RESTRICTEDWORLD TRADE
ORGANIZATIONS/C/W/97
1 March 1999
(99-0765)
Council for Trade in Services
INTERNATIONAL REGULATORY INITIATIVES IN SERVICES
Background Note by the Secretariat
I. INTRODUCTION
1. This Note is in response to a request from the Council for Trade in Services, and attempts to
provide a general overview of the development of regulatory disciplines and related measures at theinternational level.  Both mandatory and voluntary measures are included.
1  Part I of this paper gives a
summary of GATS Article VI:4 requirements;  Pa rt II provides information on existing GATS
provisions, as well as an overview of VI:4-related wo rk to date;  Part III presents relevant information
from the Secretariat background papers of the Information Exchange Exercise;  Part IV gives an
overview of the regulatory work of international organizations not included in Part III;  and Part Vsummarizes the major VI:4-related issues identified in each Secretariat background paper.
2. Article VI:4 of the GATS states "With a view to ensuring that measures relating to
qualification requirements and procedures, technical standards
 and licensing  requirements do not
constitute unnecessary barriers to trade in services, the Council for Trade in Services shall, through
appropriate bodies it may establish, develop any necessary disciplines " {emphasis added}.  In
addition, "Such disciplines shall aim to ensure that such requirements are, inter alia :
(a) based on objective and transparent criteria, such as competence and the ability to
supply the service;
(b) not more burdensome than necessary to ensure the quality of the service;
(c) in the case of licensing procedures, not in themselves a restriction on the supply of
the service".
3. Until the entry into force of disciplines developed under Article VI:4, GATS Article VI:5
remains in effect.  Article VI:5 requires "(a)  In sectors in which a Member has undertaken specific
commitments, pending the entry into force of disciplines developed in these sectors pursuant to
paragraph 4, the Member shall not apply licensing and qualification requirements and technical
standards that nullify or impair such specific commitments…."2   Also, "(b)  In determining whether a
Member is in conformity with the obligation under paragraph 5(a), account shall be taken of
international standards of relevant international organizations applied by that Member "
{emphasis added}.
                                                     
1In the goods context, a distinction is typically made between mandatory regulations and voluntary
standards.  Sometimes, however, initially voluntary standards are specified in government regulations, thereby
becoming mandatory under certain conditions.  Comparisons of regulatory disciplines under the GATS and the
GATT are presented in a separate Secretariat Note.
2"… in a manner which:  (i)  does not comply with the criteria outlined in subparagraphs 4(a), (b), or
(c);  and (ii)  could not reasonably have been expect ed of that Member at the time the specific commitments in
those sectors were made".S/C/W/97
Page 2
II. EXISTING GATS-RELATED PROVISIONS
4. Work to date in regard to Article VI:4 has fo cused almost exclusively on the activities of the
Working Party on Professional Services (WPPS).  The WTO negotiations on telecommunications, and
to some degree those on financial services, did consider, however, certain regulatory aspects related to
Article VI:4.  In addition, some Members have incl uded measures which may be regarded as falling
under Article VI:4 in the Additional Commitments co lumn of their GATS schedules of commitments.
 A. PROFESSIONAL SERVICES
5. The Ministerial Decision on Professional Services  of April 1995 established the WPPS,
required the immediate commencement of the Article VI:4 work programme, and gave priority to
work on the accountancy sector.  The mandate under the Ministerial Decision of the WPPS also had
three parts:  1)  Establishment of guidelines for th e recognition of qualifications;  2)  Concentration on
the use of international standards;  and 3)  Development of disciplines on domestic regulation.
6. The Council for Trade in Services adopted the Guidelines for Mutual Recognition Agreements
or Arrangements in the Accountancy Sector  (WTO document S/L/38) on 28 May 1997.3  As preferred
by Members, the Guidelines are voluntary.  The main elements of the Guidelines are a reminder of
notification requirements under Article VII of the GATS and recommendations on the form and
content of MRAs.  In regard to the latter reco mmendations, the Guidelines state that MRAs should
clearly identify the:  participants; purpose of the agreement;  scope of the agreement;  details of the
mutual recognition provisions, including eligibility requirements for recognition as well as
specification of the conditions under which any additional supplementary requirements may be
applied;  mechanisms for implementation;  further licensing or related requirements;  and terms for
revision of the agreement.
7. In response to the second requirement of the WPPS mandate, i.e. concentration on the use of
international standards, the Singapore Ministerial Declaration of 13 December, 1996 included the
statement, "We encourage the successful completion of international standards in the accountancy
sector by IFAC, IASC and IOSCO.4
8. On 14 December, 1998, the Council for Trade in Services adopted the Disciplines on
Domestic Regulation in the Accountancy Sector  (WTO document S/L/64), thereby accomplishing the
third requirement of the WPPS mandate regarding accountancy.  The disciplines are divided into eight
sections, i.e.:  Objectives, General Provisions, Transparency (5 measures), Licensing Requirements
(6 measures), Licensing Procedures (5 measures), Qualification Requirements (3 measures),
Qualification Procedures (3 measures) and Technical Standards (2 measures).  The disciplines are to
be applicable to all WTO Member who have scheduled specific commitments for accountancy.  They
will not have immediate legal effect, but instead are to be integrated into the GATS, together with any
                                                     
3The mandate under the WPPS was to concentrate on "facilitating the effective application of
paragraph 6 of Article VI of the Agreement by establishing guidelines for the recognition of qualifications".Article VI:6 states "In sectors where specific commitmen ts regarding professional services are undertaken, each
Member shall provide for adequate pr ocedures to verify the competence of professionals of any other Member".
According to the introduction to the MRA Guidelines, "The most common way to achieve recognition has beenthrough bilateral agreements".  Also, "There are differe nces in education and examination standards, experience
requirements, regulatory influence and various other matters, all of which make implementing recognition on a
multilateral basis extremely difficult".
4International Federation of Accountants (IFAC); International Accounting Standards Committee
(IASC);  and International Organization of Securities Commissions (IOSCO).S/C/W/97
Page 3
other disciplines which have been developed, before the end of the upcoming round of services
negotiations5
9. The main elements of the accountancy discip lines, relative to the current Article VI:4
provisions, are found in paragraphs 1, 2, 5, and 6.  Paragraph 1 establishes the principle that
Article VI disciplines are separate and distinct from measures under Articles XVI and XVII.Paragraph 2 is the core element of the disciplines, as it establishes a "necessity test" for all applicable
regulatory measures, i.e. the principle that regulatory measures shall not be more trade-restrictive than
necessary to fulfil a specified legitimate objective.  Examples of such legitimate objectives mentioned
in the disciplines are the protection of consumers (including all users of accounting services and the
public generally), the quality of the service, professional competence and the integrity of the
profession.  In paragraph 5, Members are required, for the first time, to explain upon request the
specific objectives intended by their regulations.  Finally, in paragraph 6 Members are asked, also forthe first time, to provide an opportunity for trading partners to comment upon proposed regulations,
and to give consideration to such comments.
B. T
ELECOMMUNICATIONS
10. Regulatory disciplines specific to telecommunications services are primarily found in the
GATS Annex on Telecommunications, which applies to all WTO Members, and in the "ReferencePaper" on regulatory principles (dated 24 April, 1996) drawn up in the WTO Negotiating Group on
Basic Telecommunications.  The Reference Paper is used as a basis for additional commitments in
schedules where, if included, it becomes legally binding on the Member concerned.
11. The core obligations of the Telecommunications Annex are contained in paragraph 5, entitled
"Access to and use of Public Telecommunications Transport Networks and Services" (essentiallyregarding basic telecommunications that are required, explicitly or in effect, to be made generally
available to the public).  Paragraph 4 of the Annex obliges governments to ensure the transparency of
"information on conditions affecting access to and use of" basic public telecommunications.
Regarding technical standards, paragraph 7(a) of the Annex states, "Members recognize the
importance of international standards for global compatibility in inter-operability oftelecommunication networks and services and undertake to promote such standards through the work
of relevant international bodies, including the International Telecommunication Union and the
International Organization for Standardization".
12. The Reference Paper, which was voluntarily added to Members' schedules as part of the
telecommunications negotiations which concluded in February 1997, contains provisions regarding
competitive safeguards, interconnection arrangements, universal service obligations, licensing criteria,
regulatory independence and the allocation of scarce resources.  In many cases, these provisions drawupon the principles laid out in GATS Article VI:4 (i.e. paragraphs (a)-(c)), and add greater specificity
or, in some instances, may expand upon the existing coverage and scope of GATS Article VI:
6   As of
the February 1997 negotiating deadline, 63 of the 69 governments submitting schedules included
commitments on regulatory disciplines, with 57 of  these committing to the Reference Paper in whole
or with a few modifications.
C. FINANCIAL SERVICES
13. The GATS Annex on Financial Services contains specific provisions in regard to domestic
regulation (paragraph 2 on prudential measures) and recognition arrangements (paragraph 3).  The
                                                     
5Council for Trade in Services, Decision on Disciplines Relating to the Accountancy Sector  (WTO
document S/L/63, 15 December, 1998).
6Lee Tuthill, "The GATS and New Rules for Regulators", Telecommunications Policy , November
1997, p.p. 5-9.S/C/W/97
Page 4
Understanding on Commitments in Financial Services states that Members shall endeavour to remove
or limit any significant adverse effects of non-discriminatory measures on the financial service
suppliers of any other Member.  The Understanding also contains a commitment to guarantee
financial services suppliers of any other Member national treatment with respect to bodies having
delegated regulatory authority, such as certain industry associations or other organizations(paragraph C.2.).
7
14. As noted in the Secretariat background paper on financial services (S/C/W/72), the Additional
Commitments made by some countries in the most recent negotiations included provisions which may
be called regulatory principles or guidelines on the procedures for licensing and authorization of new
activities and products.8
D. ARTICLE XVIII (A DDITIONAL COMMITMENTS )
15. The vast majority of regulatory measures scheduled by Members, in accordance with the
Additional Commitments provisions of GATS Article XVIII, involve the telecommunications
Reference Paper.  Further examples include the Understanding on Commitments in Financial
Services, as well as other financial services measures, as noted above.   In a few cases, Members have
scheduled measures concerning licensing or qualification requirements for professional services
suppliers.
III. INFORMATION FROM THE INFORMATION EXCHANGE EXERCISE
16. This section highlights progress to date at the international level in the development of
regulatory "disciplines" and other related initiatives.9   The information presented here has been taken
from the Secretariat papers..10   For organizational purposes, applicable general information has been
included under the category of licensing qualification requirements and procedures; information onMRAs has been placed under qualification requirements and procedures.
 E. L
ICENSING REQUIREMENTS AND PROCEDURES
17. The following information is presented in the Secretariat background papers concerning
international initiatives regarding licensing requirem ents and procedures (as well as relevant general
information):
Postal and Courier Services (S/C/W/39)
• "Since 1874, international regulation of postal services has been conducted under the auspices of
the UPU, an international organization consisting of 189 members.  Its members are considered to
constitute a "single postal territory" within which they guarantee the free circulation of mail.
They negotiate agreements and other instruments that collectively address issues that arise in the
course of  the Members' responsibilities for effecting cross-border transit of mail."
                                                     
