Benefitting from Access under Trade Agreements S. H. Allyson Francis CARICOM Secretariat EPA Implementation Unit sfrancis@caricom. org sfrancis@hotmail. com 1
Outline n n n CARICOM EPA (background & provisions) Services n n n Provisions Schedule for Management Consulting Services Schedule for Services Related to Management Consulting services Challenges, Opportunities, weaknesses & Strengths (COWS) Supply-side, demand-side, implementation issues Next steps
CARICOM Requirements Key Principles underpinning the CSME n Equal rights and treatment for all persons of Member States in the Market; n Nondiscrimination (Article 7) n Most Favored Nation Treatment (Article 8) Completion of the CSME includes: n the free movement of services n the unrestricted movement of capital n the free movement of selected categories of skills n the right of CARICOM nationals to set up business in any CARICOM country (the right of establishment). Removal of Discriminatory Restrictions to Provision of Services, Article 37(1)
CARICOM Requirements n n n Establishment of the Competent Authority Free Movement Committee Free Movement of Skills Department/Desk National Accreditation Body Implement relevant procedures at point of entry
CARICOM n n Professional Associations in most States National system not in place in most States for registration Domestic regulations vary in Member States; Need for convergence; n n n Registration Accreditation Mutual recognition
The EPA n Objectives n n n Reduction & eventual eradication of poverty through trade partnership; Promoting regional integration, economic cooperation and good governance; Promoting the integration of CF States into the world economy; Support for increasing investment & private sector initiative; and Strengthening relations taking into consideration levels of development and int’l obligations
Services trade Services are traded by four modes n n Mode 1 - Cross-border trade (the supplier or the consumer do not move e. g. advisory services via the internet, providing drafts); Mode 2 - Consumption abroad (the consumer moves to obtain the service e. g. tourism, non-national purchasing Consulting services paid from their home country); Mode 3 - Commercial presence (the supplier establishes in the territory to supply a service e. g. branches); and Mode 4 - Movement of natural persons (temporary movement of the supplier to provide a service e. g. consultancy services)
Services Title n n n Chapter 1 – General Provisions Chapter 2 – Commercial Presence Chapter 3 – Cross Border Supply of Services Chapter 4 - Temporary Presence of Natural Persons for Business Purpose Chapter 5 – Regulatory Framework (MR, Computer, Courier, Telecom, Financial, Int’l Maritime & Tourism) n n Chapter 6 – Electronic Commerce Chapter 7 - Cooperation
General Provisions n n n An arrangement for the progressive, reciprocal & asymmetric liberalization Do not apply to subsidies States retain the right to regulate & introduce new regulations to meet legitimate policy objectives Do not apply to measures regarding citizenship, residence or employment Measure must not be applied to nullify or impair benefits Future liberalization no later than 5 yrs from date of entry into force
General Provisions (cont’d) n Bahamas & Haiti to schedule commitments no later than 6 months after signature (preferential treatment not applicable until) n n n Recognize the importance of Reg. Int. Does not include activities in the exercise of governmental authority Do not apply to activities such as mining, manufacturing, processing of nuclear materials, production of arms, audio-visual services, nat’l & int’l air transport etc.
