Existing frameworks for how trade is facilitated between countries in this sector

The arrangements described in this section are examples of existing arrangements between countries. They should not be taken to represent the options being considered by the Government for the future economic relationship between the UK and the EU. The Government has been clear that it is seeking pragmatic and innovative solutions to issues related to the future deep and special partnership that we want with the European Union

The baseline for trade in services, including this sector, is the WTO’s General Agreement on Trade in Services (GATS). GATS is a services-specific multilateral agreement that has been used as a basis for services liberalisation since it came into force in January 1995. All WTO Members are parties to GATS which sets out general rules, principles and obligations as a framework for trade in services; plus a schedule of commitments which set out how open and non-discriminatory parties commit to be across the service sectors covered.

GATS also sets out ‘how’ parties will allow services to be traded and this is split into four principal ‘modes’:

• where a product rather than a service supplier/consumer crosses a border (e.g. an architect sending architectural drawings to a client overseas);
• where the consumer of the service crosses a border (e.g. tourism);
• where the company crosses a border (e.g. a retail chain opening a new establishment in another country); and
• where the service provider moves (e.g. a lawyer spends nine months working in their firm’s office in another country).

Commitments taken by parties vary and parties can unilaterally choose to improve their GATS offers at any point (subject to a certification procedure) or lower the level of their commitments, but in order to do so they will be expected to offer compensatory concessions.

PBS are covered by GATS. As such, legally committed market access for the UK’s PBS sector is dependent on the specific commitments listed in GATS schedules by WTO Members. In practice, this means that restrictions vary considerably, with some, such as the UK having relatively open markets and others remaining more closed.

A number of EU Free Trade Agreements (FTAs) include provisions on Trade in Services where, generally speaking, PBS will be covered by the cross-cutting provisions of a Services chapter. This includes the EU-Canada Comprehensive Economic and Trade Agreement (CETA) and EU FTAs with South Korea, Peru and Colombia, Ukraine and Vietnam. These look to build on the GATS baseline by expanding the commitments of EU Member States to open up their services market to each other.

CETA is one of the most ambitious FTAs the EU has agreed for trade in services. For example, it contains provisions on the temporary cross-border provision of services, including extending the time individual service suppliers or professionals can stay in either the EU or Canada from six to 12 months. In CETA, however, the degree of market access varies between Canada and different Member States and parties are required to specify where market access is restricted in certain ways (e.g. economic needs tests, quantitative limits or restrictions on foreign access) and where access is discriminatory (i.e. the principle of ‘national treatment’ does not apply). CETA also sets out guidelines for regulators and professional bodies to negotiate mutual recognition agreements.

EU FTAs that include services chapters often maintain a number of restrictions on foreign companies, which can vary by Member State. For example, the restrictions in the EU-South Korea FTA in some Members States include: only allowing nationals to obtain a legal license for full admission to the Bar; requiring permanent residency before lawyers can register to practice, and restricting the rights of non-nationals to own and have equity in law firms.

It does, nevertheless, facilitate trade in the legal services sector, providing staged access for establishment and a specific provision that governments should encourage regulators and professional bodies to develop and recommend mutual recognition agreements.

The proposed Trade in Services Agreement (TiSA), of which the UK through its Membership of the EU is negotiating, is a plurilateral agreement with the aim of making further progress by liberalising trade in services between 23 parties (including the EU), with the intention that each party brings its best FTA offer on services to the negotiating table. Negotiations are currently on hold.

Other international agreements also include provisions for trade in PBS. For example, the bilateral US-Australia FTA facilitates cross-border trade in services, including PBS.

In recent FTAs that the US, Australia and Korea have agreed with other third countries, there has been a trend to include a PBS specific annex, in addition to the services chapter. These annexes tend to focus on issues of licensing and recognition of qualifications while establishing Working Groups to help foster the development of agreements and identify professional services for consideration. The provisions here, however, have generally been non-binding.

There are also a number of international agreements that provide frameworks for the mutual recognition of mutual qualifications. The Trans-Tasman Mutual Recognition Agreement (TTMRA) between Australia and New Zealand entitles professionals registered in one jurisdiction to practice in the other, after notifying the local occupation-registration authority. MERCOSUR ‘encourages’ Members to develop norms and mutually acceptable criteria for the granting of licenses, registrations and certificates in the financial services, maritime services and transport services sectors.

There are also a number of existing arrangements which govern international civil judicial cooperation which is of particular relevance to the legal services sector but also more generally. The Hague Conference on Private International Law was formed to work towards the unification of the rules of private international law. It creates sets of rules, which can be applied in an international legal setting. The vehicles by which this is achieved are multilateral conventions, which promote the harmonisation of conflicting laws in a range of areas.