UNIVERSIDAD DE CHILE

FACULTAD DE DERECHO

MAIN BARRIERS TO INTERNATIONAL TRADE IN PROFESSIONAL SERVICES, WAYS OF LIBERALIZATION

Thesis to choose to the degree of Master in International Law (LL.M. INT), Investments, Trade and Arbitration.

LL.M. Int. Student: Gerardo Coppelli Ortiz. Thesis Advisor: Francisco Javier Prieto.

Santiago, Chile March 2008

TABLE OF CONTENTS

MAIN BARRIERS TO INTERNATIONAL TRADE IN PROFESSIONAL SERVICES. WAYS OF LIBERALIZATION.

INTRODUCTION.. CHAPTER I NOTIONS OF THE INTERNATIONAL TRADE IN SERVICES IN GENERAL AND OF THE INTERNATIONAL TRADE IN PROFESSIONAL SERVICES IN PARTICULAR. 1.Brief historic description of the international trade in services.

6 8

2.-

International trade in services: Concept. 2.1 Entrepreneurial definition .. 2.2 Statistical definition . 2.3 Political definition....

9 10 10 10

3.-

International trade in services: Classification..

11

4.-

The multilateral norms.... 4.1 The General Agreement on Trade in Services (GATS). 4.2 The Free Trade Agreements (FTA)...

12 12 13

5.-

Current state of international trade in services....

14

6.-

International Trade in Professional Services in particular ............

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CHAPTER II BARRIERS TO THE INTERNATIONAL TRADE IN PROFESSIONAL SERVICES. 1.General concepts regarding this issue

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2.-

Market access and national treatment........ 2.1 Market Access ....... 2.2 National treatment... 2.2.1 Tax barriers.

21 21 23 23

3.-

Other barriers to the international trade in professional services 3.1 Geographical distances... 3.2 Barriers of immigration and granting of visas...... 3.3 Customs barriers.. 3.4 Trade in services regulation.... 3.5 Quality certification......

24 24 24 25 26 26 27

CHAPTER III DIFFICULTIES ON THE INTERNATIONAL TRADE IN PROFESSIONAL SERVICES AS A CONSEQUENCE OF DOMESTIC REGULATION.

1.-

Domestic regulation......

27

2.-

Credentials, licenses and permits...

28

3.-

Sectoral barriers to the international trade in professional services.. 3.1 Accountability services.... ... 3.2 Legal services..... 3.3 Services in engineering.. 3.4 Services in architecture..

29 29 29 30 30

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CHAPTER IV THE INTERNATIONAL TRADE ON PROFESSIONAL SERVICES LIBERALIZATION 1.Different formulas for liberalization....... 1.1 Professional services liberalization proposals... 1.1.1 Free movement of persons and professional regulation 1.1.2 Tax barriers. . 1.1.3 Problems regarding information transparency 1.1.4 Social sequirity.. 1.2 Liberalization of the professional services in the light of the GATS 1.2.1 National Treatment Principle.. 1.2.2 Most Favoured Nation Treatment.. 1.3 Proposals of liberalization on the part of the WTO Members.

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31 32 32 33 33 33 34 34 35 35

2.-

The European Union as a model of liberalization...

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CONCLUSIONS. BIBLIOGRAPHY...

40 43

IV

ABSTRACT

In general terms this thesis consists in identifying, which are the main and more important barriers, obstacles and restrictions that affect the international trade in services, specifically in professional services, to then develop some ways of liberalization.

Under a descriptive model, the methodology of work will aim, mainly, to the analysis of legal texts and doctrine and the analysis of forms of work issued by different countries. The regulation of this subject matter within the WTO deserves a fundamental analysis. After a specific analysis, a compilation of the obtained information will be made, along with offers of liberalization.

INTRODUCTION

The international trade in professional services represents one of the most important productive areas for the worlds economy, probably not in monetary numbers, which anyway are the highest, but rather in qualitative terms, the personal development of the individuals who exercises this type of trade, often in an independent way with effort and great dedication. This issue is the one that has been wanted to be rescued in this thesis, which in general terms it consists in identifying, both quantitatively and qualitatively, which are the main and more important barriers, obstacles and restrictions that affect the international trade in services, specifically in professional services, to then develop some ways of liberalization. Along with the above mentioned there will be a general analysis of the international trade in services, including basic definitions, classification and importance, among other topics.

The general objective will be to identify, describe and systematize, the different barriers, obstacles and restrictions to the international trade in professional services thereby, indicating, different ways of liberalization.

Besides developing the general objective of the present thesis, diverse specific objectives will be worked, namely, describing the different aspects that characterize the international trade in services in general, along with definitions, importance, historical scope, classification, among others; explaining what the professional services are about, specifically, within the greater classification of international trade in services understood in the light of the World Trade Organization (WTO); developing each of the identified obstacles; distinguishing the different barriers to be found in the international trade in goods vis a vis the barriers to be found in the trade in services; analysing the domestic regulation established by different legislations and agreements; identifying and describing different ways of liberalization of the international trade in professional services, respect to barriers and domestic regulation as well.

It is difficult then, to the parties interested in developing trade in professional services worldwide to identify the obstacles that they will have to face. These are spread in texts under different legislations and without a clear norm that standardizes them. Thus, this work intends to facilitate the work of identification of the barriers and existing obstacles in an agile and easy way to deal with, being useful to those who happen to be conflicting, day after day, to limitations of different nature, which prevent a complete development of this type of trade.

Knowing the central aspects of the present thesis has countless advantages, like for example, by recognizing the different barriers and obstacles, the future lender of the professional service will be able to better plan the ways to follow for the development of the claimed service. Additionally, it is paramount the analysis of the different ways of liberalization of the international trade in services, that from both, an academic and a practical point of view, is quite relevant nowadays and that will be analysed in detail through this work.

Under a descriptive model, the methodology of work will aim, mainly, to the analysis of legal texts and doctrine and the analysis of forms of work issued by different countries. The regulation of this subject matter within the WTO deserves a fundamental analysis. After a specific analysis, a compilation of the obtained information will be made, along with offers of liberalization.

CHAPTER I

NOTIONS OF THE INTERNATIONAL TRADE IN SERVICES IN GENERAL AND OF THE INTERNATIONAL TRADE IN PROFESSIONAL SERVICES IN PARTICULAR.

Although the main topic of study of the present work is aimed to the development and the investigation of the international trade in professional services, it is necessary to introduce it by doing an analysis to the international trade in services in its wider concept and in its different areas.

Because of this reason, we will make a brief historical tour of the international trade in services; we will acknowledge some of its different definitions; we will enter, in a general way, within its main classifications, besides knowing the most important multilateral regulation in this matter, among other relevant topics related to it.

1. BRIEF HISTORIC DESCRIPTION OF THE INTERNATIONAL TRADE IN SERVICES.

We do not need to go back in time for too long to find the genesis of the international trade in services, unlike the trade of goods that we can associate to the beginnings of time. The most remote records of the international trade in services are probably found in the maritime transport and in finances, which are areas that for centuries were opened to the trade, but they were not developed independently but rather as complements of the trade in goods.

Perhaps, during the last thirty years we find the history of the international trade in services on a more concrete, trustworthy and, most importantly, independent way than other areas of the international trade.

During the last years the trade in services has significantly grown in the world economy, all of which is mainly enhanced by the process of internationalization of services. Due to the above mentioned, it arose the necessity to establish multilateral rules specific to the trade in services, not under the eaves of the trade in goods but in an independent way. Thus in 1995, in the light of the World Trade Organization (WTO) 1 , it became into force the most important multilateral agreement for international services, namely, the General Agreement on Trade in Services (GATS), which will be analysed further in detail.

2.

INTERNATIONAL TRADE IN SERVICES: CONCEPT.

