A global outlook
THE GENERAL AGREEMENT ON TRADE IN SERVICES IS A KEY INSTRUMENT IN LIBERALISING MARKETS.
BUT DOES IT HELP EQUIP LAWYERS WITH THE TOOLS THEY NEED TO OPEN AN OFFICE ABROAD AND TO ADVISE EFFECTIVELY? CHRIS BAKER LOOKS AT HOW THE LEGAL PROFESSION HAS ASSUMED EVER MORE IMPORTANCE IN WORLD TRADE ORGANISATION TALKS
The negotiations over a package of international measures to make it easier for solicitors to practise overseas began at the end of March.
But lawyers who work to enforce international trade agreements are not confident that it will make it any easier to practise in other jurisdictions.
After concerted lobbying by the Law Society and UK government, the European Commission (EC) is set to make an offer of liberalising measures to the World Trade Organisation (WTO) for legal services as part of the negotiations in the latest round of talks on its General Agreement on Trade in Services (GATS).
The EC negotiates on behalf of all European Union countries, while other countries will make their own offers.
The GATS are global trade agreements for services that aim to liberalise practices around the world, and legal services have been moving up the agenda in recent years amid the ongoing battle with many countries to allow foreign lawyers to come
in and operate without restrictions.
The WTO commitments on market access are made under four 'modes'.
These are: cross-border delivery, such as sending a legal opinion to a client in another WTO member state; consumption abroad, which is not believed to be relevant to legal services; establishment abroad, such as opening an office in another WTO member state; and temporary movement of personnel, or staffing an office with English solicitors.
Another example would be a lawyer flying in for a short stay and offering advice.
The last two modes are most relevant.
Some countries - such as India and South Korea - have restrictions on foreign law firms opening offices at all or on what they can do with their offices, such as prohibiting them from employing or going into partnership with local lawyers.
South Korea is expected to make an offer in the negotiations and China's recent entry into the WTO has led to gradual liberalisation of a once tight regime.
But India, one of the countries most sought after by City and other foreign firms, could prove problematic as local lawyers have brought litigation to try and restrict the activities of foreign lawyers.
The Society is sending a representative to India later this month with a view to kick-starting long-standing lobbying efforts over the issue (see [2003] Gazette, 27 March, 6).
'Legal services were only introduced in 1994-95 [into GATS] so it's very recent and only 46 countries of around 145 that make up the WTO have any commitment on legal services,' says Alison Hook, head of the Law Society's international unit.
'The WTO is saying we need to get some clarity about what we are and are not allowed to do.
We hope to push everybody's bottom line a bit and get access a little better around the world.'
The UK is second only to the US in its exports of legal services.
In 2001, exports of law firms in the UK amounted to 1.8 billion, and the Society hopes that GATS can increase this amount.
It is eager to dispel notions that solicitors will steam into countries that sign up to the agreements and take over.
'A lot of countries are quite sensitive about people employing local lawyers, asking what will happen when the UK and US firms come in and take all the best lawyers because they pay more,' Ms Hook says.
'They are worried that local firms will disappear.
We will have to get the message across in the negotiations that opening up markets is a good thing because the economy as a whole will benefit.'
The government has become more active in pushing the export of the UK's legal services.
A Lord Chancellor's Department (LCD) spokeswoman says: 'Businessmen want to have the same kind of service that is available to them elsewhere.
If they want their favourite law firm to act for them in the country they are investing money in then they should be able to.'
At a conference organised by the British Chamber of Commerce in Brussels last month, LCD minister Baroness Scotland urged WTO members to take up the liberalising cause.
But not everybody takes the view that GATS will liberalise markets in other countries to the extent anticipated by the Society and LCD.
In the late 1990s, the WTO investigated the work of accountants in an effort to see whether cross-border standards could be achieved.
This worried lawyers at the time, who were concerned that any result might then just be imposed on the legal profession, but what came out was seen as having little impact.
Clifford Chance partner Oliver Bretz has advised the Association of Chartered Certified Accountants in the past, and says the trade body has had 'huge GATS issues'.
He says: 'My view is that they are pretty toothless.
We have got all these regulations but they can only be invoked by the member state, and member states are not always willing to fight GATS cases.' This is because the case can 'boomerang back at you', adding extra rights at odds with a member's regulations and sense of protectionism, Mr Bretz says.
He is also sceptical of the means by which people can try and bring cases.
If a UK firm suspects a WTO member state to be in breach of GATS, the Department of Trade and Industry would have to be informed.
It then has to convene the other WTO member states which, in Mr Bretz's experience, may not always come to agreement on bringing a case.
'But if I could go to a court [in the state allegedly in breach] and ask for a judicial review, that would be different,' he adds.
'Until you can enforce your rights, they are not really that valuable.'
But another partner in a City firm concerned with practice rights in India, who wishes to remain anonymous owing to the 'sensitive' nature of the issue, says: 'GATS is the best opportunity that the legal community has to obtain practice rights in India.
I don't think it will happen voluntarily, and with GATS we will have some ability to use it as a bargaining tool.'
However, even this lawyer has doubts that the agreements will have a huge effect.
He says there will be 'a hell of a lot of haggling' in the current negotiations.
'If one country wants legal services, the other country will say "we want our nurses to have access to your market," and so on,' he explains.
'The concern we have as lawyers is, to be frank, that lawyers are not high up on the list of priorities.
It's the sort of thing that could be lost somewhere in the bargaining process and could be seen as a pawn that is not as valuable as other services.'
A meeting to flesh out each WTO member state's offerings will be held in Mexico in September.
Ms Hook says 'trade- offs' will play a part in the negotiations, and anticipates that agriculture will be one of the problems areas under discussion.
Mr Bretz argues that some form of mutual recognition agreement would be more effective than GATS.
He says bilateral agreements between the Society and the various national bar associations could set out what would be required to obtain practice rights while ensuring these requirements are no more restrictive than necessary.
'Then you would have a road map setting out what exams you would have to take to qualify abroad,' he says.
'Finding that out at the moment is extremely difficult - there should be a requirement to publish what the requirements are.'
However, Mr Bretz admits these agreements would work between the US and UK as the countries share a language, but the EC's multilateral approach on behalf of member states with different languages and legal traditions could act as barrier and complicate matters.
The next round of GATS negotiations will almost certainly make progress towards a wider international acceptance of lawyers being able to advise on home and international law in host jurisdictions.
But progress on issues such as advising on third country law, and partnership with - or employment of - local solicitors will prove more difficult.
Different legal traditions around the world and state protectionism will see to that.
And while complex international agreements are always going to be slow to enact and difficult to enforce, until some concrete means of cutting through domestic regulations is on the table, opening that office in Seoul or Delhi is going to still prove a struggle.
Chris Baker is a freelance journalist
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