Study on Regulatory Regimes in Selected Professional Services in EU Member States

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Study on Regulatory Regimes in Selected ProfessionalServices in EU Member States

Final Report

August 2009

CARIBBEANREGIONAL NEGOTIATING MACHINERY


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Study on Regulatory Regimes in Selected Professional Services in

EU Member States

Contract/Project No AOR 026/2009/WP2/no. 28.1-1.040Caribbean Region

By

Noel WatsonJohn J. Downes

Submitted by

The Views expressed in this report do not necessarily reflect the views of the EuropeanCommission


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TABLE OF CONTENTS

I. Executive Summary and Recommendations .................................. 2II. Introduction ............................................................................ 10

1. Brief Guide to the EPA ...................................................... 112.

Mutual Recognition of Professional Qualifications in the EU .... 15

III. Methodology ............................................................................ 17

1. Introduction .................................................................... 172. Business Environment/Market Related Issues ...................... 19

2.1. Overview of the specific domestic market for each of the selectedcountries .............................................................................. 19

2.2. Trade related issues in the selected industries in the selectedcountries .............................................................................. 21

2.3. General Framework for Setting up in Business or SupplyingServices ............................................................................... 21

2.4. Regulatory and Administrative Issues for the Listed Professions ........................................................................................... 22

IV. Opportunities for TRADE IN SERVICES ........................................ 261. Estonia: Opportunities for Cariforum Service Providers ......... 28

1.1. Size and structure of domestic market for each service .............. 281.2. Trade in Services ................................................................... 301.3. Steps for Establishing a Business in Estonia .............................. 341.4. Industry Specific Opportunities in Estonia ................................. 35

2. France: Opportunities for Cariforum Service Providers .......... 412.1. Size of each selected industry ................................................. 422.2. Trade in Services ................................................................... 432.3. Steps for Setting up a Business in France ................................. 482.4. Industry Specific Opportunities in France .................................. 49

3. Germany: Opportunities for Cariforum Service Providers....... 553.1. Size of each selected industry ................................................. 553.2. Trade in Services ................................................................... 563.3. Steps for Setting up a Business in Germany .............................. 603.4 Industry Specific Opportunities in Germany .............................. 61

4. Italy: Opportunities for Cariforum Service Providers ............. 674.1. Size of each selected industry ................................................. 684.2. Trade in Services ................................................................... 694.3. Steps for Setting up a Business in Italy .................................... 734.4 Industry Specific Opportunities in Italy .................................... 745. Malta: Opportunities for Cariforum Service Providers ............ 795.1. Size of each selected industry ................................................. 795.2. Trade in Services ................................................................... 805.3. Steps for Setting up a Business in Malta ................................... 845.4. Industry Specific Opportunities in Malta.................................... 85

6. Netherlands: Opportunities for Cariforum Service Providers .. 936.1. Size of each selected industry ................................................. 93


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6.2. Trade in Services ................................................................... 946.3. Steps in Setting up a Business in The Netherlands ..................... 986.4. Industry Specific Opportunities in the Netherlands ..................... 99

7. Spain: Opportunities for Cariforum Service Providers ......... 1027.1. Size and structure of domestic market for each service ............ 1027.2. Trade in Services ................................................................. 1037.3.

Steps in Setting up a Business in Spain .................................. 107

7.4. Industry Specific Opportunities in Spain ................................. 108

8. UK: Opportunities for Cariforum Service Providers ............. 1138.1. Size of each selected industry ............................................... 1138.2. Trade in Services ................................................................. 1148.3. Steps in Setting Up a Business in the United Kingdom .............. 1188.4. Industry Specific Opportunities in the U.K. .............................. 119V. General Regulatory and Administrative Framework for Supplying

Services .................................................................................. 1291. Estonia ......................................................................... 129

1.1. General Regulatory Environment ........................................... 1291.2. Setting up a Business........................................................... 1291.3. Estonian Chamber of Commerce and Industry ......................... 1301.4. Types of Business Undertaking .............................................. 1311.5. Foreign Enterprise Entities Operating in Estonia....................... 1371.6. Business Accounting Principles .............................................. 1371.7. Auditing Standards .............................................................. 1381.8. Taxation ............................................................................. 1381.9. Visas, Work and Residence Permits etc .................................. 1411.10. General Restrictions Tabled by Estonia under the EPA .............. 145

