Managed
Mutual Recognition:
The New Approach to the Liberalization of Professional Services
Kalypso Nicolaïdis
Table Of Contents
I.
Introduction
1. This paper focuses on mutual
recognition of qualification, licensing and certification requirements as
one of the mechanisms that can be used to address the impact of national regulations
on the capacity of professionals to exercise their activities across borders.
It asks what are the most promising approaches as well as the principal obstacles
revealed by experiences with mutual recognition agreements in the field of
professional services, and presents some recommendations for the future.
2. Unilateral recognition conducted
on an ad-hoc basis has long been the norm for professional wishing to practice
across borders. This involves comparing the qualifications acquired by a professionals
in a home state with those required in a host state where the professional
requests recognition, and where the competent authorities are to assess some
level of equivalence according to unilaterally determined criteria. But such
a way of allowing entry for foreign professionals constitutes partial and
arbitrary liberalisation. Partial, because most of the time, the foreign professional
is not granted unconditional access; arbitrary because the ad hoc character
of the procedure does not ensure objectively predictable assessments.
3. Agreements on mutual recognition
turn the above procedure from a unilateral to a reciprocal one, reducing transaction
costs of granting entry for regulatory bodies and the uncertainty related
to rights of entry for professionals (mutual recognition is sometimes referred
to by professional bodies as "inter-recognition" or reciprocity).
Mutual recognition theoretically covers the various components of professional
qualifications: professional education sanctioned by diploma, professional
experience, and formal licensing or certification requirements -- including
examination and membership of professional association. In practice, recognition
agreements can focus on one of these elements.
4. Mutual recognition is a principle
that can be applied to products as well as services in general and professional
services in particular. Formally, mutual recognition can be defined as a contractual
norm between governments -- or bodies with delegated authority -- mandating
the transfer of regulatory authority from the host country (or jurisdiction)
where a transaction takes place, to the home country (or jurisdiction) from
which a product, a person, a service or a firm originate (jurisdictions are
generally sovereign states but they can also be sub-national units in federal
entities). This in turn embodies the general principle that if a professional
can operate, a product be sold or a service provided lawfully in one jurisdiction,
they can operate, be sold or provided freely in any other participating jurisdiction,
without having to comply with the regulations of these other jurisdictions.
The "recognition" involved here is of the "equivalence",
"compatibility" or at least "acceptability" of the counterpart's
regulatory system; the "mutual" part indicates that the reallocation
of authority is reciprocal and simultaneous. A Mutual Recognition Agreement
(MRA) is one in which the respective regulatory authorities accept, in whole
or in part, the regulatory authorisations obtained in the territory of the
other Party or Parties to the agreement in granting their own authorisation.
It is therefore a specific instance of application of the general principle,
between specific parties, applying to specific goods and services and including
more or less restrictive constraints and caveats.(1)
5. This paper puts forth three
interrelated arguments about mutual recognition:
1) Managed Mutual Recognition
as a process: The European experience with mutual recognition demonstrates
the value of adopting a form of "managed mutual recognition" which
does not require extensive prior harmonisation of qualifications across
borders. Instead, MRAs can involve variations in scope, automaticity and
reversibility of access to compensate for existing differences in the ways
in which professions are regulated. Moreover, they should be thought of
as the basis for dynamic processes of learning-by-doing and progressive
liberalisation.
2) Regulatory Cooperation: MRAs cannot be struck in a vacuum. Because
they are vulnerable to conflicts of interpretation and changes in domestic
circumstances, they must be designed so as to minimise risks of disruptive
conflicts. They therefore require corollary regulatory cooperation in the
form of on-going and systematic exchange of information, mutual monitoring
and cooperative enforcement. Such an emphasis will not only serve liberalisation
as an end in itself, but will also help provide incentive for, and enhance
the effectiveness of regulatory reform in OECD countries.
3) Pro-active Multilateralisation: The WTO should adopt a cautious
approach to the enforcement of unilateral obligations -- including unilateral
recognition --by judicial fiat. Instead, it needs to create incentive for
the negotiation of open MRAs as well as devise mechanisms to guard against
disruptive discriminatory effects and accelerate the multilateralisation
of MRAs, including through the drafting, updating and administration of
MRA guidelines. The OECD can provide precious support in this regard.
II.
Mutual Recognition in the context of overall liberalisation
6. There are still strikingly
few MRAs in the professional sector, but there is a growing sense that their
development could play a key role, both to maintain the regional and international
momentum for services liberalisation and to provide impetus for regulatory
reform as spearheaded by OECD.(2)
Mutual recognition will likely
be at the heart of trade diplomacy in the next decades. It has proved contagious
since its broad-base adoption in the context of the Single Market in Europe,
especially as applied to products. Its adoption generally comes in two phases.
First, it is enshrined in a broader treaty or agreement as a general principle
for further liberalisation. As with the Treaty of Rome forty years ago, NAFTA,
APEC the FTAA and the Australia-New Zealand Closer Economic Relations Trade
Agreement (ANZCERTA) all call for future negotiations on mutual recognition.
At the global level, the signatories of the Uruguay Round called for the bilateral
or plurilateral negotiation of MRAs both in the Agreement on Technical Barriers
to Trade (TBT Article 6) and in the General Agreement on Trade in Services
(GATS Article 7).(3)
7. Second, following these injunctions
and guidelines, actual MRAs involving specific rights and obligations are
negotiated at bilateral, plurilateral or multilateral levels.(4)
MRAs for professional services are still in their infancy. The Working
Party on Professional Services operating under the aegis of GATS is engaged
in a major endeavour to apply mutual recognition and harmonisation to the
field of accounting. Under the umbrella of NAFTA, an agreement on recognition
in engineering was reached in June 1995 and is currently awaiting ratification.
Agreements on foreign legal consultants and architecture are also near completion
and consultation is under way in a number of other professions (nurses, dieticians,
veterinarians).(5) One
of the most far-reaching agreements is the Trans-Tasman MRA (which builds
on the ANZCERTA) to be implemented in 1997.
8. What are the factors behind
this drive towards mutual recognition? First, mutual recognition has a central
place among the array of methods to liberalise trade in professional services.
Since 1995, under the auspices of the OECD Committee on Capital Movements
and Invisible Transactions (CMIT), the broad range of barriers that impede
the free movement of professionals across borders either in their capacity
as individuals, or as professional firms has been extensively documented and
analysed.(6) Lack of recognition
of foreign qualification and experience has been cited repeatedly as a core
impediment to trade in professional services. Other impediments are either
more basic (citizenship) and therefore addressed earlier; or they subsist
in spite of mutual recognition and need to be dealt with by domestic competition
law.
9. Mutual recognition also carries
benefits beyond rights of access. First, it may be a way for the importing
country to make better use of imported skills and increase its comparative
advantage in certain professional fields. Second, MRAs allow the various regulatory
bodies involved in granting rights to practice to save time and resources
by working together and engaging in a more effective division of labour. It
is this growing realisation that is leading professional associations and
licensing boards to enter discussions on MRAs on their own initiative. Third,
engaging in such recognition may also enhance mutual learning and the transmission
of regulatory experience, thus raising professional standards as well as the
level of access to professional services around the world. Maybe most importantly,
the very prospect of having to negotiate MRAs can constitute a stimulus for
internal regulatory reform and the necessary adaptation of the professions
to changing economic and social environments.
10. There are also major obstacles
that need to be overcome in order to engage in MRAs. First is the mere complexity
and opacity of the education and training systems prevalent around the world
and of the licensing requirements that they are meant to prepare for. Building
bridges between such complex systems requires in depth individual and institutional
learning. Second is the often expressed fear on the part of government regulators
and professional bodies alike that mutual recognition may lead to a lowering
of professional standards, both because it would mandate entry for professionals
trained below the standards of the host country and because accreditors may
be tempted to enter into regulatory competition to expand their "client
base". In addition to purely corporatist reactions, this line of argument
is the main cause for the resistance stemming from the professions themselves.
These obstacles lead back to the fundamental tension which is at the heart
of this whole debate, that between the trade culture which emphasises openness
and competition and the regulatory culture which emphasise the need for constraints
on such competition and the collective responsibility for mitigating the potentially
harmful effects of markets. The challenge for mutual recognition proponents
is to show how these two sets of objectives can be reconciled.
III.
The European Experience: Emergence of managed mutual recognition
11. The Europeans were the first
to systematically apply mutual recognition to the professions. The historical
experience accumulated in the EU is worth drawing lessons from both because
it illustrates alternative approaches to mutual recognition and because it
provides a roadmap for what I argue is the only workable approach to mutual
recognition in most circumstances, namely managed mutual recognition.
1. The historical sequence of
alternative paradigms
12. Mutual recognition was formally
invented in 1958. The Treaty of Rome called for the adoption of EU directives
on "the mutual recognition of diplomas, certificates and other evidence
of formal qualification," both for the purpose of freedom of establishment
and free movement of services.(7)
The first interpretation of this injunction dominant until the mid-1970s was
that mutual recognition was predicated on the equivalence of diploma and that
equivalence meant similarity: far-reaching harmonisation of professional
training standards was to be a prerequisite to the mutual recognition of diplomas.
Regional integration through convergence -- rather than through competition
-- was the rationale for this approach. On this basis, the European Commission
along with member state representatives drafted far reaching proposals in
1969-70 concerning about twenty professions.(8)
For each profession, they set out with great precision training requirements
which were to be respected in each member state, including quantitative requirements
as to the minimal number of hours of courses to be delivered by degree-granting
institutions.(9) With
such conditions fulfilled, mutual recognition would grant full and unconditional
access in the host country to all professional activities that a given diploma
granted in a home country.
13. A second paradigm followed
in the mid-1970s, replacing such quantitative harmonisation with qualitative
harmonisation as a basis for mutual recognition. In other words, equivalence
of diplomas should not be predicated upon their similarity but upon their
comparability. This meant that broad guidelines for the content of curricula
would be spelled out along with specification of the required lengths of study.
A series of mutual recognition directives did pass on this basis in the mid-1970s
concerning medical and para-medical profession, but dozens of other sectoral
directives, including for engineers, accountants, professors, and lawyers,
reached a stalemate. Thus, of the nearly 150 professions being practised in
the EU, only a handful had been liberalised in the first two decades of the
EU experience. The last directive adopted in this vein (for architects, in
1985) set out fundamental requirements in terms of skills and abilities without
specifying a corresponding content of education and training. It was a precursor
to the next phase of liberalisation.
14. By the early 1980s, a third
paradigm was in the making, namely mutual recognition without prerequisite,
thus delinking mutual recognition from harmonisation. The lesson seemed clear
after almost two decades of protracted negotiations in this area: if quick
progress was to be achieved, the sectoral approach which had prevailed until
then would need to be abandoned and measures would need to be devised to liberalise
in a broad sweep, without entering into the complexities of each particular
profession. In 1984, European heads of states called for the introduction
of "a general system for ensuring the equivalence of university diplomas
in order to bring about the effective freedom of establishment within the
Community." This came to be known as the horizontal approach to professional
services liberalisation and was embedded in the General System Directives
(GSDs). This approach was not to the liking of most professional bodies which,
during all the previous rounds of negotiations, had fiercely defended the
need to deal with their particular needs and characteristics under separate
legal frameworks.(10)
2. The GSD: A multi-tiered mechanism
of recognition for all the regulated professions
15. The General System is a stratified
system based on the length and character of study or training required to
have access to a profession. It is based on two separate directives, one dealing
with higher level diplomas corresponding to three or more years of studies,
the other dealing with less then three years.(11)
In contrast to the prevailing mechanism for unilateral recognition, the General
System addresses the issue of equivalence by asking applicants to opt directly
for a specific profession rather than selecting the University diploma that
they consider equivalent to their own (in most European countries where registration
in professional associations is based on the possession of a diploma, unilateral
recognition involved ministries of education delivering certificates of equivalence
between diploma). The GSD also moves away from the diploma-centred approach
of the 1970s by allowing for training and professional experience to play
a concurrent role as diploma in assessing equivalence.(12)
On this basis, the horizontal approach meant not only that all categories
of professions ought to be covered, but that they ought to be covered whatever
the mode of their regulation in the home country that is without setting prior
conditions regarding the criteria for accreditation in the home country.(13)
16. To make up for its basic philosophy of broad-based equivalence, the system
establishes a relatively complex set of distinctions between seven types of
professional qualifications that may have been obtained by the professional
in her home country.(14)
Conditional equivalence is established within each category and bridging mechanisms
are set out to cover cases where requirements fall in different categories
in the home and host countries. The system is based on the notion of "regulated
profession" defined as the specified set of professional activities that
constitute a given profession in a given member state.(15)
On this basis, a state cannot restrict access to only some activities within
a profession and conversely an applicant cannot apply only to one subset of
activity (e.g. "syndic de faillite" as part of lawyer).
3. Assessing the new bargain
a. Replacing prior harmonisation
by a system of compensation
17. The core innovation of the
GSD is to have done away with prior harmonisation altogether. For harmonisation
is by definition a case-by-case cooperative process incompatible with a horizontal
approach. To make up for such lack of negotiated convergence, the GSD allows
for reduced automaticity of access under mutual recognition, introducing a
"system of compensation" based on requirements of local adaptation
period and sometimes aptitude tests in order to offset the prevailing differences
among national degree-granting systems (see part IV for detail). Such compensations
create bridges between national systems that differ both as to the content
of qualifications and as to how the profession itself was regulated. In short,
the basic logic of the directive is the following: national authorities should
accept equivalence of qualifications as is, identify areas where there remains
"significant" knowledge gaps or "deficits," and seek ways
to compensate for these gaps on a case-by-case basis. The idea was in effect
to translate the judicial notion of proportionality into Community
secondary law, whereby criteria for assessing such proportionality would be
codified in legislative form by member states rather than left up to
the Court of Justice (ECJ).(16)
18. The GSD turns the traditional
EU approach of on its head, whereby harmonisation and mutual recognition are
to be followed by full and unconditional market access. Instead, mutual recognition
might be qualified and therefore grant only conditional market access. The
system thus consists of two steps: a premise of broad equivalence of
licensing systems, and customised recognition accorded to individuals.
Figure 1: The EU horizontal approach:
Trading off automaticity for
harmonisation
b. Sustained cooperation: mutual
trust in words, mutual monitoring in practice
19. While the GSD implies that
ex ante transaction costs of negotiation associated with recognition are substantially
lower than under the prior harmonisation approach, it also implies that ex
post transaction costs associated with liberalisation have dramatically increased.
