Sunday, June 07, 2015

Trade in Service Agreement (TiSA) and Legal Services


(thanks to Wikileaks)

Wikileaks has just released 17 documents TiSA related documents. For those of you who haven't heard of TiSA before it's the Trade in Services Agreement. It is the largest part, but least known, of the three main trade agreements being negotiated now. They are TPP (Trans-Pacific Partnership), TTIP  (Trans-Atlantic Trade and Investment Partnerships) and TiSA.

Fifty-one nations participated in TiSA yet the BRICS were excluded. Moreover, the detailed contents were to remain secret for five years after signing. TiSA is much more far reaching than GATS and its negotiations have been ongoing since 2013.

According to the New Republic
The deal would liberalize global trade of services, an expansive definition that encompasses air and maritime transport, package delivery, e-commerce, telecommunications, accountancy, engineering, consulting, health care, private education, financial services and more, covering close to 80 percent of the U.S. economy. Though member parties insist that the agreement would simply stop discrimination against foreign service providers, the text shows that TiSA would restrict how governments can manage their public laws through an effective regulatory cap.
Among the documents released is the TiSA Annex on Professional Services which includes legal services. So what does TiSA say about professional and legal services?

If a member state has restrictions on trade in services it should enable cross-border supply of professional services without limit. So how will India be affected by this? It's a BRIC so it has had no role in this negotiation and it tightly forbids cross-border legal services. And parties must not try to impose national restrictions on cross-border suppliers of professional services.

If you want to practise in a member state, you don't have to set up an office there or be resident.

If a foreign provider is providing services through a "commercial presence", no limits on the amounts of foreign capital can be imposed in investment or share capital. Nor can the nationality of the partners or senior management be restricted.

A member state can't require that professional services be provided through a joint venture. Wholly owned foreign suppliers should be allowed. In addition member states can't impose discriminatory hiring practices, namely, nationals only.

As a professional services firm, you can keep your firm's name. Baker & McKenzie won't have to forage for partners with these names to open their offices. Interestingly, Japan is one of the proposers of this change and yet used to be one of the perpetrators.

If you as a lawyer want to provide foreign or international law advice, you will be permitted to fly in and fly out to do so for up to 90 days, and nor do you need an office in the other's state to do this. Again this will impact on India.

Member states should work to recognise each others' qualifications, licensing and registration regimes. At least there should be a regime for temporary recognition of other member states' licensing and registration procedures. Moreover, temporary recognition should not operate as a block on subsequent full recognition.

To make sure this happens member states must set up a Working Party on Professional Services with a mandate to working with the regulators to pursue mutual recognition.

If you take this set of proposals in conjunction with those on financial services--very liberal and will forbid restrictive local regulation--London and New York law firms especially are going to do extremely well. Local law firms will have to play catch up.

For legal services I don't see anything that perturbs me, at least too much. But I can see why the BRICS were excluded as this effectively stampedes their sacred cows. What will make it hard for countries such as India is that most of the foreign lawyer/law firm disputes that its courts have heard will become instead part of the investor-state dispute settlement system, i.e. arbitration. This could be explosive, I imagine.





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1 comment:

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