2. France .......................................................................... 1452.1. General Regulatory Environment ........................................... 1452.2. Setting up a Business........................................................... 1462.3. Types of Business Undertakings. ........................................... 1472.4. Other Legal Requirements .................................................... 1492.5. Foreign Professionals wishing to Provide Professional Services in

France ............................................................................... 1502.6. Visas, Work and Residence Permits Etc. ................................. 1512.7. Taxation ............................................................................. 1522.8. E-commerce ....................................................................... 1522.9. Contacts ............................................................................. 1532.10. General Restrictions Tabled by France under the EPA ............... 153

3. Germany ...................................................................... 1533.1. General Regulatory Environment ........................................... 1533.2. Setting up a Business........................................................... 1543.3. Types of Business Undertakings ............................................ 1543.4. Taxation ............................................................................. 1563.5. Business Premises Law ......................................................... 1563.6. Employment Law Provisions .................................................. 1563.7. Other Legal Requirements .................................................... 1573.8. Visas, Work and Residence Permits ........................................ 1583.9. E-commerce ....................................................................... 1613.10. Bank Accounts .................................................................... 1613.11. General Restrictions Tabled by Germany under the EPA............ 1613.12. Contacts ............................................................................. 1614. Italy ............................................................................. 1634.1. General Regulatory Environment ........................................... 1634.2. Setting Up in Business ......................................................... 163


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4.3. Types of Business Undertakings. ........................................... 1634.4. Visas, Work and Residence Permits etc .................................. 1654.5. Bank Accounts .................................................................... 1674.6. Taxation ............................................................................. 1674.7. General Restrictions Tabled by Italy under the EPA .................. 167

5. Malta. ........................................................................... 1675.1.

General Regulatory Environment ........................................... 167

5.2. Types of Business Undertaking .............................................. 1675.3. Taxation ............................................................................. 1695.4. Visas, Work and Residence Permits etc. ................................. 1695.5. Accounts ............................................................................ 1725.6. General Restrictions Tabled by Malta under the EPA ................. 172

6. Netherlands. ................................................................. 1726.1. General Regulatory Environment ........................................... 1726.2. Setting Up as Business ......................................................... 1726.3. Types of Business Undertakings ............................................ 1736.4. Recognition of Foreign Qualifications ...................................... 1746.5. Taxation ............................................................................. 1756.6. Visas, Work and Residence Permits Etc .................................. 1766.7. General Restrictions Tabled by the Netherlands under the EPA ........

................................................................................... 1817. Spain ........................................................................... 182

7.1. General Regulatory Environment ........................................... 1827.2. Types of Business Undertakings. ........................................... 1827.3. Setting up a Business........................................................... 1837.4. Taxation ............................................................................. 1847.5. Employment Issues ............................................................. 1857.6. Business Premises ............................................................... 1857.7. Visas and Work Permits ........................................................ 1857.8. Bank Accounts. ................................................................... 1877.9. General Restrictions Tabled by Spain under the EPA ................ 188

8. United Kingdom. ............................................................ 1888.1. General Regulatory Environment ........................................... 1888.2. Types of Business Undertakings ............................................ 1898.3. Business Premises ............................................................... 1968.4. Taxation ............................................................................. 1978.5. Business Licenses ................................................................ 1998.6. Employment Issues ............................................................. 2008.7. Visas, Work Permits etc ........................................................ 2018.8. Bank Accounts .................................................................... 2048.9. General Restrictions Tabled by Spain under the EPA ................ 204VI. Regulatory Framework for Trade IN SPECIFIC Services ............... 205

1. Introduction .................................................................. 2052. Accountancy Services and Auditing .................................. 206

2.1. Estonia ............................................................................... 2062.2. France ............................................................................... 2092.3. Germany ............................................................................ 2122.4. Italy. ................................................................................. 2182.5. Malta ................................................................................. 2222.6. Netherlands ........................................................................ 2262.7. Spain ................................................................................. 2302.8. United Kingdom .................................................................. 235

3. Architects ..................................................................... 2613.1. Estonia ............................................................................... 261


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3.2. France ............................................................................... 2653.3. Germany ............................................................................ 2683.4. Italy. ................................................................................. 2743.5. Malta ................................................................................. 2763.6. Netherlands ........................................................................ 2783.7. Spain ................................................................................. 2793.8.