Market Access (MA) n n Parties shall accord treatment no less favorable than that provided for in the specific commitments Measures not to be maintained unless specified. Limitations such as on n n the number of commercial presences (quotas, monopolies, exclusive rights or other requirements such as ENT) the total value of transactions or assets the total number of operations or quantity of output the participation of foreign capital specific types of commercial presence
National Treatment (NT) Where there are MA commitments States shall grant treatment no less favorable than that accorded to their own like service provider (treatment will be considered less favorable if it modifies the conditions of competition in favor of the other party)
Most-Favored Nation Treatment (MFN) n n The EC shall accord treatment no less favorable than the most favorable accorded to third country with whom they conclude & agreement with after signature of the EPA CF shall accord treatment no less favorable than the most favorable accorded to any major trading economy – (major trading economy is any country with more than 1% world share in merchandise trade or group with more that 1. 5%)
Temporary Presence of Natural Persons for Business Purposes n Key Personnel – National employed by a legal entity responsible for setting up or the proper control (all sectors liberalised under mode 3) n Business visitors – n Intra-corporate transfers – must be in a senior position, do not engage in direct transaction with the gen. public & do not receive payment from a source in the host must have been employed or partners for at least 1 year, transferred on a temporary basis n Managers (directing, supervising auth. to recruit or dismiss or recom. ) n Specialists (must possess uncommon knowledge)
Temporary Presence of Natural Persons (cont. ) Graduate trainees – national employed by a legal entity for at least 1 year, possess a university degree, temporarily transferred for career development & training in business techniques or methods (recipient co. may be required to submit training programme) For all sectors liberalised under mode 3
Business Service Sellers (BSS) Representatives of a service supplier seeking temporary entry to negotiate the sale of services or entering into agreements to sell services For all sector liberalized n Temporary entry for 90 days n Do not engage in making direct sales to the public n Do not receive remuneration from a source in the host State For all sectors liberalised under modes 1, 2 & 3 n
Contractual Services Suppliers National employed by a legal entity, with no commercial presence in the other territory, have concluded a bona fide contract requiring temporary presence to fulfill
Conditions for CSS n n Must have a registered business or an employee of a juridical person Must possess a university degree or equivalent and professional qualifications (except fashion model chef de cuisine & entertainment); Must first obtain a service contract must not exceed a period of twelve months; Must have been an employee of the juridical person for at least 1 year immediately preceding application;
Conditions for CSS (cont. ) Must possess at least three years professional experience; n Remuneration only for the contract; and n Subject to Economic Needs Test (ENT) n The main criteria will be the assessment of the relevant market situation in the Member State or the region where the service is to be provided, including with respect to the number of, the impact on, existing services suppliers
Independent Professional National, self-employed with no commercial presence in the other territory, have concluded a bona fide contract requiring temporary presence to fulfill
Conditions for IP n n n Self employed Must possess a university degree or equivalent and professional qualifications; Must first obtain a service contract must not exceed a period of twelve months; Must have at least 6 years professional experience at the date of application; Subject to Economic Needs Test (ENT) - The main criteria will be the assessment of the relevant market situation in the Member State or the region where the service is to be provided, including with respect to the number of, the impact on, existing services suppliers
Other Provisions n Short Term visitors for business purposes n Research and Design; Marketing research; Training seminars; Trade Fairs; Sales; Purchasing; Provided they are not engaged in selling their services to the general public; do not receive remuneration in the territory of temporary stay, not to engage through a contract outside of the territory of temporary stay; Temporary stay up to 90 days
Qualifications 'qualifications' means diplomas, certificates and other evidence (of formal qualification) issued by an authority designated pursuant to legislative, regulatory or administrative provisions and certifying successful completion of professional training.
Mutual Recognition (MR) n n n Nothing in this Title shall prevent the Parties from requiring that natural persons must possess the necessary qualifications and/or professional experience specified in the territory where the service is supplied, for the sector of activity concerned. Professional bodies encouraged to Jointly develop & provide recommendations on MR of criteria applied re authorisation, licensing, operation and certification Negotiations to start no later than 3 years after entry into force of the Agreement
MR (cont. ) n n n Start with accounting, architecture, engineering & tourism Recommendations to be reviewed by the Joint Committee for consistency If consistent negotiate through comp. auth a MRA n n Consistent with GATS Art. VII – , shall not be in a manner which constitutes a means of discrim. between countries in its application & shall afford oppor. for other interested Mem to negot. CF- EU Trade & Development Committee to review progress every 2 years
Procedures n n Where a specific commitment has been made & authorization is required, the competent authorities of the Parties shall, within a reasonable period of time after the submission of an application considered complete inform the applicant of the decision concerning the application. The Parties shall maintain or institute judicial, arbitral or administrative tribunals or procedures which provide, at the request of an affected investor or service supplier, for a prompt review of, and where justified, appropriate remedies for, administrative decisions.