The enforcement of the new system requires a high degree of sustained cooperation
on the part of member states. For one, in order to decide whether and how
to apply compensation measures, states need to engage in mutual monitoring
or mutual oversight, draw up lists of relevant subjects and constantly update
the comparison between their respective systems. This means a constant strengthening
of the ties and mutual acquaintance among national regulators. As stated by
the Commission, "to aid the member state in its task of assessing the
qualifications offered and enable it to determine whether these qualifications
are adequate, or whether compensatory measures are needed, cooperation is
necessary between member states."(17)
For this purpose, cooperation takes place through an information exchange
and cooperation procedure both between member states and between member states
and the Commission. With the help of the Commission, a group of co-ordinators
appointed by each member state is in charge of monitoring the implementation
of the directive and collecting useful information to that effect.(18)
20. Mutual trust between national
authorities has repeatedly been emphasised as the critical condition for success.
When introducing the new system, the Commission argued that the envisaged
procedures "would have only a limited effect and ultimately be of slight
practical advantage to the citizens of Europe if its application were not
based on the idea of reciprocal confidence."(19)
While this is true as a minimum condition, I would argue that the GSD places
at least as much an emphasis on mutual monitoring through formal and informal
ties as on mutual trust. Obviously the two are not mutually exclusive and
may reinforce each other (mutual trust is based on mutual knowledge which
needs to be constantly updated). But the introduction of compensatory requirements
and the related need and right for national regulators to be able to probe
into each other's system on an ongoing basis would seem to constitute a much
greater factor for accepting mutual recognition than simply trusting each
other's standards. As methods of training evolve, as new professions are introduced,
as new requirements are added and old ones discarded, the public or private
authorities competent in regulating professional markets cannot assume that
equivalence at some initial point in time will be sustained. This in turns
speaks to the importance of extant and new institutional mechanisms as a crucial
enabling factor for the adoption of mutual recognition.
c. Beyond the GSD: the partial
return of the sectoral logic
21. The two GSDs have now been
in force for 6 and 3 years respectively, although the fact that Member States
have used different techniques to transpose them into national laws has increased
the uncertainties associated with the early phase of implementation.(20)
Applications for cross-national recognition did increase slightly, especially
at the beginning (professionals had been awaiting the implementation of the
GSD) but seem to have levelled off. Concurrently, the negotiation agenda is
not closed. One piece of the legislative agenda has been to expand the GSD
to craft trades and other business services. Although requirements are on
average less stringent in these areas, differences between member states are
sometimes even greater than in the traditional professions. Old directives
in the health sector have also been updated in the spirit of the GSD. The
EU Commission now seeks to simplify the GSD itself, in particular to address
the problem of professions falling under one directive in one country and
under another in a different country, and to clarify the legitimate content
of compensatory requirements.
22. Maybe most importantly, the
GSD is far from having won unqualified approval from professional bodies.
These bodies would have preferred to set criteria for equivalence on their
own to be translated into sectoral directives rather than leaving such assessment
to the "arbitrary" decisions of "state bureaucrats". They
feel that professional associations are best able to design and update the
equivalence system. For instance, in 1986, FEANI, the European Association
of Engineers representing one million engineers, created a "register
commission" for engineers, hoping the initiative would serve as a basis
for a sectoral directive. This commission proposed a complex numeric formula
for differentially weighing years required for three components of engineering
training.(21) Under this
scheme, applicants for cross-border provision of services would have been
granted various types of titles of certified FEANI engineers. These efforts
were at least temporarily pre-empted by the implementation of the GSD in 1991.
23. In the legal arena, the GSD
has been considered at best as only a stepping stone and at worst as a drawback
in the close to two decade long pursuit of an adequate scheme by the profession
itself. It is often argued that this is the profession where host country
requirements are the most justified (and where corporatist patterns are most
pronounced).(22) Thus,
this was the only profession to have obtained a derogation in the GSD for
the host country to be able to impose an aptitude test on applicants. In the
2 years following the entry into force of the GSD, only a few dozen lawyers
applied for recognition outside the bilateral flow between UK and Ireland.
Professional bodies have consistently argued that the GSD did not serve their
needs and that they needed their own directive. In 1994, after protracted
negotiations between national bars, the EU Commission put forth a draft for
a new directive to apply to lawyers concerning the right of establishment
and an amended proposal was adopted in 1996.(23)
The establishment directive is supposed to fill the three main gaps in the
GSD by: a) facilitating admission for experienced lawyers, where disagreements
have focused on the exact conditions for waiving compensatory requirements;
b) granting cross-border rights to law firms in addition to lawyers, where
disagreements have focused on the fate of firms not controlled by EU lawyers;
and c) allowing individual lawyers and law firms to practice throughout Europe
under their home title, the most controversial issue (see discussion in IV.3
and V.5).
d. Preliminary diagnosis
24. It is fair to ask, at this
most general level, whether the current European approach constitutes a first
or second best when compared to the traditional approach focusing on the prior
adoption of common standards. Clearly, in the short run, such an approach
has a number of advantages: a) expediency: it is a more effective way to achieve
progressive liberalisation than seeking to bridge the structural differences
between national systems; b) coverage: it was designed to cover the broadest
possible spectrum of training configurations found across member states and
2 by 2 differences found between national training systems; c) standards:
it maintains guarantees on qualifications through compensatory requirements.
This in effect enabled parties to go through with an agreement that might
otherwise have been held hostage to the least regulated European states. By
replacing ex-ante harmonisation with conditional access and the reliance on
mechanisms for ex-post cooperation, the EU achieved in three years what had
not been achieved in the previous thirty years while at the same time alleviating
-- to some degree -- member states' fears of sub-standard competition.
25. But many questions remain
open under the GSD. For one, even when migrants do not encounter barriers
to access after review of their application, the uncertainty is still there.
Isn't the system bound to deter occasional or sporadic service provision?
What will happen to the mandatory updating of professional standards and the
continued training required in a number of countries? Should the mandatory
character of retraining also be bypassed through recognition? What will happen
with the emergence of new professional sectors? To what extent can a host
state be challenged for raising the stringency of its compensatory measures
either when it wishes to raise the professional standards applied to its own
nationals (and a forciori to non-nationals) or when a home country reduces
its professional standards? In part, the answer to these questions will come
from the behaviour of the host states themselves and how they interpret the
provisions of the GSD.
26. The answers to these questions
also lies with the ECJ as well as national Courts who will be called upon
to uphold the rights of individuals in the face of potentially arbitrary requirements
imposed by host states under the compensatory system. The drafters of the
new system, however, were confident that it actually created new patterns
of incentives for individual states that would progressively lead to an upward
convergence of standards and therefore alleviate most of the potential conflicts
that could be envisaged. Because they have acquired new rights, professionals
are calling for more mobility in the EU. Yet, given the customised features
of compensation measures, these theoretical rights amount to very different
effective rights of access depending on the characteristics of home country
standards. Professionals coming from low standards countries and facing higher
compensation than their counterparts from other countries are starting to
act to upgrade the reputation of their home country systems. Instead of a
"race to the bottom" this type of "managed" regulatory
competition is likely to create a "climb to the top." In short,
the GSD created the conditions for an incremental loosening of host country
compensatory requirements and therefore for a progressive expansion of the
effectiveness and automaticity of mutual recognition.
IV.
Main features of MRAs
27. Drawing on the European experience
as well as that of NAFTA, Australia-New Zealand and WTO -- and extrapolating
from these examples -- it is possible to define and describe more precisely
what I mean here by managed mutual recognition and which of its features may
be most appropriate in different contexts. As an outcome, managed mutual recognition
can be contrasted with "pure" mutual recognition in the same sense
as managed trade can be contrasted with total free trade. Pure mutual recognition
implies granting fully unconditional and open-ended rights of access. In contrast,
mutual recognition in operational terms actually involves complex sets of
rules and procedures, that may serve to reduce, if not eliminate, the open-endedness
of mutual recognition.
28. I outline below the four main
dimensions along which mutual recognition can be managed or fine-tuned, namely:
a) prior conditions for equivalence; b) automaticity; c) scope; and d) ex-post
guarantees. On this basis, managed mutual recognition can be viewed in a static
or a dynamic manner. At a given point in time, variations along each of these
dimensions can be seen to indicate how far parties have travelled down the
road to full recognition. Dynamically, mutual recognition can be viewed as
a process, involving trade-offs between these dimensions that may change over
time.
1. Variation in prior conditions
for equivalence between national systems: Is harmonisation necessary?
29. How similar must qualification
and licensing requirements be before we can consider engaging in mutual recognition?
How is such equivalence determined? To address this question, MRAs must first
determine the level at which equivalence is to be assessed. There are two
main functions in the regulation of the professions that may be the object
of mutual recognition:
1) The assessment of qualification
through education and training of professionals, which is itself based in
part on systems of accreditation to education and training bodies;
2) Licensing, certification and/or registration of professionals
granting the right to practice.
30. The type of bodies responsible
for these regulatory functions and the character of their intervention changes
from one country to the other. Diplomas delivered by Universities can serve
as sole licensing mechanisms, as a mandatory input, or as an non-mandatory
input for licensing. Accreditation of professional schools by professional
associations and other accreditation bodies can be mandatory or only serve
as an input in determining the validity of a degree as a base for licensing.
Licensing bodies range from ministries to purely private associations, although
the later generally deliver certificates rather than licenses. Registration
in a professional association can replace or supplement licensing undergone
under the authority of an examination board. It can itself be compulsory or
mandatory. In order to simplify the potentially daunting task of assessing
equivalence between such potentially different systems it is necessary to
first determine what part of the regulatory chain or process does recognition
extend to. Mutual recognition -- like the regulations recognised -- can apply
to input (relied upon by the regulatory body to make its decision), determinations
(agency decisions regarding the application of regulatory standards in particular
instances) and legal results (ultimate decision resting on input or determination).(24)
In the professions, this means
that recognition can be limited to the whole or part of the education and
diploma obtained (input), the license or certification granted on this and
other basis (determination), or the right to practice granted by the home
country whatever the input and determination. Only under such recognition
of results, is there direct effect of the home country rules on the territory
of the host country and right to practice follows not only from positive regulation
but also from a failure to regulate in the home country.
31. Once the level of recognition
is determined, a second distinction comes into play between two fundamental
aspects of regulatory systems to which recognition applies:(25)
a) Substantive requirements,
("professional standards") that is the criteria for determining
adequate professional qualification and for accrediting training institutions,
including the content of studies and licensing examinations; and,
b) Qualification and licensing
procedures that is the set of procedures by which individuals are made to
conform and comply with these requirements, including through examination,
and the process by which the institutions that certify them are themselves
accredited.
32. Mutual recognition in the
professions technically applies to the second category: it is the process
by which a professional acquires a stamp (whether of qualification or license
to practice) that is recognised as equivalent. Such recognition is in turn
conditional on assessing whether the underlying requirements or criteria for
qualification should themselves be unilaterally or mutually recognised or
harmonised (and if the later to what extent). The GATS states explicitly that
recognition may or may not be achieved through prior harmonisation of the
content of the relevant measures (Article 7). Thus mutual recognition and
harmonisation are neither mutually exclusive nor necessarily corollaries.
The "test of equivalence" between systems that underpins recognition
can be conducted concurrently or alternatively with regards to the explicit
standards of education, training and licensing in and of themselves or between
the procedures followed by licensing and accreditation bodies.
a. Equivalence of professional
standards
33. At one extreme, parties may
simply decide that their systems pass an "equivalence test" as is
without the need to spell out common standards and requirements for training
professionals. This is the approach taken by the EU and ANZCERTA. Generally,
establishing equivalence involves a prior agreement on common professional
requirements between parties which in turn may involve the upgrading of their
domestic ones by at least some of the parties to the agreement. In general,
the first step in most mutual recognition negotiations has been to set in
motion procedures to develop such mutually acceptable standards. In accountancy
-- the first profession to be examined under the GATS -- technical bodies
outside the WTO have been busy designing international technical accounting
standards (related to the characteristics of the services themselves) while
the GATS has provided a framework for assessing equivalence of qualification
standards per se. When standards concern educational requirements, experts
in training and licensing for the profession first need to find ways to express
common standards in the text of an agreement. The degree of specificity and
detail of such criteria for equivalence may vary to include length of study,
fields covered, types and content of courses required, etc. Standardisation
efforts involve assessing whether the scope of the profession is comparable
among parties as well as whether the training undergone for similar activities
is equivalent. This specificity reflects an understanding between parties
as to the degree of acceptable differences between them.
34. There is a growing number
of initiatives among the professions themselves aimed at developing common
minimal standards across borders. As one example, the Assembly of the International
Union of Architects (UIA) adopted an accord on standards of professionalism
for architects in July of 1996 after 2 years of intensive discussions.(26)
There are speculations that this text will serve as a model for other professions.
The text defines principles of professionalism including expertise, autonomy,
commitment, and accountability; it defines an "architect" and the
"practice of architecture" as well as the scope of such practice
(a difficult issue). It adopts the list of fundamental requirements for registration,
licensing and/or certification of an architect developed in the EU directive
for architects, but adds more specific points on standards for education,
accreditation, experience, examination, licensing and certification, procurement,
ethics and conduct. The protocol is presented as a step towards "inter-recognition"
of national standards but does not in itself establish procedures for assessing
national conformity to these standards. It constitutes a "basic policy
framework" to be further developed into detailed guidelines that will
allow flexibility for establishing principle of equivalency, "so that
requirements reflecting local conditions ...can be readily added." The
model developed here is most promising in that it sets in place a process
rather than a rigid framework and creates a dynamic of increased mutual familiarity
between professional bodies. Those involved are driven by a will to "influence
the political process shaping international trade in services" presumably
to ensure that diplomats do not bypass professional bodies as negotiations
unfold. If there is a risk that the professions might insist on too narrow
an interpretation of standards at the cost of mobility, this will be tested
in the next stage of equivalence determination.
35. A major effort at developing
criteria for equivalence of qualifications is currently being conducted under
the UNESCO Convention on the Recognition of Diplomas in the Europe Region,
which established a working group to contribute to a better assessment of
credentials from both sides of the Atlantic.(27)
In 1996, the Working Group adopted a series of general guidelines to help
promote the mutual recognition of qualifications between Europe and the US.
These include greater respective participation by the parties in each other's
placement and recognition processes, giving a chance to home country specialists
to review placement decisions made for applicants qualified under their system.