United Kingdom .................................................................. 281

4. Engineers...................................................................... 285

4.1. Estonia ............................................................................... 2854.2. France ............................................................................... 2854.3. Germany ............................................................................ 2864.4. Italy .................................................................................. 2924.5. Malta ................................................................................. 2954.6. Netherlands ........................................................................ 2974.7. Spain ................................................................................. 2984.8. United Kingdom .................................................................. 300

5. Management Consultants ................................................ 3045.1. Estonia ............................................................................... 3045.2. France ............................................................................... 3055.3. Germany ............................................................................ 3055.4. Italy .................................................................................. 3095.5. Malta ................................................................................. 3105.6. Netherlands ........................................................................ 3105.7. Spain ................................................................................. 3115.8. United Kingdom .................................................................. 312

6. Tourist Guide Services .................................................... 3146.1. Introduction ........................................................................ 3146.2. Estonia ............................................................................... 3146.3. France ............................................................................... 3156.4. Germany ............................................................................ 3166.5. Italy .................................................................................. 3196.6. Malta ................................................................................. 3206.7. Netherlands ........................................................................ 3216.8. Spain ................................................................................. 3216.9. United Kingdom .................................................................. 322

7. Tour Operators .............................................................. 3287.1. Estonia ............................................................................... 3287.2. France ............................................................................... 3317.3. Germany ............................................................................ 3327.4. Italy .................................................................................. 3397.5. Malta ................................................................................. 3417.6. Netherlands ........................................................................ 3427.7. Spain ................................................................................. 3427.8. United Kingdom .................................................................. 343VII. Appendices ............................................................................ 3461: General Considerations and Macroeconomic Comparisons ............. 3462: Opportunities at the country level: ............................................. 3533. General Framework for Supplying Services: ................................. 3584. Summary of Regulatory Framework for the Professions in The 8 EUMember States .............................................................................. 3645: Questionnaire on the business environment ................................ 3786. Contacts and Interviewees in EU Member States.......................... 383


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Abbreviations and Explanations

ACP African Caribbean Pacific

Cariforum

Caribbean Forum of States : Antigua and Barbuda, the

Bahamas, Barbados, Belize, Dominica, the DominicanRepublic, Grenada, Guyana, Haiti, Jamaica, Saint Lucia, SaintVincent and the Grenadines, Saint Kitts and Nevis, Surinam,and Trinidad and Tobago. Cuba is a member but was notinvolved in this EPA.

CRNM Caribbean Regional Negotiating MachineryCSS Contractual Services SuppliersEEA European Economic Area: Iceland, Liechtenstein, Norway.EPA Economic Partnership Agreement

EU

European Union : Austria, Belgium, Bulgaria, Cyprus, CzechRepublic, Denmark, Estonia, Finland, France, Germany,Greece, Hungary, Ireland, Italy, Latvia, Lithuania,Luxembourg, Malta, Netherlands, Poland, Portugal,Romania, Slovakia, Slovenia, Spain, Sweden. UnitedKingdom

IP Independent Professionals

OECDOrganisation for Economic Cooperation and Developmentcomprises 30 countries including France, Germany, Italy,the Netherlands, Spain and the UK.

Schengen

Countries

Austria, Belgium, Czech Republic, Denmark, Estonia,Finland, France, Germany, Greece, Hungary, Iceland, Italy,

Latvia, Lithuania, Luxembourg, Malta, Netherlands,Norway, Poland, Portugal, Slovakia, Slovenia, Spain,Sweden.

UNCPC United Nations Central Product Classification


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I. EXECUTIVE SUMMARY AND RECOMMENDATIONS

The project arises from the European Partnership Agreement (EPA)between the EU and the Cariforum countries regarding trade relations2008-2028.

Amongst the aims of the EPA are to:

Improve Cariforum countries global competitiveness.Enable them to take advantage of key opportunities in the exportof services.Liberalise investment and trade in services.