Cooperation Cooperate by providing support through technical assistance, training & capacity building: n n n Improve ability to gather information on & meet regulations & standards of the EU; Improve export capacity particularly marketing of tourism & cultural services, SMEs; Facilitate interaction & dialogue;
Cooperation (cont. ) n n n Address quality & standards needs under the agreement & domestic & regional markets. Also ensure participation in the development & adoption of sustainable tourism standards; Developing & implementing regulatory regimes; and Mechanisms for promoting investment & joint ventures & enhancing the capacities of IPA
EU Commitments The EU have scheduled their reservations in four different sections n Cross-border supply of services; n Commitments on Establishment (Commercial Presence); n Reservations on Contractual Service Suppliers (CSS) & Independent Professionals (IP)n Reservations on Key Personnel and Graduate Trainees.
Cross-border provision Horizontal limitations on acquisition of land real estate by foreign investors
Commercial Presence Commitments Commercial presence (Mode 3) Horizontal limitations n n Limitations on acquisition of land real estate by foreign investors in 19 Member states Limitations on the type of establishment includes limitation on the treatment accorded to branches or agencies established in a Member State by a third country company, also, residency & nationality conditions in the composition of the board of directors
Commercial presence horizontal limitations (Cont. ) n n n EC reserve their right to prohibit or regulate the acquisition of a juridical person for overriding reasons of general interest in so far as they comply with Community law and international obligations. Prior authorization; and Limitation on foreign participation
Movement of Natural Persons n Those measures (e. g. need to obtain a license, need to register with the Registrar of Companies, universal service obligations, need to obtain recognition of qualifications in regulated sectors, need to pass specific examinations, including language examinations, non-discriminatory requirement that certain activities may not be carried out in environmental protected zones or areas of particular historic and artistic interest), even if not listed, apply in any case to service suppliers of the other Party.
Key Personnel & Graduate Trainees n n 2 Member States, BG & HU require ENT for Graduate Trainees); The number of ICT must not exceed 10%(BG), Unbound HU; Restriction for Managing Directors and Auditors include - Residency requirement, trade permit, specific authorization (AT, FI, FR, RO, SE) EU directives on mutual recognition of diplomas only apply to EU nationals.
Key Personnel & Graduate Trainees (Cont. ) n EU directives on mutual recognition of diplomas only apply to EU nationals. The right to practise a regulated professional service in one Member State does not grant the right to practise in another Member State – (In order for third-country nationals to obtain EC-wide recognition of their qualifications, it is necessary to negotiate a Mutual Recognition Agreement)
Key Personnel & Graduate Trainees (Cont. ) n Commitments on key personnel and graduate trainees do not apply in cases where the intent or effect of their temporary presence is to interfere with or otherwise affect the outcome of any labour/management dispute or negotiation
Contractual Service Suppliers (CSS) n n n The EU made commitments in 29 sectors For the EC 10 commitments enter into force in 2011 For Bulgaria & Romania 2014 EC directives on mutual recognition of diplomas only apply to nationals of EU Member States. The right to practise a regulated professional service in one Member State does not grant the right to practise in another Member State. (In order for third-country nationals to obtain EC-wide recognition of their qualifications, it is necessary a Mutual Recognition Agreement to be negotiated)
Areas of access for CARIFORUM CSS in the EU 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. Legal advisory services in respect of international public law and foreign law Accounting and bookkeeping services Taxation advisory services Architectural services Urban planning and landscape architecture services Engineering services Integrated Engineering services Medical and dental services Veterinary services Midwives services