When we talk about International Trade in Services it does not come to mind a clear or defined concept, which is probably due to the lack of a definition contained in treaties or agreements that regulate the matter, or probably because, since there is not a uniform definition each author linked to this topic has desired to express a concept in the best possible way which has redounded to countless definitions and concepts, that might have some truthful content, being some of them more complete that others.

Anyway, we must identify certain bosses or concepts that belong to them and that must be present in any definition or commentary made on the international trade in services.

Service is an economic intangible and invisible activity, which marks a deep difference with the trade in goods, where there is production of physical goods.

World Trade Organization is an international organization that deals with the procedure that governs the trade between nations. The goal is to help the producers of goods and services, the exporters and the importers to taking forward their activities. (available at: http://www.wto.org/english/thewto_e/whatis_e/whatis_e.htm)

Service is an activity that produces a change in the conditions of a person or of a good as a result of an agreement between producer and consumer. 2

Next, a number of definitions that respond to a sectoral criterion of the international economy will be exposed:

2.1

Entrepreneurial definition.

This entrepreneurial definition of the concept International Trade in Services contains a wider conception of trade. This definition takes as a fundamental base the nationality of the producing company. 3 In a world where companies compete for establishing their international market share - not for establishing their exports from the country of origin - makes the concept approach to the international trade reality commonly known by us today.

2.2

Statistical definition.

The professionals specializing in the statistical area define the exports of services as services that are sold to residents of other countries, and they define imports of services as services that they buy to residents of other countries. For the worshippers of this definition, trade is the sale of a value to an individual and the services are any economic activity that does not lead to a new product as a result. 4

PRIETO, Francisco Javier, Material of support of classes on International Trade in Services. Master in International Law, Investment, Trade and Arbitration. University of Heidelberg. Santiago de Chile: 2007. 3 FEKETUKY, Geza. International Trade in Services. First edition. Ed. Gernika S.A, Ciudad de Mxico: 1990. 4 FEKETUKY, Geza. International Trade in Services. First edition. Ed. Gernika S.A, Ciudad de Mxico: 1990.

2.3

Political definition. More than political definitions on trade in services, we find discussions belonging

to the political sphere, circumscribed mainly to the will of defending one or another position of interest. This is due to the fact that it will be the political class the one in charge to defend interests both in the creation of domestic regulation on the matter and in the procedure and approval of the international agreements on the matter.

It is important to consider that the GATS does not contemplate a written definition, but it does indicate what we must understand of services within certain circumstances. Therefore, and if we could adhere to some concept that contains all of the requirements in the creation of a complete definition, we might indicate, with no fear to commit a mistake that: SERVICES ARE INVISIBLE, INTANGIBLE AND

PERISHABLE HUMAN RENDERINGS DIRECTLY GIVEN BETWEEN PRODUCER AND CONSUMER, CAPABLE OF PRODUCING A CHANGE IN THE CONDITIONS OF A PERSON OR A GOOD.

3.

INTERNATIONAL TRADE IN SERVICES: CLASSIFICATION.

The classification of the services is about gathering in different classes or categories the different services given worldwide. Certainly, this classification is an endless list unthinkable to entirely reproduce in this opportunity. What we should not leave out of indication is that this classification, known as W/120, is a uniform and detailed list of the services, which is a tool of vital importance for the negotiations taken forward by countries.

This sectoral list or classification includes about 155 subsectors divided in turn in 12 categories. Next, the major classification of services is presented. Given the importance for the present work, within the same classification, professional services are also detailed:

Classification of the Services 5

1.

Services given to the companies and professional services Services of accounting Services of advertising Services of architecture and engineering Services of computer science and connected services Legal Services 2. Services of communications 3. Services of construction and connected services 4. Distributions services 5. Services of education 6. Environmental services 7. Financial services 8. Social services and health. 9. Services of tourism and travel 10. Services of scattering, cultural and sports 11. Services of transport 12. Other services not classified in other section of the list The article 1, number 2 of the GATS, establishes that according to the way in which these services are given, four manners of renderings have been catalogued:

1.

Cross-border supply: From the territory of one Member into the territory of any other Member. For example, services of telecommunications or services distantly.

2.

Consumption abroad: In the territory of one Member to the service consumer of any other Member. For example the tourism.

3.

Commercial presence: By a service supplier of one Member, through commercial presence in the territory of any other Member. For example hotel chains.

4.

Presence of natural persons: By a service supplier of one Member, through presence of natural persons of a Member in the territory of any other Member. 6 For example medical services.

The latter category is very important to the professional service.

5 6

WTO, GATS. MTN.GNS/W/120.Sectoral Services Classification List: 1991 WTO, General Agreement on Trade in Services. Article 1, N 2: 1995.

4.

THE MULTILATERAL NORMS.

Within the multilateral regulation of the international trade in services, undoubtedly the most important agreement in force is the General Agreement on the Trade in Services. Certainly the latter is not the only one due to other types of agreements containing rules on the trade in services have lately gained a lot of importance, namely, the Free Trade Agreements, also known as FTAs.

It is important to indicate that through the present work, and in different chapters, it will be analysed in detail the different variables of this regulation; next we will only analyse its most relevant aspects.

4.1

The General Agreement on Trade in Services (GATS).

This agreement is the first trade multilateral agreement that includes the trade in services. Its redaction was one of the big achievements of the Uruguay Round. 7 Several years of negotiations had to pass to reach this agreement, which among its most basic objectives we found the adaptation of the disciplines of the trade in goods to the international trade in services.

In order to reach this agreement, the main working topics of the negotiating groups were:

1) The creation of a multilateral framework of principles and procedure applicable to the trade in services.

The Uruguay Round represents the most recent process of multilateral negotiations, inaugurated in September, 1986 and concluded in 1993. The objective of this Round was to check, update and extend the scope of the General Agreement on Tariffs and Trade (GATT). (Available in: http: // www.economia.cl/aws00/servlet/aawsconve r? 1, 500499). From this round the World Trade Organization was born.

2) A wider scope of the trade in services in conditions of transparency and progressive liberalization and,

3) The promotion, by means of the liberalization of the trade, of the economic growth of the parties. 8

This agreement is applicable to all of the sectors of services, with the exception of two:

1) The paragraph 3 of the article I of the GATS excludes services supplied in the exercise of governmental authority. They are services neither given in commercial conditions nor in competition with other suppliers. As examples of this we find the systems of social security and any another public service, such as health or education, which are not lend in conditions of market.

2) Besides, the Annex on Services of Air Transport establishes that the Agreement is not applicable to the measures that affect both the rights of air traffic and the services directly related to the same ones. 9

4.2

The Free Trade Agreements (FTA).

Like GATS the FTAs are trade agreements celebrated regionally or bilaterally to stretch the market of goods and services among the signatory countries. The fundamental objective of the FTAs is to eliminate or reduce the duties for goods between the parties, and to reach agreements regarding services.

The general rule is that a FTA looks for the reciprocal extension of the markets of the parties by means of the elimination of customs duties and burdens that affect exports and imports. It also seeks the elimination of the non-tariffs barriers, the subsidies to the agricultural exports, and the liberalization of commerce, the
World Trade Organization, web site. (Available at: http://www.wto.org/english/tratop_e/serv_e/serv_e.htm); January 2008. 9 World Trade Organization, web site. (Available at: http://www.wto.org/english/tratop_e/serv_e/serv_e.htm); January 2008.
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restructuring of rules and customs procedures to speed up the pass of commodities and to unify the phytosanitary procedures and procedures of other nature. 10

Regarding the professional services, the FTAs contain annexes which objective is to harmonize the measures that rule the services by means of the granting of authorizations and dispositions for the professional exercise. The provisions of these annexes seek to guide the competent organs of the parties to develop and harmonize their procedures for the acknowledgement of professional titles and services in general.

