RESTRICTEDWORLD TRADE
ORGANIZATIONS/C/W/80
9 December 1998
(98-4968)
Council for Trade in Services Original:  English
COMMUNICATION FROM THE UNITED STATES
Legal Services
The following communication received from the delegation of the United States was
circulated informally on 22 July 1998 to the Members of the Council for Trade in Services to assist in
the discussion on Legal Services in the context of the Information Exchange Programme.
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I. GROWTH OUTLOOK AND BENEFITS OF LIBERALIZATION
1. Legal services have become increasingly important to businesses and business activity.
Improved market access for legal services increases availability and quality of services; such
competition also often will lower costs. One of the primary growth areas in connection with legalservices is international business transactions, where countries often choose to structure transactions
using model laws from other nations.  It is clear that with the increased globalization of the world
economy, all countries will need to guarantee their law firms and consumers access to high quality
legal advice and advisory services, in support of expansion of existing export markets and creation of
new markets for goods and services. As the Secretariat also notes, technological advances in the
telecommunications sector, including the growth of the internet and electronic commerce, will help
promote additional cross-border trade in the legal services sector, including foreign legalconsultancies.
2. Legal and foreign legal consultancy services are a business service whose role in international
trade has paralleled the growth of international trade.  For the United States, statistics collected by the
Bureau of Economic Analysis support this conclusion.  For 1990, U.S. cross-border exports of legal
services totaled $451 million, and imports were $111 million.  For 1996, exports totaled $1.91 billionand imports were $516 million, or a 323 percent increase in exports and a 365 percent increase in
imports over 7 years.  Trade statistics on affiliate trade, also indicate growth of the sector.  A great
deal of this trade is in the form of foreign legal consultancy services, both on U.S. and international
market conditions and regulations.  Given the growing importance of this sector, we expect that many
other WTO Members have experienced similar increases in legal services economic activity.
II. POSSIBLE AREAS FOR FUTURE DISCUSSION AND WORK
3. WTO Members could take several steps to build upon commitments undertaken during the
Uruguay Round.
4. Many countries apply regimes in this sector that are more liberal than the regimes bound in
their schedules.  The current level of openness should be the baseline for further discussions andnegotiations of the sector.S/C/W/80
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5. During the Uruguay Round, many WTO Members determined that U.N. CPC description of
the legal services sector was not relevant to the nature of international trade in the sector and chose to
use another definition, including foreign lega l consultancy services, for scheduling GATS
commitments.   Other service activities where greater precision may be needed include alternative
dispute resolution, legal training and business counseling.  It would be useful for WTO Members tocontinue discussions and agree on a common definition of the services provided, to lead to greater
transparency and liberalization in the markets of  existing and new members of the WTO.
6. Those WTO Members that have not made commitments for legal services, especially for
foreign legal consultancies, should consider doing so.
7. The Secretariat has noted (paragraphs 30-40) that market access and national treatment
restrictions remain in this sector, including nationality requirements, restrictions on legal form of the
enterprise and partnership with and hiring of locally licensed professionals.
8. Further liberalization of mode 3 is essential for law firms that want to provide a full range of
services to clients in foreign countries.  Countries should review the rationale for remaining barriers in
mode 3 and the possibilities for allowing foreign legal consultants to form partnerships and other
forms of commercial presence.  As the Secretariat notes, most legal services are provided in modes 1
(cross border) and 4 (presence of natural persons) which are largely unregulated.  Increased activityunder commercial presence might provide Governments with a closer link to the economic activity.
9. All WTO Members should strive to provide maximum transparency in this sector, including
in the operation of domestic regulatory regimes.  We agree that WTO members will have to look
closely at the balance between Article VI-t ype disciplines and industry self-regulation.
10. The Secretariat raises the issue of whether the WTO, in developing multilateral disciplines on
domestic regulation under Article VI, can take advantage of work done by international professional
organizations.  We support examination of this question.
11. The Secretariat notes that several Members have scheduled domestic regulatory measures,
although this is not necessary under the GATS.  In light of different approaches taken by WTO
Members, this may merit further examination and discussion.  Some useful work in this regardalready has been undertaken by the Working Group on Professional Services pertaining to
accountancy services which may be expanded to other sectors.
12. WTO Members should participate actively in the Working Group on Professional Services in
seeking agreement on the mutual recognition of professional licenses, including those benefiting
foreign legal consultancies.
III. U.S. REGIME
13. The U.S., recognizing the benefits for economic  growth in open markets for foreign legal
services, made substantial commitments in this sector during the Uruguay Round negotiations.  U.S.
commitments are very broad and cover two types of legal services:  consultancy on law of jurisdiction
where service supplier is qualified as a lawyer (excluding representative of a party before a court, and
some real estate, estate, and family law matters); and  practice as or through a qualified U.S. lawyer.
U.S. has a very open regime for foreign legal consultancies.  In the U.S., the states regulate almost allmatters concerning the practice of law.  Twenty-one states and the District of Columbia have adopted
rules for the licensing of foreign legal consultants without examination, based on an American Bar
Association model rule.  The U.S.  also allows foreign service providers to practice U.S. law, with few
limitations.S/C/W/80
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IV. REMARKS ON SECRETARIAT PAPER/QUESTIONS FOR DISCUSSION
14. We believe that it would be more accurate in para. 45 to say that the NAFTA includes
provisions (rather than “disciplines”) on transparency, objectivity, and licensing for professional
services.
15. In para. 46, we believe it is more accurate to state that the GATS allows Members to enter
into bilateral or plurilateral mutual recognition agreements, rather than stating that Members can
“discipline qualification requirements by means of” such agreements.
16. We would expand para. 48, third tick, to note  that liberal regulatory regimes allow foreign
legal consultants to provide advisory services on host, third country and international  law.
17. As an update to para. 49 and a further expansion of  the liberal U.S. regime for foreign legal
consultants, 21 states and the District of Columbia have adopted rules for the licensing of foreign
legal consultants without examination.
18. Regarding para. 50, it would be more accurate to say that the NAFTA calls for Parties to work
out mutual recognition agreements for foreign legal consultants (rather than “includes rules”).
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