Areas of access for CARIFORUM CSS in the EU (cont’d) 11. 12. 13. 14. 15. 16. 17. 18. 19. 20. Services provided by nurses, physiotherapists and paramedical personnel Computer and related services Research and development services Advertising services Market Research and Opinion Polling Management consulting services Services related to management consulting Technical testing and analysis services Related scientific and technical consulting services Maintenance and repair of equipment
Areas of access for CARIFORUM CSS in the EU (cont’d) 21. 22. 23. 24. 25. 26. 27. 28. 29. Chef de cuisine services Fashion model services Translation and interpretation services Site investigation work Higher education services (only privately-funded services) Environmental services Travel agencies and tour operators' services Tourist guides services Entertainment services other than audiovisual services
Independent Professionals (IP) Market access was granted in 11 sectors. 1. Legal advisory services in respect of international public law and foreign law (i. e. non-EU law) 2. Architectural services 3. Urban planning and landscape architecture services 4. Engineering services 5. Integrated Engineering services 6. Computer and related services 7. Research and development services 8. Market Research and Opinion Polling 9. Management consulting services 10. Services related to management consulting 11. Translation and interpretation services
CARIFORUM Commitments GATS structure – does not include The Bahamas & Haiti n Takes into account regional integration progress and sensitivities of individual states/sub-groupings n Key personnel & Graduate trainee where there is a mode 3 commitment, subj. to an ENT – Main criterion is availability of persons with the requisite skills in the local labour market (mode 4) or an assessment of the relevant market situation ie. number of & impact on existing service suppliers
CARIFORUM Horizontal commitments n n n Treatment may be reserved with respect to subsidies or grants Mode 3 – requirements for incorporation, registration & limitation on the acquisition of land Mode 4 – Unbound except for Key Personnel & graduate trainees not available locally
Movement of Natural Persons n In those sectors in which economic needs tests (ENTs) are applied for Mode 4, the main criterion will be availability of persons with the requisite skills in the local labour market. With regard to other modes of supply, the main criteria for ENTs will be the assessment of the relevant market situation where the service is to be provided, with respect to the number of, and the impact on, existing service suppliers.
Management consulting Services
Classification of Management Consulting Services (UNCPC) n n n n 86501 - General management consulting services 86502 - Financial management consulting services (except business tax) 86503 - Marketing management consulting services 86504 - Human resources management consulting services 86505 - Production management consulting services 86506 - Public relations services 86509 - Other management consulting services
Classification of Services Relating to Management Consulting n n n 86601 Project management services other than for construction 86602 Arbitration and conciliation services 86609 Other management services n. e. c.
EU Commitments in Management consulting services n n n Modes 1), 2) & 3) None CSS & IP - CY, DE, EL, FR, IE, LV, LU, MT, NL, PT, SI, SE, UK: None. ES, IT, PL: Economic needs test for IPs BE: Economic needs test, except for CSS when the annual wage is above the amount defined by the relevant laws and regulations. DK: Economic needs test except for CSS stays of up to three months AT, BG, CZ, FI, HU, LT, RO, SK: Economic needs test.
EU Commitments in Services related to Management Consulting n n n n Modes 1) & 2) None Mode 3 - HU: Unbound for arbitration and conciliation services CSS & IP - CY, DE, EL, FR, IE, LV, LU, MT, NL, PT, SI, SE, UK: None ES, IT, PL: Economic needs test for IPs BE: Economic needs test, except for CSS when the annual wage is above the amount defined by the relevant laws and regulations. DK: Economic needs test except for CSS stays of up to three months AT, BG, CZ, FI, HU, LT, RO, SK: Economic needs test.