The EPA will require adjustments in EU legislation, regulations andadministrative procedures.

It will be necessary to develop mutual recognition procedures for

professional and other qualifications.

The objectives of this report are to:

Set out the opportunities that arise for certain key professions.Provide trade data.Outline the existing legal, regulatory and administrative frameworkfor these professions in 8 EU Member States.

The professions concerned are:

Accountancy, auditorship and book-keeping.Architecture.Engineering.Management Consultancy.Tourist Guiding.Tour Operations.

In defining those professions this report uses the UNPC ClassificationSystem.

The 8 EU Member States covered are: Estonia, France, Germany, Italy,Malta, Netherlands, Spain and the United Kingdom.

Opportunities for trade in the selected countries are presented in thetable set out in Part VII: Appendix 2 of this report. In summary

The most open markets for Cariforum suppliers appear to be inEstonia, Italy, Netherlands and the UK.Less open are those in France, Germany, Malta and Spain but thatdoes not mean that there no opportunities in those countries asthe report indicates below.Cariforum professionals may take the opportunities afforded bytheir capacity to provide services at a lower cost, using modes 1


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and 4, to markets where costs are substantially higher e.g. France,Germany, Italy, Netherlands, Spain and the UK.The proximity of Estonia to Scandinavia and its links with theformer Soviet countries may provide Cariforum professionalsworking with Estonian counterparts with opportunities to penetratethose larger markets.

The proximity of Malta and its linkages with North Africa likewiseprovides opportunities to tap into those larger markets.In addition to the UK, Anglophone Cariforum professionals mayfind it easier to engage in business in markets where English iswidely understood such as Estonia, Germany, Malta and theNetherlands.Surinamese professionals have an advantage in penetrating theDutch market based on historical relationships, common languageand the Surinamese diaspora in the Netherlands. The same is truefor professionals from the Commonwealth countries in respect ofthe UK.

The study finds that due to the general level of maturity of markets inthe EU, in all of the selected markets there are minimal or nocompetitive edges to be gained from the following factors:

Industry competitiveness

- Nearly all industries are very competitive so very fewopportunities could be found based on monopoly or some othermarket structure.

- There are a few exceptions for tour guides in niche areas orcertain geographical regions.

Quality of service

- In all industries the quality of services provided were rated asfairly good or international standard.

Availability of service providers

- There were no industries where there was a declared shortage ofservice providers, in fact, with the global recession and the useof offshoring, the converse was usually true.

The main opportunities are due to the following factors:

The sheer size and income of the EU market

- This gives the relatively tiny Cariforum service providers a vastarray of opportunities to skim off minute pieces of the EUmarket. This activity will have no significant impact on the EUmarket but could have a relatively substantial impact onCariforum exports and foreign exchange earnings.


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Price-related opportunities.

- Due to the fact that in all industries Cariforum prices (fees &charges) are generally lower than those in the EU. As long as EUusers of services can verify that the quality of services provided

by Cariforum services providers is of international standardthen the price advantage should result in an increased demand.

Positive attitude towards joint ventures

- The survey found that in all of the selected industries across theeight countries, there was a positive attitude towards jointventures. Joint ventures typically represent a win-win situationthat can increase earnings and minimize risks and costs for bothparties while not posing major threats to either.

A table setting out the general framework for Cariforum citizens wishingto supply professional services in the 8 EU countries is set out in PartVII: Appendix 3 of this report.

The report provides details on:

The system, rules and procedures governing trade under all fourmodes of delivery and, where relevant, entry, residence andsetting up in business or taking up employment opportunities inthe 8 Member States.

The nature of the legal system in each of the 8 states

The rules and procedures governing the various types of businessentities, their registration and liabilities.

Any compulsory membership provisions for business entities.

Tax provisions applicable to individuals and business entities.

There are detailed descriptions of the regulations governing each of theprofessions in each Member State set out in this report. A summary is

provided in Part VII: Appendix 4

Exploitation of the opportunities identified in this report will requireaggressive and proactive initiatives by:

Caribbean service providers themselves,Association representing service providers e.g. Coalitions of ServiceProviders,Caribbean policymakers and negotiators, andCaribbean High Commissions and Diplomatic Attaches in the

various EU countries.


