Clued up on cross-border trade in legal services

The International Bar Association (IBA) has this week published an updated version of its Guide to International Trade Agreements for IBA Member Bars. (I should declare an interest: I am one of its three authors.)

The guide has so far been updated three times – every 10 years – and is of importance to anyone whose firm undertakes work which crosses borders, and also to those who compete with foreign lawyers. The updates describe how the background to trade in legal services, a trade in which the UK excels, has changed over the decades.

The booklet starts with a list of questions for bars to show why it is needed, since whether a country exports or imports legal services – and practically every country  does one or the other, and often a mixture of the two – lawyers need to know the consequences. For instance, in what form can foreign lawyers practise, and with whom? What regulatory changes are needed? What will competition do to the local market?

The very title of the new version tells its own story. It used to be called the GATS Handbook, and was devoted to describing how the structure built up through the World Trade Organization (WTO) – based on the General Agreement on Trade in Services or GATS – affected lawyers. But the WTO has had its own problems recently. Its work has been slowed to the point of near-invisibility by agendas pursued either by developing countries (which see the WTO multilateral system as not always in their interests), or by developed countries – well, one developed country, the US – which concluded that the WTO’s dispute settlement system was not in its interests, and so stopped the appointment of judges to the point where dispute settlement has more or less seized up.

But trade will have its way regardless, and so there has been an expansion in bilateral and regional – as opposed to multilateral – trade agreements over recent years. We in the UK have become familiar with the CPTPP (Comprehensive and Progressive Agreement for Trans-Pacific Partnership), with membership around the Pacific Rim, since we joined it formally earlier this month. We also know the EU, because we left it at the beginning of 2020.

But the guide mentions the slew of other agreements. Abbreviations only are given, since full names, descriptions and countries covered would swallow my word count – but they cover every continent:  ASEAN, RCEP, EAC, SADC, UEMOA, AfCFTA, USMCA, Mercosur, CETA, and so on. They largely follow the WTO framework, but new developments are inevitably creeping in.

As an aside, international trade seems particular prone to the use of initialisms and acronyms, and so if you want to know your MRA (mutual recognition agreement) from your RTA (regional or bilateral trade agreement), this is the place to go.

Our own Law Society has an experienced international department which has for decades been liaising with government departments to ensure that legal services are a top priority when trade agreements are being negotiated. You may have read about the recent breakthrough with India, where English and Welsh solicitors have wished to practise more freely for decades. The UK has become a largely services-based economy, and our government is well aware of the need to promote our legal services abroad.

But the position is different in other countries. For instance, a representative from the Ministry of Justice in Mozambique spoke at a recent IBA conference about how foreign companies are now very interested in her country’s energy and mineral resources. They are flying in with their own lawyers to conduct transactions. Mozambique’s relatively small legal profession is having difficulty coping with the influx of foreign lawyers. What to do? The guide gives pointers as to how cross-border trade in legal services works.

Its first and most important lesson is that all bars need to become clued up, in order to influence their own government in negotiations. At root is the solution to how a foreign lawyer regime should operate in a particular jurisdiction. Complete bans on foreign lawyers are rarely the answer. The case of India is instructive. It operated an almost complete ban for years, but cross-border transactions into India continued to be undertaken by foreign lawyers, merely from outside its borders.

New elements are creeping into trade agreements. Not only are services now regularly a component (in other words, not only goods), but legal services have become more prominent. Other, newer, areas have emerged: data protection and data flows, sustainable development, government procurement. And the arbitration of disputes remains a politically contested area – where should the arbitration take place, and with arbitrators from which jurisdictions? Too often, the arbitration of a local dispute in a developing country flies out to Paris or London, without arbitrators from the country concerned.

All these developments mean work for lawyers, and policy issues are for bars. The IBA handbook points the way.

Jonathan Goldsmith is Law Society Council member for EU & International, chair of the Law Society’s Policy & Regulatory Affairs Committee and a member of its board. All views expressed are personal and are not made in his capacity as a Law Society Council member, nor on behalf of the Law Society