These annexes establish the bases in order to the competent authorities elaborate the procedure and the needed criteria for the authorization of the professional exercise. 11

5.

CURRENT STATE OF THE INTERNATIONAL TRADE IN SERVICES.

Currently, the international trade in services represents an important percentage of the international trade, about 20 % of the world trade, vis a vis the 80 % that goods represent in the world trade.

According to recent statistics of the World Trade Organization, the international flows of trade of goods and services experienced the following evolution between 2000 and 2006:

De Ford, Federico Valerio, El Comercio de Servicios en los Tratados de Libre Comercio. (Available at: http://www.comex.go.cr/difusion/ciclo/2001/fvalerio.pdf); December 2007. 11 De Ford, Federico Valerio, El Comercio de Servicios en los Tratados de Libre Comercio. (Available at: http://www.comex.go.cr/difusion/ciclo/2001/fvalerio.pdf); December 2007.

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World Trade in goods and services (percentages) 12 2000 2001 2002 2003 2004 2005 2006 World exportation of goods World exportation of services 81,2 18,8 80,5 19,5 100 81,2 18,8 100 80,1 19,9 100 81,0 19,0 100 80,4 19,6 100 81,3 18,7 100 80,6 19,4 100 81,7 18,3 100 81,0 19,0 100 82,0 18,0 100 81,4 18,6 100 82,4 17,6 100

Total exports goods and services 100 World import of goods World import of services 82,0 18,0

Total imports goods and services 100

With similar growth rates during the current decade, the flows of trade both of services and goods kept its participation with variations close to 1%. Annual growth rates of world trade in goods and services (percentages) 13 2000 World exports of goods World exports of services Total exports goods and services World imports of goods World imports of services Total imports goods and services 13,0 6,2 11,7 13,6 6,5 12,3 2001 2002 -4,1 0,4 -3,3 -3,6 1,2 -2,7 4,8 7,3 5,3 4,0 5,8 4,4 2003 16,8 14,6 16,4 16,6 14,0 16,1 2004 21,5 20,1 21,2 21,6 18,8 21,1 2005 2006 13,7 11,1 13,2 13,4 10,9 13,0 15,4 12,1 14,8 14,5 11,3 13,9 Average 11,0% 10,7% 11,0% 10,8% 10,2% 10,7%

In 2006, the exports of services represented 18.6 % of total exports, growing in an average annual rate of 10.7 % between 2000 and 2006. On the other hand, goods

World Trade Organization, web site. (Available at: http://www.wto.org/english/res_e/statis_e/its2007_e/its07_world_trade_dev_e.htm); January 2008. 13 World Trade Organization, web site. (Available at: http://www.wto.org/english/res_e/statis_e/its2007_e/its07_world_trade_dev_e.htm). January 2008.

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represent 81.4 % of the exports in the same year, with an average annual growth rate of 11.0 % between 2000 and 2006.

Regarding imports, the services constituted 17.6 % with an average annual growth of 10.2 % for the same period. Goods, on the other hand, represented 82.4 % with an average annual growth of 10.8 %. 14

Making an analysis of the just exposed figures, particularly within the services area, it is possible to estimate that between 2000 and 2006 exports of services grew in 1.8 times, being those correspondent to other commercial services the ones that reached the highest dynamism.

The exports of services of transport, in turn, increased in 1.8 times in that period, slightly diminishing in 2006 its participation in the total exports of services, which reached 22.9 %.

The incomes resulting from international travel increased in the period in 1.5 times, diminishing its participation in 3% during the period to finally reach 27.1 % in 2006, while exports of other commercial services increased in 2.1 times between 2000 and 2006, showing as of 2003 a great dynamism. 15

As we have been able to assess, the participation of services in international trade is lower than that of goods. Many are the reasons that explain this, for example, the barriers and domestic regulations, which is a subject matter that will be analysed further as important barriers and difficulties to the trade in professional services. Furthermore, many services have not yet been commercialized in an international arena, be it because of the lack of knowledge or information with regard to the way to developing such business. Considering this and developing strong multilateral policies

14 15

Ministry of Foreign Affairs of Chile, General International Economic Affairs Department. Ministry of Foreign Affairs of Chile, General International Economic Affairs Department.

Maines caractersticas y dinamismo del comercio mundial de servicios. Santiago de Chile: 2008. Maines caractersticas y dinamismo del comercio mundial de servicios. Santiago de Chile: 2008.

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that allow it, some scholars estimate that to mid 2020 international trade in services could reach the 50 % of world trade. 16 Currently a relevant topic in the Doha Round 17 is to reaffirm the commitment to lead the negotiations promoting the economic development of every commercial partner and the growth of the developing countries and the less developed ones. Along with this, the directives and procedures to reach the ultimate objectives established in the GATS are reaffirmed.

6.

INTERNATIONAL TRADE IN PROFESSIONAL SERVICES IN PARTICULAR.

The international trade in professional services constitutes one of the relevant areas in the world trade in services, which is of great importance in the current economic international activity.

Its importance is very well expressed in a communication of the European Communities and its Member States addressed to the Council for Trade in Services of the WTO which partly indicates that the professional services are of particular importance for the economic development; due to its importance for the development of infrastructure (architecture, engineering); and for the role that they play in the creation of an institutional framework that facilitates the investments and business activities (legal and accounting services). Especially in the case of developing countries, the

PIA Gonzlez, Joaqun. Globalizacin y Servicios. First edition. Ed. Lexis Nexis. Santiago de Chile: 2003. 17 Doha Round, of the World Trade Organization is a negotiation tackled to liberalize the world trade. It began in Qatar in November, 2001, and it constitutes the Fourth Ministerial conference of the WTO after Singapore in 1996, Geneva in 1998 and Seattle in 1999. (PRIETO, Francisco Javier. Servicios en el programa Doha para el desarrollo (PDD): Cuestiones relativas a la aplicacin y a las polticas. Integracin & Comercio Magazine, Santiago de Chile, N 22, January - June 2005, year 9, p. 160).

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grant of liberal access to markets of these services is indispensable to attract direct foreign investment and to promote the transference of knowledge. 18

The professional services, classified within the services given to the companies (in the classification W/120) and mainly given by means of natural persons' presence in the territory of another Member (number 4 of the manners of supply established in the article 1, number 2 of the GATS), are the following: 19

1. Legal services. 2. Services of accounting, auditing and bookeeping services. 3. Taxation Services. 4. Architectural services. 5. Engineering services. 6. Integrated engineering services. 7. Urban planning and landscape. 8. Medical and dental services. 9. Veterinary services. 10. Services provided by midwives, nurses, physiotherapists and para-medical personnel. 11. Other.

As we can assess, the professional services are as wide as heterogeneous, but they represent an important set of renderings of services, which growth is increasingly dynamical.

Its characteristics differ substantially from one sector to the other. The sector of the legal services, for example, has registered a constant growth in the last decades, due to the increase of the international trade and the appearance of new spheres of activity, especially in the sector of the economic law. The profession has been
WTO, S/CSS/W/33. Communication of the European Communities and its Member States to the Council for Trade in Services. Series of extraordinary meetings. GATS 2000: Professional Services, Geneva: 2000. 19 WTO, AGCS. MTN.GNS/W/120. Services Sectoral Classification List: 1991.
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internationalized, and the jurists have more frequently to face transactions that do not know the national borders and that affect diverse jurisdictions.