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These players will have to engage in activities such as the following:view the large EU market as part of their day to day opportunity set;operate using all the modes of trading services; and exploit all of thepotential opportunities.

Cariforum diplomatic representatives need to pressure their EUcounterparts (e.g. at the British Home Office) to ensure that simple fasttrack processes for acquiring business visas, as envisaged by the EPA,are put in place.

A survey of Cariforum interest in exporting selected services to the EUshould be conducted in order to target more closely those who areinterested. It cannot be taken for granted that most Cariforum servicesproviders want or need to penetrate EU markets.

Funded service trade missions should be arranged to selected EUMember States for serious export oriented professionals. Criteria forseriousness should be developed such as:

A one-page outline of export history and capacityContribution to the cost of the mission, which is reimbursable onpresenting a report on opportunities and making at least onepresentation to an industry grouping

A small and efficient Regional Unit, such as the Caribbean Coalition ofServices Providers, should be supported and given a mandate to seekexport opportunities in professional services. This would include:

Searching all major global databases for Request for Proposals andbid documents;Circulating information to relevant national associations;Helping to put Regional teams together;Arranging joint ventures with EU and other non-Cariforum serviceproviders;Having a constantly updated website with links to sites where bidsare advertised.

Branches of this Unit should be established/strengthened in eachCariforum Member State.

A more aggressive outward looking approach by Cariforum servicesproviders. This may require some training or stimulus for them to thinkglobal; remember size of the global market; use the Internet to findsites where requests for proposals are advertised; look for partners andpull teams together to submit large bids.

Cariforum service providers should aggressively look for Requests forProposals and bid documents and be the senior partners in puttingteams together. This approach will tend to yield to higher earnings(including finders fees) than playing the subsidiary partner.


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Regional services providers should be oriented to seek opportunities totrade by all four modes. They should not be afraid of setting up abusiness in the EU if it is the best way to supply the diaspora market.However, they should be reminded that they do not have to set up inEU to export services if they use the other three modes of supply.

Cariforum service providers should be encouraged to make corporatevisits to key EU organizations including EC funded organizations, privatesector associations and private sector companies to submit businessprofiles, request to be put on any list that they send out to seek biddersand enter and stay in their hearts and minds.

Professional associations in the Cariforum countries need to prepare formutual recognition of professional qualifications by:

Preparing a document setting out the qualifications required topractice the profession and, in particular, addressing the following,even if the answer is not applicable:

- Academic qualifications: what is needed; what are the essentialentrance requirements; what are the syllabus requirements; aretheir rules governing the nature, amount and grading ofassessments; whether there are rules governing where thesequalifications are acquired; rules governing how long or howmany attempts may be made to acquire these qualifications.

- Professional experience: is this a pre- or post-qualificationrequirement; what type of experience is needed; where must itbe acquired; who, if anyone, is qualified to supervise theexperience; how is the experience tested or reviewed; what is itsduration; can it be part-time or interrupted for time off.

- Professional associations: is membership compulsory; are theircategories of membership; are there services which can only belegally provided by a member of that association; are thereservices which members are prohibited from providing; is therecorporate membership and if so are there rules governing it (e.g.more than 50% of the shares or control of the company must bein the hands of chartered accountants); is there a disciplinary

system; is there a system of quality assurance/peer review; isthe association linked with others abroad.

- Professional cards, certificates, diplomas etc.: are there rulesrequiring a professional to carry, hold, display a card, badge,certificate, diploma etc.; is there a system of practisingcertificates; how might these be suspended or revoked.

- Negotiations: associations should elect a negotiating team.Preferably it should include a person with internationalexperience and a person with academic training experience.


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- Contact points for recognition procedures: an administrator(s)that may be contacted by individual professionals enquiringwhether their qualifications are recognised in an EU MemberState and who also might be contacted by a person qualified inthe EU and is seeking recognition of their qualification in theCariforum country.

- Lifelong learning provisions: whether there are continuingprofessional development requirements.