The recommendations also expand on what types of tests should be considered
as equivalent and state that "an individual US student's record (including
the diploma for an intermediate associates degree) should be analysed on a
course-by-course basis to determine which courses completed are appropriate
for meeting certain requirements of European higher education ...due consideration
should be given to the quality of the program studied, the grades obtained,
and the relevance of courses." The approach recommended here requires
very detailed assessments and may need to be specified if it is to serve as
a basis for MRA-based commitments.
b. Equivalence of accreditation
and licensing procedures and inter-recognition between competent bodies
36. In addition to the standards
for qualification themselves, the equivalence test can be based on recognition
of equivalence between accredited bodies, accreditation and licensing bodies.
At the level of accreditation, this may be done in conjunction with the setting
of education standards whereby experts from the respective parties may or
may not feel the need to satisfy themselves that the common criteria are actually
adhered to effectively in each of the parties. The only way to verify this
for accredited institutions and training programs is often through on going
interaction, field trips and on-site investigations.(28)
An extreme version of this approach would be to actually require joint accreditation
of educational institutions as a precondition for eligibility under MRAs.
37. More generally, the question
that arises is whether parties ought to recognise as equivalent the bodies
awarding diploma or licenses (universities or licensing bodies, boards, etc.).
Public and private authority is allocated differently in different countries
and professional cultures. Often in the professions, and especially in the
Anglo-Saxon context, states have devolved regulatory authority to statutory
bodies or association (self-regulation), or to independent agencies as opposed
to direct government oversight, or to hybrid forms of "self regulation
within a statutory framework." MRAs need to specify authorised "regulatory'"
bodies. This can be done in one of three ways:
1) Full mutual recognition involves
recognising that any body duly accredited by a home country government is
recognised as competent by the host country government. This amounts to
transitivity of mutual recognition from horizontal (among states)
to vertical (within states) recognition: transnational recognition takes
sub-national recognition as a given. Thus, if a home state chooses to delegate
the regulation of a profession, the host state must recognise such a delegation
even if it does not conform to its own regulatory culture. This is the core
of the GSD approach.(29)
2) Recognition may be based
on an enumeration procedure, both at the moment of signing of the MRA and
on an ongoing basis. In this way the host country can retain some control
over accreditation in the home country, from minimal (through simple notification)
-- to maximal -- (through a collective process of screening and accrediting
such bodies). The procedure may be used when there are worries that alternative
training routes may be abused by potential claimants, leading to a multiplication
of channels of access to the benefits of recognition. In the EU, the issue
arose because in the United Kingdom and Ireland, professional licensing
is mainly granted by private bodies based on professional training courses
rather than University degree titles. This was very much at odds with the
continental culture which formed the basis for the original proposal to
restrict recognition to diploma and other evidence of qualifications awarded
by universities or higher education establishments, thus limiting access
to the continent for British professionals while allowing professional practice
by foreigners in Britain who would not fall under the authority of the associations.
Ultimately, the GSD included in the definition of regulated professional
activities those "pursued by the members of an association or organisation,
the purpose of which is, in particular, to promote and maintain a high standard
in the professional field concerned and which, to achieve that purpose is
recognised in a special form by a member state (Art 1.d)" In order
to qualify, these associations needed to award a diploma to their members
and enforce rules of professional conduct. But while all other countries
fell under a generic recognition of national accreditation, the GSD listed
the bodies entitled to award diploma in the UK and Ireland.(30)
3) Finally, equivalence can
be attested by the accreditation and/or licensing bodies themselves who
can enter into direct inter-recognition agreements. This may be done in
the absence of agreements on mutual recognition/harmonisation of standards
between the respective countries (although it may involve agreement directly
between these bodies themselves on common accreditation standards); or it
may complement a general mutual recognition agreement in order to improve
on it. Thus for instance, the association of European bars (CCBE -- Conseil
des Barreaux de la Communauté Européenne) has encouraged its
members to enter into inter-bar agreement that would provide for the possibility
of all or part of country' aptitude test in favour of applicants for the
professional associations that are party to the agreement (The Brussels
Bar has recently concluded such agreements with the Paris and Italian Bars).
2. Variation in automaticity:
What is recognised at the individual level?
38. Mutual recognition is necessarily
based on an "equivalence test" between national systems. So the
degree of automaticity of access granted is first a function of the level
of recognition sought as discussed above. But the question arises whether
only national systems as a whole must pass such an equivalence test or whether,
given some broad equivalence at the macro-level, professionals still ought
to be subjected to some residual equivalence test at the individual level.
Given that equivalence is so hard to establish at the macro level, most MRAs
are unlikely to automatically extend the right of professionals from one country
to practice in another. This is true whether or not agreement has been reached
on common minimal standards. Thus MRAs need to establish procedures to deal
with variations and gaps between qualification systems and design means to
bridge these differences.
39. MRAs vary according to the
degree of automaticity of recognition which they afford and as a result, the
ease with which access will be granted to applicants. First, we need to consider
minimal interface requirements. Fully automatic recognition means in
effect, setting a system of "international licensing" whereby any
national stamp from a country that is part of the system provides automatic
access to the rest of the system, without local requirements. For example,
the Trans-Tasman MRA provides for automatic recognition, whereby registration
boards automatically license professionals registered under each other's jurisdiction.(31)
The professional need not interact with host state authorities at all if the
home state is only required to notify these authorities directly that the
person in question is duly licensed and thus authorised to operate in its
territory. Or verification may be limited to producing simple proofs issued
by the home country. In this case, specific host country authorities must
be empowered to attest to the validity of diploma obtained in the home state.
Attempts must be made at this level to minimise bureaucratic impediments (in
a number of EU countries, a high percentage of applications warranting automatic
recognition was delayed on the basis of "incomplete documentation").
40. In almost all cases, MRAs
fall short of setting up single passports for professionals. Rather, they
constitute agreed mechanisms whereby the host country "takes into
account" the qualification obtained in the home country, and where
foreign professionals are granted "adequate opportunity for recognition."
The current EU approach has been referred to as "semi-automatic"
recognition.(32) Such
lack of automaticity implies lack of predictability and remaining room for
arbitrary behaviour of the part of the host country. Nevertheless, MRAs provide
greater transparency and above all standardised criteria for building bridges
across professional licensing systems.
41. To simplify, automaticity
depends on two sets of factors: the first has to do with conditions
for migrants to be eligible for recognition in the first place; the second
has to with compensatory requirements that the host country can impose on
migrants as a condition for granting recognition. In order to highlight the
potential for negotiation, it is important to distinguish between these two
dimensions analytically even if they may overlap in practice. For instance,
crafters of MRAs may choose to cast a broad net through generous clauses on
eligibility if they need to accommodate very different systems; this may in
turn call for greater compensatory allowance; or they may choose to narrow
down eligibility and leave little room for compensation if they do not have
enough resources to manage the recognition mechanism.
a. Eligibility: recognition
of professional experience and competence.
42. Guidelines for determining
eligibility of migrants have to do with determinations of equivalence of systems
(IV.1.) and the specific characteristics of the migrant himself. On this second
count, MRAs need to specify both what host country authorities must take
into account and what they are allowed to require from the
migrant. A major step towards greater automaticity of recognition is to require
the host country to determine eligibility on the basis of a broadened range
of inputs, assessing equivalence qualitatively rather than quantitatively
and taking into account all evidence of professional competence beyond
strict professional qualification. This is key when a profession is not
regulated or when the granting of "diplomas" is not a condition
for licensing in some of the parties to the agreement. That is when there
is neither license nor qualifications to recognise. Competence can be defined
as the proven ability to provide a service, through experience and the "work
credentials" acquired in the process. In the Anglo-Saxon culture where
learning is supposed to occur on the job more than in the classroom, such
acquired skills are much more important than formal studies. Should evidence
of experience and training compensate for lack of required education credentials?
The EU adopted a broadly liberal approach in this regard, basing recognition
on requirements of formal qualification in other fields and professional experience
in the home country (some form of qualification was necessary nevertheless).
The debate was carried over to NAFTA where professional services were ultimately
defined as "services whose provision requires specialised post-secondary
education, or equivalent experience and training, and for which the right
to practice is granted or restricted by a Party." In some cases, it may
be relevant to also take into account experience acquired in the host country
before application for recognition, either that connected to a similar but
different profession or in the same profession but under reduced scope of
recognition (see IV.3). MRAs may also allow host countries to require professional
experience and must specify under which circumstances. The European GSD allows
host countries to require a number of years of experience in the home country
when the latter does not regulate the profession and the migrant is self-trained
(3 years), or has acquired some other qualifications (2 years), or has itself
recognised a diploma issued by a non-EU third country (2 to 3 years), or requires
training at least one year shorter than that of the host country.
43. In either case, how should
the relevant "competence" or "experience" be determined?
The simplest approach is in terms of number of years of experience. Other
variables include: a) how far back can the experience have been obtained (ten
years for the GSD) b) the profession where competence was obtained (the GSD
specifies that it must have a number of activities in common with that for
which recognition is sought); c) whether the experience must have been acquired
after having obtained a diploma in the profession to be recognised; d) the
type of organisations/firms and other specified conditions of prior experience;
e) qualitative evidence of competence, such as letters from previous collaborators
or employers in the home country; and f) interviews on work premises in the
home country. The second GSD had introduced the concept of "regulated
training" in the home country, that is training with specific requirements
to ensure competence at the end of the training period (this can serve to
ease the professional requirements for Irish applicants). Such a notion might
be generalised to cover all professions. Here again, the search for flexible
equivalents is key to progressive liberalisation.
b. Compensatory requirements
Defining deficits justifying compensation
44. If an MRA is to adopt the
"semi-automatic" route taken by the GSD, it needs to specify under
what conditions the host country is allowed to impose compensation requirements
unto the migrant, in view of her fulfilment of eligibility criteria. These
conditions amount to identifying deficits or gaps in qualification
between host and home countries, after eligibility requirements have
been accounted for. In the EU, compensatory requirements can be imposed:
- where education undergone by
the migrant is at least one year shorter than that required in the host
state,
- where the matters covered by
the education and training [in the respective countries] differ substantially,
- where the professions regulated
in the host state comprises one or more professional activities which are
not in the profession regulated in the home state, and that difference corresponds
to specific education and training required in the host state.
45. While differences in lengths
of studies are precisely specified here, assessing when differences in the
content of training or the scope of the professions matter is left to the
host country. Conceivably, MRAs could also allow for compensations when certain
deviations from commonly agreed standards are observed, when a host state
has obtained specific derogations, or when training (as opposed to education)
conditions differ significantly.
Facilitated examination and
aptitude test
46. Professional qualification
is traditionally assessed through written examination, including both by educational
bodies and by licensing authorities. A minimal form of "input recognition"
(often taken unilaterally) consists in recognising the equivalence of training
between parties and allowing foreign professionals to take host country licensing
exams directly without having to go through a course of study.
47. The next step is to limit
these exams to the differences between the foreign applicant's training and
that required in the host county. The GSD's aptitude test, for instance, is
designed on a case-by-case basis and is limited to matters that are not adequately
covered by the system of education in the applicant's home country and to
the host state's rules of conduct. How such differences are determined is
obviously key. Can experience be taken into account? How important must such
differences be before warranting examination? What are "substantial"
differences in the European or other contexts? The GSD provisions leaves ample
room for interpretation on the part of the host country.(33)
There seems to be somewhat of a consensus that the host country should to
be allowed to test for objective gaps in technical knowledge that is
specific to its regulatory, natural or economic environment (e.g. rules of
construction for engineers or architects; anti-seismic construction rules
for some jurisdiction; local law for lawyers; local diseases for doctors).
It is harder to justify testing the skills of the applicants through an examination,
that almost by definition cannot capture such skills (the GSD makes it possible
to test for practical skills as well as theoretical knowledge). One vexing
issue is whether the host country ought to be allowed to test for competency
in its language (as with the use of the TOEFL in the US) as a precondition
for recognition. While this is clearly an instance where, in general, the
clients ought to be able to assess the skills of the professionals themselves,
there may be a case for a test when local clients do not have a choice of
service providers (teachers, doctors) or when provision of the service in
a foreign language may decrease its quality unbeknown to the client.(34)
48. Whatever the test, the very fact of having to take exams -- even if facilitated
-- does constitute a major limitation on mutual recognition. Professionals
with twenty years of practice may have forgotten the fine points of examinations,
especially if they originate from a culture that emphasised on the job training
over academic studies. Customised compensatory tests are bound to discourage
episodic provision of services. As a matter of fact, the introduction of the
aptitude test was a very controversial element of the GSD negotiations opposed
by most in the EU Commission. The fear is that through such a test, the requirement
to adapt to host country standards could be reintroduced through the back
door, potentially emptying mutual recognition from its substance. One small
step towards greater automaticity is to allow the applicant to take the test
in her home country, in a familiar environment and according to local procedures.
But ultimately, a key to increasing automaticity is to seek alternatives to
examination altogether.
Local professional experience
and adaptation period
49. Maybe the most promising option
for reducing the automaticity of recognition in the least cumbersome way is
to make it conditional on a transitional period of local practice for a specified
length of time, under what could be called a "pre-recognition status".
The rationale for such a requirement can be seen as twofold:
1) training: to provide
a mechanism to help the candidate for recognition fill the deficits in his
training while still granting him some kind of access;
2) quality control: to enhance the quality guarantees of the
service provided -- and thus seek to ensure consumer protection -- in this
interim period. Indeed the quality of any service does not depend uniquely
on the specific competence of the service provider but also on the organisational
infrastructure and the complementary skills that characterise the local
environment in which he is asked to perform.
50. Two basic categories of transitional
requirements can be envisaged. One entails independent local practice under
some reduction in scope of access, such as the use of local titles or the
scope of activities (see IV.3). This approach is currently envisaged for EU
lawyers. The other category consists in requiring collaboration with local
professionals in a more or less subordinate capacity (from stagiaire to partner).
In the EU, the approach taken for the adaptation period is that of a stage
(e.g. exercise of the profession under the responsibility of a locally qualified
professional) not exceeding three years. In some professions, like law, apprenticeship
is part of the culture; in others it may be harder to introduce. In cases
where the candidate for recognition is a senior professional, local collaboration
on an equal footing may be more appropriate (note that local partnership may
itself be restricted in some countries in that it entails local ownership).