7Provisions relating to new financial services an d transfers of information are also relevant as
disciplines on domestic regulation.
8These Members were the European Union, Japan and the United States. W/72 also observes,
"Although technically, Article VI:4 and 5 may not be applicable to prudential measures, questions may remainas to whether they are based on objective and transparent criteria, or are not more burdensome than necessary".
9Such measures are often voluntary, and differ somewhat from GATS Article VI:4 categories and
criteria.  Additional regulatory information regarding sp ecific sectors is presented in Annex I, as well as in
individual background papers.
10As noted in the individual background papers, the availability of regulatory information varies
between services sectors.  Data from Member papers was not included, as these were typically informalsubmissions.S/C/W/97
Page 5
• "The Universal Postal Convention, sets the basic UPU principles and guidelines for the exchange
of letter post mail and to a lesser extent for express mail.  Other UPU agreements and guidelinesapply to parcel post and financial services, such as postal money orders.  The Universal Postal
Convention defines general guidelines on international postal service and regulations on the
operations of letter post mail.  These include the rates, called terminal dues, that countries pay
each other as compensation for processing and delivering in-bound mail, the methods ofcalculating and collecting terminal dues, the maximum and minimum weights, the size limits of
letter post mail, and the conditions of acceptance.
• "The representatives of UPU members (i.e. the national postal service suppliers) may also enter
into bilateral agreements to exchange express mail and plurilateral agreements to exchange all
categories of international mail under conditions more favourable than might be possible in
negotiations at a global level."
• "the World Customs Organization, now in the pr ocess of reviewing its Convention, has under
consideration some amendments aimed at simplifying customs procedures affecting postal andcourier services."
Audiovisual Services (W/40)
• "The "Television without Frontiers" Directive of the EC, for example, adopted in 1989 and
amended in 1997, establishes basic rules for advertising, protection of minors, broadcasting of
major sporting and other events, protecting the right of reply and the promotion of European
works.  Cultural obligations are set out more or less explicitly by European laws and regulations,
especially those applicable to public service bodies."
• "The amendment of the "Television without Frontiers" Directive in 1997 strengthened the
requirement that Television channels should broadcast a majority of European productions
excluding news programmes, sporting events, advertising, games, teletext and teleshopping
services.
11"
Legal Services (W/43)
• "The NAFTA Agreement includes rules on foreign legal consultants.  According to Annex 1210
(Chapter 12) Section B, in implementing its co mmitments regarding foreign legal consultants,
each Member shall ensure that foreign legal consultants from other Members are allowed to
practice or advise on the law of the country in which such consultant is authorised to practice as a
lawyer.  The same section also includes provisions on future liberalisation and provisions
mandating consultations with professional bodies on matters such as associations and partnerships
between locally licensed lawyers and foreign legal consultants and standards and criteria for thelicensing of foreign legal consultants."
• "Commonalties between countries’ ethical standards in legal services have allowed the Council of
the Bars and Law Societies of the European Community (CCBE) to adopt a European Common
Code of Conduct, which applies to 17 European countries.  Five other countries have observer
status.  This code is binding on any lawyers undertaking cross-border activities in Europe.  Incontacts between the ABA, the Nichibenren and the CCBE - respectively the U.S., the Japanese
and the European lawyers professional associations - the respective codes of conduct for lawyers
have been compared, with the result that no serious differences were found.
12   An international
code of ethics has been developed by the International Bar Association (IBA) ( infra )."
                                                     
11 "WTO, Trade Policy Review - European Community 1997, May 1998, Geneva, p. 60."
12 "OECD, “Liberalisation of trade in professional services,” OECD Documents, 1995."S/C/W/97
Page 6
Advertising Services (W/47)
• "International policy initiatives concerning the advertising industry have been aimed
predominantly at reaffirming the individual countrie s' right to regulate within their jurisdiction.
For example, the Guidelines on Consumer Protection, adopted by the UN General Assembly in
1985 (Res. 39/2488 of 9 April 1985) recognize the governments' right to regulate advertising,including messages originating from abroad, and calls on enterprises to respect the rules of their
host countries.
13"
Tourism Services (W/51)
• "In December 1994, the International Civil Aviation Organization held a world-wide conference
to examine international air transport regulation.  Although the "open skies" concept wasconsidered, developing country and some developed country members perceived this to be a
threat to their continued participation in intern ational air transport.  The conference therefore
concluded with the decision that each State would choose its own pace for change, using bilateral,
regional and multilateral mechanisms.  Various options for gradual liberalization by developing
countries were discussed, including the liberalization of charter flights as an initial step."
Energy Services (W/52)
• "The grid access model provides access for newcomers to their incumbent competitors’ grid, on
the basis of long term contractual arrangements.  This model has been adopted in the UnitedState
14 and by the European Union Directive on the liberalization of the internal power market in
alternative with the single buyer model ( infra ).  Full vertical separation of generation,
transmission and distribution is not required."
Air Transport Services (W/59)
• "The applicable regulations take several forms.  First there are security regulations defined
multilaterally by the International Civil Aviation Organization (ICAO).  Secondly, national civil
aviation authorities occasionally enact additional standards and ensure that service providers
respect these standards, both on national territory and abroad, through certification programmes.
Finally, in order to avoid conflicts of jurisdiction which might result from this certification offoreign suppliers, a series of bilateral agreements on air safety is being developed, alongside the
start of harmonization and mutual recognition of certifications.  An example of this is the
cooperation between the U.S. Federal Aviation Administration and the Joint Aviation Authorities
of EU Member States."
• "Bilateral agreements also govern the commerc ial activities of companies, and ICAO identifies
six types of provision in this context:  the right to establish offices or personnel in the territory ofthe other party;  the right of a designated company to sell transport services in the currency of the
other party or a freely convertible currency;  the right of a designated company to provide its own
ground services in the territory of the other party, or to choose an agent to do so;  the existence
and conditions applicable to CRS services;  the right to convert or transfer funds;  and a residualcategory."
                                                     
13 "According to Baudot, Barabara Sundberg (1990), International Advertising Handbook, Lexington."
14 "The United States, however, is now moving towards a full competitive market, with retail
competition scheduled for 2003."S/C/W/97
Page 7
Land Transport Services Part II - Rail Transport Services (W/61)
• "a new model separating operating activities from management and maintenance of the
infrastructure {is} gradually started to be impos ed.  The theoretical inspiration for this model is
similar to that for the telecommunications, electric ity and gas sectors.  This model was imposed in
the European Union by Directive 91/440/EE15 and in this particular case was coupled with the
intra-Community liberalization of traffic.  This st ep towards the international liberalization of rail
traffic was the first in the world and warrants a relatively detailed description."
• "Directive 91/440/EEC gives "international groupin gs" (of one or more railway undertakings in
member States) access and transit rights in the member States of establishment of their constituentrailway undertakings, as well as transit rights in other member States for the supply of
international transport services among member States where the undertakings constituting the said
groupings are established. "
• "Subsequent Directives defined the regime for the li cences that need to be obtained in order to be
considered a railway undertaking within the m eaning of Directive 91/440 (Directive 95/18 of
19 June
16) and the criteria for the non-discriminatory allocation of infrastructure capacity and the
charging of fees (Directive 95/19 of 19 June 17 )."
• "In two successive White Papers on 30 July 18 and 29 May 19, the Commission of the European
Communities proposed to extend access rights to all freight and international passenger services."
"These proposals have encountered strong opposition from certain member States and trade
unions."
Maritime Transport Services (W/62)
• "A certain movement of liberalization can also be observed regionally and multilaterally.  OECD
members, for instance, signed in 1993 with the Newly Independent States and Central and Eastern
European Countries ("NIS-CEEC") Bulgaria, Es tonia, Latvia, Lithuania, Romania, Russian
Federation and Ukraine, an "understanding on common shipping policy principles" largely
inspired by the "common shipping policy principl es" agreed inside the OECD in 1987. Similarly
OECD members have begun a dialogue with the Dynamic Non Member Economies ("DNME"
that is Argentina, Brazil, Chile, Hong Kong Chin a, Korea, Malaysia, Singapore, Chinese Taipei)."
"OECD members and DNME are now working on a draft understanding on common shipping
policy principles similar to the one concluded with the NIS-CEEC."
• "Another important regulatory development is the extension outside Europe, and notably to the
pacific region, of the "port state control" principle,  that is the right recognized to the state of the
harbour where the ship calls to arrest and detain substandard ships for safety reasons."
Financial Services (W/72)
• "Major international efforts have been made by the relevant international organizations to
improve regulatory and supervisory standards across countries.20  Numerous bilateral agreements
                                                     