CARIFORUM Commitments in Management Consulting n n n ATG, BRB, BEL, DMA, DOM, GUY, JAM, KNA, LCA, VCT, GRD (Except 86506 Public relations services) SUR (Except 86509 - Other management consulting services) TTO (CPC 86503 - Marketing management consulting services)
CARIFORUM Commitments in Management Consulting n Mode 1 – None n n n Mode 2 - None Mode 3 – None n n Except - DMA, GRD, KNA, VCT – Unbound (MA & NT) Others None Except - DMA, BEL, GRD, SKB, VCT – Unbound (DMA -none 2018, VCT – none 2020) Mode 4 – Unbound except as indicated in the horizontal commitments n Except - BRB - Subject to economic needs test for IP, BEL Subject to economic needs test for CSS and IP & TTO - None
CARIFORUM Commitments in Services Relating to Management Consulting n n n ATG, BRB, DMA, DOM, GUY, JAM, KNA, VCT, TTO, BEL (CPC 86609 - Other management services n. e. c. ) GRD (CPC 86601 - Project management services other than for construction & 86609) SUR (Except CPC 86602 - Arbitration and conciliation services & 86609)
CARIFORUM Commitments in Services Relating to Management Consulting n n n Mode 1 – None Mode 2 – None Mode 3 – None n n (Except KNA & VCT Unbound) Except – DMA Unbound. None from 2022, GUY, KNA, TTO Unbound & VCT Unbound. None from 2022 Mode 4 – Unbound except as indicated in the horizontal commitments n Except - BRB - Subject to economic needs test for IP, BEL Subject to economic needs test for CSS and IP
Summary of CARIFORUM commitments n In the majority of States there are no limitations in modes 1, 2 & 3 n Reflective of the importance on these modes for trade in services, as well as the view of the development of the sector (for mode 1 have to take into consideration rates for telecommunication services) n Mode 4 limited commitments - subject to ENT (availability of skills in the market) n Reflects the endeavor to encourage the development of small/individual suppliers
CHALLENGES OPPORTUNITIES WEAKNESSES STRENGTHS
Challenges n n n n n Absence of tax treaties to avoid double taxation Foreign exchange controls Language Ignorance of cultural norms, customs and values Protectionist policies Meeting the right people Cost of travel Ignorance of the laws Residential status requirement in some EU States Visa requirements
Opportunities n n n n Openness to foreigners Use of English Access to other markets Contacts in place Pricing Positive attitude towards joint ventures/partnerships Diaspora populations Implementation of the Agreement
Weaknesses n n n Small size of firms Lack of business operation in the EU Unwillingness to collaborate
Strength CICMC
Other issues to consider (Demand-side) Demand-side issues (market access, consumers, target markets, regulatory regimes) n Identify persons & companies in the EU for partnership n Determine the need for a MRA to capitalize upon opportunities
Other issues to consider (Supply-side) Supply-side issues (Competitiveness, product quality, HR, Technological capabilities) n Identify best practices & standards for MR n Need to develop capacity to meet nat’l & int’l standards n Technical assistance for professional development n Acquire the relevant draftspersons to develop required laws n Provide training to contest the EU market and provide Management Consulting Services
Implementation issues n n n n CARIFORUM-EC cooperation and regional CARIFORUM integration designate a Coordinator Future Liberalisation; Facilitatory Measures Sectoral Measures on Mode of Supply Harmonisation & enactment of a modern regulatory framework
Other issues to consider (cont. ) Implementation issues n Develop a national strategic development plan n Development & enforcement of laws n Development of required legislation for registration, licensing & certification n Training n Adequate project development to draw down development assistance
Implementation issues (cont. ) n n Conduct nat’l consultations toward development of policies and legislation for the implementation of provisions & commitments in services & investment Conduct nat’l consultations towards the future liberalisation of services & investment commitments Review legislation & implement new legislation to facilitate trade in all sectors liberalised Complete the process of the CARICOM – DR services schedules
Implementation issues for the Movement of Natural Persons Mechanism to address the ENT n Collection of data n Thorough assessment of what policy is in place for temporary entry n What labour market tests are in place (national & regional) n How do we assess the HR needs
Implementation issues (cont. ) n n n Train specialists to monitor other FTA and address granting MFN to EU service providers – seminars with immigration Sensitization of all stakeholders on legal requirements for temporary movement Greater collaboration/coordination between Ministries and agencies establishment of enquiry points Develop policies to govern the behaviour of investors
Implementation issues (cont. ) implement measures to: n facilitate prior publication of new measures; n specify and publicize application requirements; n establish mechanisms for the timely response to application queries.
Way forward n n n n What is necessary for your sector to become more competitive What you need to know about the EU & DR market How the cooperation provisions can assist Do you have the relevant laws & regulations in place Do you have the necessary technology Where is training required How effective is the organizational structure Cost of telecoms (important factor for mode 1)
Way forward n Implement the provisions of the CSME that will allow for the free movement of Service Suppliers; n n Registration, licensing, Certification & Recognition Implement necessary policy & regulations for the regulatory and administrative operation of the profession;
Way forward (cont. ) n Initiate the process for negotiating the MRA between CARIFORUM & the EU n n Development of proposals & recommendations Develop mechanism to address implementation of commitments
Thank you
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