If this second option is chosen however, it is crucial to determine as specifically
as possible what mutual obligations are entailed. Under the 1977 directive
on cross-border services for lawyers, for instance, the host state had been
allowed to require visiting lawyers "to work in conjunction with a [local]
lawyer" when the cross-border service involved litigation.(35)
France and Germany chose to interpret "in conjunction with" so as
to put the foreign professional and the services rendered under the effective
control of local lawyers and were found to impose excessive requirements by
European Court of Justice. At the same time, the host state must be satisfied
that the migrant does not use a token local collaborator to bypass the compensation
provisions.
51. MRAs must also specify the
extent to which local authorities can dictate what the applicant must actually
do during the adaptation period and the process by which local authorities
determine whether to grant recognition at the end of the period. Procedures
for conducting the evaluation must be spelled out as well as options in case
of failure.(36) Miscellaneous
concurrent activities to the local practice itself can also be taken into
account for the final evaluation, such as short periods of education, or attendance
at courses or seminars relevant to identified deficits in qualification. These
may be required or be used by the migrant to shorten the adaptation period.
52. In some cases, professional
experience in the home country or in any country other than the host
country can also be used as a compensatory requirement -- in addition to a
means to determine eligibility. In the EU for instance, it can serve to compensate
specifically for at least a one year shortfall of length of study (not the
other 2 determinants of deficit) and cannot exceed 4 years or twice the shortfall
in duration of education.(37)
Note that professional experience and competence can be introduced as means
to limit or increase automaticity, at the stage of eligibility or at the stage
of compensation. Taking into account prior professional experience can make
admission automatic when it previously wasn't. At the same time, requiring
additional professional experience when a diploma is considered sufficient
in the home country can be more restrictive than a straightforward recognition
of home licensing.
Consumer protection schemes
53. Finally, market-based compensation
requirements can involve an obligation for the beneficiary of recognition
to adopt various kinds of consumer protection schemes taking into account
the specific features of cross-border service provision. To start with, labelling
as a minimalist form of compensation for recognition was systematically advocated
by the ECJ for trade in goods and was systematised through EU regulations
on "adequate labelling" for products: is it legitimate to transfer
this approach to people? Foreign service providers can simply be required
to provide potential customers with substantive information on the quality
of their product in a more systematic way than required of local professionals,
through various kinds of disclosures, including on past practice. Migrant
professionals could be required to ensure that prospective clients be aware
not only of the quality of her service, but also of where they obtained their
qualifications and the implied differences in qualification guarantees (this
is akin to the obligation for purchasers of insurance policies falling under
the EU mutual recognition scheme to sign a declaration acknowledging their
awareness of foreign origin). Such an obligation might constitute a least
restrictive functional equivalent to requiring the use of home country title
(see IV.3.), although it may be vulnerable to projectionist abuses (buy local
campaigns).
54. Beyond information-based consumer
protection, discussions held at OECD have highlighted the importance of ex-post
guarantees, based on establishing a right to redress across borders. This
can be done through required professional indemnity and liability insurance
schemes or client restitution funds. As a note of caution, compensation schemes
based on improving consumers' capacity to assess the quality of a professional
service and to insure against risk are unlikely to be very effective without
increased public involvement in the making of professional policy in the first
place.(38)
c. Issues raised by compensation
provisions
55. Several issues arise in designing
systems of compensatory requirements. First, are they cumulative or alternative
requirements? It seems to make sense to allow the combination of consumer
protection requirements with any of the other one. While the aptitude test,
adaptation period and professional experience (as compensation) are alternatives
in the EU, they could be cumulative in other contexts. Parties may consider
that alternative compensatory requirements serve different functions and that
they can make up for different kinds of deficits. "Cumul" may even
be more desirable from the applicant's viewpoint (who can equalise the marginal
cost of alternative requirements) if it is possible to submit to the least
cumbersome part of each requirement. Lawyers in the EU for instance would
like to see some host country experience entitle them to dispense with at
least part of the aptitude test. MRAs then need to specify "equivalency
criteria" between compensatory requirements (how many years or what kind
of local experience for what share of the test). For instance, as a way to
placate the French who are very attached to the aptitude test, the legal profession
agreed in 1995 that host country practice of European law should not count
as host country law and thus qualify as a basis to be exonerated from the
aptitude test (although European law is often directly transposed into national
law).(39)
56. Second, if compensatory requirements
are alternatives, is the choice between them up to the applicant or up to
the host country regulators? The EU solution has been to leave choice to the
professional himself as a base rule (except for lawyers), while countries
can be allowed derogations on a sectoral basis.(40)
Leaving the decisions up to the host country almost unavoidably leads to the
imposition of an examination (as demonstrated by the treatment of lawyers
under the GSD).(41) Conversely,
candidates are unlikely to choose a test over an adaptation period. Freedom
of choice is all the more valuable to the applicant for recognition if some
of the alternatives are redundant with market requirements. Architects for
instance, often consider it a necessity to have a local partner familiar with
the local context anyway. Nevertheless, they may still be restricted by the
precise division of labour imposed by the official requirements. Moreover,
as trade in services becomes increasingly possible through communication networks,
requirements involving local presence may become truly restrictive. Home country
experience or even examination may become the preferred alternative.
57. Third, can compensatory requirements
serve to curb the potential for abuse of mutual recognition? In the first
years of implementation of the GSD, national authorities have observed individuals
using the system to circumvent their own national training requirements. The
only case subject to an appeal in Ireland has been that of an Irish barrister
who became a solicitor in England and Wales and who returned to Ireland as
a solicitor on the basis of the British diploma. The applicant appealed the
Irish decision to impose an aptitude test. Although the decision was repealed
in light of the applicant's experience and the ECJ decision in Vlassopoulou,
the designated authorities retained their basic objection arguing that the
applicant used the directive for a purpose to which it was not intended with
the objective of circumventing national rules governing movement between the
two branches of the legal profession in Ireland.(42)
While such cases are rare, criteria might need to be spelled out to differentiate
between circumvention and mobility.
58. Finally, when are the "compensatory"
conditions so rigorous as to significantly deter entry, making non-automatic
recognition into an oxymoron? Given the case-by-case nature of such requirements
they obviously leave room for continued restrictions on mobility through arbitrary
individual decisions. Parties may vary widely in their decisions to have recourse
to compensation in the first place.(43)
They may also determine the content of these requirements very differently.
(44) Such a margin of
manoeuvre is obviously useful when MRAs include many parties. But in some
cases, the differences might be so great that the freedom of manoeuvre of
the host country might have to be moderated. In general MRAs should clearly
include a proportionality clause.(45)
Moreover, parties may decide that the detailed rules governing compensatory
requirements should not be left under the sole competent authority of the
host state (with judicial review as in the EU) but instead be decided by joint
commissions. MRAs must at least strive to mandate strictly defined ceilings
for such requirements. Residual powers of host states need to be circumscribed
by agreed upon procedural guarantees for examining applications (home state
certificate must be considered as sufficient evidence, the host state bears
the burden of proof regarding difference, it must give a ruling within four
months of each application and give reasons for its decision) and applicants
must be able to seek legal redress against host country decisions with national
or supranational courts.
3. Variation in scope: Access
to what?
59. Mutual recognition can also
be characterised in terms of its scope, e.g. what is the range, mode and object
of practice to which professionals benefiting from recognition actually have
access. Scope can be a most controversial issue simply because modalities
of access to a given market can vary from one country to the next for the
locally qualified professionals themselves. Even when this is not the case,
limiting scope during the initial phase of a mutual recognition process can
be seen as an opportunity to create a laboratory to test the impact of liberalisation.
Steps towards full mutual recognition can be achieved through the progressive
expansion of scope. In the meanwhile, some beneficiaries of recognition might
be satisfied with performing only some activities, for some period of time,
as reduction in scope calls for.
60. Below are six ways in which
the scope of access falling under mutual recognition can be circumscribed.
Some of these distinctions may overlap or even be redundant but they nevertheless
reflect alternative rationales that may or may not be relevant in different
contexts.
a. Right to practice vs Title
61. The first basic way to limit
the scope of recognition is to grant foreign professionals the right to practice
certain activities in the host territory without the right to use the corresponding
local professional title.(46)
The title signals to the potential client that the professional is a licensed
or certified "architect," "lawyer" or "accountant"
with credentials equivalent to those of local practitioners and is therefore
the ultimate evidence of recognition. It means in effect that the applicant
has been admitted to the host country profession. The option to withhold such
a right of access to the professional label and other modes of practice has
a different significance depending on the regulatory approach prevalent in
the host country. In particular, countries can rely on titles as mechanisms
for licensing -- e.g. a mandatory condition -- or certification. In the first
case, a country regulates a specific professional activity and the conditions
under which it can be exercised, including the holding of a title. In the
second case, only the use of a title is regulated, not the professional practice
itself, and is usually predicated on the holding of a diploma.(47)
The role of titles as signalling devices is usually more important in the
latter case. In cases where some parties to an MRA have title requirements
for entry into a profession and others not, the agreement may have to include
a differentiated approach (e.g. in Europe, Italy and Luxembourg are the only
states who require an engineer title for all engineering activities). Title
recognition may be an easier proposition in countries with two-tiered systems
where a generic title is protected under the general state-enforced system
while specific versions of the title may be under the purview of private bodies
("chartered architects" as awarded by the Royal Institute of Architecture
in the UK).
62. Requiring the use of the home
title for certain beneficiaries of recognition is a useful device when the
scope of activities or the mechanism for certification differ strongly between
parties.(48) Under the
GSD for instance, professionals regulated by private associations in the home
country were only allowed to use the professional title or designatory letters
conferred by that organisation rather than the host country title.(49)
This is functionally equivalent to requiring labels of origin and turns the
right to use a host country title from a licensing (exclusive rights) to a
certification method. How restrictive granting access to a right of practice
is short of a access to a right to use a national title depends on the characteristic
of each professional market. It may even be the case that the use of host
country title become a restrictive requirement rather than a sought after
right (see IV.5. for a discussion on lawyers).
b. Scope of permissible activity
63. An MRA must specify the activities
that correspond to a right to practice or a given title. But the scope of
activities permissible under a single professional practice or allowed under
a given title may vary across national systems (e.g. "barristers"
and "solicitors" in the United Kingdom vs generic "lawyers"
or "avocat" on the continent; engineers vs architects in different
countries).(50) In theory,
mutual recognition ought to imply that permissible activities are those practised
by the professional in the home country (this is how recognition has been
implemented in financial services in the EU for instance). Most commonly however,
the scope of recognition is reduced to activities allowed in the host country
under the given professional label. It can even be reduced further to exclude
regulated activities that are at the core of the profession in the host country,
e.g. recognising only foreign lawyer' right to advice on matters of foreign
law.(51) The greater
the asymmetries between permissible activities between parties (including
when some do not regulate this aspect at all) the more likely the use of this
option for limiting scope, at least during an interim period.(52)
c. Rules of conduct and enforcement
64. One of the least common domains
where home country modes of practice is likely to apply concerns rules of
professional conduct, including codes of ethics, privacy issues, and advertising
rules. This can be attributed to a host of factors: these rules constitute
lesser impediments to the mobility of professionals (easier to adapt to),
equivalence may be harder to demonstrate when ethics and therefore absolutes
are involved, consumers more routinely expect their own local standards to
apply, and different rights for foreigners and locals may unequivocally result
in unfair competition (advertising and rights to solicit clients). In addition
to retaining control over the content of the rules (often reflected by an
examination on the subject), the host country generally retains at least residual
powers of enforcement in case of breach of compliance both because it is likely
to be better able to identify such breaches and in order to guard against
moral hazard problems (the fact that the home country may have less incentives
than the host in punishing a breach that would not affect its own citizens).
One configuration of mutual recognition that can be envisaged in the longer
run is home country enforcement of host country standards. Note that even
when host country codes of conduct apply, cross-jurisdictional recognition
of judgement passed on professional conduct ought to apply on an on-going
basis. As a result, proof of validity of home license can be time-bound, or
complemented by certificates of good repute, to ensure that recognition was
granted to a service provider's current status: if a certified professional
has been sanctioned in his home country for professional misconduct he should
not be able to claim recognition for a right to practice which is no longer
valid. For this reason, the Trans-Tasman agreement requires that registration
be renewed every year for certain professions.
d. Cross-border supply vs establishment
65. Limiting the scope of mutual
recognition by limiting the choice between mode of delivery has sometimes
been used as a mechanism for partial recognition, although under two different
rationales. Under one rationale, recognition for the purpose of cross-border
provision of services ("trade") has been deemed less problematic
and requiring less preconditions, since the cross-border nature of the service
itself makes it clear to the client that the professional is not a "local".
In this vein, the first mutual recognition directive issued in the EU that
required no preliminary harmonisation was that related to free cross-border
service provision of a temporary nature for lawyers (see discussion under
compensatory requirements above). Similarly, barristers in the EU are subject
to a specific directive on free provision which makes access more automatic
than under the GSD framework if their activity in the host country does not
involve establishment (host countries are obliged to recognise as a barristers
anyone authorised to practice under this title in the home country). More
generally, establishment simply gives access to a bigger market and is therefore
a bigger concession from a projectionist viewpoint. Yet, under a different
rationale, mutual recognition may only apply to establishment, or at least
involve local presence or residency requirements (short of establishment).
This approach is justified as a means to ensure that local law can be enforced
(in particular on rules of conduct) and that professionals are available for
redress.(53)
66. As shown by the European experience,
it may not always be easy to distinguish between cross border offices established
in support of occasional cross-border rendering of services and establishment
itself.(54) MRAs that
employ this scope option need to specify where service trade ends and where
establishment begins.