15 "Official Journal of the European Communities (OJEC) No. L 237, 24 A ugust 1991."
16 "OJEC No. L 143, 27 June 1995."
17 "OJEC No. L 143, 27 June 1995, it should be noted that this Directive, as is the case for the licensing
Directive, also excludes from its scope the cross-channel shuttle services."
18 "COM(96)421 final."
19 "COM(97) 242 final."
20 "See BIS (1997) and other documents and publications from the same source.  The activities of the
Basle Committee on Banking Supervision in developing prudential standards for banking are extensive andS/C/W/97
Page 8
and MOUs (Memorandums of Understanding) for the exchange of supervisory information and
cooperation between national supervisory authorities have been made in this area.21  International
efforts to prevent money laundering have also made large progress in recent years.22"
• "The structure of regulatory and supervisory authorities at the international level is also being
reviewed, in response to the afore-mentioned integration of financial institutions and markets at
the international level.  Most recently, particularly due to the current crisis involving market
volatility and problems associated with the activities of hedge funds and inadequate risk
management of financial institutions, a strengthening of the architecture of the international
monetary system is  called for."
• "The main efforts being made under the auspices of the IMF and other groups such as the G22
and G7 in this context are (i) the development, dissemination, and adoption of internationally-
accepted standards or codes of good practice, (ii) enhancement of greater transparency andreporting, (iii) strengthening of domestic financia l systems through international collaboration and
coordination, (iv) promoting the orderly integration of international financial markets, and
(v) involving the private sector in the prevention and resolution of financial crises.
23   Under
item (iv), the Board of the IMF is asked to review the experience of countries with the use of
controls on capital movements, and the circumstances under which such measures may beappropriate.
24"
 F. QUALIFICATION REQUIREMENTS AND PROCEDURE S25
18. The following information is presented in the Secretariat background papers concerning
international initiatives related to qualification requirements and procedures (including MRAs):
                                                                                                                                                                    
well-documented.  IOSCO (International Organization of Securities Commissions), and IAIS (International
Association of Insurance Supervisors) conduct similar work in the areas of securities and insurance.  Among
numerous other codes and standards, IOSCO has produ ced the Statement of Objectives and Principles of
Securities Regulation and International Disclosure Standards for Cross-Border Offerings and Initial Listings byForeign Issuers.  IAIS has produced the Supervisory Standard on Licensing, as well as other standards.  TheOECD has also been active in the field, particularly on regulatory reform for the sector in its member countries."
21 "Most such international and bilateral arrangements on prudential regulation and supervision are
based on moral authority or exchange of  letters and documents, and not on the basis of binding international
treaties such as the GATS."
22 "Such efforts are spearheaded by the Financia l Action Task Force (FATF) based at the OECD."
23"Communiqué of the Interim Committee of the IMF, 4 October 1998, and the Report of the Managing
Director to the Interim Committee on Strengthening the Architecture of the International Monetary System,October 1998.  Also see the reports of the three G22 Working Groups on those issues.  All those documents are
available on http://www.imf.org."
24 "Various proposals have been made by market pa rticipants and observers.  See, for example, Soros,
George (1998).  Some proposals included in this testimony are: the establishment of an International CreditInsurance Corporation, the establishment of some kind of international supervision over the national supervisoryauthorities, and a reconsidering of the international banking system and the functioning of the swap andderivative markets."
25In regard to recognition arrangements, GATS Article VII:5 states, "Wherever appropriate, recognition
should be based on multilaterally agreed criteria.  In appropriate cases, Members shall work in cooperation withrelevant intergovernmental and non-governmental organizations towards the establishment and adoption ofcommon international standards and criteria for recognition and common international standards for the practiceof relevant services trades and professions."S/C/W/97
Page 9
Legal Services (W/43)
• "in the EU the trade restrictive effects of qualification requirements have been virtually eliminated
in a legal environment which reproduces, albeit on a smaller scale, elements of diversity in
qualification requirements similar to those existing at the multilateral level."
• "Three EC Directives have dealt with qualification requirements within the EU.  The Directives
do not restrict the scope of practice and allow access to all fields of the law, including
representation services and host country law.  Lawyers who are not European citizens and have
qualified outside the European Union (and EEA) cannot invoke the Directives.  Their access to
the EU legal services market is regulated by the individual Member States.  The first Directive
(77/249/EEC) requires each Member State to reco gnise lawyers from another Member State for
the purpose of providing occasional services.  It allows the foreign lawyer to practice under the
home title, but requires submission to the deontology of both home and host state.  It also requires
a foreign lawyer to be assisted by a local lawyer for in-court services."
• "The second Directive (89/48/EEC), on the mutual recognition of qualifications, provides for the
full integration into the legal profession of a host Member State upon that state’s recognition of
home state legal qualifications.  Member States are required to ensure that recognition takes place
via two alternative routes: an aptitude test or a waiting period of practice  before a lawyer can
become a fully qualified member of the host state legal profession.26 "
• "The third and most recent Directive (95/5/EC) provides for an alternative to the requirements of
an aptitude test or a waiting period in the legal services sector.  It allows a foreign lawyer from
one EU Member State to practice host country law immediately, after simply proving registration
as a lawyer in another Member State, with no limitations on the scope of practice and without
supervision by locally qualified lawyers.  Initially foreign lawyers will only be allowed to practicehost country law under their home professional titles, however, after three years of host country
law practice they will be en titled to gain admission to the local profession and to the host country
professional titles."
• "The NAFTA (North American Free-trade Agreement) Agreement does not contain binding
provisions on the mutual recognition of qualifications among its Members.  However, it includes
disciplines on transparency, objectivity and licensing in professional services and a work
programme for the development of mutually acceptable professional standards and criteria for
licensing and certification in professional services (Annex 1210, Section A)."  "NAFTA Members
have also undertaken to eliminate any citizenship or permanent residency requirement for the
licensing and certification of professional services providers (Article 1210(3))
27 ."
• "Professional associations are also involved in the bilateral negotiation of market access for
foreign lawyer28  and mutual recognition agreements on matters such as qualification
                                                     
26"The Community system on the recognition of professional qualifications was presented by the
European Communities to the Working Party on Professional Services with respect to the Accountancyprofession.  See document S/WPPS/W3, Communication from the European Communities and their MemberStates."
27"However, Article 1210(3) also provides that “where a Party does not comply with this provision
with respect to a particular sector, any other Party may maintain an equivalent requirement or re-instate any
such requirement eliminated pursuant to this Article, on ly in the affected sector, for such period as the non-
complying Party retains the requirement.”"
28"It has been reported that the Law Society of England and Wales has been negotiating with the
relevant bar councils in India to discuss the creation of a foreign lawyer regime for the country, ideallymirroring the rights that Indian advocates enjoy in the United Kingdom."S/C/W/97
Page 10
requirements, licensing requirements and ethical standards.  Bilateral agreements exist between
the American Bar Association (ABA) and the Law Society of England and Wales."
Architectural and Engineering Services (W/44)
• "regional and bilateral efforts to facilitate access for foreign architects and engineers have made
substantial progress in recent years.  Within the context of regional economic integration, the
European Union and the European Economic Area introduced the principle of free movement of
professionals and the mutual recognition of diplomas.  Directive 85/384/EC of 10 June 1985, the
"architects" directive, implements this principle.  Under this Directive, as subsequently amended,
each EU Member State recognises the diplomas, certificates and other evidence of formal
qualifications awarded in the field of architecture by other Member States to nationals of Member
States."
• "The NAFTA (North American Free Trade Agreement) (Chapter 12) does not provide for
automatic recognition of professional titles obtained in other NAFTA parties.  However, itcontains certain disciplines, such as objectivity and transparency, pertaining to the licensing and
certification of professionals, and a commitment to eliminate any citizenship or permanent
residency requirement that a party maintains for the licensing or certification of professional
service providers of another party."
• "The NAFTA also encourages the relevant bodies in their respective countries to develop
mutually acceptable standards and criteria for licensing and certification of professional service
providers.
29   In this context, a mutual recognition agreement for temporary and permanent
licensing of engineers, recognizing equivalent professional qualifications, was signed in 1995
between the professional representatives of the NAFTA Parties, which mutually recognizesprofessional qualifications of these countries for engineers.
30"
• "A large number of countries have notified mutual recognition agreements under the GATS
Article VII:4 which requires notification of existing recognition measures.  Most of theseagreements pertain to mutual recognition of diplomas between governments.
31  but a number of
them relate to mutual recognition of professional qualifications in accountancy and other areasbetween non-governmental professional bodies.  Concerning architecture and engineering, the
inter-recognition agreement between the U.S. and Canada (S/C/N/52) in architecture, and the
Washington Accord in engineering (S/C/N/53) described below have been notified, which are
both agreements between non-gove rnmental professional bodies.
• "In the APEC, work has started on the preparation of a directory on the requirements for provision
of professional services, with priority on accountancy, engineering, and architecture.
32  A larg e
                                                     
29"Annex 1210.5 of the NAFTA contains provisions on the development of professional standards for
professional services.  Specifically, the Parties to the Agreement "shall encourage the relevant bodies in their
respective territories to develop mutually acceptable st andards and criteria for licensing and certification of
professional service providers and to provide recomme ndations on mutual reco gnition" to the Free Trade
Commission.  The Free Trade Commission will review the recommendation, and based on this review, eachparty shall encourage its respective competent authorities, where appropriate, to implement the recommendationwithin a mutually agreed time."
30""Mutual Recognition of Registered/Licensed Engineers by Jurisdictions of Canada, The United
States of America and the United Mexican States to Facilitate Mobility in Accordance with the NAFTA,"described in an informal communication from Canada to the WPPS dated 13 March 1996."
31 "Work to this effect has been undertaken actively in the Latin American and Caribbean region."
32"Convenor's Report, 21 February 1998, Fifth Meeting of the APEC Group on Services."S/C/W/97
Page 11
number of bilateral agreements on recognition of practice standards in engineering have also been
concluded in the region.33"
(architecture)
• "Based on the United States – Canada Free Trade Agreement, the U.S. architectural profession
concluded an agreement with their Canadian counterparts on a series of requirements for
certification applicable to U.S. and Canadian architects in 1994.  It is an agreement between the
National Council of Architectural Registration Boards (NCARB – a non-governmental, national
federation of the official registration boards in 55 U.S. jurisdictions) and the Committee of
Canadian Architectural Councils (CCAC – a committee comprising all of the Canadian Provincial
Architectural Associations).  It is implemented by those states and provinces that ratify the
agreement, and is implemented in a majority of them."
• "At the UIA (Union Internationale des Archit ectes), the second edition of the Accord on
Recommended International Standards of Professionalism in Architectural Practice is currentlybeing developed, and is scheduled to be presented for adoption by its members in 1999.
34  I t
comprises guidelines on 1) accreditation policy, 2) practical experience/training/internship policy,
3) practical examination (demonstration of professional competence) policy, 4)
registration/licensing/certification policy, 5) ethics and conduct policy, and 6) continuingeducation policy
35"
(engineering)
• "In engineering, the Washington Accord was signed in 1989 by professional bodies of
six countries (Australia, Canada, Ireland, Ne w Zealand, United Kingdom, and United States).
Since then, two more bodies have become sign atories (Hong Kong, China, and South Africa).
Signatories to the agreement recognize the substantial equivalency or comparability of
engineering education courses leading to the first professional degree or basic education in
engineering (the "Accredited Engineering Degree").  It does not, however, address the mutual
recognition of professional credentials, such as the Professional Engineer, or Chartered
Engineer.36"
• "In Europe, FEANI (Fédération Européene d'A ssociations Nationales d'Ingénieurs) has
established the title of EurIng, and has determined a process of assessment of individual
engineer's qualifications and practice experience.  The model for EurIng is based upon a
minimum of seven years of qualifications, training and experience (the latter having to be of at
least two years).  Such developments in self-regulatory initiatives could lead to more rapidinternational recognition of qualifications and practice competency."
Health and Social Services (W/50)
• "Although a number of recognition measures may exist in health-related areas, autonomously or
through mutual agreement, the Council for Trade Services has received only one notification
under the relevant provisions of Article VII:4.  (The notification, S/C/N15, essentially concernsMacau's recognition of professional qualifications obtained from Portuguese institutions.)"
                                                     
