RESTRICTED
WORLD TRADE S/WPPS/W/19
8September 1997
ORGANIZATION(97-3600)
Original: English Working Party onProfessional Services
COMMUNICATION FROM INDIA
Disciplines fortheAccountancy Sector
Intheinformal meeting oftheWorking Party onProfessional Services heldon24July1997,
itwasdecided thattheSecretariat shallprepare asynthesis paper which would serve asaworking tool
forthenextmeeting. Inforwarding these ideas, India hastaken intoaccount thevarious proposals
ontheissueofmultilateral disciplines inrelation totheaccountancy sector which havealready been
submitted bydelegations. Theproposals submitted byIndiadonotdealwithdetailed andcomprehensive
disciplines butonlyhighlight some ofthepreliminary issues ofconcern toIndia.
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DISCIPLINES FOR ACCOUNTANCY SECTOR
1. Scope
1.1 TheWorking Party onProfessional Services (WPPS) wasestablished asaresult oftheDecision
onProfessional Services adopted attheMarrakesh meeting inApril 1994. TheDecision onProfessional
Services identifies certain aspects oftheaccountancy sector towhich theWPPS should givepriority.
Further, aspertheSingapore Ministerial Declaration, theWPPS istoaimatcompleting thework on
theaccountancy sector bytheendof1997 andtocontinue todevelop multilateral disciplines and
guidelines.
1.2 TheWPPS, afterconcluding itswork pertaining tofacilitating effective implementation of
paragraph 6ofArticle VIoftheGATS byadopting non-binding “guidelines formutual recognition
agreements orarrangements intheaccountancy sector ”,hasnowtaken uptheissueofthedevelopment
ofmultilateral disciplines referred toinparagraph 2(a)oftheDecision onProfessional Services.
1.3 Paragraph 2(a)oftheDecision onProfessional Services reads asfollows:
“2. Asamatter ofpriority, theWorking Party shallmake recommendations for
theelaboration ofmultilateral disciplines intheaccountancy sector, soastogive
operational effect tospecific commitments. Inmaking these recommendations, the
Working Party shallconcentrate on:
(a) developing multilateral disciplines relating tomarket access soastoensure
thatdomestic regulatory requirements are: (i)based onobjective and
transparent criteria, suchascompetence andtheability tosupply theservice,
(ii)notmore burdensome thannecessary toensure thequality oftheservice,
thereby facilitating theeffective liberalization ofaccountancy services, ”
1.4 From theabove mandate itisclear thatthepresent exercise istogiveoperational effect to
thespecific commitments undertaken bytheMembers intheAccountancy Sector andtheapplicability
ofanymultilateral disciplines developed shallbeonlyforthosecountries which haveundertaken specific
commitments intheaccountancy sector.
1.5 Itiswellrecognized thatservices sectors areveryoften more intensively regulated thanthe
goods sector andthere areconsiderable variations amongst sectors inthenature ofregulatory
intervention. Therefore, there arelimits beyond which general rules anddisciplines canbemade
applicable todifferent services areas. Thus, ashasbeenthefocus oftheWPPS tillnow,theapplicability
ofthedisciplines being developed atpresent should berestricted toonlytheaccountancy sector.
1.6 TheGATS recognizes thattheMember shallhavecertain domestic policy choices withregard
tomeasures ofgeneral application affecting trade inservices. Therefore, there istheneedtostrike
anappropriate balance between theareas which should fallunder theambit oftheMember ’sdomestic
policy domain andtheareas which aretoberegulated bythemultilateral disciplines.
1.7 Considering thatsuchmultilateral disciplines would require considerable administrative burden
bywayofbringing domestic regulation inlinewithagreed multilateral disciplines, andputting
appropriateadministrativemachineryinplace,developingcountryMembersshouldbeallowedsufficient
timetocomply withsuchmultilateral disciplines evenaftertheyundertake specific commitments in
theaccountancy sector.S/WPPS/W/19
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2. Transparency ofRegulations
2.1 Itmaynotbenecessary tohavenewdisciplines on‘Transparency ofRegulations ’because
asperArticle IIIoftheGATS theMembers already havegeneral obligations withregard totransparency.