67. In either case, the trade-impeding
impact of restricting mutual recognition to a specified mode of delivery is
a function of corollary market characteristics. The need for close and on-going
relations with clients as well as for in depth knowledge of local markets
constitute autonomous incentives for local establishment. When this is true,
restricting mutual recognition to locally established professionals may not
seriously impair professional mobility. On the other hand, rights of cross-border
provision are especially relevant for activities that rely on information
networks and economies of scale. Initial steps towards mutual recognition
may differentiate between different activities within a given profession based
on these technical constraints.(55)
Ultimately, freedom to chose between modes of delivery is one of the clearest
guiding principles that has emerged from global negotiations on services in
the last few years and mutual recognition needs to be extended to all modes
of delivery.(56) Both
the right of local presence and the right of non-establishment are enshrined
in the NAFTA (as well as in the GATS for the former while only partially for
the latter). As a next step, they must be upheld in combination with mutual
recognition.
e. Temporary vs permanent right
of access
68. A closely related distinction
bearing on the scope of mutual recognition is that between temporary and permanent
access (temporary rights are usually associated with cross-border provision
but not vice versa). In theory, recognition can be granted temporarily, in
order to allow for the provision of a specific service at or until a given
point in time. NAFTA specifically encourages, when possible, the development
of temporary licensing regimes. Under an agreement signed in 1995, engineers
licensed to practice in one country have the right to obtain a temporary license
in any other country. Temporary recognition may be an effective first step
to full recognition in professions and/or contexts where professional reputation
plays an important role or where individuals are identified with specific
niches. Since temporary service provision usually involves collaboration with
local professionals this also increases the quality guarantees associated
with the right. Clauses can be included that facilitate graduation to permanent
recognition.
f. Consumer type
69. Finally, the professions may
borrow from an interesting approach used for the liberalisation of insurance
services in the EU, where mutual recognition was initially granted for the
purpose of accessing specific types of customers and not others, as a function
of a client's capacity to discriminate between foreign professionals. An MRA
can initially allow professionals to serve clients who may be deemed sophisticated
enough to be able to assess their qualification -- clients with "investigative
capacity"-- such as firms, hospitals, etc. By the same token, informed
consumers could be identified through self-selection by limiting recognition
to dealings with "active" consumers who initiate contact with foreign
professionals not established in their state, or to dealings with existing
clients originating from the home country. Barring a professional from seeking
out new clients in the host country amounts to eliminating the risk of involuntary
exposure to professionals with foreign credentials.
4. Variation in ex-post guarantees:
alternatives to host country control.
70. Finally, in addition to the
degree of automaticity of the recognition extended or its scope, MRAs may
give different emphasis to the setting up of cooperative mechanisms between
parties in order to compensate for loss of host country control. The aim is
to increase the confidence that parties have in the mutual recognition process
and therefore the legitimacy and sustainability of the agreement.(57)
But control mechanisms are not costless, and their development is therefore
itself an object of negotiation. These mechanisms include:
a. Mutual monitoring
71. Parties need to be confident
that the others abide by the letter and spirit of the agreement. Such confidence
is based on the initial familiarisation and continued involvement with the
foreign system, including through: obligations of transparency of regulatory
systems, decision making process, and change in such systems through the continued
exchange of information between licensing, registration and certification
bodies; rights of regulatory oversight and mutual monitoring that allows for
the continued assessment of technical competence, capabilities, and efficiency.
b. Collaboration
72. The loss of host country control
can also be compensated by the development of extant cooperative networks
among parties to collectively "manage" the implementation of mutual
recognition. In this way they can help each other abide by the terms and spirit
of the agreement in particular by supporting the upgrading of standards where
they are lagging (many in Mexico have expressed their aim to use MRAs as means
of upgrading their professional standards). This can also include collaboration
on accreditation procedures and support for inspection and evaluation that
may progressively lead to a common culture on licensing standards. In this
sense, MRAs should be seen as much as frameworks for mutual technical assistance
and more optimal division of labour than as templates for regulatory competition.
Host countries can also help home countries enforce compliance with rules
of conduct by readily transferring relevant information. Transnational mechanisms
for consumer protection in particular require a high degree of cooperation
between host and home countries to ensure that professionals of bad repute
cannot take advantage of loopholes.
c. Reversibility
73. In order to increase the incentive
for parties to the agreement to enforce high level standards of training and
certification, MRAs must be designed more explicitly as contingent agreements
that can be terminated should the situation change in a country that fails
to produce the required professional standards. These are in effect measures
against regulatory dumping. MRAs could include trial periods, periodic reviews,
safeguard provisions for the temporary lifting of obligations vis-à-vis
one or several parties, and reversibility clauses allowing parties to nullify
the agreement altogether. The credibility of the system depends on: a) the
possibility to observe and interpret "the state of the world" that
is the soundness of home licensing and accreditation; b) the existence of
procedures to impose safeguards under commonly agreed circumstances; c) the
capacity of parties to reverse their initial concession in case of non-compliance,
including by reverting to traditional entry procedures for licensing bodies
and terminating inter-recognition of accreditation. On all these counts, reversibility
itself must be the object of cooperation between regulators including under
conditions of crisis. It must not be an end in itself, however, and must be
embedded in a reappraisal and renegotiation process. When the 1972 US-UK bilateral
agreement on architectural training was terminated, no procedures had been
designed to cope with the crisis and the whole cooperation process was allowed
to lapse.
d. Competition law and dispute
resolution mechanisms
74. Finally, parties must invest
resources in dealing with external factors that might emerge and would unduly
nullify the agreement. For example, the access provided by mutual recognition
may be incomplete as private anti-competitive behaviour replaces previous
requirements. Private companies may continue to require local diploma or professional
registration bodies may refuse to abide by the letter of an MRA. Domestic
rules restricting consumers' right to change suppliers may impede openness
in spite of recognition. Cooperation in competition law must act as a supplementary
lever on market openness where market forces would not take care of these
problems alone. Finally, if the host country is granted the right to impose
compensatory requirements, this must be subject to the proportionality principle
and overseen by effective dispute resolution mechanisms. In order to make
such commitment acceptable to public opinion, political, regulatory and professional
accountability must be explicitly and publicly shared between home and host
countries.
5. Tradeoffs between features
of mutual recognition
75. Every MRA needs to include
provisions that pertain to the licensing, certification, and accreditation
system on one hand and to the individual professionals seeking to be recognised
on the other hand. At the level of the systems, MRAs are based on prior harmonisation
and/or criteria for equivalence and cooperative mechanisms to make up for
loss of host country control once the agreement is in place. The individual
candidate for recognition will be affected by the provisions on how automatically
and on what basis the recognition is granted, and the scope of recognition
set out in the MRA, that is the range and mode of practice accessible to the
beneficiary of recognition. These various dimensions are obviously connected.
How confident the parties are on the degree of equivalence between their systems
will determine how automatically they are ready to grant recognition. How
broad a scope for access is envisaged will also determine automaticity. The
need for spelling out prior conditions of equivalence may be reduced if there
are good prospect for sustaining a high level of cooperation after the agreement
and if reversibility is a plausible option of last resort.
76. In short, whether implicitly
or explicitly, trade-offs can be exploited among the features of an MRA. The
more parties are aware of these potential trade-offs, the higher the likelihood
that they will reach agreement and devise solutions acceptable to all. In
some cases, it may be more appropriate to relax prior conditions of equivalence
and concentrate on fine-tuning automaticity (EU). In others, reducing initial
scope may be considered as a way to test the grounds (NAFTA). From a dynamic
viewpoint, scope and automaticity can be reduced initially to accommodate
insufficient prior equivalence and expanded later on in light of ex-post cooperation.
Some of these core trade-offs are briefly discussed below.
Figure 2. Trading off between features of mutual recognition
Prior conditions vs ex-post
guarantees
77. Parties need to decide how
quickly they want the agreement to come into effect and how many resources
they will be able to devote to managing its implementation. This means deciding
whether the regulatory cooperation that must necessarily accompany mutual
recognition needs to bear fruit before the agreement is actually implemented.
Although regulatory assurances are necessary before and after liberalisation,
if there is a sense of urgency, they can focus on ex-post guarantees. On the
other hand, when resources may be insufficient to manage the guarantee mechanism
ex-post facto, it may be wiser to seek high thresholds of equivalence earlier
in the process. One of the central "twists" that allowed Europeans
to respect (more or less) their 1993 deadline for the internal market is the
resort to a shift from mandatory and extensive ex-ante cooperation and harmonisation
to on-going ex-post cooperation. This does not mean that the scheme ought
be reproduced everywhere, especially where no prior culture of regulatory
cooperation exists.
Prior conditions vs automaticity
and scope of access
78. If they are able to reach
a high degree of prior harmonisation -- as with accounting under GATS -- parties
can aim for an ambitious and immediate full scope recognition. Alternatively,
parties can also exploit the potential for customised automaticity and reduced
scope, to design a step by step approach to mutual recognition through incremental
extension of automaticity and scope conditional on increased confidence between
parties after the MRA comes into force. The choice hinges on the particular
professional culture, whether harmonisation is feasible, the characteristics
of the customers of this particular service, whether the degree of regulation
varies significantly between parties, etc.
79. It is also important to ask
whether less then full recognition makes a significant difference in a particular
context. Hence, the scope of recognition did not extend to statutory definition
of functional separation and permissible activities in the EU. A French "avocat"
is usually not able to perform in the UK the services provided alternatively
by solicitors or barristers; a foreign engineer is restricted to a specific
category in Germany and a psychologist authorised to prescribe medicine in
Spain but not in Italy. Such restrictions would be considered much more significant
limitations in the financial sector, then in the professional realm where
comparative advantage has more to do with the how than with the what of service
provision. That host country rules of local conduct, including on liability,
deontology or advertising generally continued to apply also appears to have
little restrictive effect.
Reconciling different valuation
of scope and automaticity
80. There is a rich set of possible
trade-offs between automaticity and scope of recognition for which the various
solutions alternatively envisaged regarding the treatment of lawyers in the
EU provide a textbook example. The main controversy regarding the establishment
directive has involved the right to practice under home country title, precisely
because it is associated with more automatic entry. The debate pits French
and Anglo-American philosophies. According to the former, lawyers that practice
in a country and advise on issues that include a component of host-country
law ought to be treated as local lawyers with all the rights (host country
title) and the obligations (test of local knowledge and conditions for joining
the local bar) that go along with it. The position is motivated in part by
the fear to see the French legal system overtaken by the English one and to
create a precedent that might extend to US lawyers. The British and American
position on the other hand is to seek as extensive and unconditional rights
as possible for bearers of home country titles; for the British, operating
in their capacity as "solicitor" is not a hindrance since their
comparative advantage is based on their transnational character and their
specific reputation.
81. The crust of the debate for
the last decade has been what ought to be the quid pro quo for introducing
automatic rights of access for lawyers using their own title. Scope limitation
other than access to title can be twofold: a) in terms of scope of practice
(excluding advice on host country law). Already, under the 1977 directive,
the scope of practice under automatic rights of access was restricted to giving
advice on the law of the host or home country and on international and community
law, whereas litigation was subject to compensatory requirements; b) in terms
of time limit, e.g. temporary access under home title followed by an obligation
to undergo host title requirements. The British position is obviously against
time limits. But on the premise that some scope reduction might be a necessary
concession, the British ask that experience acquired through local practice
under home country title be taken into account in devising the mandatory aptitude
test required at the end of the time limit (through partial or total exemption).
The draft directive proposed by the Commission in 1994 provided for automatic
admission to the local bar/title after three years of experience in the host
country, if the experience has led to sufficient familiarity with host country
law. At the same time, it included a requirement to switch to host title or
else leave the country. This "up-or-down" approach was expectedly
opposed by the British who persuaded the European professional association
to counter with a proposal for an indefinite right to practice under home
country title even as requirements for the local bar would be made harder.
The so-called "Fontaine report" of the European parliament issued
in 1996 has proposed a compromise whereby a requirement to join after 3 years
could be bypassed at the cost of being confined to advising on all law except
host country law (automaticity maintained in exchange for reduced scope).
82. The issues raised by mutual
recognition for lawyers in Europe have an exemplary character. The negotiations
pit a position favouring greater automaticity with reduced scope (UK) against
lesser automaticity with full scope (France). The compromises proposed draw
on the possibility for sequencing these options, adding restrictions
with time as an incentive for local adaptation (scope of practice) and relying
on local experience as the sole condition for scope expansion in terms of
title. Whether it is realistic to reduce rights of access after a given period
of time -- that is in effect granting non renewable temporary access for a
subset of activities -- is open to debate.
V.
Options and Guidelines for negotiating MRAs
83. Mutual recognition must be
thought of as a dynamic process and the signing of an MRA as only one phase
in this process. Decades can be fruitfully spent on analysing convergence
between national education and training systems; but nothing can replace the
virtues of learning by doing. This in turn requires that the "doing"
accommodate the various interests in place without letting any of them stall
the process. As stressed by a player in the NAFTA process, "the key is
to get the professions to embark on the road to mutual recognition, an objective
that is more likely to be achieved-and hence generate useful demonstration
effects-if the system design remains flexible."(58)
I have sketched above a framework for designing flexible MRAs to fit alternative
needs and priorities. I now turn to the broader context to consider some of
the options available to enter the process of recognition.
1. Creating "mutual recognition-friendly"
national environments.
84. One of the core implications
of globalisation is that some if not all actors concerned have to adapt to
the changes required by the new competitive environment. "Who adapts?"
is therefore a key question in considering the prospect for MRAs. Systems,
that is licensing, accreditation and education systems, including the organisations
who shape and run them, will need to adapt in particular by becoming more
compatible with their counterparts in other countries. Mobile professionals
wishing to practice across borders bore the burden of adaptation prior to
mutual recognition. In a mutual recognition environment, less adaptation to
various national systems will be required (the whole point of MR), but they
will have to adapt to new requirements, including for purposes of greater
consumer protection. Local professionals obviously will have to adapt
to the new competition. Finally, consumers, previously shielded from
having to adapt to foreign professional practices, may now be asked to invest
in a greater capacity to responsibly exercise their freedom of choice between
professionals presenting diverse credentials. Various versions of managed
mutual recognition demand different degree of adaptation from each of these
categories of actors. There may be a great level of asymmetry among countries
and among actors within countries in the adaptation required. So part of the
preparatory process involved in creating national environments that are mutual
recognition-friendly is to enforce adaptation progressively and in the appropriate
sequence.
85. In particular, the question
of who adapts and how raises some important sequencing issues between domestic
regulatory reform and the adoption of MRAs. On one hand, MRAs will certainly
be easier to negotiate for parties who have moved far enough down the road
of domestic reform. The implementation of mutual recognition between states
or provinces in federal systems where professions are regulated at the sub-national
level can greatly facilitate international recognition. Similarly, the application
of competition law to domestic circumstances where professional associations
or registration boards may unduly control (through quotas for instance) entry
in the profession will encourage these parties to adapt to greater competition
from abroad. Minimal steps towards unilateral recognition may also prepare
the ground for recognition. It can start by simply increasing transparency
and setting explicit standards for licensing of foreign professionals. It
can include the validation of qualifications obtained abroad by nationals
(this was the first step taken by the Japanese national registration and accreditation
board). Unilateral recognition can be far reaching if conducted in a broader
context of domestic regulatory reform. Moreover, it can be more acceptable
to certain regulatory cultures. Countries can also pre-empt the need for adaptation
in case of mutual recognition when they develop regulatory systems from scratch
by systematically incorporating foreign and international standards and including
direct provisions for recognition of foreign accreditors.