In the sector of the countable services, the market is dominated by big multinational companies that have managed to create an international web of companies, so that they can consider specific local aspects that are still very wide in this sector. These multinationals give employment to almost half a million people in worldwide. On the contrary, the services of architecture and engineering are traditionally more local or regional. 20

The barriers, obstacles and difficulties are many, both of domestic order of the countries (known as national regulation) and rather general procedure norms such as those of market access and national treatment, which the lender of the service finds in foreign countries. This problem is of a vital importance when we see that in the last decade the trade in professional services has grown notably. This intensification is due to in part to the recognition of the importance of the sector, because it contributes to the foreign investments and to the economic global growth, both in the developed

countries and in the developing countries as well, be it by means of the participation of professions in the direct presentation of services (legal or countable advice to consumers and companies, etc.) or be it as indispensable input for activities of great scope development (services of engineering, of architecture, of town planning in relation with the construction, exploitation of mines, environmental projects, etc.) 21 .

WTO, S/CSS/W/75. Comunicacin de Suiza al Consejo del Comercio de Servicios. Serie de reuniones extraordinarias. GATS 2000: Professional Services, Geneva: 2001. 21 WTO, S/CSS/W/52. Comunicacin del Canad al Consejo del Comercio de Servicios. Serie de reuniones extraordinarias. GATS 2000: Professional Services, Geneva: 2001.

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CHAPTER II

BARRIERS ON THE INTERNATIONAL TRADE IN PROFESSIONAL SERVICES

Before getting to know and to analyze some of the different barriers to the international trade in professional services, it is important to dedicate some lines to determine what the barriers to the services are in general.

1.

GENERAL CONCEPTS REGARDING THIS ISSUE.

A barrier to the international trade of services might be defined as a measure of a State that creates an obstacle or difficulty to the sale of services produced in a foreign country. 22

These barriers have a narrow link with the ways of rendering, for example, the access of the lender or consumer to a certain market, ruling provisions or the qualification for the rendering of a service, requirements of local presence, migratory categories, etc.

Often, certain measures of the countries tend to disable the flow of money, information, persons or goods creating barriers or difficulties to the trade of services, since they limit the means to transfer these services internationally.

We find punctual limitations in, for example: the barriers to the international flow of information that create obstacles to the international trade of services when processing data and information that depend on the former. The restrictions to travel
22

FEKETUKY, Geza. International Trade in Services. First edition. Ed. Gernika S.A, Ciudad de Mxico: 1990.

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give way to barriers for the trade in tourism, education and professional services, among others, which depend essentially on the movement of people.

With regard to the limitations to the movement of people, they originate a certain obstacle to the trade in professional services for the useful and necessary personal contact between the exporter and the foreign client.

The barriers to the international trade in services are clearly not found in the customs, due to that, as we indicated in the previous chapter, barriers are intangible, invisible. They must be created only in case a State can keep control of them. For example, the buying of foreign currency to pay imported services; the movement of people, information and capitals across borders; the employment of foreign workers of the services sector in the importer country. 23

2.

MARKET ACCESS AND NATIONAL TREATMENT.

When referring to the concepts of market access and national treatment, we mentioned the possibility that Member Countries have to adapt the entry conditions and market share to its objectives and limitations in specific sectors. Therefore, they essentially constitute an express authorization for establishing barriers to the market of services. This way, countries can attach limitations to the commitments to reserve the right to apply measures incompatible with the full market access and the national treatment. 24

These concepts belong to the chapter of specific commitments of the GATS, which consist of the obligation of the Members to assume particular commitments related to the market access and to the national treatment.
FEKETUKY, Geza. International Trade in Services. First edition. Ed. Gernika S.A, Ciudad de Mxico: 1990. 24 WTO. Introduction to the General Agreement Trade on Services: 2006. (Available at: http://www.wto.org/english/tratop_e/serv_e/serv_e.htm); December 2007.
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2.1

Market Access.

Article XVI of the GATS defines Market Access as the duty of the Members to grant services and service suppliers of any other Member treatment no less favorable than that provided for under the terms, limitations and conditions agreed and specified in its Schedule. 25

Like the national treatment, the market access is treated in the GATS in a flexible way, allowing Members to adapt the entry conditions and market share to their objectives and limitations in specific sectors. 26

The provisions of the GATS regarding market access, established in the Article XVI, include six types of restrictions that shall not be maintained if limitations have not been recorded. The above mentioned restrictions refer to the following factors: a) Suppliers' number of services; b) Value of the assets or transactions of services; c) Number of operations or quantity of the production; d) Number of natural persons that they give a service; e) Type of legal person or of joint venture; f) Participation of the foreign capital. These measures, except letters e) and f), are not necessarily discriminatory, that is to say they can affect services or suppliers of services both national as foreigners. 27

The lists of commitments regarding the market access are negotiated as multilateral packages, although it is needed that rounds of bilateral negotiation be held in order to elaborate the packages. These commitments will contain the negotiated and guaranteed conditions that will give way to the international trade in services. If a
WTO, General Agreement on Trade in Services. Article XVI: 1995. WTO. Introduction to the General Agreement Trade on Services: 2006. (Available at: http://www.wto.org/english/tratop_e/serv_e/serv_e.htm); December 2007. 27 WTO. Introduction to the General Agreement Trade on Services: 2006. (Available at: http://www.wto.org/english/tratop_e/serv_e/serv_e.htm); December 2007.
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registered condition is changed to the detriment of other Members, the Member must warn at least with three months in advance and it shall negotiate compensation with the affected countries. Anyhow, the commitments can be improved at any moment. 28

2.2

National treatment.

This principle is embraced by Article XVII of the GATS. When we speak of national treatment, we are saying that the suppliers of foreign services will not be subject to discriminatory measures that alter their conditions of competition before the nationals of the final country; in other words, the national treatment consists of treating the nationals and the foreigners equally. Regarding services, this means that once a foreign company has been authorized to render services in a country, there should not be any discrimination between the foreign companies and the national ones.

According to the provisions of the GATS, a country only will be able to apply this principle when it has assumed a specific commitment to offer access to its market of services to the foreigners. It will not be bound to apply the national treatment in sectors in which it has not assumed commitments. Even in the case of existent commitments the GATS allows certain limits with respect to the national treatment.

This situation contrasts with the way in which the principle of the national treatment is applied to goods; in these cases, once a product has crossed the border and has passed through customs, it must receive national treatment even when the importer country has not assumed any commitment to bind the tariff in accordance with the WTO. 29

CEPAL. Manual para la preparacin del cuestionario sobre las medidas que afectan al comercio de servicios en el hemisferio. Divisin de Comercio Internacional y financiamiento para el desarrollo, unidad de comercio internacional: 1999. 29 CEPAL. Manual para la preparacin del cuestionario sobre las medidas que afectan al comercio de servicios en el hemisferio. Divisin de Comercio Internacional y financiamiento para el desarrollo, unidad de comercio internacional: 1999.

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Within the barriers of national treatment, we must underline those of tax order which are explained as follows:

2.2.1 Tax barriers.

Different rules of taxation order of the countries, which sometimes we might admit as legitimate, in many cases make difficult the trade in professional services. Regarding trade in goods we know that the tariffs known as customs taxes are pivotal, and regarding trade in services, the taxes affecting them are mainly the Income Tax and the VAT (Value Added Tax). 30

The main problem is generated when the lender of the professional service cannot deduce in his country taxes that were paid in another country, given that between those States there is no any agreement authorizing so. This factor greatly blocks the incentive to developing professional services between countries that have not signed an Agreement of Double Taxation, which are the agreements that authorize the corresponding deduction of taxes, but that currently are not sufficiently massive as to count on a professional service coverage that is not limited by this factor.

With respect to the Income Tax the problem aims the same aspect, that is to say, the burden of paying levies for the profits obtained both in the country generating profits and in the country exporting the professional service. 31

ALCA. Formulario FTAA.SOC/w/166. Comit de Representantes Gubernamentales sobre la participacin de la sociedad civil.: 2000. 31 PIA Gonzlez, Joaqun. Globalizacin y Servicios. First edition. Ed. Lexis Nexis. Santiago de Chile: 2003.

