RESTRICTED
WORLD TRADE S/WPPS/W/17
25June 1997
ORGANIZATION
(97-2622)
Original: English Working Party onProfessional Services
COMMUNICATION FROM THE EUROPEAN COMMUNITIES
AND THEIR MEMBER STATES
Note ondraftdisciplines fortheaccountancy sector submitted
bytheEuropean Communities andtheirMember States
ThefollowingcommunicationhasbeenreceivedfromthedelegationoftheEuropeanCommission
withtherequest thatitbecirculated forconsideration byMembers atthemeeting tobeheldon
26June1997.
_______________
INTRODUCTION
Atthetimeofwriting,theChairmanoftheWPPShascirculatedbothashortnon-paperoutlining
apossible basisfortheWP’swork uptotheendoftheyearandaletter fromIFAC outlining possible
disciplines. Thispaper takes account ofideas expressed inboththose documents andseeks tocreate
abasic framework ofdisciplines fortheaccountancy sector thatwould build upon andaddvalue to
theprovisions ofArticle VI.4. Intheinterests ofmoving thediscussion forward, some ofthemore
legalandtechnical aspects ofthedossier arenotcovered indetail. Thefocus ofthisdocument ison
practicalities andtheday-to-day application ofrequirements andprocedures inthose WTO Members
which havemade commitments intheaccountancy sector. Theaimistoimprove thetreatment and
positionofforeignaccountancyprofessionalsseekingtoworkoutsidetheirhomecountriesandtoprovide
aclear framework formore detailed analysis intheinstance ofdispute settlement.
MAIN ISSUES
Asstated above, themain issue facing theWPPS ishowtoaddvalue totheexisting textof
Article VI.4, howtoenforce application oftheprinciples ofobjectivity andtransparency, andhow
toguarantee thatrequirements areneither more burdensome thannecessary toensure thequality of
theservice norarestriction inthemselves onthesupply oftheservice.
Recent work within theWPPS hasfocused onsixaspects ofregulation, eachofwhich was
analysed inthelightoftheresponses given byWTO Members tothequestionnaire onaccountancy
during 1996:
- Qualification requirements
- Licensing requirements
- Regulations governing theestablishment ofacommercial presence
- Nationality/Citizenship/Residency requirements
- Professional liability/Ethics
- Regulations governing entry andtemporary stayofnatural persons forthepurpose
ofsupplying accountancy servicesS/WPPS/W/17
Page 2
Inthelightofdiscussion, ithasbecome apparent thatnotallissues lendthemselves fordetailed
disciplinesandtherefore,forthepurposesofestablishingdisciplines,ashorter,moreconvenientbundling
ofthese issues might beadopted, asfollows:
A. Qualification requirements
B. Licensing requirements
Under thisclassification, disciplines onresidency, professional liability andethics arelinked
together withlicensing requirements. Theissues ofnationality, citizenship andofentryandstayshould
besetaside atthisstage asbeing issues clearly related toArticle XVI, Article XVII, andtheAnnex
ontheMovement ofNatural Persons, where Member States havetherighttotakeaction within the
confines oftheprovisions oftheGATS andthespecific commitments made intheirschedules.
A. Qualification requirements
When acitizen ofoneWTO Member setsouttotakeadvantage ofcommitments made and
topractice anaccountancy profession intheterritory ofanother Member, qualification requirements
canbeseenastheinitial screening process through which thatperson mustpass. Without satisfying
theinitial qualification requirements, theapplicant willnotevenreach thelicensing andestablishment
phases.
However, given thecomplexity anddetailed nature oftheissues, thepossibilities fordrawing
upmultilateral disciplines inthisfieldarerather limited. Theexistence ornon-existence ofanMRA
between twocountries willalways bethemajor influence ontheability offoreign professionals to
practise. Intheabsence ofanMRA establishing equivalence between thequalifications ofthehome
andhoststates, thepossibility foraforeign professional topractice willdepend ontheexistence of
atransparent mechanism providing fortheexamination offoreign qualifications and/or ontheir
willingness torequalify inthehostcountry.
Possible disciplines
Intheabsence ofamutual recognition agreement orother recognition arrangement, Members
shall:
(a) provide foradequate procedures toverify thequalifications, competence andability
ofprofessionals ofanyother Member;
(b) provide forthatverification totakeplacewithin areasonable time-frame (sixmonths?);
(c) ensure thatqualification requirements areclear andthatdetails ofthem arepublicly
available sothatforeign applicants canfamiliarise themselves withthedetails;
(d) ensurethattherelevantauthoritiesmakeinformationpubliclyavailableexplainingwhere
andhowforeign applicants canobtain thenecessary qualifications.S/WPPS/W/17
Page 3
B. Licensing requirements andprocedures1
Onceoverthehurdle ofqualification requirements (whether through theprovisions ofanMRA,
recognition arrangements, through alternative mechanisms orthrough requalification), theforeign
applicant should beconsidered tohaveproven thetechnical andintellectual capacity toprovide the
service inthehostcountry. Further requirements toobtain alicence and,ifapplicable, toestablish
inthehostcountry should beinproportion withtheneedtoprotect consumers andnotafurther means
ofscreening outforeign applicants. Inotherwords, anyrequirements should comply withtheprovisions
ofArticle VI.4andbeobjective, transparent, notmoreburdensome thannecessary andnotinthemselves
arestriction onthesupply oftheservices. Disciplines should giveamore detailed interpretation of
these provisions oftheGATS. Asstated above, Article VI.4provides aclearframework, butvalue-
added isrequired.