86. On the other hand, in cases
where there is significant internal resistance to regulatory reform, the prospect
of recognition or the actual negotiation of an MRA may be seen as a necessary
lever for change. As the need of multinational firms for mobile professionals
increase and as the competitive edge of professionals benefiting from recognition
increases vis-à-vis those originating from countries that are still
relatively closed, a specific demand for engaging into mutual recognition
may arise, in turn pushing for domestic reform. Some sub-national units, professions
or specific bodies within the professions may be more ready than others to
engage in the recognition process, and by doing so may then create demonstration
effects for the rest of the system.
2. The respective role of education,
accreditation and licensing organisations
87. Participants in mutual recognition
negotiations can be governments, organisations representing the professions,
or private bodies with delegated authority. Ultimately, all the actors involved
in the regulation of the profession at the domestic level need to be involved
in some way in the recognition process. The first step towards MRAs -- that
can last for years -- is for all of the relevant parties to enter exploratory
discussions to familiarise themselves with their respective educational systems,
training, examination, certification and licensing requirements, methods of
consumer protection, definition an scope of practice, etc. On this basis,
they need to assess the benefits and changes associated with mutual recognition
and develop a greater awareness of the multiple options for "managing"
mutual recognition. But who ought to take the lead in the MRA negotiations
themselves?
88. Under one vision prevalent
in the European context, it is governmental bodies -- e.g., the Commission
and the committee of permanent national representatives -- who are responsible
for designing and enforcing MRAs with more or less co-optation of the professions
in the process. Under the US lead, NAFTA proposes another vision where it
is considered the task of the experts themselves (professional and licensing
bodies) "to arrive at mutually acceptable provisions given the special
features of the particular profession."(59)
One of the core objectives of NAFTA in the area of professional services was
to develop blueprints of rules, principles and procedural mechanisms to encourage
the professions themselves to conclude MRAs (architects, lawyers and engineers).
Under ANZCERTA, MRAs are largely left to professional associations to negotiate.(60)
Even under this second vision, it can be argued that it is essential for governments
to be able to lean on the relevant professional bodies engaged in the work
of mutual recognition in instances where negotiations may have reached a stalemate.(61)
89. The most promising scenario
may be to combine both recognition routes. Professional association and non-governmental
regulatory bodies can negotiate recognition agreements among themselves which
can then serve as a basis for government agreements that will provide official
mechanisms for enforcing rights and obligations. Another option is to first
negotiate government-to-government MRAs in order to create frameworks and
floors for recognition, and then encourage MRAs between non-governmental bodies
to supplement and enhance the governmental agreement. Obviously as discussed
earlier there are many possible configurations in terms of participants and
functional levels of recognition. Accredited institutions (e.g.. schools and
universities) can enter into recognition agreements that can serve as an input
to recognition of accreditation as well as to the recognition of licensing
or certification. Professional registration bodies can enter inter-recognition
agreements which can increase automaticity of access to different degrees
depending on the place of registration in the host country system.
90. MRAs between accreditation
bodies in particular are likely to become one of the most important building
blocks in recognition systems.(62)
As mentioned earlier, inter-recognition agreements between bar associations
are developing in Europe. Another interesting model is provided by the so-called
Washington Accord signed in 1989 by professional engineering accreditation
bodies from the US, Canada, Australia, UK, Ireland and New Zealand which have
agreed to the mutual recognition of their respective accrediting programs.
This gives the migrant recognition of her home educational qualification for
purposes of registration; it also serves as the basis for recommendations
made by the member accrediting bodies to their respective licensing authorities
to treat training in the other member countries as equivalent (but migrant
engineers are still subject to host country testing for licensing purposes).
Accreditation bodies could also accredit directly educational institutions
from abroad. This may sometimes involve the revision of their charters and
certainly may require increased accreditation fees, but there seem to be few
obstacles in principle. Another possible route is to accredit schools in foreign
countries to train professionals to host state standards. This half-way-house
is currently the dominant approach to mutual recognition in the realm of products,
but is unlikely to become significant in the professions.
91. There are risks involved in
relying on accreditation bodies to provide the first building block of recognition.
First, as pointed out by Bernard Ascher, this could in itself become a basis
for restriction, if foreign schools are not afforded adequate opportunity
for accreditation and if accreditation standards discriminate against them.
Accusation of discriminatory treatment is a staple of the accreditation world
at the purely domestic level. The same types of solutions are therefore called
internationally as domestically: as with the domestic level, there may be
appeals procedures regarding accreditation determination, accredited institutions
may not have a monopoly in producing candidates for licensing, accreditation
bodies can have specific mandates to allow for accreditation at the national
of institutions that do not meet their conventional standards of accreditation
in order to encourage diversity --provided the institution carries out the
purpose of the accreditation.(63)
In addition, there may be technical assistance programs set up internationally
to help candidates to be recognised abroad, including in paying accreditation
fees.
92. A parallel question may be
whether accreditation bodies that are part of mutual recognition pacts and/or
start accreditation abroad are likely to enter into a competition amongst
themselves to widen their market and whether such competition is likely to
lead to a lowering of accreditation standards or to the hegemony of some national
standards. Mutual confidence and incentives for quality reputation, as well
as collective guarantees of quality control backed up by peer enforcement,
will help guard against these developments. Nevertheless, because of the risks
of discriminatory accreditation and competitive accreditation, extraterritorial
accreditation should be pursued with caution and mutual recognition of accreditation
should be the preferred option.
3. Horizontal vs Sectoral approaches
to recognition
93. Turning to a more macro-level,
which bodies are involved may in turn depend on whether the approach taken
to recognition is horizontal or sectoral. The horizontal approach has been
adopted in the EU and in the Australia-New Zealand context in order to ensure
full sectoral coverage, even if at the cost of automaticity. Sectoral recognition
agreements, because they either involve some degree of co-ordination of education
and training or can spell out criteria for recognition tailored to the sector
in question have the potential to lead to more automatic recognition for qualified
professionals. In Europe, the first generation of recognition directives in
the health sector and the architect's directive of 1985 constitute illustrations
of these two variants of sectoral approach. NAFTA has also adopted a sectoral
approach to mutual recognition, although under a broad horizontal legal umbrella
to cover the range of issues relevant to liberalisation of professional services.(64)
Under such a "universal sectoral approach" one question is where
to start. It may be easier for instance to start with the technical professions
that are often less regulated or where regulations tend to be expressed in
terms of technical norms (engineering, architecture, health). Engineering
has been the first sector tackled under NAFTA.
94. The two approaches are not
exclusive. In the EU, the second has followed the first due to the progressive
realisation of the cumbersome nature of the process. When this lesson has
been transferred, others have skipped the first step altogether as with the
case of Australia-New Zealand. But sectoral approaches can also complement
horizontal approaches. Thus, the European Commission did not exclude the possibility
of negotiating sectoral directives after the GSD was put in place, stating
three conditions for doing so: a) the agreement of the profession concerned;
b) wide consensus among the member states; c) an advantage for using this
approach rather than the GSD. This third condition is where the Commission,
with its exclusive right of initiative, possesses the greatest margin of action
and can develop objective criteria. Sectoral complements could be warranted
when: a) the level of obligation set by the horizontal agreement is too vague
or too low; b) the implementation of progressive liberalisation under the
horizontal may has led to convergence between national systems that may be
codified in order to increase the automaticity of the rights of access; c)
conversely, the horizontal approach has led to too many instances of entry
of "sub-standard" professionals from other members, showing the
insufficiency of generic compensation mechanisms.
4. Multilateral Guidelines for
sectoral MRAs
95. One of the most important
obstacles to the negotiation of MRAs is their apparent complexity. In a few
rare cases, bilateral MRAs have been negotiated ex-nihilo. But generally,
MRAs will likely follow from two prior steps: a) adoption of framework agreements
calling for MRAs; b) the crafting of detailed work programs, roadmaps and
guidelines for designing MRAs which can provide a precious basis for learning
from precedents. NAFTA's professional annexes constitute a first attempt at
doing so by fine tuning and expanding the range of criteria to be considered
for adoption in MRAs.
96. The discussions in the WTO
on accountancy have provided a first forum for exploring mutual recognition
at the multilateral level. In order to support these and other incipient efforts
to negotiate MRAs, the USTR submitted a proposal for multilateral MRA guidelines
in March 1996, followed in the summer of 1996 by a similar initiative on the
part of the European Union. Multilateral guidelines for an MRA in accounting
are now being considered and could be adopted in 1997. This could pave the
way for a pledge by WTO Members that the same formats and procedures be adhered
to in all MRA negotiations, leading to an open and transparent negotiating
system for such agreements. To ensure this result, these multilateral guidelines
should be designed to be workable (not too onerous to discourage participation),
broad (compatible with different regulatory systems), and open and flexible
(enabling expansion).(65)
At this last stage of discussions, it is important to safeguard the voluntary
nature of the guidelines and clearly separate out the mandatory provisions
related to the treatment of third parties stemming from Article 7 of GATS
(see discussion in part VI). More generally, the guidelines should encourage
parties to view MRAs as a dynamic process and include provisions to that effect.
These can be related to the purpose ( to set in place a process for the progressive
enhancement of the understanding with the ultimate goal of full mutual recognition);
the combination of different mechanisms for recognition within a single MRA;
indications as to how automaticity may progressively increase; maximising
the range of choice regarding compensatory requirements; drawing explicit
connection between variation in scope of access (activities, title, timeframe,
mode of delivery) and automaticity; and the inclusion of a reversibility clause.
VI.
Prospects for global mutual recognition
97. What are the prospects for
world-wide mutual recognition in the professions? Mutual recognition is clearly
a contagious principle.(66)
MRAs in the field of products are currently initiated in every region of the
world. Recognition for the professions is likely to take more time but the
same dynamics are at play. Following on the examples of the EU and Australia-New
Zealand, other regional arrangements are likely to encourage their professional
associations to explore the issue. There is also going to be a demonstration
effect across regions as well as across professions. Part of the role of the
WTO ought to be to magnify and manage the contagion effect of MRAs. In its
Article 7 on mutual recognition, GATS encourages signatories to adopt measures,
by way of bilateral agreements or "autonomously," "to recognise
the education or experience obtained, requirements met, or licenses or certification
obtained in a particular country." It has now gone one step further by
supporting the development of guidelines on the form an content of MRA as
discussed above.
98. But WTO Members need to address
squarely the potential contradictions between mutual recognition and the core
tenets of the multilateral trading system -- unconditional most-favoured-nation
treatment (treating all trading partners equally) and diffuse reciprocity
(seeking broadly equivalent concessions but not on a quid pro quo basis).
Bilateral or plurilateral mutual recognition deals cannot be "multilateralized",
simply because concessions based on assessing current and future equivalence
of regulatory systems are not fungible. Hence, under recognition, extending
MFN treatment is indeed conditional, not on some symmetrical lowering of trade
barriers, but on actual compatibility of rules or equivalence of procedures
of the other party. To be sure, the MFN obligation requires countries to treat
service providers of any other WTO Member no less favourably than it treats
service providers of any other country in like circumstances. "Like circumstances"
means that treating an unqualified professional differently is legitimate.
In short, since the extent to which foreign professionals meet domestic standards
varies, recognition can be said to be compatible with the letter of the MFN
obligation.
99. Nevertheless, in order to
uphold the spirit of multilateralism and MFN, the WTO needs to ensure that
the adoption of a web of MRAs around the world does not lead to greater fragmentation
of international professional practice. This involves at least three types
of tasks. Clarifying the line between unilateral obligations and the option
to enter into MRAs, ensuring the transparency and openness of individual bilateral
or regional MRAs; providing a normative framework for resolving issues of
transitivity and compatibility between these disparate agreements with the
aim of eventually integrating them under a global decentralised framework.(67)
1. From non-discrimination to
mutual recognition: Articles 6.4 and 7 of GATS
100. In 1995, the GATS Council
established a Working Party on Professional Services whose main mission is
to set out guidelines for how to ensure inter alia that licensing and certification
requirements do not constitute unnecessary barriers to trade but are based
on objective and transparent criteria, as mandated by Article 6.4 of the GATS
on Domestic Regulation.(68)
This is paramount to asking what should be the legal obligations of the parties
to GATS short of mutual recognition?
101. The answer to this question
obviously changes the incentives for negotiating over MRAs in the first place.
There are arguments on both sides. On one hand, a broad interpretation and
strict enforcement of policed national treatment (even to the point of enforcing
unilateral recognition) ensures a minimal level of liberalisation and may
constitute an incentive for MRAs. Given their purely voluntary nature (WTO
simply "encourages"), countries (or their regulatory bodies) may
simply refuse to negotiate MRAs with those that approach them for fear of
competition once mutual recognition is in place. It is not even clear that
WTO Members are obliged to give reasons for refusing to respond to requests
for MRA negotiations. In such cases, the stringency of alternative obligations
must make it clear that the country cannot simply get away with it. This is
the goal of the provisions under GATS Article 6 regarding non-discriminatory
regulations. They include familiar obligations to use least restrictive means,
proportionality criteria, and the like that go beyond the traditional interpretation
of national treatment. But the question of whether given domestic standards
and regulations conform to these obligations is likely to be extremely difficult
to answer. How far is it possible in the WTO context to follow the path of
the EU? There, the adoption of an ambitious approach to mutual recognition
followed a progressive reinterpretation of what constitutes a "barrier
to trade" and of the extent to which member states were directly obligated
by the Treaty of Rome to provide cross-border access to people and product.
In effect, mutual recognition constituted a reinterpretation and a broadening
of the traditional principle of national treatment. At one extreme, some of
the "conditions" of entry into national markets applied in the form
of non-discriminatory obligations to both national and foreigners can come
to be considered as "restrictions," and thus become the object of
a legal obligation of recognition. In overcoming regulatory barriers to trade,
where does enforcement of liberalisation as a legal obligation end, and where
does the need for harmonisation/recognition as a political option start? The
current task of "Article 6.4" working groups needs to be pursued
in order to push the frontier of these obligations as far as possible without
compromising service quality, even while some members already resort to the
more ambitious MRA approach.