- The effects of recognition of foreign qualifications in theCariforum country: whether the person whose qualification isrecognised is required to undertake a professional examination(e.g. a foreign accountant might be required to take a course inTrinidadian and Tobago Business Law and Taxation) or otherrequirement; are there restrictions on what they might andmight not do.

- Fees: are the fees that may be charged regulated by law/ by theprofessional association; can a client challenge the fees chargedand, if so, how; are their rules governing anti-competitivepractices and unfair trading.

- Complaints procedures: is there a system in thecountry/provided by the association for dealing with complaintsagainst a member; do foreign clients resident within/outside ofthe jurisdiction have access to this system.

- Exemptions: are there exemptions granted to any of theprofessional requirements.

- Use of professional titles: are these protected in law.

Preparing a gap analysis between the professional requirements inthe Cariforum country and those of the EU Member States.

Identify best practice that already exists between professionalassociations in the Cariforum countries and those in EU MemberStates.

Give consideration to harmonising professional qualifications in theCariforum states in order to strengthen their bargaining power innegotiating with EU counterparts.

Conduct a review of the existing qualifications and trainingrequirements with a view to matching international best practiceand harmonisation with that in the EU states.

Tour operators, travel agents, destination management companies,ground handlers, tourist transportation providers, touristaccommodation providers, tourist guides and other tourist service


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providers should form professional associations on a Cariforum widebasis and have an umbrella organisation to promote their commoninterests.

There is a need for the Cariforum countries to take advantage of theassistance provided under the EPA to develop strong and efficient

institutional and regulatory frameworks for tourism. These shouldreplace out of date laws and regulations that tend to solely focus onindustry regulation. There is a need to develop a modern legalframework that enshrines the principles of sustainability in the lawitself; that promotes tourism development; that facilitates investment;encourages and facilitates SMEs to take advantage of niche markets;that ensures that tourism resources are identified, classified, protected,enhanced and utilised sustainably; that furthers the MillenniumDevelopment Goals through tourism development.

The tourism sector needs to find support for developing direct sell-mechanisms to the EU market through e-commerce. They will requireto build consumer confidence in the EU by harmonising legal provisionsin the Cariforum countries with those in the EU dealing with packagetravel; unpackaged travel; distance selling; e-commerce (e.g.electronic signatures); credit cards; data protection; financialinsolvency. This is more achievable on a Cariforum-wide basis than inindividual countries. Many countries outside of the EU have harmonisedwith these provisions.

Professional and trade associations need to be improved and becomemore outward-looking. They should not merely be accreditation bodiesor professional guilds but should provide members with businessservices. Business associations play a major role in economic change.Thus, they need to be strengthened in the Cariforum countries by areview of their operations, identification of best practice, a gap analysisand a plan for implementing change. Specialized training programmesfor the professional associations should be developed. A ProfessionalAssociations Executive Management course should be developed.Strategic and business plans should be produced for each association.Associations might share some common administrative and businessfacilities. New methods of consultation with members and meetingsshould be developed to ensure active participation e.g. through virtualmeetings, association websites, professional blogs etc.

Languages: The lack of sufficient foreign language skills, particularly inthe Anglophone countries means that it may be difficult forprofessionals from those countries to fully avail themselves of theopportunities afforded in continental Europe by this EPA. A review oflanguage teaching in schools needs to be undertaken, particularly inAnglophone countries. Universities and colleges should devise intensivebusiness language and culture courses for undergraduates onvocational courses and for qualified professionals.


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Hidden cultural barriers: it is important to understand the culturalnorms, business ethos and the nuances of inter-personal dealings in thebusiness community of the host country in order to successfullynetwork and obtain business there. Familiarisation events might be puton for business professionals in cooperation with foreign embassies,consulates and cultural associations.

Access, Distance and Costs: obtaining visas, long-distance travel andthe costs of transport and accommodation may be prohibitive for manySMEs. There is a need for cooperation to share costs to send fact-finding and networking groups to the EU. Support funding might besought together with sponsorship arrangements with airlines, touroperators and hotel chains.

Protectionism: though outwardly open to business, EU counterpartsmay in practice rely on well-established networks and contractualpartners and may be reluctant to welcome Cariforum competitors. TheEPA sets out commitments of EU Member States and a system for

complaints and dispute settlement.

