/serv_e/serv_e.htm 2. IBA GATS Handbook: http://www.ibanet.org/document/default.aspx?documentuid=4f39b 8D5-2110-4A8A-BDAF-7CB1D7083236 3. IBA WTO Working Group webpage: http://www.ibanet.org/ppid/constituent/legl_profession_world_org s/wto_working_group/projects.aspx 4. Article: Terry, From GATS to APEC: The Impact of Trade Agreements on Legal Services (2010), http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1630566 19