102. At the same time, a fundamental
tension exists between legal and political mutual recognition. Such attempts
at strengthening unilateral obligations should not overlook the fact that
recognition is above all a process of mutual adaptation. Granting too much
ground for imposing recognition through broad-based GATS clauses, e.g. judicial
fiat at the multilateral level, endangers the legitimacy of the system as
a whole and foregoes the benefits of regulatory cooperation that go along
with recognition. The fact that even in the EU judicial activism has created
resistance and that WTO's dispute settlement mechanism is a main target for
the political exploitation of the "sovereignty argument" against
trade liberalisation ought to suggest caution. It would seem to be wiser to
enforce openness to the greatest extent possible of the MRAs themselves and
to resolve emerging disputes through renewed political negotiations.
103. Even when unilateral recognition
is voluntary, the prospect of falling under MFN obligations enforceable by
dispute settlement bodies may discourage parties to extend unilateral recognition
in the first place. This is true for GATS where the granting of national treatment
is voluntary but could theoretically result in unilateral recognition. The
very fact that MFN was not made conditional on the compatibility between regulatory
regimes for concessions made in national schedules has greatly decreased their
utility as mechanisms for addressing regulatory barriers to trade. The obligation
of unilateral recognition that may emerge from the application of Article
6.4 and of national treatment when applicable should not be carried too far.
Mutual recognition needs to remain a political contract.
2. Developing guidelines for
MRAs: International Obligations and Responsibilities
104. How can the broad notion
of non-discrimination be salvaged in the negotiation and implementation of
the MRAs themselves? While the drafters of GATS have sought to ensure procedural
if not actual non-discrimination in the wording of Article 7, these attempts
may be insufficient to ensure that customised rights of access granted through
recognition do not become a means of discrimination between countries based
on non-regulatory criteria. Three types of guarantees follow from GATS which
need to be fine-tuned and reinforced on a case-by-case basis. Further efforts
through the WTO need to ensure that these guarantees are enforced and eventually
codified through more specific obligations under an amended multilateral treaty.
1) Transparency: In theory,
parties to MRAs are subject to a notification and reporting requirement
to be submitted to the WTO Secretariat "as far in advance as possible"
of recognition negotiations and when the agreement is concluded. Concretely,
USTR has suggested that parties must notify their intent to enter into discussion,
the entities involved, the dates and place of the meeting. In practice,
however, the degree of transparency of MRA discussions is hard to ensure
when involving highly sensitive sectors, where multilateral criteria do
not pre-exist and when there is great asymmetry between regulatory practices
and cultures involved. There is also the vexing question of when do negotiations
actually begin. Preliminary talks can last many years and shift progressively
into negotiations. At the other end of the spectrum, when is an agreement
an agreement? Is it when it has been adopted by at least one party (even
if this might be a sub-national jurisdiction) or when it is implemented?
Given the still ad hoc nature of the process, the best that might be hoped
for is greater post hoc transparency, in particular through requirements
to establish contact points where details on the substance of the
agreement can be obtained by third parties. These contact points should
preferably involve the same people as those managing the agreement.
2) Openness: Under GATS, members who grant recognition must "afford
adequate opportunity" for other interested members "to negotiate
their accession" to existing or future bilateral or multilateral MRAs.
Who decides that adequate opportunity has been granted? How extensive are
these obligations? How should we distinguish between obligations to respond,
an obligation to "talk", and an obligation to negotiate? The central
issue here is that negotiating over recognition is highly resource intensive,
at least when it involves thorough evaluation of equivalence and detailed
mechanisms for bridging remaining differences. When discussions are conducted
by private organisations they do it at their own expense and every additional
partner spells additional drain on resources. Technically, it may also be
much easier to proceed incrementally rather than try to involve too may
parties at once. In this light, MRAs should specify procedures for granting
opportunity of access to the agreement, while taking account of these constraints.
Parties need to specify where and how requests to join should be forwarded;
what information is required of the applicants; what are the alternative
options for demonstrating equivalence and/or for "graduating"
into the agreement. Openness can be progressive and granted step-by-step
using the same differentiated approach as with initial parties to the agreement.
This might involve concrete steps for including third parties as observers
in joint evaluation or accreditation missions, field trips and meetings
and in all other discussions that can help them master the conditions for
their eventual inclusion. Formally, MRAs could include a special category
of "associate parties" who are not considered to have met equivalence
criteria and thus would only be granted restricted benefits in terms of
automaticity and scope but would be full participants in the MRA cooperation
networks.
3) Equitable Treatment: If third parties have been given the opportunity
to apply to MRAs but do not pass the minimal equivalence test, the GATS
specifies that a member must not use mutual recognition as a means of discrimination
between countries (e.g. the "ins" and the "outs") in
the application of its regulations or constitute a disguised restriction
on trade in services. But obviously, it is allowed to treat professionals
of different origins (covered or not by recognition) differently. Equitable
treatment should therefore be conceived more proactively to mean that MRAs
should include clauses specifying the "bridges" available to third
country applicants. In this sense procedures for progressive openness and
equitable treatment should be thought of as on a continuum.
105. Exploring the concrete obligations
entailed by the requirement of openness associated with multilateralism raises
the traditional problems associated with sub-national delegation of authority
which need to be addressed in a coherent manner. For the moment, commitments
to least restrictive approaches and liberalisation are often cast in terms
of "best endeavours", reflecting the fact that governments have
often delegated jurisdiction over the professions to sub-national governments
(or federations), who themselves often grant self-regulatory authority to
professional bodies. How should obligations contracted by governments be transferred
to region and especially private bodies with delegated public authority? In
an area where liberalisation entails extensive cooperation, information gathering
and analysis, asking private bodies to accede indiscriminately to the demands
of any of the potential hundreds of mutual recognition partners around the
world would obviously be excessive and inoperative. At the same time, their
statutory power entails obligations, including those contracted by their government
internationally. Why should architects from Argentina be favoured over architects
from Uruguay with the same qualifications simply because the US based association
of architects has not yet had time to attend to the later? International organisations,
including UNCTAD and the OECD need to devote resources to address this issue.
3. Encouraging expansion and
enforcing transitivity
106. Finally, the practice and
legal basis for MRAs ought to be progressively incorporated in the WTO framework,
first by developing guidelines to enable expansion of country coverage and
eventual multilateralization. According to the drafters of the current proposal,
"MRAs on a given profession should be able to fit together and be expanded
into a multilateral system." In applying this principle, WTO Members
need to strike a balance between flexibility and consistency. In particular,
the expansion from individual recognition agreement into a multilateral system
could be accelerated by enforcing more systematically the principle of transitivity.
If parties A and B as well as B and C have a recognition agreement, should
A and C be under consistent recognition obligations? More generally, if A
enters a mutual recognition with B, and B is part of a federation or a regional
trade agreement, should A be under an obligation to negotiate recognition
with all the other parties connected to B? How far should GATS go in this
regard?
107. It may be best to leave the
greatest flexibility possible to parties engaging into mutual recognition.
Under NAFTA, for instance any configuration of mutual recognition agreement
is conceivable in theory, in order to give parties as much flexibility as
possible so as not to discourage recognition initiatives. An MRA between engineers
from specific states or provinces in Canada and the US does not need to be
extended to the rest of the country, let alone Mexico. Moreover, NAFTA starts
from the premise that even parties who are part of the same regional arrangements
may have greater differences among themselves then with some outside third
parties. The benefits of mutual recognition negotiated by one or two parties
with a third parties (say between the United States and the EU) need not automatically
extend to other NAFTA signatories.
108. Transitivity applies in principle
in the EU although the issue as to whether training obtained outside the EU
by EU nationals benefits from recognition was not an easy one to resolve.
Here, the GSD adopted a very liberal approach under pressure from the UK,
Ireland, Luxembourg and Greece whose nationals often pursue their professional
training abroad. It states that, if an EU state has recognised a foreign diploma,
such recognition will apply throughout the EU, provided the applicant has
acquired three years of professional experience. The same logic has not been
extended to non-EU nationals.(69)
109. The most important issue for WTO is whether there should be a presumption
of transitivity across bilateral or regional MRAs: if the US negotiates an
MRA with the EU and with some APEC countries, to what extent are the EU and
the concerned APEC countries obliged to recognise each other's regulations?
Transitivity would preclude the need for "rules of origin" in mutual
recognition zones and increase the consistency between such zones. Parties
may be allowed to object to transitivity because the actual access benefits
may not be balanced under the new configuration or the compounded regulatory
differentials through chain recognition may surpass their threshold of "acceptable"
differences. But in this case, asymmetries in trade benefits and regulations
must be significant and the burden of proof should be born by opponents of
transitivity. This should not preclude the use of safeguards and allowance
for generous confidence-building periods to allow regulators to set up networks
for mutual monitoring. By enforcing such transitivity the WTO could help decrease
the closed nature of MRAs, "plurilateralize" bilateral agreements,
and thus prepare the ground for eventual world-wide mutual recognition.
4. The role of OECD in promoting
a culture of mutual recognition
110. The adoption, implementation
and enforcement of MRAs in the professional sector requires overcoming a host
of obstacles. If it is based on sustaining the quality of services provided
and current levels of consumer protection -- even as the definitions and regulation
of professions change at a growing pace -- the process of recognition is likely
to be highly resource-intensive. MRAs cannot be crafted overnight or follow
some grand design. They need to be adapted to the requirements of the particular
professions and countries involved. At the same time, they need to be consistent
with one another. The OECD can support efforts at negotiating MRAs by continuing
its current work on the identification of barriers to the mobility of professionals
around the world and highlighting the areas where mutual recognition is both
most necessary and most feasible. It can suggest alternative options for MRAs
and help create a systematic data bank of on-going negotiations. It can point
out how specific liberalisation steps procedures such as competency assessment,
temporary licensing or practice under home title can form part of a mutual
recognition process rather than be considered in isolation. It can also contribute
to more proactive non-discrimination on the part of the parties most advanced
down the path of recognition by providing technical support on the conditions
for entry into MRAs.
111. The links between regulatory
reform and MRAs also need to be analysed and exploited further. The OECD can
encourage members to shape new regulatory policy that include "points
of entry" for potential recognition exercises. It can suggest guidelines
for creating more "mutual recognition friendly" domestic regulatory
environments. And it can highlight the way in which mutual recognition combined
with regulatory reform can contribute to increased competitiveness of national
business services in a world in which they will increasingly be subject to
global competition.
112. More generally the OECD can
contribute in creating a culture of mutual recognition whereby the professions
themselves become increasingly aware of the benefits that can be had through
recognition as well as the many ways in which recognition can be "managed"
to alleviate their concerns over a general lowering of professional standards
in their respective countries. Such a culture of mutual recognition would
underscore the notion that recognition is a process not an outcome, and that
it needs to be continually updated, reinforced and reappraised. Ultimately
however, and in spite of all the possible caveats and refinements explored
here, mutual recognition is a leap of faith. A leap of faith that will be
facilitated by fora like the OECD that can help breed greater familiarity
and confidence between the parties involved and enthusiasm for the challenge
ahead.
VII.
Suggested issues for discussion
113. In light of the considerations
discussed in this Note, participants may wish to reflect on the following
issues:
a) What are the professions
and regional contexts most ripe for MRAs? When is prior minimal harmonisation
of professional standards necessary and when could it be avoided altogether?
b) How could the design of MRAs best exploit the potential for compromise
and flexibility involved with the trade-offs between features of MRAs, namely
prior conditions for equivalence, automaticity, scope and ex-post guarantees?
c) How could an incremental and dynamic approach to mutual recognition of
professional qualifications be promoted around the world to maximise the
demonstration effects of recognition?
d) What kind of measures might be tackled through general liberalisation
measures short of engaging in a mutual recognition process?
e) What broad rules and concrete measures might be envisaged to ensure the
open and non-discriminatory character of MRAs?
f) What concrete initiatives might be undertaken to promote a culture of
mutual recognition and encourage the various bodies involved to experiment
with alternative scheme
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Notes
i. See Kalypso
Nicolaïdis, "Mutual Recognition of Regulatoy Regimes: Some Lessons
and Prospects," in Regulatory Reform and International Market Openness,
OECD Publications, November 1996.
ii. See "Regulatory
reform project-Draft chapter on Professional Business Services," DAFFE,
OECD, November 1996.
iii. Article
7 of GATS encourages signatories to adopt measures, byway of bilateral agreements
or autonomously, "to recognize the education or experience obtained, requirements
met, or licenses or certification obtained in a particular country."
iv. MRAs in the
field of products are being now negotiated or considered both bilaterally -e.g.
between the United States and the European Union, Australia and New Zealand-
plurilaterally -the G4 countries- and regionally -within APEC, ASEAN, NAFTA
and the FTAA.
v. See Bernard
Ascher, "Trade Agreements and the Professions," Paper presented at
Euroservices: Transatlantic Trade in the 21st Century, US Department of Commerce,
June 18, 1996, p4.
vi. See OECD
Documents, 1995, Liberalisation of Trade in Professional Services, and
OECD Documents,1996, International Trade in Professional Services: Assessing
Barriers and Encouraging Reform (referred to hereafter as OECD Documents,
1995 and 1996). Measures are recorded in the OECD Inventory of Measures Affecting
Trade in Professional Services and the survey on Regulation on Acces to the
Professions and their Activities.
vii. Article
57.1. Although the European Court decided in a series of cases in the mid-1970s
that the provision of the Treaty were to be self-executing in the absence of
the Commuity directives it called for, this did not extend to mutual recognition.
viii. This includes
pharmacists, doctors, dentists, engineers, architects, accountants, lawyers,
veterinarians, midwifes, opticians, nurses.
ix. Every profession
was treated along the same scheme under three separate directives concerning
respectively, a) the abolition of legal restrictions on freedom of movement;
b) the mutual recognition of qualifications; c) and coordination of conditions
for the taking up and pursuit of the professions.
x. For greater
detail see Jean-Eric de Cockborne in OECD Documents, 1995; and Nicolaïdis,
OECD, 1996.
xi. Directive
89/48/CEE completed by 92/51/CEE. The first general directive entered into force
in January 1991 and the second in 1994. For a detailed description see for instance,
Vademecum sur le Systeme de Reconnaissance Des Qualification Pofeionnelles Instauré
par la directive 89/48/CE et Complété par la Directive 92/51/CEE-Rapport
Final-Clifford Chance, Brussels, 1994.
xii. Article
3 the GSD stipulated that, "where, in a host member state, the taking up
or pursuit of a regulated profession is subject to possession of a diploma,
the competent authority may not, on the grounds of inadequate qualifications,
refuse to authorize a national of a Member State to take up or pursue that profession
on the same conditions as applied to its own nationals : (a) if the applicant
holds the diploma required in another member state for ... the profession in
question... (b) if the applicant has pursued the profession in question full
time for two years during the previous ten years in another member state which
does not regulate that profession, ... and possesses evidence of one or more
formal qualifications ... awarded by a competent authority...which show that
the holder has successfully completed a post-secondary education course of at
least three years duration... and where appropriate that he has successfully
completed the professional training required in addition to the course, and
which have prepared the holder for the pursuit of the profession."