Difficulty of obtaining and disseminating information: it is difficult forSMEs to obtain up to date information on business opportunities in theEU. Also, those that do obtain such information are not always efficientin disseminating it. In many countries Business Schools gather, assess,review and disseminate this information to businesses andprofessionals, often for a small charge. Arrangements should be madebetween professional associations and the higher educationalinstitutions to cooperate on these matters. This may be a mutualbenefit/no cost arrangement, a commercial one, one sponsored from

public or private funds or a combination thereof. Where EU regulations require a professional to have professional

indemnity insurance the costs may prove prohibitive for the Cariforumprofessional. However, for the most part, they type of contractualagreement that the Cariforum professional will have with an EUcounterpart will require the latter to have professional liability insurancenot the former. Where it is a requirement, Cariforum professionalassociations should cooperate to seek a common policy. This willstrengthen their negotiating power with the relevant financialinstitutions. The latter will lower premiums for members of well-run,properly policed and quality assured professional associations.

The cost of exchange transactions is very expensive. Title 3 deals withcurrent payments and capital movement. The aim is to ease theprocess through which payments for commercial transactions can bemade and the process by which capital related to investment is movedbetween the two sides.

There needs to be greater cooperation on a regional level both at theprofessional level and the state level. Regional and internationalregulatory harmonisation is taking place elsewhere in order to facilitatetrade and competitiveness. The Cariforum countries need to address

this.


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II. INTRODUCTION

This project arises from the Economic Partnership Agreement (EPA)between the Caribbean ACP (Cariforum) and the EU governing traderelations 2008-2028. A key aim of that agreement is to improve the

Cariforum countries global competitiveness and promote exportdiversification. It is expected that the main gain will be in services as thesecountries already have market access for their goods. The World Bank hasobserved that the key opportunities for market growth in the Cariforumcountries are in the export of services.

Title II of the EPA provides arrangements for a progressive two-wayliberalisation of investment and trade in services. It is acknowledged thatthis will require adjustments to legislation, regulations and administrativeprovisions in the EU. Article 82 para. 2 provides:

the Parties shall encourage the relevant professional bodies in therespective territories to jointly develop and providerecommendations on mutual recognition to the Cariforum/EU Tradeand Development Committeefor the authorisation, licensing,operation and certification of investors and service suppliers and, inparticular, in the professional services sector.

Thus, it is envisaged that there will be subsidiary agreements on mutualrecognition.

In addition to helping professional associations to prepare for mutualrecognition negotiations with EU counterpart associations under Articles 82

and 85 of the EPA, this report will provide information on the regulatoryframeworks and provide market intelligence to assist small and mediumprofessional services businesses on supplying services in 8 EU MemberStates.

The objective of this report is to set out the opportunities that arise fromthis Agreement; to provide trade data; and outline the regulatoryframework for providing selected professional services in 8 Member Statesof the EU and to assist the Cariforum countries and the relevantprofessional associations within them in making the necessary adjustmentsand informing negotiations so as to maximize the benefits envisaged by

the EPA.


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1. Brief Guide to the EPA

The parties negotiated provisions on market access, mutual recognitionand cooperation in the provision of professional services. The UN CentralProduct Classification System was used for the purposes of thisnegotiation. The negotiations focussed on, amongst other things, the

removal of barriers to providing services in respect of; Market access.

National treatment: the extent to which foreign service suppliers aretreated like domestic service suppliers.

There are also provisions on cooperation and mutual recognition ofqualifications in respect of professional services and technical assistancefor the tourism sector.1

There are provisions in the EPA to facilitate trade in services by making it

easier for Cariforum nationals to visit EU Member States for brief periodsfor business purposes. Those purposes must relate to research and design,marketing, training, trade fairs, sales, purchasing and tourism. However,this does not compel EU Member States to issue any Cariforum nationalwith a visa.

Article 60(5) expressly provides that Member States can retain or amendtheir rules governing, for example, visas, residence permits and workpermits .provided that such measures are not applied in such a manneras to nullify or impair the benefits accruing to any Party under the terms ofa specific commitment.

Each state is entitled to retain its domestic regulations governing theprofessions in respect of such matters as qualifications, certification,registration and licensing etc.

