Reducing the Barriers to International Trade in Accounting Services AEI STUDIES ON SERVICES TRADE NEGOTIATIONS Claude E. Barfield, series editor REDUCING THE BARRIERS TO INTERNATIONAL TRADE IN ACCOUNTING SERVICES Lawrence J. White INSURANCE IN THE GENERAL AGREEMENT ON TRADE IN SERVICES Harold D. Skipper, Jr. Reducing the Barriers to International Trade in Accounting Services Lawrence J. White The AEI Press Publisher for the American Enterprise Institute WASHINGTON, D.C. 2001 Available in the United States from the AEI Press, c/o Publisher Resources Inc., 1224 Heil Quaker Blvd., P.O. Box 7001, La Vergne, TN 37086-7001. To order, call 1-800-937-5557. Distributed outside the United States by arrangement with Eurospan, 3 Henrietta Street, London WC2E 8LU, England. ISBN 8447-7157-0 1 3 5 7 9 10 8 6 4 2 © 2001 by the American Enterprise Institute for Public Policy Research, Washington, D.C. All rights reserved. No part of this publication may be used or reproduced in any manner whatsoever without permission in writing from AEI except in the case of brief quotations embodied in news articles, critical articles, or reviews. The AEI Press Publisher for the American Enterprise Institute 1150 17th Street, N.W. Washington, D.C. 20036 Printed in the United States of America v Contents FOREWORD, Claude E. Barfield v ACKNOWLEDGMENTS xi 1INTRODUCTION 1 2B ACKGROUND 3 3WHY INTERNATIONAL TRADE IN SERVICES IS (AND IS NOT) DIFFERENT FROM TRADE IN GOODS 5 4ACCOUNTING SERVICES IN INTERNATIONAL TRADE 11 5THE IMPEDIMENTS TO TRADE IN ACCOUNTING SERVICES 18 6D IFFERING ACCOUNTING STANDARDS: HOW IMPORTANT IS HARMONIZATION?22 7THE CURRENT FRAMEWORK FOR NEGOTIATIONS 28 8T HE ROAD AHEAD 34 9CONCLUSION 37 NOTES 39 R EFERENCES 43 G LOSSARY OF TRADE TERMS 47 A BOUT THE AUTHOR 55 [...]... living This chapter will first explore the latter notion, in order to motivate the general discussion in this study of the importance of reducing the barriers to international trade in accounting services We will then turn to the important ways that services are different Trade in Services Is Not Different: Improving Efficiency The basic economics argument for reducing or eliminating impediments to trade. .. dismantling of barriers in the services areas than is true for goods Nevertheless, the GATS represents a substantial effort toward freer trade in services, and accounting services are an important part of that effort We now turn to a deeper exploration of accounting services 4 Accounting Services in International Trade T he scope of accounting services 11 is usually understood to include accounting. .. trade in goods and the recent substantial interest in liberalizing trade in services, however, it seems likely that the Seattle events will represent only a brief stumble on the path to freer international trade 1 2 REDUCING THE BARRIERS TO INTERNATIONAL TRADE Prior to the Ministerial Conference, substantial progress had been made with respect to establishing international commitments for freer trade in. .. rising tide of interest in trade in a wide range of services The street-level disruptions at the Seattle Ministerial Conference of the World Trade Organization in November and December 1999 were an unfortunate slowing of the general process of liberalizing international trade in goods and services Given the momentum of more than five decades of international progress in reducing the barriers to trade. .. to the GATS accounting agreement (similar to the regulatory annex in the GATS telecommunications agreement) Finally, this monograph and the accounting sector itself point up a continuing tension in service sector negotiations: domestic regulators can themselves become impediments to trade liberalization unless they are convinced that such liberalization serves the national interest In the case of accounting. .. regulatory institutions and procedures are in place This appears to be the case for accounting services As was documented in chapter 4, the major accounting firms are international in structure; international trade in accounting (and related) services is a substantial reality But the widespread local regulatory restrictions that these firms face force them into inefficient compromises that impede the flow... initiative focusing on professional services has been included in these negotiations The WTO Working Party on Professional Services (WPPS),2 which came into existence in 1995, selected accounting as the first of the professional services areas for which a set of multilateral “disciplines” (rules that limit the protectionist nature of the 3 4 REDUCING THE BARRIERS TO INTERNATIONAL TRADE domestic regulatory requirements... International Grant Thornton International Horwath International RSM Internationala Moores Rowland International Summit International Associates Nexia International PKF International Fiducial International HLB International Moore Stephens International AGN International MacIntyre Strater International IGAF BKR International 150 81 133 157 135 86 91 86 74 87 58 78 108 60 90 75 67 83 57 60 a Includes McGladrey... discussion during the so-called Uruguay Round of GATT negotiations in the late 1980s Those negotiations ultimately led to the creation of the World Trade Organization (WTO) as the successor to the GATT, and to a General Agreement on Trade in Services (GATS), which has served as the vehicle for the specific negotiations concerning reductions in the barriers to international trade in services A major initiative... key input for lenders’ and investors’ decisions as to whether, when, and how to provide finance to enterprises.1 Accounting is thus an important part of the business sector of any modern economy The growth of multinational enterprises generally, and of multinational accounting firms in particular, has focused attention on issues related to international trade in accounting services This attention, in . Reducing the Barriers to International Trade in Accounting Services AEI STUDIES ON SERVICES TRADE NEGOTIATIONS Claude E. Barfield, series editor REDUCING THE BARRIERS TO INTERNATIONAL TRADE. INTERNATIONAL TRADE IN ACCOUNTING SERVICES Lawrence J. White INSURANCE IN THE GENERAL AGREEMENT ON TRADE IN SERVICES Harold D. Skipper, Jr. Reducing the Barriers to International Trade in Accounting Services Lawrence. explore the latter notion, in order to motivate the general discussion in this study of the importance of reducing the barriers to international trade in accounting services. We will then turn to the