xiii. This is
in keeping with the general philosophy set out in the Court's judgement Cassis
de Dijon (1979) where any alcoholic product was to be allowed free entry in
any member state if "lawfully produced and marketed" in another member
state.
xiv. The first
three correspond to alternative levels of training and constitute the basic
organizing categories; the next two have been added by the second GSD to cover
particular cases (attestation de competence and title FGEPS). The last two -title
of training and regulated title of training- cover qualifications acquired in
a home state that does not regulate a profession.
xv. In virtually
all the member states regulated professions are concentrated in the same fields:
education, health care, shipping, law and finance. But social and cultural differences
explain variance beyond this core. A professional activity is considered as
regulated under two conditions: 1) the regulation is issued by public authority
or private authority with delegated public authority. Private professional authorities
must be deemed competent to deliver a certificate under the MR system; 2) the
regulation must be aimed at conditioning access to the practice of a profession-directly
or indirectly- to the possession of a stated type of qualification.
xvi. A year
prior to the passing of the GSD, the Court had indicated how proportionality
ought to apply in the case of salaried activities, stating that host states
were required to "take into account" training received in the country
of origin and could not refuse access if such training complied with a number
of criteria of equivalence. While the case concerned free movement of workers
(EEC Treaty, article 48), it was interpreted as applicable by analogy to the
professions. Case 222/86, Heylen, judgement of 15 October 1987, ECR 4116.
xvii. Explanatory
memorandum, Commission, Bulletin of the European Communities, es, Supplement
8/85, p7.
xviii. Article
9, GSD. In addition, the Commission committed itself to step up its support
for Community wide education data bases such as the information center on the
academic recognition of diplomas and period of study established in 1976 by
the Council.
xix. Explanatory
memorandum, p7.
xx. Some states
have chosen to adopt a general horizontal measure, transposing the GSD's general
principles and appointing competent authorities, with detailed rules for each
professions awaiting secondary legislation; others have chosen to transpose
vertically, profession by profession. See Economic Advisory Group, "The
Impact and Effectiveness of the Single Market, 30 October 1996, Communication
from the Commission to the European Parliament and Council, European Commission,
DGIII and accompanying bacground information in The 1996 Single Market Review,
15 November 1996.
xxi. See Luis
Orzack, "The General Systems Directive: Education and the Liberal Professions,"
in Hurwitz and Lequesnes, eds, The State of the European Community, (Boulder:
Lynne Rienner, 1991).
xxii. For an
extensive analysis, see Sydney Coyne, International Trade in Legal Services,
Little, Brown and Company, 1996.
xxiii. Commission
of the European Communities, "Proposal for a European Parliament and Council
Directive to facilitate practice of the profession of lawyer on a permanent
basis in a Member State other than that in which the qualication was obtained,"
COM (94) 572 final, Brussels, 21.12.1994, 94/0299 (COD); Amended Proposal, Com
(96) 446 fin. For a description of the negotiations, see Coyne, op cit.
xxiv. See David
Leebron in OECD Proceedings, Regulatory reform and International Market Openness,
1996.
xxv. These correspond
to technical standards and conformity assessment procedures for goods.
xxvi. "UIA
Accord on International Recommended Standards of Professionalism in Architectural
Practice,"adopted by the UIA Assemby in Barcelona, Spain, 9 July 1996.
The agreement builds on an accord between the US and Canada, first signed in
1978 and expanded in the annex on Architecture in the US-Canada Free Trade agreement.
The FTA established the need for common standard on accreditation without spelling
out these standards specifically. A process of recognition under the FTA has
actually been set in motion between the National Council of Architectural Registration
board and the Commission of Canadian Architectural Council.
xxvii. The convention
was sgned between UNESCO (CEPES), the Council of Europe, and the European Union,
through their respective national information networks on academic recognition,
such as the European National Information Centres on Academic Recognition and
Mobility (ENIC). See "Guidelines and Recommendations From the Working Group
On Europe-U.S.A.: Mutual Recognition of Qualifications," by Stamenka Uvalic-Trumbic,
CEPES-UNESCO, 1996.
2xxviii. In
the current discussions towards a possible MRA in architecture between Mexico,
US and Canada, teams of experts from each country have been given the task of
visiting Schools in Mexico. They will then meet to go over the results and assess
whether the schools are actually up to standards.
xxix. When there
is no further precision and specific provisions are mentioned the term GSD refers
to the first directive.
xxx. To ensure
that the system would not be abused the United Kingdom added an explanatory
statement that the associations and organizations recognized in a special form
were those which are incorporated under Royal Charter (statement 9). The lists
provided by Ireland and the UK includes Institutes and Chartered bodies supervising
Accountants, Loss Adjusters, Management Accountants, Chartered Secretaries and
Administrators, Insurance, Actuaries, Bankers, Surveyors, Planning, Physiotherapy,
Chemistry, Psychology, Libraries, Foresters, Building, Engineering (structural,
civil, mining, electrical, gas, mechanical, chemical, production, Marine), Energy,
naval Architects, Aeronautical Society, the Institute of Metals, the Institute
of Measurement and Control, the British Computer Society.
xxxi. In land
surveying and pharmacy they have done so for 100 years! Architects have automatic
registration since 1990. Automatic cross registration is currently being implemented
for teachers, veterinary sciences and dentistry and is under way for radiography.
See "A proposal for the Trans-Tasman Mutual Recognition of Standards for
Goods and the Professsions: A discussion paper circulated by the Council of
Australian Goverments and the Government of New Zealand," Australian Government
publishing services, April 1995.
xxxii. Jean-Eric
de Cockborne, OECD Documents, 1985.
xxxiii. An element
of clarification was attempted in the statement 15 added to the directive: "the
Council and the Commission agree that matters differ substantially ...where
the activities in question cannot be pursued satisfactorily in the host member
state unless they have been mastered."
xxxiv. This
was a controversial point in the GSD negotiations. Ultimately, the right was
not included in the directive but the object of an informal understanding under
statement 3, "the Council and the Commission agree that applicants must
possess the linguistic knowledge necessary for the pursuit of their profession."
How far member states could go in enforcing language requirements was thus left
unclear and subject to ECJ review. In a well publicized case regarding a foreign
teacher in Ireland, the Court did allow for language requirements on the grounds
of preserving national identity.
xxxv. Council
Directive of 22 March 1977, OJ No 78, 26.3. 1977.
xxxvi. At this
stage it is important to ensure that the host country does not reintroduce an
entry test through the backdoor. Under statement 11 of the GSD, for instance,
the adaptation period is the object of an assessment on the part of host country
regulators, provided that this assessment only pertains to the activities under
supervision and "in no case" takes the form of a formal written or
oral test.
xxxvii. The
formula is actually more complex, with X and Y as respectively lengths of studies
in home / host countries (years), T as years of training, C as years of controlled
practice, P as maximum years of professional experience which can be required
as a compensatory measure: Y=X+aT=>P=2x(a); Y=X+bC=> P=b
xxxviii. See
notably contributions by Ursula Knapp, James Murray, "Liberalisation and
the consumer,"and Jenny in OECD Documents, 1996
xxxix. See Coyne,
op cit.
xl. EU member
states are allowed to derogate from the right to choose: i) for the legal profession;
ii) "for professions whose practice requires precise knowledge of national
law in respect of which the provision of advice and/or assistance concerning
national law is an essential and constant aspect of the professional activity
(article 4);" iii) for all professions, subject to a notification procedure
with the Commission (art 10). France for instance asked for a derogation in
tourism and professions requiring a detailed knowlege of national law (e.g.
industrial property consultant). See directive 89/48/EEC, Article 11 Reports
(1991/1992), Member States reports.
xli. See Article
11 Reports, op cit.
xlii. Ibid,
Ireland Report. The French report also cites French nationals trained as psychotherapists
in Belgium.
xliii. This
is evident in the EU Member States reports on the implementation of the GSD
which are due every two years after the implementation of the GSD on 6 January
1991. In the first two years, the rate of automatic acceptance varied greatly
across pairs of countries and professions. Even between the UK and Ireland where
there is probably the highest flow,the automatiity ratee ranged from 96% for
solicitors, to a third for secondary school teachers. The UK's rate of 75% automatic
acceptancee was the highest reported.
xliv. A good
example can be found with the legal profession in Europe. In Germany the test
consists in two written exam covering respectively a compulsory topic and a
topic in an area selected by the candidate, and an oral on professional rules.
In France the National Bar council reviews each applicant's qualification and
in light thereof requires the applicant to take from one to 3 oral exams, sometimes
complemented with a four hour written exam. In the UK the Aptitude test consists
of two three hour written exam on property law and litigation, and short exams
on professional conduct and account, and principles of the common law.
xlv. See for
instance statement 15 of the GSD: "The Council and the Commission agree
that neither the adaptation period not the aptitude test should constitute a
disguised means of imposing upon applicants a more stringent requirement than
is necessary."
xlvi. More generally,
regulations and therefore rights of access can apply to the actvity per se or
to certain modes of practice ( in addition these include the use of titles,
the reimbursement of professional acts in the field of health or right to added
compensation, such as a government subsidy due to a collective agreement). Access
to these other modes of practice can be a precondition for local practice or
simply an added bonus.
xlvii. The distinction
may be more or less important to different countries. In architecture for instance
there is a great difference of culture between the napoleonic tradition of granting
a title as a precondition for professional practice and the anglo-saxon culture
where the title is protected by law but not the practice. In the UK many bodies
carry out the function of architect under other professional labels such as
engineers; quantity surveyor and building surveyor and technicians.
xlviii. The
use of titles as signaling devices was introduced in the EU 1975 medical directives,
where host states were allowed to require use of home state title followed by
the name and location of the establishment or examining board which awarded
it; in cases where the home title "may be confused" with a host state
title, implying training which the person concerned had not undergone, the host
state could require adaptation of the title through the introduction of "suitable
wording." In addition, formal certificates of training were to be used
only in the language of the member state of origin.
xlix. Other
beneficiaries can use both the professional title of the host member state or
the academic title of the home state. In the latter case the host state may
require the applicant's title to be followed "by the name and location
of the establishment or examining board which awarded it."
l. One of the
traditional purposes of regulating professions has been to establish constraints
on which activities could be exercised by whom. Compartmentalising functions
and services serves to limit professionals' capacity to prescribe their own
services. Different professions are designated to provide specific services
where there may be conflict of interest (e.g. accounting and legal services).
It also allows the imposition of different degrees of regulation which may lead
to higher controls in some countries. Thus law counselling (solicitors) is more
regulated in common law countries. Similarly, the right to represent clients
is distinguished from the task of recording acts in many countries, and the
right to request contruction permits reserved to architects not suveyors or
engineers. See Steven Nelson, OECD Documents, 1996.
li. See Ehlermann-Cache
and Ursula Knapp, OECD Documents, 1996. The scope of "foreign law"
can itself be a matter of interpretation. According to USTR, lawyers with an
office in the EU ought to be allowed to practice EU law since it is part of
European law. Europeans countered that EU law often takes effect as the domestic
law of member states.
lii. There are
countries where titles serve as evidence of a level of training and allow for
even more differentiated access, such as Germany. Certain types of organizations
are free to reserve certain activities to "doctorate engineers" rather
than "graduate engineers." In this case, full recognition implies
that such distinctions cannot apply to foreign engineers.
liii. In another
vein, lawyers traditionally needed to be accessible to the court and thus it
was nomal that they maintain an establishment within its territory. Steven Nelson,
OECD Documents, 1996.
liv. In the
Gebhard case, the ECJ denied that the 1977 directive on cross-border
provision allowed a German Rechtsanwalt to keep an office in Milan, to service
nationals of the host country. "on a stable and continuous basis."
Case c-55/94, European Court of Justice Judgement of Nov 30 1995.
lv. An interesting
example is the combination of an obligation to establish for audit while cross
border provision is accepted for book keeping. See Ursula Knapp, "Inventory
of measures affecting Trade in Professional Services," OECD Documents,
1996.
lvi. For a discussion
of the importance of this idea in the context of the Uruguay Round, see William
Drake and Kalypso Nicolaïdis, "Ideas, Interests and Institutionalization:
"Trade in Services" and the Uruguay Round," in International
Organization 46, no.1 (Winter 1992): 37-100.
lvii. This line
of thinking can be presented under the general category of "securing insecure
contracts". For a discussion, see Nicolaïdis, OECD, op.cit,
p18-20. Section IV.4 draws heavily on this chapter.
lviii. Pierre
Sauvé, "The Long and Winding Road: NAFTA and the Professions,"
in OECD Documments, 1995.
lix. See Ascher,
op cit, p. 7.
lx. See Rhonda
Piggott in OECD Documents, 1996.
lxi. Under the
NAFTA model, the NAFTA Commission, meeting at the ministerial level, is supposed
to review and monitor progress. See Sauvé, OECD Documents, 1995.
lxii. See Ascher,
op cit, p8 and discussion in IV.1.b. above.
lxiii. For instance,
the American Bar Association that accredits Law schools in the US adopted such
a waiver. See ABA, Standards for Approval of Law School and Interpretations,
Standard 802 (October 1991), (ex.18).
lxiv. See Pierre
Sauvé, OECD Documents, 1995.
lxv. Bernard
Ascher, op cit, p. 7.
lxvi. For an
early discussion, see Nicolaïdis, 1989. See also Nicolaïdis, OECD,
1996.
lxvii. This
section draws extensively from Nicolaïdis, OECD, 1996.
lxviii. The
same language appears in the FTA (Article 1403: Licensing and Certification),
NAFTA (Article 1210: Licensing and Certification).
lxix. In the
field of law for instance, the US requested that the EU grant US lawyers the
same treatment accorded to English solicitors (e.g. right to advice) on behalf
of all non-EU lawyers. US negotiators may have been ill-advised to make such
a universal demand, for this was seized upon by the EU to refuse to consider
the request. Under the draft establishment directive for lawyers, non-EU lawyers
who qualify as English solicitors by passing the English Qualified Lawyers Test
(e.g. from Canada, the US or Australia) or as Avocat by passing the French Special
Exam would not be entitled to the benefits of the directive unless they were
EU nationals. See Coynes, op cit
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