The main objective of the Handbook “LIBERALISATION OF PROFESSIONAL SERVICES IN ASEAN THROUGH MUTUAL RECOGNITION: ENGINEERING SERVICES” is to provide an important tool to disseminate informationand create greater understanding of the liberalisation of the trade in engineering services within ASEAN.
The Handbook will assist ASEAN engineering professionals understand requirements to qualify and to practice as an engineer in all ASEAN Member States (AMS) and the requirement to set-up commercial presence in the relevant profession in another AMS. The ability of engineers in ASEAN to move beyond national borders in ASEAN will assist ASEAN to achieve the ASEAN Economic Community (AEC) in 2015. The ability of engineers to provide services beyond national borders is also facilitated by the ASEAN Framework Agreement on Trade in Services (AFAS) 1995 and the Mutual Recognition Agreement (MRA) on Engineering Services 2005.
AFAS, which is the main legal documents facilitating liberalisation of trade in services aims to (1) enhance cooperation in services among AMS; (2) to improve the efficiency and competitiveness of ASEAN services industries, diversify production capacity and supply, and distribution of services; (3) eliminate substantial barriers to trade in services; and (4) liberalise trade in services by expanding the depth and scope of liberalisation beyond those undertaken under the General Agreement on Trade in Services (GATS) of the World Trade Organization (WTO).
The Handbook will first familiarise readers with the four modes of supply of services under AFAS which is adopted from Article I.2 of GATS. The definition of modes of supply of services trade under AFAS, as in GATS, is four-pronged, depending on the territorial presence of the supplier and the consumer at the time of the transaction.1
Pursuant to Article I:2 of GATS, services trade include services supplied
from the territory of one Member into the territory of any other Member (Mode 1 - Cross border trade);
in the territory of one Member to the service consumer of any other Member (Mode 2 – Consumption abroad);
by a service supplier of one Member, through the presence of natural persons of a Member in the territory of any other Member (Mode 4 - Presence of natural persons).
Examples of the four modes of supply are as follows:
Mode 1: Cross border
A user in country A receives services from abroad through its telecommunications or postal infrastructure. Such supplies may include consultancy or market research reports, tele-medical advice, distance training, or architectural drawings.
Mode 2: Consumption abroad
Nationals of A have moved abroad as tourists, students, or patients to consume the respective services.
Mode 3: Commercial presence
The service is provided within A by a locally-established affiliate, subsidiary, or representative office of a foreign-owned and – controlled company (bank, hotel group, construction company, etc.)
Mode 4: Movement of natural persons
A foreign national provides a service within A as an independent supplier (e.g., consultant, health worker) or employee of a service supplier (e.g. consultancy firm, hospital, construction company).
Commercial linkages may exist among all four modes of supply. For example, a foreign company established under mode 3 in country A may employ nationals from country B (mode 4) to export services cross-border into countries B, C etc. Similarly, business visits into A (mode 4) may prove necessary to complement cross-border supplies into that country (mode 1) or to upgrade the capacity of a locally established office (mode 3).
Figure 1: Four Modes of Supply under AFAS/GATS
To facilitate movement of ASEAN individual professional service providers (natural person)to another AMS, AMS entered into the ASEAN Agreement of the Movement of Natural Persons (MNP Agreement) signed on 19November 2012 in Cambodia.
The MNP Agreement covers temporary entry of skilled workers, professionals and executives. The scope of the MNP Agreement is limited to business visitors, intra-corporate transferees, business visitors and contractual service suppliers, and is subject to the commitments made in the Schedule of Commitments. The MNP Agreement does not cover professional service providers who seek access to employment market.
The Handbook also discusses the “mutual recognition agreement” (MRA) at the international and ASEAN levels. MRA is one of the important tools to increase the level of utilization of the liberalization of cross-border trade in professional services in ASEAN.
The Handbook is arranged in the following manner.
Part 2 of the Handbook discusses the definition of mutual recognition and MRAs, models of mutual recognition and MRAs in several jurisdictions, and MRAson engineering servicesat international and regional levels.
Part 3 of the Handbook provides an overview of educational requirement prior to qualifying as an engineering professional in the ten (10) AMS. Part 3 also discusses the pre-conditions required to set-up commercial presence of engineering practices (Mode 3) in AMS.
Part 4 analyses various issues surrounding the liberalisation of engineering in ASEAN, with particular attention on Mode 3 and Mode 4.
Part 5 of the Handbook provides several proposals for reform in the liberalisation of professional services in ASEAN.