30

20

3.

OTHER BARRIERS TO THE INTERNATIONAL TRADE IN PROFESSIONAL SERVICES.

Although some of barriers that we will indicate next will appear in Chapter IV of liberalization again, it is necessary to mention them now to then knowing the proposed ways of liberalization for some of them.

3.1

Geographical distances.

One of the main barriers to the international trade in professional services is the distances among markets. Unlike goods, where through a mean of transportation the produce is sent and sold abroad, services rendered by professionals, in general, require the movement of persons to be done. Under this circumstance, it appears the disadvantage of the geographical distance that has to be covered and the expenses that must be considered in order to set off and operate the rendering of services.

3.2

Barriers of immigration and granting of visas.

The incorporation of especial permits for professionals in the FTAs has come to solve, in part, the problem of the granting of visas and work licenses. Professionals have always needed to request these permits or visas to develop an activity abroad, and in some cases, even without the possibility of exercising their profession due to a prohibition resulting from the domestic order of each country. Some FTAs have incorporated especial chapters dedicated to the movement of persons, including professionals who are granted a special treatment after entering the territory of another party.

Thus, for example, in the FTA between Chile and the United States, Annex 11.9, Professional Services, Section A - General Provisions, Development of Professional Standards:

21

1. The Parties shall encourage the relevant bodies in their respective territories to develop mutually acceptable standards and criteria for licensing and certification of professional service providers and to provide recommendations on mutual recognition to the Commission. 32 Along with the above mentioned, Chapter Fourteen, Temporary Entry for Business, Persons, Article 14.1: General Principles: 1. Further to Article 1.2 (Objectives), this Chapter reflects the preferential trading relationship between the Parties, the mutual desire of the Parties to facilitate temporary entry of business persons under the provisions of Annex 14.3 on a reciprocal basis and of establishing transparent criteria and procedures for temporary entry, and the need to ensure border security and to protect the domestic labor force and permanent employment in their respective territories. 33

3.3

Customs barriers.

For the customs offices in the world, the incorporation of the services to the international trade has raised new challenges that have not been overcome efficiently until today. The customs have been historically regulated to rule the needs of trade in goods and not trade in services. This has generated the necessity to elaborate a special regulation that rules the matter.

One of the links of professional services and the rest of the services with the customs offices is the so-called exporter's qualification of services, by virtue of which the exporter of services requests to be recognized as such with the purpose of obtaining a series of benefits that this condition gives to him, like for example, not paying the VAT. 34

32 33

Free Trade Agreement, Chile-United States: 2002. Free Trade Agreement, Chile-United States: 2002. 34 PIA Gonzlez, Joaqun. Globalizacin y Servicios. First edition. Ed. Lexis Nexis. Santiago de Chile: 2003.

22

3.4

Trade in services regulation.

The lack of information on the domestic regulations of other countries is a factor to be considered as a barrier to the trade in professional services. This limitation can increase the costs of investment in a considerable way when commissioning studies that give information about the regulation of the recipient country of the professional service, additional staff for its application, etc.

3.5

Quality certification.

In order to export a service, this certification of quality has paramount importance, especially when the services are aimed to countries with more advanced standards.

This certification transforms itself in a barrier to the trade in professional services, but in turn a challenge for the least developed countries, since they must reach high levels of work to cover the most developed markets.

23

CHAPTER III

DIFFICULTIES ON THE INTERNATIONAL TRADE IN PROFESSIONAL SERVICES AS A CONCEQUENCE OF DOMESTIC REGULATION.

Analyzing the domestic regulation, also known as national regulation is of great importance, since great part of the barriers to the trade of services we find them in this area.

Specifically, in the area of the professional services, the national regulations of the countries, the requirements of nationality and residence, the regulation for the grant of licenses and the procedure of qualification, besides the restrictions of the property or certain forms of legal organization, they are some other barriers of the effective access to the market in almost all the countries. Besides, the procedure on temporary incorporation of foreign workers or natural persons' movement on the markets of the countries also they disable the trade in the sector of professional services.

In this chapter different barriers and obstacles have been included, regarding the trade in professional services, which though, in general they happen to be affected by similar obstacles also exist others that are own.

1.

DOMESTIC REGULATION.

Contained in the article VI of the GATS, it establishes partly that each Member shall ensure that all measures of general application affecting trade in services are administered in a reasonable, objective and impartial manner." 35

35

WTO, General Agreement on Trade in Services. Article VI: 1995.

24

The majority of the obstacles for the development of the trade of services we find them in this area. With the objective to that the countries assure not distort the trade a group of work was created in the WTO on National Regulation for the production of disciplines in relation to the requirements and procedures of aptitude, technical procedure, regime of licenses, among others.

Between other things, this national regulation consists of that when an authorization is requested to operate in the territory of another Member in some sector in where one has contracted specific commitments, this country will have to facilitate information about the request without delays or inappropriate arrears. 36

Certainly,

these

regulations

constitute

an important

restriction to

the

opportunities of growth. Since it they are certain technical procedure for the regime of licenses that do not guard relation with the competence and professional capacity, since it they are the requirements of citizenship, nationality or of residence. 37

2.

CREDENTIALS, LICENSES AND PERMITS.

The article VII of the GATS says to the recognition, that its in turn, the base of the processes of crediting, licenses and permissions for the rendering of professional services in different country, requesting him it recognizes the education or experiences obtained before.

If two or more Members have agreements of mutual recognition of titles of aptitude, the GATS indicates that it must give also to other Members the opportunity to negotiate comparable agreements. The recognition of the titles of aptitude of other

PIA Gonzlez, Joaqun. Globalizacin y Servicios. First edition. Ed. Lexis Nexis. Santiago de Chile: 2003. 37 MATOO, Aaditya and Pierre Sauv. Domestic Regulation and Service Trade Liberalization. First edition. The World Bank. Washington: 2003.

36

25

countries neither must be discriminatory nor must constitute a concealed protectionism. These agreements of recognition have to be notified to the WTO. 38

In relation to titles of aptitude, an important aspect it contributes the article VI, N 4 of the GATS that us raises that for his grant:

a) Based on objective and transparent criteria, such as competence and the ability to supply the service; b) Not more burdensome than necessary to ensure the quality of the service; c) In the case of licensing procedures, not in themselves a restriction on the supply of the service. 39

3. SECTORAL BARRIERS TO THE INTERNATIONAL TRADE IN PROFESSIONAL SERVICES.

As it was distinguishing itself previously, though barriers exist to the international trade in professional services that we might call generic, there exist others that are own of every professional activity, and that are which the professionals of the different areas must draw lots to take forward the presentation of his certain service. Next to there are exposed some barriers of certain professional services:

3.1

Accountability services.

Multiple obstacles are outlined to the trade in services of accounting, among others, the restrictions of the right to establish a commercial presence and the requirements of grant of licenses and examinations, excessive tariffs and special taxes on the utilities of the in force services of consultancy. Another obstacle is generated in

38

WTO. Web site, Available at: http://www.wto.org/spanish/thewto_s/whatis_s/tif_s/agrm6_s.htm; January 2008. 39 WTO, General Agreement on Trade in Services. Article VI, N 4: 1995.

26

the obligation that some countries impose of affiliating to professional associations of local area and the procedure that prohibit the use of names of multinational companies in the national operations. 40

3.2

Legal services.

Certainly, with the increasing internationalization of the economy the legal services have charged vital importance since this service fulfills a fundamental role in the operative development of the investment.

