RESTRICTEDWORLD TRADE
ORGANIZATIONS/C/W/90
16 December 1998
(98-5086)
Council for Trade in Services Original: English
COMMUNICATION FROM UNITED STATES
Accountancy Services
The following communication received from the delegation of the United States was
circulated informally on 15 December 1998 to the Members of the Council for Trade in Services to
assist in the discussion on Accountancy Services in the context of the Information Exchange
Programme.
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I. GROWTH OUTLOOK AND BENEFITS OF LIBERALIZATION
Accounting and related services, such as auditing, bookkeeping and management consulting,
help businesses structure their operations in a sound and transparent manner and contribute directly tothe growth of domestic and international trade in goods and services.  WTO Members’ need for high
quality and low-cost accounting and related services will continue to increase, especially with the
movement to harmonized approaches for domestic and international business transactions (such as
International Accounting Standards).  Foreign suppliers of such services can help meet these
demands, whether through establishment of various forms of commercial presence or operating on a
cross-border basis.
The emerging economies will benefit from offering substantial  liberalization in this sector to
be able to take advantage of the highest quality and most competitive services available.  Foreign
participation in accounting and related services can help with restructuring and diversifying of these
economies, including providing independent advice on macroeconomic and/or fiscal reform to
governments and enterprise reform to individual businesses.  Foreign service suppliers also cangenerate substantial local employment, both through accounting, management consulting and related
activities - the Secretariat background note highlights  that small-scale firms predominate in the
accounting services sector - and through the positive ripple effects on the economy.  There also are
benefits in terms of bringing in the latest and most applicable technologies.
Technological advances in the telecommunications sector, including the growth of the
internet and electronic commerce, will help promote additional cross-border trade in the accounting,
management consulting and related sectors.
U.S. trade data groups accounting, management consulting, auditing, bookkeeping and public
relations services together.  U.S. affiliate trade far outstrips cross-border trade because typically
countries place fewer restrictions on servicing clients through affiliates than through cross-border
services.  According to official U.S. trade data, U.S. cross-border exports of these services totaled
US$ 2.4 billion in 1997; cross-border imports totaled US$ 1.1 billion over the same period.  In 1996
(the most recent year for which data is available), U.S. sales of such services by foreign affiliates of
U.S. companies totaled US$ 7.5 billion and purchases from U.S.-based affiliates of foreign companiesS/C/W/90
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reached US$ 1.9 billion.  These statistics may not fully capture new services activity as a result of the
growth of services provided via electronic means.
II. POSSIBLE AREAS FOR FUTURE DISCUSSION AND WORK
• The U.S. believes that it would be useful for WTO Members to review their current market
access and national treatment commitments for accounting, auditing, bookkeeping and related
services with a view towards further liberalization.  For example, the Secretariat background
note mentions that many restrictions apply regarding the establishment of Mode 3  -
commercial presence, most often the requirement for firms to be controlled by locally
licensed professionals.  It is not clear that such restrictions are necessary for consumer
protection reasons - as opposed to licensing of accounting professionals themselves.
• We also urge WTO Members to review and consider elimination of remaining
nationality/citizenship  and residency requirements for accountant, auditing, bookkeeping and
related services.
• WTO Members also should review rationale for other remaining restrictions on the
establishment of commercial presence, including economic needs tests.
• Many WTO Members have made commitments to provide market access and national
treatment for Mode 1- cross border and Mode 2 - consumption abroad of accounting and
related services.  Other WTO Members should consider the benefits of making and binding
such liberalization.
• Domestic regulation in the accountancy sector and its effect on trade merits further
discussion.  In this regard, the recently negotiated “Disciplines on Domestic Regulation in the
Accountancy Sector” represent a starting point for tackling this complex issue.
• Another issue related to market access is mutual recognition of accounting requirements, both
for professionals and for firm ownership and management.
III. U.S. REGIME
In the Uruguay Round, the United States took on substantial commitments to maintain open
its market to foreign suppliers of accounting, auditing and bookkeeping services.  The U.S. maintains
no market access or national treatment restrictions for Modes 1 or 2.  The U.S. maintains no
restrictions on market access or national treatment for Mode 3 with the exception that in regard to
market access, sole proprietorships or partnerships are limited to persons licensed as accountants,except in Iowa where accounting firms must incorporate.  Mode 4 is bound  as indicated in the
horizontal section.  In addition, an in-state office and/or in-state residency is required for licensure in
certain states, and U.S. citizenship is required for licensure in one state.  There are no restrictions on
national treatment for Mode 3 with the exception that  in-state residency is required for licensure in
some states.
In the U.S., the accountancy sector is regulated by state law and by professional
self-regulation.  The states license certified public accountants.  Auditing (for all companies) is
generally regulated by the State Boards of Accountancy, and (for publicly-traded companies) the
Securities and Exchange Commission.  Tax consultation and representation is regulated by the
Internal Revenue Service and by State Boards.  Industry and public sector accounting and
bookkeeping services are not regulated.S/C/W/90
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Professional self-regulation applies to standard setting (accounting/auditing) and code of
professional conduct (including independence requirement).
Relevant authorities in the United States have concluded mutual recognition agreements on
accounting services with relevant authorities in Canada and Australia.
IV. REMARKS ON SECRETARIAT PAPER/QUESTIONS FOR DISCUSSION
Questions for discussion following paragraph 36:
We agree that Members who have not yet responded to the accountancy questionnaire should
be encouraged to do so.
We agree that the recent OECD recommendations on professional services (summarized in
footnote 31) will be useful both for the ongoi ng mandate of the Working Party on Professional
Services and for upcoming negotiations on trade in services issues.
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