Cross-Border Mobility 

Law/Public Practice

Cross-Border Mobility

While trade agreements have led to increased labour mobility in recent years, CGAs still do not have public practice rights throughout Canada. However, a recent challenge by CGA-New Brunswick may change that.

FROM: MAY-JUN 2005 ISSUE | BY GERRY STOBO

Every day, professionals travel throughout Canada, across North America, and around the world to provide services. Based on this fact, we could all be forgiven for believing that we live in a seamless, service-delivery global village. But the reality is that despite the emergence of trade agreements to reduce and gradually remove barriers, cross-border mobility of professionals is still far from seamless. And the problems are not just with international borders. Within Canada, varying regulations and laws are barriers for professionals wanting to provide services across provincial and territorial borders. In fact, it is estimated that the cost of impediments to efficient inter-provincial trade is close to $10 billion per year.

And while some of the international barriers have come down, we cannot say we have free trade in services. Perhaps the most we can say is that we now have "freer" trade than in the past. There is a series of international and inter-provincial trade agreements that have helped promote cross-border movement, but more still needs to be done. Existing agreements include the General Agreement on Trade in Services (GATS), the North American Free Trade Agreement (NAFTA), and Canada's inter-provincial Agreement on Internal Trade (AIT), all of which have implications for the mobility of professionals.

GATS

The GATS was negotiated during the Uruguay round of multilateral trade negotiations which resulted in the creation of the World Trade Organization in 1994. Until the GATS was signed, multilateral trade agreements dealt strictly with trade in goods. The GATS was the first multilateral trade agreement dealing with professional services such as accounting, legal, insurance, financial, research and development, information technology, engineering, and architectural services.

The GATS established a set of basic rules and obligations for each member country as well as a dispute settlement mechanism to ensure that the rules are enforced. Generally speaking, parties to the GATS have agreed: 1) not to discriminate by offering preferential treatment to service providers from one particular country over another (Most Favoured Nation treatment); 2) not to discriminate against foreign service providers by offering preferential treatment to domestic service providers (National Treatment); 3) not to take measures that restrict market access, such as quotas, economic needs tests, maximum foreign shareholding limits and requirements for certain types of entities (Market Access); 4) to administer domestic regulations in a reasonable, objective, and impartial manner; 5) to ensure that qualifications, licensing requirements, and technical standards are transparent, objective, and not more burdensome than necessary to ensure quality of service; and 6) to ensure that regulations and policies are public and transparent.

Shortly after the GATS came into effect, the WTO identified several occupational groups as prime candidates for enhanced cross-border mobility, and at the top of the list was the accounting profession. Given that accounting principles are essentially the same whether applied in Toronto, Los Angeles, Paris, Hong Kong, or Buenos Aires, the WTO formed a special committee to see how the mobility of accountants could be facilitated.

The committee reviewed the obstacles that prevented mobility of accountants and made a number of recommendations that were accepted in 1998 as the "Disciplines for Domestic Regulation in the Accounting Sector." The disciplines contained provisions respecting licensing requirements, qualifications requirements and procedures, and technical standards for the accounting profession. At their heart these provisions encouraged members not to adopt measures (such as qualifications and licensing requirements) that were more trade restrictive than necessary, and to eliminate obstacles preventing the free movement of accountants between countries.

Furthermore, the disciplines encouraged member countries to evaluate the qualifications, education, and experience acquired by an accountant in another territory. The committee identified Mutual Recognition Agreements (MRAs) as one of the ways that this could be achieved. MRAs are entered into when occupational groups accept that the training and experience requirements of one jurisdiction are generally satisfactory for practice in another jurisdiction. Consequently, professionals can move between jurisdictions without having to undergo extensive re-training or re-qualification procedures.

NAFTA

NAFTA and its predecessor agreement, the Canada-U.S. Free Trade Agreement, have led to an explosion of cross-border trade and commerce. Not only has our cross-border trade in goods risen dramatically, but Canada-U.S. trade in services has also enjoyed significant growth. From 1989 to 2002, Canada's exports in services to the U.S. nearly tripled from $11.8 billion to $35.1 billion, while imports doubled from $18.1 billion to $40.8 billion.

Chapter 12 of NAFTA is devoted to promoting cross-border trade in services. It provides that parties shall ensure that licensing or certification of nationals of another party must not constitute an unnecessary barrier to trade and that regulations relating to cross-border mobility of professional advisors be based on objective and transparent criteria, "such as competence and ability to provide a service."

Not only does NAFTA provide a framework to encourage the removal of unnecessary obstacles for professional mobility, it provides a mechanism for professional service providers to enter other countries to deliver services. For example, Appendix 1603.d.1 of NAFTA provides that accountants can take advantage of the provisions that facilitate the movement of professionals into another NAFTA country in order to provide accounting services. It is important to note that accountants must comply with the immigration and licensure requirements of the country in which they are providing services.

Mobility Under the AIT

Within Canada, many workers face a litany of measures preventing them from providing services across provincial and territorial borders. The AIT's labour mobility provisions were designed to deconstruct these obstacles, and some measure of success has been noted with the signing of new MRAs between occupational groups throughout Canada.

Positive as those developments have been, unfair hurdles continue to exist. Some provinces still have legislation or regulatory regimes that unfairly prevent out-of-province professionals from providing services. You may be well aware of the fact that Quebec still does not permit CGAs to provide public accounting services. With a few exceptions, public accounting in Quebec can only be practised by CAs. Not only does this long-standing inequity fail to recognize the competency of CGAs, it means that Quebec is not in compliance with its obligations under the AIT and will not be until the provincial legislation is changed.

Under the AIT, provinces and territories must remove any laws or regulations that restrict the mobility of someone who has the competency to deliver a service from doing so. The competency must be assessed on an objective basis and not on the basis of a designation. This was the conclusion of the successful challenge CGA-Manitoba brought against Ontario's public accounting regime in 2001.

In March 2005, CGA-New Brunswick launched a challenge to Quebec's discriminatory public accounting laws using the provisions of the AIT. While all CGAs are affected by this situation, CGAs living and working near the New Brunswick-Quebec border are particularly affected by Quebec's measures. Given the successful challenge of Ontario's public accounting legislation, there is good reason to be hopeful that the AIT panel will find that Quebec's laws contravene the AIT. Then it will be up to the government of Quebec to change the provincial legislation just as the provincial governments of Ontario and Prince Edward Island have done. Only then will CGAs — no matter where they live — be able to provide accounting services for companies and individuals doing business in Quebec.

The importance of trade agreements in the removal of mobility barriers across Canada and around the world continues. But until the seamless delivery of cross-border services becomes a reality, much work remains to be done to dismantle obstacles preventing the mobility of professionals. As a final note, just as capital flows between jurisdictions, so should accounting services.

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Gerry Stobo, LLB, is one of Canada's leading trade lawyers and a partner in the Ottawa office of Borden Ladner Gervais, the firm retained as counsel for the AIT challenge put forward by CGA-New Brunswick in March 2005.