33"See T. Connor, Engineering Services, in OECD, op. cit ., 1996."
34"The first edition of this document was adopted by the General Assembly of the UIA in 1996."
35"See document S/C/N/52."
36"See document S/C/N/53."S/C/W/97
Page 12
Air Transport Services (W/59)
• "Bilateral agreements include other provisions, concerning for example unscheduled or cargo-
only flights, dispute settlement procedures, exemptions from taxes or customs duties (which are
often reciprocity-based) and the recognition by one of the parties of licenses, qualifications or
certificates of  air worthiness issued by the other."
Financial Services (W/72)
• "A possible means to address concerns arising from differences in prudential regulation between
countries is for each Member to recognize the prudential measures of other countries with high
standards of prudential regulation and supervision.  Such recognition may be based on an
agreement or arrangement with the countries concerned, or may be accorded unilaterally.
Although the Annex on Financial Services provid es for such recognition, and a notification
requirement exists under Article VII:4 (a) and (c), [as corrected]{few} notifications {have} been
made under these provisions to date.37"
Accountancy Services (W/73)
• "At the regional level, the European Communities has instituted procedures for the mutual
recognition of diplomas.  In almost all cases, however , an aptitude test is still required to cover the
specificities of national law, which may help explain why the use of the provision has been
minimal to date.38"
• "Under the North American Free Trade Agreement (NAFTA), professionals from NAFTA
countries are required to be given non-discriminatory access to certification and licensing
procedures.  In this connection, the three countries concerned have agreed to try to eliminate all
residency and citizenship requirements for certification to practice accountancy.
• "At the bilateral level, the American Institute of Certified Public Accountants, the U.S. National
Association of State Boards of Accountancy and the Canadian Institute of Chartered Accountantsin 1991 concluded an agreement on "Principles of Reciprocity". The agreement was a
recommendation to state boards of accountancy in the United States and provincial authorities in
Canada to permit an abbreviated examination intended to demonstrate satisfactory knowledge of
relevant local and national legislation, standards and practices in the jurisdiction being entered.The recommendation was subsequently adopted by 36 U.S. States (as of June 1996)."
• "The Protocol on Trade in Services to the Australia-New Zealand Closer Economic Relations
Trade Agreement (ANZCERTA), concluded in July 1996, establishes as a basic principle theright of a person registered to practice an occupation in one of the two countries to practice an
equivalent occupation in the other country.
39"
• "Notifications to the WTO, under GATS Article VII:4, of recognition procedures which
specifically mention accountancy have been relatively infrequent.  They include:  the March 1996
notification of Macau (S/C/N/15), describing procedures permitting the registration of
accountants and auditors who are members of foreign professional associations;  the
                                                     
37 "This does not mean, however, that such recognition is not made in the domestic laws or regulatory
practices of countries."
38"As observed in Panorama of EU Industry 1997, "The general system was not in fact designed in
order to remove the existing barriers, but was meant to help accountants to establish themselves abroad in spiteof these barriers" (p. 25/26)."
39"The ANZCERTA Agreement was notified to the WTO under GATS Article V.7 (S/C/N/66, dated
21 October 1997)."S/C/W/97
Page 13
February 1997 notification of the United States (S/C/N/51), concerning the 1991 U.S.-Canadian
agreement (as described above);  and the March 1998 notifications of Australia and the United
States (S/C/N/67 and N/68), describing A Princi ples Agreement for Reciprocal Licensing signed
in October 1996.  The latter agreement involves Australia, on a national basis, and U.S. States on
an individual basis (19 as of July 1997).  Considering the major effect that national qualificationrequirements have on trade in accountancy services, the number of MRAs on accountancy
notified to the WTO to date appears to be remarkably small."
 G. T
ECHNICAL STANDARDS40
19. The following information is presented in the Secretariat background papers concerning
international initiatives related to technical standards:
Environmental Services (W/46)
• "Standards, norms and conformity assessment are currently being developed through multilateral
processes, such as ISO 14001 and the Environmental Management and Auditing Systems(EMAS)."
Advertising Services (W/47)
• "To address public concerns and, certainly, to ease pressure for further regulatory action, the
advertising industry - agencies and customers - has developed their own guidelines.  One of the
first examples dates from 1938, when the International Chamber of Commerce issued its Code of
Standards of Advertising Practice.
41"
• "specialized UN agencies, in particular WHO and FAO, have issued recommendations on how
advertising of sensitive health and food products should be controlled. Some international
industry associations have also established sector-specific guidelines;  for example, theInternational Federation of Pharmaceutical Manufacturers has issued ethical criteria for
advertising drugs."
Education Services (W/49)
• "the Convention on the Recognition of Qualifications Concerning Higher Education in the
European Region", co-sponsored by the Counc il of Europe and UNESCO, was concluded in
April 1997 to facilitate international exchanges of students and scholars by establishing standards
for the international evaluation of secondary and post-secondary credentials.  Signatories include
the European Union, many East European countries, Australia, Canada, Israel and the United
States.
42  (See Annex II)"
                                                     
40No definition of technical standards is made in the GATS, but work in accountancy suggests that
services standards are being applied to both "produ ction" and "process" methods, i.e. to the technical
characteristics of the service (e.g. the format of financial reports) as well as to the way in which a service mustbe performed (e.g. the way in which an audit must be performed).
41"The ICC Code of Advertising Practice addresses issues such as compliance with prevailing standards
of decency;  honesty; truthful presentation;  use of comparisons, testimonials and endorsements;  denigration;
protection of privacy;  exploitation of goodwill;  imitation;  safety;  and content destined for children."
42"Other initiatives at the international level includ e efforts among institutional accreditation bodies for
the recognition of the equivalence or substantial comparability of processes for "accrediting educational course,programmes, etc.""S/C/W/97
Page 14
Health and Social Services (W/50)
• "At {the} professional level, there are various initiatives aimed at harmonizing education and
certification standards.  Cases in point are a Trilateral Initiative for North American Nursing,
involving groups from Canada, Mexico and the United States, and efforts in Central, South and
Eastern Africa towards establishing common standards and competencies for nursing.43"
Tourism Services (W/51)
• "In 1995, the World Travel and Tourism Council, the World Tourism Organization and the Earth
Council released a joint environment plan, entitled Agenda 21 for the Travel and Tourism
Industry:  Towards Sustainable Development.  The plan covers such issues as waste utilisation,
energy and non-renewable resource conservation, water management, local community
involvement customer awareness and staff education and training.  Also included are mechanisms
for the development of consultative arrangements between government, industry, local
communities and environmental interests.44  An example of initiatives at the government level is
the ECoNETT environmental communications  network of the European Community."
• "Trade liberalization in the tourism sector, including the increased movement of natural persons,
has also led to increased demand for development of international standards.  The World TourismOrganization has developed human resource quality, and is working on developing a range of
other quality standards, commencing with those to be applied to tourism destinations.  The
International Organization for Standardization (ISO) has formed a working group to examine
standards on terminology for hotel accommodations."
Air Transport Services (W/59)
• "The industry (in practice IATA's tariff standards) distinguishes between APEX tickets (Advance
Purchased Excursion) and "full flexible fares"."
• "the appearance in the early 1980s of "Codes of Good Conduct" under which a CRS supplier was
authorized to operate only if it undertook an obligation to give non-discriminatory treatment to all
airlines such as EU regulation n° 2299/
45 and n° 3089/46 or the corresponding U.S. legislation.47
These regulations, which imply reciprocity-based treatment, have been the subject of MFNexemptions."
• "ICAO has also produced two Codes, in 1991 and 
48, containing similar obligations as to
"neutrality" and undertakings on non-discriminatory access to the market which are in many ways
comparable to those in the GATS.  Thirty states adopted the 1991 Code.  The 1996 Code replaces
the 1991 Code in its entirety.  So far, nine States, of which eight are WTO Members (Fiji, France,
Kingdom of the Netherlands-Aruba, Kuwait, Portug al, Romania, Thailand and the United States)
have adopted this Code or indicated that their legislation is applied consistently with its
principles."
                                                     
43"See Oulton, Judith A. (1998), International trade and the nursing profession , in Zarrilli, S., and C.
Kinnon op cit. "
44 "Internet site of the World Travel and Tourism Council (http://www.wttc.org/)."
45 "OJ n° L/220, 29 July 1989, page 1."
46 "OJ n° L/278, 11 November 1993, page 1 (under revision)."
47"57 FR 43834, 22 September 1992."
48 "ICAO Council Resolution of 17 December 1991 and ICAO Council Resolution of 25 June 1996,
(text available at the Secretariat)."S/C/W/97
Page 15
Maritime Transport Services (W/62)
• "the International Maritime Organization has continue to elaborate international conventions on
safety and has widened the membership of existing conventions.49"
Financial Services (W/72)
• "The development of international standards and codes of good practice in the areas of financial
services and accounting of financial transactions and institutions has been progressing markedly
in recent years.50   Such efforts are expected to reduce the possibility that domestic standards and
codes are perceived by other countries as overly burdensome or effectively constitute barriers to
trade."
Accountancy Services (W/73)
• "At the international level many countries, as noted in W/2 (and updated in a March 1998
informal Secretariat Note), have voluntarily inte grated international standards into their (often
mandatory) domestic standards.51  The task of creating international standards is essentially
divided between the International Accounting St andards Committee (IASC) and the International
Federation of Accountants (IFAC), with IASC responsible for accounting standards and IFAC
responsible for auditing, educational and ethical standards."
• "The International Organization of Securities Commissions (IOSCO), comprising securities-
market regulators worldwide, is looking to IA SC to provide mutually acceptable international
accounting standards (IASs) which are acceptable for multinational securities listings and other
international offerings.52  IOSCO and IASC earlier announced a multi-year programme to
accelerate the standards-setting process, with revisions to the IASs expected to be completed by
the first part of 1999, after which IOSCO will decide whether to grant its approval.  The decision
of IOSCO, while non-binding upon its members, is  likely to strongly influence the approval
processes of national regulators."
IV. ACTIVITIES OF OTHER INTERNATIONAL ORGANIZATIONS
20. This section briefly summarizes additional information known to the Secretariat, apart from
that presented in Part III, concerning the work of major international organizations on services-relatedregulatory issues.  As noted above, such work often differs from the parameters defined in GATS
Article VI:4.
                                                     