Ingeneral, disciplines applying tolicensing requirements andprocedures should comply with
thefollowing principles:
- Licensing requirements andprocedures ofaMember shallbeinconformity withthe
provisions oftheGATS andwiththecommitments undertaken bytheMembers intheir
relevant specific commitments andexemption lists.
- Thelicensing requirements andprocedures shall beneutral inapplication and
administered inafairandequitable manner. They shallnotconstitute ahidden form
ofdiscrimination against foreign service providers.
More detailed disciplines intheareaoflicensing andestablishment could besetoutinthree
sub-categories:
(1) Provision ofinformation -aimed atensuring transparency.
(2) Substanceofrequirements-aimedatensuringobjectivity,adherencetoGATSprinciples
andproportionality inthesubstance oftherequirements.
(3) Procedures -again aimed atensuring objectivity, adherence toGATS principles and
proportionality oftheprocedures usedtovetforeign applicants.
1Licensing requirements andprocedures
These aretherequirements andprocedures which individuals have tocomply with inorder toobtain
alicence oranyother form ofauthorisation topractise certain regulated activities intheterritory ofaMember.
Thisnormally requires thepresentation ofaformal application andthesubmission ofdocumentation totherelevant
authorities/administrative body.
While licensing requirements aremore thesubstantive requirements which applicants have tocomply
with inorder toobtain alicence, licensing procedures cover more theadministrative orformal sideoftheprocedure
which leads totheissuing ofalicenceS/WPPS/W/17
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Possible disciplines
1. Provision ofinformation
Members shall:
(a) provide details totheWTO ontheactivities/professions which areregulated intheir
territory andtherefore require alicence;
(b) make clearwhich regulated activities arecovered bythelicence andthetitlesuccessful
applicants areentitled touse;
(c) ensurethatinformationregardingthelicensingproceduresandtheauthoritiesresponsible
forthem arepublicly available;
(d) indicate theconditions forthegranting oftherelevant licence interms ofsubstantive
andformal requirements, andtheprocedure applicants havetofollow;
(e) specify thereasoning behind allrequirements concerning licensing when requested
todoso;
(f) ensure thatinformation regarding theappeal mechanism against licensing decisions
ispublicly available andeasily accessible.
2. Substance ofrequirements
Members shall:
(a) ensure thatrequirements relating tothelicensing offoreign individuals andthe
establishment ofnatural andlegalpersons intheaccountancy sector areneutral intheir
application anddonotsethigher standards forforeign accountancy professionals than
fordomestic service suppliers;
(b) ensure thattherequirements formembership oftheprofessional organisation are
reasonable andnon-discriminatory vis-à-vis foreign applicants;
(c) limittheirrequirementsregardingindemnityinsurancetoensuringthatforeignapplicants
haveinsurance similar incoverage tothatoftheircounterparts from thehoststate,
taking fullyintoaccount anyhome-country indemnity insurance;
(d) allow thesame choice oflegal establishment asispermitted fordomestic service
suppliers.
Members may:
(e) require membership ofprofessional organisations onlywhere necessary toensure the
integrity oftheprofession, forexample forreasons ofsupervision ortoguarantee the
enforcement ofethical standards;S/WPPS/W/17
Page 5
(f) require aprofessional toberesident onlywhere necessary forconsumer protection
orsupervisory purposes andifitisnotpossible tomaintain thesamelevelofprotection
withother lessrestrictive means.
3. Procedures
Members shall:
(a) ensure thatprocedures arefairandequitably administered andnon-discriminatory
between foreign anddomestic professionals;
(b) designate thelicensing authority orauthorities towhom applications shallbesubmitted,
and,where appropriate, central information points which canprovide information and
direct applicants tothecompetent authority;
(c) ensure thatapplication procedures andtherelated paperwork arekeptassimple as
possible;
(d) ensure thatthenumber ofbodies tobecontacted bytheapplicant inrelation tothe
application arekepttotheminimum;
(e) ensure thatthecompetent authority oracentral information point informs applicants
promptly ontheprocedure tobefollowed andthedocuments which have tobe
presented;
(f) ensure thatapplicants receive ahighstandard oftreatment bytherelevant authorities.
Thisincludes thefollowing:
- Thereceipt ofanapplication shallbeacknowledged promptly. Ifthecompetent
authority considers thattheapplication isnotcomplete, sothatitcannot proceed
withit,itshallimmediately inform applicant ofthedocuments missing;
- Thedecision ofthelicensing authority ontheapplication, whether positive
ofnegative, shallbenotified totheapplicant within areasonable timefrom
thedateofpresenting theapplication (sixmonths);
- Thedecision shallbeproperly motivated and,where applicable, contain aclear
statement ofreasons fortherejection ofthatapplication;
(g) ensure thataremedy isavailable andaccessible against thedecision, ortheabsence
thereof. Thedecision taken bythecompetent authority should statethatitisopento
appeal andshould inform theapplicant oftheappeal procedure andinparticular, of
thetimelimitforbringing anappeal;
(h) notrequire more documents thanarestrictly necessary forthepurpose oflicensing
andnotimpose unreasonable requirements regarding theformat ofdocumentation.
(i) ensure thattheappeals procedure isindependent;
(j) ensurethatauthoritiesinformapplicantswhentheyundertakeactiontoverifyinformation
supplied byapplicants;S/WPPS/W/17
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(k) ensure thatwhere authorities charge fees,theseareinproportion withtheadministrative
costs involved anddonotrepresent animpediment inthemselves tothetaking-up of
therelevant activity;
(l) ensure thatauthorities handle applications inthestrictest confidence.