Clear that these services are not exempt of obstacles, and one of his main ones consists of the predominant national character of the laws together with the preponderant national character of the formation that they deliver, in general, the schools of law. In a communication that does The United States to the Council of Services 41 one proposes to extend the definition of legal services to give content to the services of legal consultancy, mediation and activities of lobbying, as well as to the labor related to the international law of arbitration. Likewise, the elimination of restrictions is claimed as for the commercial presence (the services of the way called 3), including the measurements that border the field of competence of the attorneys' foreign companies and those that restrict certain forms of legal organization (mainly attorneys' association of different countries).

3.3

Services in engineering.

The services of engineering, as the rest of the professional services have presented a high growth in the last time. Nevertheless the important potential of growth
TROLLIET, Claude. Regulatory Reform and Trade Liberalization in Accountancy Services. 1 edition. The World Bank. Washington: 2003. 41 Council for Trade in Services operates under the guidance of the General Council and is responsible for overseeing the functioning of the General Agreement on Trade in Services (GATS).
40

27

of the sector, the trade of Services of Engineering presents certain own obstacles that reduce his competitiveness with regard to the trade of goods. These obstacles are, among others: The difficulty in the free traffic and professionals' record, problems associated with the requirement, of this type of exports, of being tied to the provision of Financial Services, of Assurances, etc., internal barriers that do not favor the international trade of services since it they are requirements of residence or nationality or the fulfillment of quotas for the obtaining permission.

3.4

Services in architecture.

The services of architecture, as other professional services suffer the difficulty of the system of quotas, imposed by some countries for the development of his profession in the exterior. Another problem is the possibility of exercising commercial presence, the reciprocal recognition of qualifications architecture.

28

CHAPTER IV

THE INTERNATIONAL TRADE ON PROFESSIONAL SERVICES LIBERALIZATION.

Since already we have indicated, is admitted worldwide that the sector of the professional services there presents a great potential of growth and internationalization, which must be promoted for an institutional frame based on the respect for the loyal practices of trade, transparency of the rules of market and an ideal reciprocity in the legislations and regulations.

These processes of integration must be promoted for institutional frames that provide clear and transparent rules for the development of the services, encouraging the processes of complementation internationally and mainly to regional level (as groups as the European Union have done it and as what seeks to do Mercosur's community). In this area, in the international concert varied formulae exist to look for the liberalization of the trade in professional services. Certainly, it will depend on the spirit of nations, diverse needs that these face and no doubt, the will in to get in the world process of growth of services of a firm and awkward way. 42

These diverse ways of liberalization can qualify not neither for importance nor which is more adapted to every country, his application will depend on his economic characteristics establishing for everyone the way of liberalization more appropriately.

1.

DIFFERENT FORMULAS FOR LIBERALIZATION.

Indicated expressly in his preamble, one of the central objectives of the GATS to contribute to the expansion of the trade under conditions of transparency and
42

MATOO, Aaditya and Pierre Sauv. Domestic Regulation and Service Trade Liberalization. First edition. The World Bank. Washington: 2003.

29

progressive liberalization and as a means of promoting the economic growth of all trading partners and the development of developing countries. 43 Under this context we prune to identify and to construct some possible routes of liberalization and that express later:

Before that the routes of liberalization established in the GATS we will initiate this analysis with the measurements of day after day, which arise from the daily professional exercise and that are for those that the professionals of the different areas hope that State they can bring over to his real needs. It is like that, since in the different subsectors of the professional services numerous obstacles can be detected for the development of services. Often it is difficult for a foreign supplier of services to know the local conditions, which can be very different of a market from other one, and to extract the best party. The difficulties do not stay there, with independence of the question of the recognition of the titles obtained in another country, the foreign supplier of services has to face often especially to the requirement of the nationality or the residence, as well as to restrictions on the investment and the form of the commercial presence. The requirement of the residence turns out to be like particularly missed in the epoch of the fulminating growth of Internet and of the services given in accordance with the way 1 (cross-border supply). Finally, the interested party will have to overcome the obstacles relative the displacement of the persons (way 4). 44

1.1 Professional services liberalization proposals.

Of the professional exercise in different areas, we rescue certain routes of liberalization to barriers or difficulties that already we have known in previous chapters:

WTO, General Agreement on Trade in Services. Preamble: 1995. WTO, S/CSS/W/75. Comunicacin de Suiza al Consejo del Comercio de Servicios. Serie de reuniones extraordinarias. GATS 2000: Professional Services, Geneva: 2001.
44

43

30

1.1.1 Free movement of persons and professional regulation.

It would be improved establishing an agreement for which the States, they harmonize his criteria of certification of titles, professionals and specialties, including his homologation. Likewise, it is necessary to establish a joint agreement for uniformed and improve the procedures of renewal and recognition of titles and, additional, professional temporary records must be implemented.

1.1.2 Tax barriers.

For the countries in which there does not exist a specific legislation that avoids the double taxation, the payment of taxes of diverse nature in the country recipient of services is a condition that affects the equity in the competence and the national treatment. Similar situation we find when we speak about the VAT, which in the practice has transformed in very much countries in an implicit exigency of residence since to accede to the corresponding credit that this tax represents only the local companies will be able to use it, not being fulfilled therefore the concept of national treatment. To solve this problem there must be established major and better agreements that avoid the double taxation. In the particular case of the VAT a mechanism must be analyzed for return (or temporary employee exemptions of the payment of VAT) for the foreign services established in the country recipient. 45

1.1.3 Problems regarding information transparency.

The suppliers must have transparent access, in the possible measurement, to the local regulations on professional services in every country and on the specific treatment that drinks to the foreign supplier, including conditions of access to the market, legal, institutional, tributary and labour aspects. Therefore, every country member must deliver a complete relation of the legal and regulation dispositions that regulate this type of services to the competent organizations as it is the professional
PIA Gonzlez, Joaqun. Globalizacin y Servicios. First edition. Ed. Lexis Nexis. Santiago de Chile: 2003.
45

31

specialty, as for example the professional colleges, departments related to the area as the department of health concern of medical services or the department of housing and urbanism concern of services of architecture.

1.1.4 Social sequirity.

Countries exist without agreement social sequirity between them, which is translated in a double obligation or load social sequirity, her of informing funds for his future retirement in the country where it has his permanent residence and in the country where it gives himself temporarily the service. To avoid this problem it must be allowed the international coverage of funds social sequirity, by means of a system of post of newspaper correspondent between the respective entities, as for health, forecast and accidents of the work, in a system similar to which there use the commercial banks, who without having office in the whole world work with associate banks that it allows them to have coverage and international service more completely.

1.2

Liberalization of the professional services in the light of the GATS.

As we were indicating it, the GATS you have his own ways of liberalization that the Members use to extend his commercial horizons. It is the most common way and which the Members states of the agreement must apply to liberalize the areas of his interest. In the light of this, the most classic, simple formula and probably the one that would be waited is that of major application, it is the unilateral liberalization, across which there are eliminated discriminatory elements that affect the trade in professional services or other areas of the services of own way, with only zeal of which the economy of the liberalizing State joins of a real way to the international trade.

For example, it might raise her not exigency of a specific nationality to give a service or her not exigency of permanent residence to develop an activity, among others. But surely, more than examples the governing term of the process of liberalization and the one that must guide the political ones in this matter is of not discrimination, that means to have an identical treatment for natives and foreigners

32

known like national treatment, as well as also it equal treat between the foreigners with regard to a country known as clause of her most favoured nation treatment. 46

1.2.1 National treatment principle.

Already we were speaking about the national treatment in the chapter II in relation to the barriers to the trade in professional services, this time and at the same time, this concept guards relation with the ways of liberalization that it represents. This because in essence, the concept of national treatment established in the article XVII of the GATS, it involves the absence of any discriminatory measurement that can modify the conditions of competence to the detriment of the services or suppliers of foreign services. It transforms, later, in a barrier that we might call legitimate, on having established exceptions for the full application of the national treatment to the foreign supplier. Anyhow, his last and most important purpose is to offer the same possibilities of developing the services to compete in equality of conditions. 47

1.2.2 Most favoured nation treatment principle.

In relation to this, the article II of the GATS, it establishes partly, in his paragraph 1 that each Member shall accord immediately and unconditionally to services and service suppliers of any other Member treatment no less favourable than that it accords to like services and service supplies of any other country.