49"For more details on this work, see the International Maritime Organization website:
http://www.imo.org."
50"A compendium of such standards and codes in banking can be obtained on the Internet Homepage
www.bis.org, for example.  Also, the development and endorsement of International Accounting Standards by
IASC and IOSCO have important implications for the financial services sector."
51"Although international standards for accountancy are widely used at the national level, to date this
has only occurred on an individual, voluntary basis.  Panorama of EU Industry 1997 also notes, "The fact that
there have long been professional standards in this  sector has hitherto considerab le limited the real impact of
ISO 9000 Standard as regards accountancy services" (p. 25/28)."
52"A number of stock exchanges already require or allowed foreign issuers to present financial
statements in accordance with IASs and, as a result, private companies are increasingly reporting that their
financial statements conform with IASs."S/C/W/97
Page 16
2. ISO
21. The International Organization for Standardization (ISO), created in 1947, is a non-
governmental organization composed of one national standards body from each country.  As of
September 1998, ISO had 128 members (now 130), composed of 85 member bodies,
34 correspondent members and 9 subscriber members. Emerging countries accounted for about 70 percent of the membership, but only 5 per cent of the secretariats of technical committees, of which there
were about 200 controlling over 5000 active projects.
53
22. When the ISO was created, its main objective was to provide recommendations to members
for harmonizing national standards.  The ISO began publishing International Standards only in the
early 1970s.  International Standards are defined by the ISO as "documented agreements containing
technical specifications or other precise criteria to be used consistently as rules, guidelines, or
definitions of characteristics to ensure that materials, products, processes and services are fit for theirpurpose".  ISO standards are voluntary and developed on a consensus basis, defined as "general
agreement, characterized by the absence of sustained opposition to substantial issues by an important
part of the concerned interests and by a process that involves seeking to take into account the view of
all parties concerned and to reconcile any conflicting arguments".  Consensus does not necessarily
imply unanimity, the ISO notes.  Detailed information on the standards-making process is availableon the ISO Internet site.
54
23. Although there are over 10,000 ISO standards, very few currently apply to services.  Many of
the standards developed by the ISO, however, concern services indirectly, for example the standards
for the technology associated with the delivery of ATM banking services.55   The best known ISO
standards applicable to services are the ISO 9000 and 14000 series, concerning quality andenvironmental management, respectively.  These series are described as "generic management system
standards", with generic meaning that they can be applied to any organization, including services
providers.  Simply defined, quality standards under the ISO 9000 definition refer the features of a
service (or a product) which are required by a customer;  environmental management standards refer
to actions taken by an organization to minimize the harmful effects of its activities on theenvironment.
24. ISO has established a number of "fast-track" approval procedures for use in situations when
suitable international standards have already been developed outside the ISO, and/or when is it
necessary to proceed more rapidly.
56   Other examples of the need for streamlined procedures are
found in high-technology areas, where corporate consortia have rapidly created  de-facto  international
standards.  To evaluate the need, and potential demand, for the creation of international standards in
services, the ISO organized regional seminars in 1998, in which the WTO participated.  Some of theservices sectors considered at the seminars for the possible development of international standards
include hotel, tourism and financial services.  Another recent ISO activity was a workshop on mutual
recognition agreements, held in Geneva in May 1998. the areas of network access, signalling and
control, interfaces, security and optical networking.
                                                     
53ISO support for emerging countries includes the publication of development manuals, e.g. for the
establishment on development of a national standards body, training programmes, and the sponsorship ofdelegates for ISO technical meetings.
54 Http://www.iso.ch.
55 According to the ISO, while it does not presently standardize services, it does provide what might be
called "technology support standards" for services.  The classifications used by the ISO often apply potentially
to both goods and services including, for example, technical committees on banking, documentation and
information technology.
56 See, for example, the information available at  http://www.iso.ch/presse/ newprod.htm.  The ISO
states that its fast-track activities are complementary to, and mutually supportive of, the work of otherspecialized bodies.S/C/W/97
Page 17
3. ITU57
25. The functions of the International Telecommunication Union (ITU) are organized and carried
out in three areas of work, referred to as sector s. These are radiocommunications, standardization, and
development. Of these, both the Radiocommunication Sector and the Telecommunication
Standardization Sector play an important role in the development of  internationally agreed standardsand other national regulatory measures. For its part, the Development Sector (ITU-D) has primary
responsibility for activities aimed at facilitating and enhancing telecommunication development by
offering, organizing and coordinating technical cooperation and assistance in five major areas --
sector reform, technologies, management, finance and human resources. Some of the instruments
which are the basis for and which also result from ITU activities, such as the Radio Regulations, are
legally binding obligations on its Member States.  Many activities of the ITU Radiocommunication
and Standardization Sectors result in texts known as Recommendations which, although not formallybinding on Members, frequently form the basis for national radio and telecommunication standards
and regulatory measures.
26. The purpose of the ITU Radiocommunication Sector (ITU-R) is, inter alia, to ensure rational,
equitable, efficient and economical use of the radio-frequency spectrum by all radiocommunication
services, including those using satellite orbits, and to carry out studies and adopt Recommendationson radiocommunication matters.  This is undertaken in an environment characterized by, among other
things, an increased interest, in particular on the part of the developing countries, in worldwide
radiocommunication system standards to achieve  overall system economy, and the widespread
application of digital techniques to most space and terrestrial systems, including mobile
communications and new television and sound broadcas ting systems.  Among the functions of ITU-R
are: the efficient management of the usable radio-frequency spectrum, free from harmful interference;
developing criteria for frequency sharing and coordination of new and existing systems in both space
and terrestrial environments; to ensure the application of the Radio Regulations; to issue
Recommendations on, inter alia, the characteristics and performance of radio systems; to facilitate
timely coordination systems in both space and terrestrial environments; and to develop spectrumregulation initiatives to better harmonize frequency allocations and the use of satellite orbits.
27. The purpose of the ITU Telecommunication Standardization Sector (ITU-T) is to study
technical, operating and tariff questions a nd adopt Recommendations on them with a view to
standardizing telecommunications, on a worldwide basis.  It also plays a role in promoting cooperation
among international and regional standardization organizations and other relevant bodies concerned
with telecommunications and in developing Recomm endations for new technologies and applications
such as appropriate aspects of the Global Information Infrastructure and multimedia services andmobile services.  In its work on standardization, ITU-T has recognized the implications of a world-
wide trend towards a "market-driven" approach, and the increased involvement of the private sector in
the standardization process.  This has led to an emphasis on developing Recommendations that
acknowledge market- and trade-related considerations, to developing them more rapidly in response
to market demands, and to a need to address issues related to changes in competition, tariff principlesand accounting practices. Among its priorities in the coming years, ITU-T has identified a need to
produce Recommendations concerning, for example: Internet Protocol (IP) related aspects as well as
the interoperability and convergence of IP-based  networks, the Internet, with existing network
infrastructures; multimedia applications aris ing from the convergence of telecommunication,
broadcasting, computer and information technology; the further evolution of network infrastructures,for example in the areas of network access, signalling and control, interfaces, security and optical
networking.
                                                     
57 For additional details, see  Strategic Plan for the Union 1999-2003 , ITU, December 1998.S/C/W/97
Page 18
4. UNCTAD
28. The Inter-governmental Working Group of Experts on International Standards of Accounting
and Reporting (ISAR) was created in 1982 by a resolution of the Economic and Social Council of the
United Nations (ECOSOC).  ISAR st ates that it is the only intergovernmental working group in the
UN system devoted to the harmonization of national accounting and auditing practices at thecorporate level.
58
29. Recent ISAR activities related to international regulatory measures included a survey on the
level of compliance with international accounti ng standards (TD/B/ITNC/AC.1/(XIV)CRP.1, dated
23 April, 1996), which was also circulated as an informal WPPS document.  Currently, ISAR is
working on the development of a global accounting curriculum for professional accountants, for use
on a voluntary basis, as part of efforts to reduce the time and costs associated with the verification of
foreign qualifications.
30. UNCTAD in 1996 also presented information to the WPPS concerning the regulation of the
accountancy profession in developing countries (S/WPPS/W/5 and W/8).  UNCTAD earlier released a
background Note entitled, Harmonization and Recognition of Professional Qualifications
(UNCTAD/SDD/SER/2, date d 14 September 1993).  The Note discussed such issues as the
internationalization of professional services;  regulations affecting trade in professional services;licensing;  and mutual recognition and harmonization.  UNCTAD also maintains the Measures
Affecting Services Trade (MAST) database, containing information on regulatory measures at the
national level.
5. APEC
31. Asia-Pacific Economic Cooperation (APEC) is pursuing a number of activities concerning the
regulatory aspects of international trade in services.
59  APEC's Telecommunications Working Group
has completed a report on the Legal and Regulatory Issues pertaining to electronic commerce.
APEC's informal Group on Services (GOS), following a review of trade in services procedures within
APEC in 1997, is undertaking to develop an APEC Directory on Professional Services, encompassing
accountancy, architecture and engineering.  The directory will collect requirements for the provisionof professional services as part of work on the development and adoption of common professional
standards.
32. APEC's  Human Resources Development Working Group in January 1998 completed Stage II
of its work on the mutual recognition of engineering qualifications.  According to the APEC website,
this involved identifying a framework of best practices in accreditation, recognition and development
of professional engineering qualifications.  Stage III w ill establish the APEC Engineering Register as
a way to advance the best practices framework, thereby facilitating the mutual recognition of
engineering skills in the region and increasing the mobility of professional engineers.
60
6. OECD
33.  The OECD has long been involved in major studies of regulatory reform, including the
reform of services-related regulation.  As defined by the OECD, "regulation refers to the diverse set of
instruments by which governments set requirements on enterprises and citizens.  Regulations include
                                                     