Availability ofEnquiry Points andtheobligation onthepartoftheMember toatleastannually inform
theCouncil forTrade inServices oftheintroduction anynew, oranychanges toexisting laws,
regulations oradministrative guidelines which significantly affect tradeinservices covered byitsspecific
commitments under theGATS, should besufficient toensure thatalllawsandpublications relevant
totheaccountancy sector arepublicly available.
2.2 Itmayalsonotbepractical toprovide anopportunity toallWTO Members tocomment on
proposed changes onlawsandregulations totheaccountancy sector, asthebenefits likely tobederived
from suchanexercise arelikely tobenotcommensurate withtheburden thatshallbeimposed upon
theMember. Thisrequirement mayalsocause delay infinalizing andoperationalizing thenecessary
changes.
3. Qualification Requirements andProcedures
3.1 Considering thevaried nature ofcourse-content from country tocountry andthecomplexity
oftheissue, thepossibility ofdrawing upmultilateral disciplines onqualification requirements israther
limited. Theissue canbebestapproached bilaterally through thenegotiations ofmutual recognition
agreements.
3.2 However, iftheMembers arenotabletoreach anagreement onmutual recognition of
qualifications, analternative should beavailable fortheforeign applicant toobtain therequired
qualifications ofthehostcountry. Thequalification requirements need tobeadministered ina
non-discriminatory, fairandequitable manner andtherequirements forforeign applicants should not
bemore burdensome thannecessary toensure quality oftheservice. Thequalification requirements
should beclearandtheirdetails should beavailable sothatforeign applicants canfamiliarize themselves
withthem.
3.3 Theoverall levelofdifficulty oftheexamination fortheforeign applicant should normally
notbegreater thanthatforthedomestic applicant. However, considering thatforeign accountants
arerequired tohavein-depth knowledge about hostcountry ’scorporate law,auditing rules, taxation
laws, business environment etc.andgood knowledge oftheworking language, theforeign applicants
canbeasked toundertake examinations inadditional subjects.
3.4 There should benoneedforcitizenship, nationality andresidency requirements forappearing
intheexaminations.
4. Licensing Requirements
4.1 Once thequalification requirements havebeenmet,thelicensing requirements should notbe
more trade restrictive thannecessary tofulfil legitimate objectives taking intoaccount oftherisks
non-fulfilment would create. Consumer protection, ensuring quality oftheservice andprevention of
deceptive andfraudulent practices should besome oftheprime objectives ofthelicensing requirements.
4.2 Theregulations maybedifferent forforeigners buttheymustbelegitimate andmustfitinto
thebasic principles ofpara4ofArticle VIoftheGATS.
4.3 Themembership inthehostcountry ’sprofessional body maybedesirable forforeigners if
thesame isrequired forthenationals, assuchprofessional bodies register service providers andtheir
regulationsalsopromoteconsumerprotection.However,theprofessionalsfromthedevelopingcountriesS/WPPS/W/19
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should notbecharged, orcharged aminimal concessional membership fee/annual charges sothat
membership fee/annual charges donotbecome barriers totrade.
4.4 Requirements regarding theformoflegalestablishment should notbediscriminatory toforeign
applicants ascompared tothenationals ofthehostcountry. AMember country mayberequired to
justify therestrictions, ifany.
5. Licensing Procedures
5.1 Theapplications oftheforeign applicants should behandled bythelicensing authority orsome
other designated authority. There should beproperly laid-down rules andprocedures forlicensing.
Allinformation concerning licensing procedures should bemade public.
5.2 Thedesignated authority oftheMember concerned shall, within areasonable period oftime
afterthereceipt ofthecompleted application, inform theapplicant ofthedecision relating tohis
application. Further, attherequest oftheapplicant, thelicensing authority should alsosupply clear
statement ofreasons foranyrejection.
5.3 Therules forlicensing procedure should beneutral inapplication andadministered inafair
andequitable manner.
6. Citizenship, Nationality andResidency Requirements
6.1 Citizenship andnationality requirements arenotjustified astheyarenotindicators oftheability
tosupply theservice.
6.2 Residency requirements areconsidered justified andcanbeinsisted upon bytheregulatory
authorities toachieve objectives likeavailability oftheservice provider within thereach oflocallaw,
collection oftaxes etc.