Though, in the paragraph 2 of the same article it indicates an exception to this liberalizing clause known as exemptions 48 , saying that: A Member may maintain a
PIA Gonzlez, Joaqun. Globalizacin y Servicios. First edition. Ed. Lexis Nexis. Santiago de Chile: 2003. 47 WTO. Introduction to the General Agreement Trade on Services: 2006. (Available at: http://www.wto.org/english/tratop_e/serv_e/serv_e.htm); December 2007. 48 Exemptions: The Members can request them in the moment of the acceptance of an Agreement, or, in the moment of the adhesion. These exemptions are recorded in specific lists for every country and his duration must not exceed at first (in principle) of 10 years. (WTO. Introduccin al Acuerdo General sobre el Comercio de Servicios: 2006. (Available at: http://www.wto.org/english/tratop_e/serv_e/serv_e.htm); December 2007.
46

33

measure inconsistent with paragraph 1 provided that such a measure is listed in, and the conditions of, the Annex on Article II exemptions. Called the process of

liberalization it is marked by the possibility of establishing the minor quantity of exemptions and of establishing the major possible opening in the terms established in the paragraph 1 mentioned.

1.3

Proposals of liberalization on the part of the WTO Members.

The Members states adhered to the GATS usually are promoting, presented or suggesting diverse liberalizing offers in different areas of the trade in professional services that mark a general trend of extending the limits of liberalization opposite to barriers or obstacles.

Next to there are summarized diverse presentations realized by different countries to the WTO across the Council for Trade in Services in his series of extraordinary meetings that express the firm spirit of some Members for taking forward the process of liberalization of the trade in professional services:

On December 22, 2000, the European Communities raised the following offers to the Council for Trade in Services, central debating on the requirements of nationality and residence established by the Members, which often constitute important barriers to the trade in professional services:

In his series extraordinary meetings, the Council for Trade in Services should begin, already it is in his bosom or in that of a subsidiary organ that is established with this end, a debate on the general intentions of the negotiations in the sector of the professional services. For example, the requirement of the nationality is often an inadequate instrument for the control of the professional competence. Nevertheless, this requirement can justify for the official functions that certain suppliers of services recover in defense of the public interest The requirements of residence (that practically exclude any cross-border supply of the service) are only acceptable for protections reasons of the consumer or related to the responsibility of the supplier of the service.

34

The Members should study the replacement, providing that it is possible, of such requirements of residence for less restrictive requirements of the trade that allow to reach the same objective of politics. If the requirements of residence should be kept, they should diminish to the minimum, and to be chosen the least restrictive form of the trade (it is to say, to be demanded only a limited form or hint of presence in the country, such as the designation of a representative, to allow the establishment of a temporary presence, etc.). The use of the names of the companies is restricted often, which prevents these to benefit from the reputation of an internationally known trade name, since they must use another name in the national area 49

On March 14, 2001 Canada expressed the following offers to the Council for Trade in Services directed to restrictions to the national treatment, the facilitation of suppliers' entry of professional services and the mutual recognitions of titles:

Restrictions to the national treatment and to the market access: to try a quantitative and qualitative improvement of the commitments corresponding to the manners 1, 2, and the elimination of the prescriptions to try openly discriminatory that take the form of requirements of nationality and citizenship, looking for substitute solutions of the criterion of permanent residence or of residence in the measurement in which there exist less restrictive means (for example, the collaboration with natives or the exigency of guarantees to assure the viability of the resources, and agreements on the disciplinary measurements Cross-border supply). Canada has established diverse improvements in this sphere, including the production of rate of licenses to facilitate the access of some foreign suppliers of professional services (legal, of engineering and of architecture). To facilitate suppliers' entry of professional services (way 4): to try improvements in the field of application of the regime of permanent entry and stay of foreign professionals. Canada an independent offer has presented respect of the way 4. Mutual recognition of titles: to study the ways of stimulating the production of agreements of mutual recognition among the organizations in charge of the regulation

WTO, S/CSS/W/33. Communication of the European Communities and its Member States to the Council for Trade in Services. Series of extraordinary meetings. GATS 2000: Professional Services, Geneva: 2000.

49

35

of the professions and of stimulating the participation of all the Members of the WTO in order to facilitate and to improve the access to the foreign markets. It might be a good point of item the possibility of extending Directives for mutual agreements or dispositions in the sector of the accounting to the professional services in general. National regulation (paragraph 4 of the article VI of the GATS): the transparency acquires a considerable importance having in bill the character strongly regulated of the majority of the professions that need fitting out and the scope of the administrative discretion in the application of the rate of license. Canada is pawned in continuing collaborating in the bosom of the current and different organisms that are created to improve the opening of the rate of national regulation. It will strain also for developing general disciplines, with the possibility of elaborating specific others to give fitted to the peculiar characteristics of certain professions. In this regard, the Canada has demonstrated his interest to examine the following professional services: of engineering, of architecture, legal, of town planning, of appraisement of real estate and of survey 50

On May 4, 2001 Switzerland raised the following offers to the Council for Trade in Services, once more concern of the requirements of nationality and residence established with proposed in the matter:

" Switzerland proposes the elimination of the requirements of nationality and residence and the readjustment of certain prescriptions, especially the relative ones to the belonging to professional local associations and to the forms of establishment. In many cases, these restrictions nowadays in effect can be replaced with measurements less discriminatory than in spite of all sound adapted to guarantee the respect of the obligations mentioned in the previous paragraph. Besides, Switzerland admits that the displacement of the persons is particularly important for the sector of the professional services and proposes that the Members should examine the possibility of reducing the obstacles in the matter, in order to facilitate the presentation of this type of services for the natural persons. By means of the present offer, Switzerland wants to contribute to the debates on the reduction of the
WTO, S/CSS/W/52. Comunicacin de Canad al Consejo del Comercio de Servicios. Serie de reuniones extraordinarias. GATS 2000: Professional services, Geneva: 2001.
50

36

obstacles that provoke a distortion of the negotiations. It is not a question of putting in danger the quality of the service or the protection and the safety of the consumers 51

2.-

THE EUROPEAN UNION AS A MODEL OF LIBERALIZATION. The European Union 52 has turned into the process of more important

commercial and economic integration and it has been the promoter of a series of principles and liberalizing procedure of the trade in professional services.

Between these principles it is necessary to emphasize the following ones: Free movement of workers and persons. The one that consists of the possibility of all the citizens of the Union the right to reside and to move freely within the territory of the Members states. In relation to the previous thing, the European Union has adopted measurements tending to standardize the social safety of the workers as effective measurement to guarantee the possibility of displacement of the workers who give his professional services in another country Member of the Union. Law and freedom of establishment and recognition of titles. He contemplates the possibility of exercising independent activities, very important aspect for the professional services. The recognition meditates expiring with minimal conditions in education and experience. There exist many other areas of important development for the trade of services in general, like for example in the free movement of the capitals, the transport, the telecommunications and the freedom to give services, among other.

WTO, S/CSS/W/75. Comunicacin de Suiza al Consejo del Comercio de Servicios. Serie de reuniones extraordinarias. GATS 2000: Professional services, Geneva: 2001. 52 The European Union, is a community of 27 European States established on November 1, 1993, when there entered in effect the Agreement of the European Union. She is the successor of the European Communities, created in the years 50. It has for purpose develop political uniform in the political, economic and social of their members.