58As was noted earlier in S/WPPS/W/2, ISAR is serviced by UNCTAD's Division on Transnational
Corporations and Investments.  ISAR reports to the Co mmission on International Investment and Transnational
Corporations, a subsidiary body of the UNCTAD Trade and Development Board.
59 According to information available on the APEC Internet site (http://www.apecsec.org.sg), APEC's
committees and working groups are involved in thr ee main areas of activities:  trade and investment
liberalization;  business facilitation;  and economic and technical cooperation.
60Http://www.apecsec.org.sg/cti/cti98/rpt2mins98a3.html.S/C/W/97
Page 19
laws, formal and informal orders and subordinate rules issued by all levels of government, and rules
issued by non-governmental or self-regulator y bodies to whom governments have delegated
regulatory powers.61  Regulations are divided into three types, i.e. economic, social or administrative
regulations.
34. In professional services, the OECD conducted a number of surveys of regulations on access to
professional services, regulations governing the establishment of firms, and nationality and local
presence requirements in the OECD area. A categorized inventory of measures affecting trade in
professional services was compiled;  the OECD Secretariat presented the methodology and
preliminary results of the work in a meeting of the Working Party on Professional Services held
in October 1995.62   As noted in W/72, the Third OECD Workshop on Professional Services, held in
February 1997, resulted in a number of policy recommendations, nearly all of which pertain to
measures to be scheduled under GATS Articles XVI and XVII63
35. Other services sectors examined by the OECD included telecommunications, financial
services and energy services (electricity).  As with professional services, specific policy
recommendations were issued, to be implemented at the national level by governments.64   Curr ent
activities are focused on the review of the regula tory systems of OECD Member countries, including
the Netherlands, the United States, Japan and Mexico in 1998;  research on improving the efficiencyof international standardization activities;  and measuring the cost across countries of divergent
product standards and duplicative conformity assessment procedures.
V. ARTICLE VI:4-RELATED REGULATORY ISSUES
36. This section presents summaries of GATS Arti cle VI:4-related regulatory issues at the
sectoral level, as identified in the Secretariat background papers.  As noted in the individualbackground papers, the availability of regulatory information varies considerably between services
sectors.
Distribution Services (S/C/W/37)
37. The Secretariat Note states that distribution services are affected by a wide range of
government regulations.  These exist for a variety of reasons, including health and safety, urban
planning and environmental protection, as well as for economic motives.  In many cases, regulations
are designed, at least in principle, to remedy market imperfections (paragraph 37).  Several types of
regulation have received attention, in particular restrictions on large-scale outlets, shop opening hours,
and zoning and planning laws.  Other relevant legislation concerns vertical restraints, restrictions on
pricing and promotion, and labour market legislation.  It is notable that many of the regulations that
affect the distribution sector are implemented by local governments and municipalities, who have a
powerful influence on the authorization of new stores and the conditions of operation (paragraph 38).
38. Several countries, including Japan, France, Italy, Belgium and Spain, have - or have had until
recently - specific national legislation concerning the establishment of large-scale retail stores.  In
some of these countries, incumbent retailers are in volved in the implementation of such legislation
                                                     
61An overview of the programme on regulatory reform is available from the OECD website
(http://www.oecd.org/subject/regreform/index.htm).
62 As noted in W/44, the results of the OCED work were subsequently published in OECD Documents,
International Trade in Professional Services–Assessing Barriers and Encouraging Reform, 1996, and OECDProceedings, International Trade in Professional Services – Advancing Liberalization through Regulatory
Reform, 1997.
63 S/C/W/73, 4 December 1998, p. 11.
64 The results of these and several other goods-related studies were published in the May 1997  OECD
Report on Regulatory Reform (Volume I).S/C/W/97
Page 20
and can impede the establishment of large stores.  In many other countries, the establishment of large
stores is controlled in the context of regional or local planning.  Furthermore, restrictions on large
stores are sometimes explicitly designed to protect small shops from competition, to pursue an
employment objective and to ensure proximity of outlets to individual consumers (paragraph 39).
39. Complex establishment procedures, especially the requirement to obtain approval from
incumbents, are in themselves likely to have deterred  entry of both local and foreign competitors.  The
resultant market power enjoyed by existing large stores, which control the relatively scarce assets of
location and space, inevitably translates into high er prices and may also limit choice.  Such concerns
have led to efforts to reform legislation on large stores in countries like Japan.  The reforms are based
on the view that the goals of earlier legislation can be met through other less distortionary means.
Non-economic goals like urban and environmental protection are being integrated in local and
regional planning.  Furthermore, the employment con cerns are being alleviated by the fact that some
modern retail formats tend to be quite labour-intensive (paragraphs 40 and 41).
Construction and Related Engineering Services (S/C/W/38)
40. S/C/W/38 provides a list of various domestic regulatory measures applicable to the sector
(paragraph 15).  The Note states that a large part of those measures are intended to maintain the safetyof the objects constructed and the construction work involved, protect the health and safety of workers
and users, or to pursue other public policy objectives, such as urban planning and environmental
protection.  They would normally be applied on a non-discriminatory basis, although some technical
standards and specifications may be applied only to foreign suppliers.  Even if the same measures are
applied to all suppliers on a non-discriminatory basis, domestic or foreign, they may be found to bemore onerous to foreign suppliers (paragraph 16).  The Note subsequently points out that difficulties
for foreign service suppliers may be created not only by the nature of the restriction, but also by the
fact that the required permits and licenses are granted by a large number of national and local
authority or industry associations (paragraph 17) .  Problems associated with the recognition of
credentials and licenses for foreign individuals and firms may also exist (paragraph 21).  It is furthernoted that many of the regulations and standards are applied to the specification of construction
materials or supplies, which are traded as goods (footnote 18 to paragraph 16).
Postal and Courier Services (S/C/W/39)
41. The Secretariat Note on postal and courier services mentions a number of regulatory measures
which may affect trade in this sector; however, only some of these are directly related to Article VI:4.These include licensing requirements, concession fees, and standards that are applied by governments
to ensure that desired levels of service quality are achieved.  Also noted was the practice that, in some
jurisdictions, application of Article VI:4 type measures to courier service suppliers was vested in the
public postal service suppliers, who usually offer their own express mail or parcel delivery services in
competition with the courier service suppliers, i.e. a competitor serves as regulator.  Since postal and
courier services often encompass components of other service industries, such as air and road
transport, Article VI:4 measures affecting other sectors may also affect the supply of postal and
courier services.  For example, some governments limit the ability of foreign courier service suppliers
to obtain the variety of licenses they may require (e.g. trucking, customs, postal, freight forwarding,
brokerage, warehouse) to efficiently provide their services.  Regulatory issues affecting this sector arediscussed on pages 7-12.
Audiovisual Services (S/C/W/40)
42. The Note on audiovisual services (paragraph 17) observes that, in most countries, audiovisual
media are regulated far more heavily than text media, reflecting their great potential for social,economic and cultural influence.  As the OECD notes, "Most countries promote domestic audiovisualS/C/W/97
Page 21
content production through a variety of policy measures and institutions.  But the most comprehensive
policy frameworks are usually contained in legislation concerning broadcasting markets, content
ownership and programming."65  In order to accommodate the new multimedia audiovisual services,
however, governments will probably need to modi fy their regulatory structures (paragraph 21).
Legal Services (S/C/W/43 )
43. S/W/43 states that qualification requirements often represent an insurmountable barrier to
trade in legal services, especially for the practice of host country law.  Legal education differs from
country to country and in some cases within the same country.  In some instances these differences
are so wide that regulators require foreign qualified lawyers to re-qualify in order to be able to
practice (paragraph 41).  Several countries facilitate access to their legal profession for lawyers
coming from jurisdictions within the same legal fam ily, either by fully recognising their qualifications
or by providing for a short route to host country qualification, which takes account of their home
qualifications (aptitude test, adaptation period, integrative education).  A good degree of recognition
exists between Commonwealth countries, which partly share the same caselaw, and to a lesser extent
between all Common Law countries.  Less recognition exists between Civil Law countries, who share
common legal principles, but whose national codes and legislation constitute separate bodies of law(paragraph 42).
44. In the fields of international law and home/third country law, qualification requirements
constitute lower barriers to trade than in the field of host country law.  Foreign legal consultants
(FLCs) face lower qualification barriers, as they normally seek access in fields of the law for which
they possess the right qualifications.  However, even in the absence of serious qualificationrequirements barriers, foreign legal consultants still face important regulatory barriers in particular
with respect to licensing requirements (paragraph 47).
45. A controversial issue of domestic regulation is the treatment of multidisciplinary practices.
Many countries prohibit them on public policy grounds, while other countries do not regulate the
association between lawyers and non-lawyers.  Those countries who do not regard foreign qualifiedlawyers as “lawyers” under national law might prohibit multinational partnerships on the same
grounds of multidisciplinary partnerships (paragraph 51).  Countries and professional organizations
justify prohibitions on multidisciplinary partnerships on grounds of consumer protection and ensuring
the quality of the service.  In particular it is often argued that multidisciplinary partnerships endanger
the lawyer-client privilege and the professional independence of the lawyer.  It appears that
multidisciplinary practices sometimes exist de facto in countries where they are prohibited or not
regulated (paragraph 52).
46. In general, a condition for the establishment of foreign legal consultants is the submission of
the professional to the local code of ethics, and this is not regarded as a major obstacle by the
profession.  Although differences exist between countries, national codes of conduct for lawyers
appear to be based on a certain number of overriding common principles, including strict rules on
conflicts of interest, loyalty to the client and confidentiality.  Points of difference are represented byrestrictions on advertisement, protection of confidentiality of lawyers’ correspondence - especially
with respect to in-house lawyers - and contingency fees (paragraph 54).
Architectural and Engineering Services (S/C/W/44 )
47. S/C/W/44 states that, although discussions in the WPPS centered on the accountancy sector,
similar issues concerning domestic regulation arise in architectural and engineering services as well.
However, compared to some other accredited professional services such as accountancy and legal
                                                     
65OECD, Policy and Regulatory Issues for Network-Based Content Services, STI/ICCP/IE(96)9/REV1,
4 August, 1997, p. 5.S/C/W/97
Page 22
services, architectural and engineering services appear to be subject to fewer restrictive regulations.
Mutual recognition between countries of education or professional experience, or licenses and
certifications granted in a particular country has become more and more popular in recent years.  The
Note states that difficulties for foreign professionals would normally arise from non-recognition or
limited acknowledgement of home country education, qualification or accreditation/licenses;nationality and residency requirements; restrictions on incorporation; restricted eligibility for
contracts including government procurement contracts; and prohibition of advertising etc,. for ethical
reasons.  The reasoning behind such regulations would be the need to maintain the quality and
standard of the service provided, and to ensure a good understanding of cultural and other factors in
exercising the profession (paragraph 21).
48. S/C/W/44 also points out that a majority of architects work as independent professionals, and
the very small scale of businesses, lack of adequate training, unfamiliarity with foreign markets, aswell as cultural and regional impediments may already cause difficulties for those hoping to enter
foreign markets.  Overly burdensome regulation could have a disproportionately large impact on
foreign professionals in such circumstances. Even when countries recognize or acknowledge foreign
qualifications or licenses, case-by-case judgement may be applied, which could give rise to
uncertainty or be time-consuming.  Professional a ssociations could, in certain circumstances, behave
in an anti-competitive manner and attempt to protec t the interests of incumbent professionals from
outside competition (paragraph 22).  Difficulties encountered by firms are also reported
(paragraph 23).  As a means to address those difficulties, regional and bilateral efforts to facilitate
access for foreign architects and engineers have made substantial progress in recent years.  The Note
explains such recent efforts, both between governments and professional bodies, in detail(paragraphs 24 to 29).
Computer and Related Services (S/C/W/45)
49. The Secretariat Note on the sector (S/C/W/45) observes that, although computer and related
services face little or no sector-specific regulation, a variety of government measures have an effecton these services.  Areas mentioned included labour, research and development support, protection of
intellectual property rights, government procurement, government procurement of information
services, tariffs, and technical standards on computer equipment.  Only the last of these would appear
to have some direct relevance to the Article VI:4 work programme.  However, as on-line supply of
computer services becomes more popular, many of the internet/e-commerce related concerns such as
authentication, encryption, protection of individual privacy, and protection of the consumer assume
importance for the computer industry -- an industry which also has a lead role on developing technicalsolutions to such issues.  As some of these issues can and are being addressed by technical means, it is
possible that some such solutions might become part  of new technical standards and requirements for
on-line supply of computer services and electronic commerce more generally.
50. As regards licensing requirements and procedures, although licensing of suppliers has
heretofore been fairly uncommon in computer services, the advent of computer-basedtelecommunications and multimedia services could mean  that such firms must begin to obtain licenses
for supply of services that are subject to licensing in the telecommunications and broadcast sectors. It
might not always be the case that licensing regimes and requirements designed for telecoms and
broadcast media can be transferred directly to similar computer services without some attention given
to possible adaptations.  A range of domestic regulatory and policy issues affecting computer andrelated services are discussed in paragraphs 27-33 of the Secretariat Note.
Environmental Services (S/C/W/46)
51. The Note states that environmental services are affected by a wide range of government
regulations.  First, there are the environmental regulations which apply to all industries and henceinfluence the demand for environmental services.  In addition, there are the regulations which areS/C/W/97
Page 23
directly targeted towards environmental services, such as urban planning restrictions on the location
of disposal sites. In many cases, regulations are designed, at least in principle, to remedy market
imperfections (paragraph 36).
52. Paragraphs 37 and 38 note that the recognition that in an unregulated economy there will be
too little abatement and too much pollution has prompted a range of regulatory responses.Governments have traditionally relied on direct regulatory controls.  It has been argued that such
command and control regulations are often set without comparison of marginal costs and benefits, and
do not necessarily lead to the most efficient level of pollution control.  In order to avoid some of the
problems of direct controls, there has recently been a greater emphasis on economic incentives than
on government control.  One approach involves the use of emissions fees, which requires that firms
pay a tax on their pollution equal to the amount of external damage.  This in effect internalises the
environmental externality by making the firm face the full social cost of its activities.  A recent,innovative approach, that does not require the government to legislate taxes, is the use of tradable
emissions permits (e.g. the 1990 Clean Air Act Amendments).
53. Given the importance of regulations in the market for environmental services, there is
sometimes concern that such regulations can themselves serve as technical barriers to trade.  The
Notes states it should usually be possible to design environmental norms so as to ensure that they donot become technical barriers to trade.  If different technologies produce equivalent results in terms of
environmental quality, then a purchaser should be free to choose the type of technology, rather than
be required to buy from a domestic source because of specified technology.  Incentive-based
approaches allow firms to determine the most co st-effective ways to limit environmental damage.
Environmental policy in the OECD countries has been  evolving in the direction of ambient standards
– which set a benchmark for the quality of the surrounding environment – and the use of market-based
incentives (paragraph 40).
Advertising Services (S/C/W/47 )
54. The background Note on advertising services points out the advertising industry's concern
about trade impediments caused by domestic regulation, i.e. measures not normally covered by the
market access and national treatment obligations under Articles XVI and XVII of the GATS
(S/C/W/47, p.3).  In many product areas, advertisers are confronted with, and need to adjust to,
country-specific regulations and market conditions.  However, there appears to be an element of
uncertainty as to their legal status under the GATS.  For example, the Note states that some Members
have excluded activities from their schedules, e.g. advertisements for tobacco products, which may be
considered sensitive for health or safety reason s.  However, other Members maintaining similar
measures might have felt that these are covered by Articles VI or XIV and, thus, need not be
scheduled (p. 7).
Education Services (S/C/W/49)
55. The Secretariat Note on education services identifies certain measures falling under the
domains of Article VI:4 as an important part of the regulatory framework for education services
(S/C/W/49, paragraphs 30-34). In most regulatory regimes education institutions are required to
obtain a license or registration, namely accreditation as a proper institution in a specific level or field
of education. Accreditation is normally subject to compliance with certain academic
(e.g. programmes, courses, instruction and evaluation methods) and general standards normallydetermined by a governmental body.  In addition, teaching staff must comply with professional
qualifications in order to obtain a license or certificate necessary to provide their services.  The
assessment of such qualifications in the case of foreign providers is commonly conducted to ensure
comparability with local qualifications.  In so me cases the administrative staff of education
institutions are also subject to certain registration and/or approval formalities.S/C/W/97
Page 24
Health and Social Services (S/C/W/50)
56. The Note on health and social services identifies three types of regulation deemed to be
particularly relevant in the sectors covered (S/C/W/50, p. 12).  These are, first, qualification and
licensing requirements for individual health professionals;  second, approval requirements forinstitutional suppliers such as clinics or hospitals;  and, third, rules and practices governing
reimbursement under mandatory insurance schemes.  The Note suggests that Members' scope for
operating qualification and licensing schemes under Article VI:4(b) would need to be assessed case-
by-case.  For example, a university degree or a comparable level of education might be absolutely
necessary for certain health professionals, for instance those entitled to issue prescriptions, but not for
others.
66   Value judgements may come into play as well;  expectations concerning the "quality of a
(health) service" are likely to be influenced by income, history and culture.
57. The Note also argues that it may be difficult in certain cases to draw the borderline between
measures subject to national treatment obligations under Article XVII and those falling under
Article VI.  For example, would potentially discri minatory measures, such as language requirements,
need to be scheduled as national treatment limitations even if they are deemed necessary to ensure the
quality of a service (p. 12).67  
Tourism Services (S/C/W/51)
58. S/C/W/51 states that many of the regulations affecting tourism, such as equity limitations on
FDI, tend to be by-products of general economic, political and social concerns applying to a number
of sectors.  In some cases, restrictions might be imposed by both the services importer and theexporter. Such measures notably included immigration and security controls, together with
documentation requirements, as well as any restrictions on currency movements which might be
applied to individual tourists or tourism businesses.  Specific regulations applying to the tourism
sector might have such objectives as consumer protection, ensuring financial responsibility, or the
development of the local economy and the domestic tourist industry.  A lack of regulatorytransparency, or the denial of national treatment, might also act as general barriers to international
trade in tourism services.
Energy Services (S/C/W/52)
59. The Secretariat Notes states that the energy sector is generally highly regulated in order to
protect important policy objectives such as health and safety, environmental protection, universal
service and consumer protection.  Moreover, all countries regard the energy sector as a strategicindustry, critical to economic and social development, and touching upon issues such as scarcity of
supply and states’ sovereignty over natural resources.  Developments in energy markets, including the
collapse of the price of oil and the reliance on alternative energy resources, have gradually shifted
national energy policies from the culture of scarcity of the 1970s and early 1980s to a more market
oriented culture based on gradual liberalisation and competition (paragraphs 63 and 64).
60. Once the energy sector is open to competition, a major trade diversion or trade facilitation
role can be played by domestic regulation and competition rules.  Those countries who have ended the
                                                     