51

37

CONCLUSIONS

The compilation of information for the development of the present work was relatively complicated. This, because although there is nourished literature regarding the international trade in services and within this, in the services rendered to companies and other services given to the companies, it does not happen the same with the professional services, especially when distinguishing barriers and difficulties. Even though, we have reached a work that fulfilled its raised objectives.

Certainly, we are particularly encouraged b the international services subject matter, the professional ones in particular, which has motivated the development of the present work. We understand, due to our own professional exercise, the real needs of liberalization of this sector and how little it has been explored yet, thereby constituting nowadays an area for absolutely opened investigation.

With respect to the conclusions of the work itself, they are numerous and among them we can rescue the following ones:

1.

INTERNATIONAL TRADE IN SERVICES IN GENERAL.

The international trade in services represents a relatively new system of trade in the men history, which is not less important because of that, on the contrary, it is a fundamental area of the international trade for the trade international affairs and, more importantly, for the strong role that it has in the human relations of the individuals. Nowadays it represents about 20 % of the world trade. It is not easy to define the international trade in services. This is not clearly defined which leads to problems related to the activities that remain included in this area of trade. Anyway, we risked a definition that we think it contains the basic elements that compose the trade of services. Services are invisible, intangible and perishable

38

human renderings directly given between producer and consumer, capable of producing a change in the conditions of a person or a good. The classification of the international trade of services determined by the document MTN.GNS/W/120 of the WTO, although it is a great, indispensable tool for negotiators as well as for the responsible of trade policy, to many people it is insufficient since there are activities that might be classified in more of one category or others that cannot qualify in any of the existing categories, mainly regarding the use of new technologies and more modern ways for the rendering of services. The multilateral regulation that rules the international trade in services is governed mainly, by the General Agreement on Trade in Services (GATS), in a multilateral level, and by the Free Trade Agreements signed directly among countries.

2.

INTERNATIONAL TRADE IN PROFESSIONAL SERVICES IN PARTICULAR.

The international trade in professional services constitutes one of the most relevant areas for the world trade, being of great importance in the current economic international field. This type of trade considers professionals of different areas embraced by the sectoral classification W120, in 11 main categories, among which we should underline: the legal services, countable services, services of architecture and services of engineering among others. Different barriers, obstacles and difficulties sometimes coming from the very domestic legislation, or sometimes rather from general procedure norms such as those of market access and national treatment, are the ones that the lenders of international services find. This work demonstrated that the barriers they have to face are diverse, but also we discover the spirit of countries to liberalizing the professional services worldwide.

39

3.

BARRIERS AND DIFFICULTIES FOR THE INTERNATIONAL TRADE IN

PROFESSIONAL SERVICES.

In the second chapter of the present work we found the barriers that the multilateral regulation imposes on the Members of the WTO; among them we outlined the market access and the national treatment, which although have a strong liberalizing content, can be understood as a legitimate barrier that the countries can use. But we not only find this type of barriers, there are also barriers that we called generic because regardless the type of trade of services that is intended to render, this type of barriers, in general, will be present in the very rendering. As an example we found the tax barriers, the geographical distances, the customs barriers, among others. In the third chapter we embraced the difficulties associated with the domestic regulation. In this sector the highest quantity of obstacles and difficulties to the trade of professional services are concentrated. The crediting, licensing and permits for the rendering of professional services constitute the means for countries to restrict in an excessive way the possibility of accessing its markets.

4.

LIBERALIZATION OF THE TRADE IN PROFESSIONAL SERVICES.

The liberalization ends up being one of the most necessary processes for the international trade. This, because we should not only see the professional services in an isolated way, but also consider that many of these services go hand by hand with the rendering of other services or the exchange of goods. For example the need that

40

attorneys or engineers are previously informed about foreign markets in order to evaluate the set off of project both of services and goods; to the accountants the possibility of being part of a greater consolidated accountability system, among others. Regarding the liberalization of the international trade in professional services, we could make a classification gathering them by ways of liberalization in the light of the GATS, contained in its own provisions, like the National Treatment principle and the Most Favoured Nation treatment on the one hand and on the other the liberalization measures that we have called day after day measures, which, in general, we are able to find in chapters II and III, but that were analysed from the liberalizing point of view and not from the standpoint of a barrier.

41

BIBLIOGRAPHY

Books and manuals:

CEPAL. Manual para la preparacin del cuestionario sobre las medidas que afectan al comercio de servicios en el hemisferio. Divisin de Comercio Internacional y financiamiento para el desarrollo, unidad de comercio internacional, 1999.

FEKETUKY, Geza. International Trade in Services. First edition. Ed. Gernika S.A, Ciudad de Mxico, 1990.

MATOO, Aaditya and Pierre Sauv. Domestic Regulation and Service Trade Liberalization. First edition. The World Bank. Washington, 2003

PIA Gonzlez, Joaqun. Santiago de Chile, 2003.

Globalizacin y Servicios. First edition. Ed. Lexis Nexis.

TROLLIET, Claude. Regulatory Reform and Trade Liberalization in Accountancy Services. First edition. The World Bank. Washington, 2003

VANERIO Gustavo, Comercio Internacional de Servicios Profesionales. 1 edition. Ed. Fundacin de Cultura Universitaria, Montevideo, 1999.

Documents and reports:

PRIETO, Francisco Javier. Servicios en el programa Doha para el desarrollo (PDD): Cuestiones relativas a la aplicacin y a las polticas. Integracin & Comercio Magazine, Santiago de Chile, nmero 22, enero-junio 2005.

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WTO, S/CSS/W/33. Communication of the European Communities and its Member States to the Council for Trade in Services. Series of extraordinary meetings. GATS 2000: Professional Services, Geneva, 2000.

WTO, S/CSS/W/75. Comunicacin de Suiza al Consejo del Comercio de Servicios. Serie de reuniones extraordinarias. GATS 2000: Professional services, Geneva, 2001.

WTO, S/CSS7W/52. Comunicacin del Canad al Consejo del Comercio de Servicios. Serie de reuniones extraordinarias. GATS 2000: Professional services, Geneva, 2001.

Ministerio de Relaciones Exteriores de Chile, Direccin General de Relaciones Econmicas Internacionales. Principales caractersticas y dinamismo del comercio mundial de servicios. Santiago de Chile, 2008.

ALCA. Comit de Representantes Gubernamentales sobre la participacin de la sociedad civil. Form. FTAA.SOC/w/166, 2000.

WTO. Introduction to the General Agreement Trade on Services, 2006. Available at: <http://www.wto.org/english/tratop_e/serv_e/serv_e.htm>; [December 2007].

Web Sites:

World Trade Organization, web site. Available at: <http://www.wto.org/english/res_e/statis_e/its2007_e/its07_world_trade_dev_e.htm>; [January 2008].

World Trade Organization, web site. Available at: <http://www.wto.org/english/tratop_e/serv_e/serv_e.htm>; [January 2008].

World Trade Organization, web site. Available at:

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<http://www.wto.org/spanish/thewto_s/whatis_s/whatis_s.htm>; [January 2008]. Todo definiciones, web site. Available at: <http://www.economia.cl/aws00/servlet/aawsconver?1,,500499>; [February 2008].

Legislation and others:

De Ford, Federico Valerio, El Comercio de Servicios en los Tratados de Libre Comercio. Available at: http://www.comex.go.cr/difusion/ciclo/2001/fvalerio.pdf;

December 2007.

Free Trade Agreement, Chile-United States, 2002.

WTO, General Agreement on Trade in Services, 1995.

WTO, AGCS. MTN.GNS/W/120. Services Sectoral Classification List, 1991

PRIETO, Francisco Javier, Material of support of classes on International Trade in Services. Master in International Law, Investment, Trade and Arbitration. University of Heidelberg. Santiago de Chile, 2007.

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