66 The sector description contained in CPC already implies certain basic qualification requirements.
For example, general medical services (CPC 93121) as well as specialized medical services (CPC 93122) aredefined, respectively, to comprise "services consisting in the prevention, diagnosis and treatment by doctors of
medicine of … diseases" and "diagnosis and treatment services by doctors of medicine  of diseases of a specific
nature … ".  By contrast, dental services consist of "diagnosis and treatment services affecting the patient's teeth…";  and no reference is made to the qualification of the professionals involved.  The same is true for veterinaryservices.
67 Iceland has scheduled under Article XVII a language requirement for veterinarians.S/C/W/97
Page 25
monopoly of vertically integrated public utilities, have had to introduce new complex regulation in
order to ensure the creation of a competitive market .  In this respect competition has required re-
regulation rather than deregulation.  The sectors where re-regulation has proven to be most important
to bring about competition are electricity and gas.  Central to liberalization in these sectors is the
concept of “unbundling”, which is the separation of previously vertically integrated utility’soperations into separate generation, transmission and distribution operations.  This allows to introduce
competition into as many elements of power and gas supply operations as possible.  In fact, whilst
transmission may remain a natural monopoly, generation/extraction and distribution need not be
(paragraph 65).
61. In most countries the energy sector is subject to tight environmental, health and safety
regulations.  These regulations tend to affect the production of energy goods more than services
aspects such transport, transmission and distribution.  The regulations focus on non-fiscal measuressuch as the rationalisation of energy use, includi ng conservation and energy efficiency, support of
renewable energies, the introduction of cleaner and more efficient technologies and the imposition of
limits on CO2 emissions, but also on fiscal measures such as taxes on carbon/energy and exemptions
on clean energies (paragraph 70).
Air Transport Services (S/C/W/59)
62. For air transport services, in respect to the maintenance of aircraft, qualification requirements
are imposed on the personnel of the repair stations for public safety reasons.  Licensing requirements
and technical standards are applied to the certification of planes and repairs stations, also for safety
reasons (paragraph 14).  In respect to computer re servation systems (CRS), licensing requirements are
often imposed, in some instances for the purpose of creating a national marketing company
(paragraphs 26-27).
Land Transport Services Part I – Genera lities and Road Transport (S/C/W/60)
63. Licensing requirements applied to urban road transport services include quantitative
restrictions on taxis, and the granting of concessions for buses in respect to government procurement.
In respect to interurban road transport, licensin g requirements include general operating permits, as
well as permission to operate a given route, and are imposed in order to ensure technical capability,
financial soundness, or to enforce quantitative restrictions.  Qualification requirements are imposed
for public safety reasons on bus and taxis drivers, and on coach drivers in respect to interurban road
transport.  For both urban and interurban road transport, technical standards are applied to the
dimensions and technical characteristics of the vehicles, as well as to vehicle maintenance, for publicsafety and environmental reasons (paragraphs 19-23 and 31-34).
64. Regarding freight-oriented road transport services, licensing requirements again include
general operating permits for the purposes of ensuring technical capability, or financial soundness,
and to enforce quantitative restrictions where applicable.  Qualification requirements are also imposed
on drivers for public safety reasons, and technical standards are applied to the dimensions andtechnical characteristics of the vehicles, as well as to vehicle maintenance, for public safety and
environmental reasons (paragraph 45).
Land Transport Services Part II - Rail Transport Services (S/C/W/61)
65. S/C/W/61 notes that, in respect to rail transport, licensing requirements are applied to the
granting of concessions in respect to government procurement.  Licensing requirements are imposed
in respect to qualifications for open access, for the purposes of ensuring technical capability, or
financial soundness, and to enforce quantitative restrictions where applicable.  Drivers are subject to
qualification requirements for public safety reasons.  Technical standards are applied in respect to
dimensions and braking systems (paragraphs 16 to 18).S/C/W/97
Page 26
Maritime Transport Services (S/C/W/62)
66. Regulation related to Article VI:4 in the in the maritime transport services sector in respect to
shipping are detailed in paragraphs 21 to 30.  For public safety reasons, qualifications requirements
are imposed on crew and officers under a national registry;  technical standards are applied to theconstruction and maintenance of vessels for the same reason.  In regard to harbour services, licensing
requirements include general operating permits for the purpose of ensuring technical capability or
financial soundness, and in some cases to implement quantitative restrictions (paragraphs 31, 32 and
37).
Financial Services (S/C/W/72)
67. The Note identifies four types of government intervention or involvement that could have an
impact on the financial services sector:  (i) macroeconomic policy management, (ii) prudential
regulations, (iii) non-prudential regulation to pursue various public policy objectives other than that
falling under (iv), and (iv) trade restrictions concerning market access or national treatment.  Under
the GATS, item (ii) is dealt with by paragraph 2 of the Annex on Financial Services, and (iii) by
Article VI (paragraphs 31 to 33).
68. The development of international standards and codes of good practice in the areas of
financial services and accounting of financial transactions and institutions has been progressing
markedly in recent years.  Such efforts are expected to reduce the possibility that domestic standards
and codes are perceived by other countries as overly burdensome or effectively constitute barriers to
trade (paragraph 38).  The Note also points out that the rôle of industry associations and organizationsmay also need to be reconsidered.  Some industry associations or organizations have assumed self-
regulatory functions, which is appropriate in maintaining the standards and quality of the services
provided, but may also have had negative effects on competition.  A review of the activities of such
associations and organizations is taking place in some countries, limiting their rôle to the development
and implementation of technical standards and ethical codes, provision of public information andconsulting, and other non-collusive activities (paragraph 40).
69. Financial regulators have been generally cautious towards introducing competition in the
financial sector, due primarily to prudential concerns, but also because many countries have adopted
policies to develop domestic financial industries and markets.  Based on those concerns, licensing and
authorization requirements in financial services are often restrictive, and the conditions or
requirements sometimes extend beyond prudential objectives such as soundness and competence of
applicants.  This appears to be the reason why many of the licensing requirements or restrictions onthe number of licenses granted were inscribed in the Schedules of Members as limitations on market
access and national treatment.  As such licensing requirements are liberalized and are made purely
prudential, they may no longer need to be scheduled as trade restrictions, but there may still be an
issue of whether they constitute unnecessary barriers to trade in financial services. Although
technically, Article VI:4 and 5 may not be applicable to prudential measures, questions may remain asto whether they are based on objective and transparent criteria, or are not more burdensome than
necessary (paragraph 41).
70. The Note states that, because of recent progress in reducing market access and national
treatment limitations, the focus of governments in ad dressing barriers to trade in financial services
appears to have shifted to non-discriminatory measures in domestic regulation including prudentialmeasures and licensing requirements and procedures which may have the effect of creating difficulties
for foreign suppliers to make headway in the market.  Transparency and efficiency of the
administrative process are increasingly taken up in this context.  The scheduling of Additional
Commitments for a number of countries in the most recent negotiations containing regulatory
principles or guidelines on the procedures for licensing and authorization of new activities andproducts would appear to be a reflection of such shifts in focus.  As non-OECD countries also bringS/C/W/97
Page 27
down trade restrictions under the GATS, remaining obstacles to free trade in financial services for
those countries are also expected to stem from various differences in prudential or non-prudential
domestic regulation across countries (paragraphs 46 and 47) .
Accountancy Services (S/C/W/73)71. The regulatory structure of the accountancy profession is described at length in WTO
documents S/WPPS/W/2 and S/WPPS/W/11.  W/1, for example, observes that "It is clear that most if
not all service industries, and particularly the professions, will always be subject to regulation;
protection of the public interest requires the maintenance of adequate standards of competence and
integrity".  Of greatest concern, however, is the fact that the profession is often regulated in different
ways between (and sometimes even within) nations.  The scope of regulation includes both the service
provider and the service itself, extending from educational requirements for accountancyprofessionals to licensing requirements for firms, and to the setting of mandatory standards for
performing the service and for the final product itself (paragraphs 17 and 18).
72. Both the scope and form of accountancy regulation differ widely between countries.  In some
cases, certain accountancy activities may be regulated in one country and not another.  In other cases,
activities which may be performed by accountants in one country, such as taxation services ormanagement consultancy, may be legally restricted in other countries to entirely separate professions.
In most countries, regulatory powers are shared between public and private authorities (typically
professional associations), but the balance between them differs widely between nations.  In addition,
the accountancy profession in some countries is regulated at the national level, and at the sub-national
level in others.  Professional accountancy associations ranges from strictly government bodies tocompletely private organizations.  Their activities may encompass any or all of a wide range of
functions, including examinations and authorizations, education and training, professional standards,
disciplinary measures, quality control, providing various membership services and representing the
profession (paragraphs 19 and 20).
73. Qualification requirements differ both between  and within WTO Members, depending on the
national regulatory regime and type of qualification desired (i.e. accountant, auditor, etc.).  In some
cases, there may be alternatives for achieving the same qualification, e.g. trade-offs between the level
of training and experience required.  In addition to qualification requirements, licensing is typically
also required for individual professionals, whether sole practitioners or members of a firm or
partnership.  In many cases, the relevant professional organization is actually the designated licensing
authority (paragraphs 25 and 26).  A significant amount of the regulation affecting accountancy
professionals and services is defined at sub-national level in federal states.  Consequently, inter-stateor provincial trade in accountancy services can potentially meet with problems similar to those of
inter-country trade (paragraph 29).
74. In addition to market access and national treatment issues, the lack of mutual recognition
agreements (MRAs) or other recognition procedures can act as a major barrier to international trade.
As noted above, local qualifications are typically  required in respect to firm ownership and
management;  therefore, the lack of MRAs or other recognition procedures affects not only the
movement of natural persons, but also investment opportunities.  An important observation in this
respect is that MRAs, while potentially increasing the circulation of professionals, do not in
themselves promote regulatory competition between jurisdictions or lead to the removal of trade
barriers (paragraph 31).
Telecommunications Services (S/C/W/74)
75. A number of Article VI:4 measures are relevant to telecommunications;  some of these issues
are raised in paragraphs 30-33.  Perhaps the most prevalent of Article VI:4-type measures in this
sector are associated with licensing.  Some licensing practices and procedures carried over from theS/C/W/97
Page 28
monopoly era may no longer be appropriate in a competitive environment.  Licensing and bidding
fees and charges, whether or not associated with frequency assignment, can be an important source of
government revenue, but may be seen by service suppliers as too costly.  Qualification criteria, e.g.
for technical personnel, that are sometimes applied to telecommunications service suppliers are
usually associated with licensing and used to determine which companies are eligible to apply for orto obtain licenses.  Also, frequency assignment, where necessary to supply service, is typically built
into a supplier's service license, although in some cases frequency may be assigned by means of a
separate license. Therefore, procedures, criteria and fees associated with assigning frequencies to
service suppliers may fall within the scope of licensing for the purposes of Article VI:4.
76. Technical standards may affect the supply of telecommunications services in two important
respects, apart from the many goods-related standards that may apply to the equipment used in
supplying telecommunications.  First, standards that are often technical in nature that may be appliedto the suppliers themselves, such as service or network performance requirements that the suppliers
must satisfy. Sometimes such requirements are applied to some suppliers and not others.  Second,
technical standards are, or should be, the principal basis for spectrum management and frequency
allocation and assignment.  In some cases, however, there may be inadequate transparency in respect
to determining whether, for example, economic needs tests are actually being applied.
_________