The EPA deals with the standard 4 modes of trade in services:

Mode 1: Cross-Border Supply

Services flow from the territory of one Member State to that of anothere.g. by internet, telephone or other telecommunications. The

commitments given in this regard are rather conservative. Auditingservices are limited in 21 states and architecture in 13.

1The authors are greatful to CRNM for their briefing guides and, in particular, CRNMs Brief

Treatment of Professional Services in the WPA, 3200 3/EPA-8(08).


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Mode 2: Consumption Abroad

The consumer moves into another Members territory to obtainservices. The commitments for this mode of delivery are more liberalthan those given in respect of mode 1. Most countries made noreservations in respect of this mode of delivery.

Mode 3: Commercial Presence

A service supplier from one Member State establishes a territorialpresence in another Member State, including through ownership orlease of premises there, in order to provide a service. The system isbased on reservations rather than permissions i.e. if the EU MemberState has not stated a reservation or limitation in the List ofCommitments on Commercial Presence; it is presumed that there isnone other than the usual restrictions in relation to visas etc.

There are some limitations in respect of certain professional servicesand these are indicated below in the relevant parts of this report. Ofthose relevant to this study are those in respect of accountancy,auditing and book-keeping.

Mode 4: Presence of Natural Persons

Persons from one state enter the territory of another in order toprovide a service. This enables the temporary entry and stay of keypersonnel and graduate trainees for periods of up to 3 years for intra-corporate transfers: 90 days in any 12 month period for businesspersons; 12 months for graduate trainees (Article 82). Article 84requires Member States to endeavour to facilitate the entry and stay ofshort term visitors for business purposes.

Article 60(1) makes plain that the EPA does not affect measures in respectof citizenship, residence or employment on a permanent basis. MemberStates are entitled to maintain or adopt measures regulating temporarystays in their territory, for example, provided that these are not appliedin such a manner as to nullify or impair the benefits accruing to any Partyunder the terms of a specific commitment.

Chapter 4 deals with the temporary presence of natural persons for

business purposes. Article 80(1) provides that this covers:

Key personnel business visitors responsible for setting up acommercial presence and those involved in intra-corporate transfers;

Graduate trainees; Business services sellers; Short term visitors for business purposes; Contract services suppliers (CSS) ; Independent professionals (IP).


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Those entering for business purposes do so in order to:

Engage in research and design. Undertake marketing research. Attend or provide training seminars.

Attend trade fairs and exhibitions. Negotiation of sales of services. Negotiation of the purchase of services. Tourism personnel visiting to make arrangements for tours.

Those visiting for business purposes cannot sell services directly to thegeneral public whilst in the Member State or acquire remuneration for theprovision of services during their visit.

The following table sums up the general provisions on entry requirementsunder the 4 modes. It is important, however, to look at the detailedprovisions for each country set out in Section V.

Road Map for Entry into the EU - Entry Requirements for Different Modesand Categories

Mode Entry requirements Relevant requirements

Mode 1 Not relevant becausethere is no movementof natural persons

Ability to meet requiredstandards

Mode 2 Not relevant because

the service providerdoes not move

Qualifications and ability

to meet requiredstandards (of the localmarket)

Mode 3 Visa, residencepermit and workpermit

Establishment ofcompany or otherbusiness entity.

Taxation compliance, etc

Mode 4

Contract ServiceSuppliers

Business Visa Proof that the person isentering only forbusiness purposes e.g.market research,seminars, fairs,exhibitions, negotiatesales etc.


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IndependentProfessional

Business Visa Proof of membership ofprofession/qualification.Proof that the person isentering only forbusiness purposes e.g.

market research,seminars, fairs,exhibitions, negotiatesales etc.

Intra-corporatetransferees

Business Visa,residence permit andwork permit

Proof of membership ofcompany; reason fortransfer; remunerationand subsistenceprovisions; undertakingto return on completion

of period.

Independent/self-employed professionals have access to the EU in respectof 11 sectors including:

Accounting and book-keeping services. Taxation advisory services. Architectural services. Urban planning and landscape architectural services. Engineering. Integrated engineering.

EU Member States may still apply Economic Needs Tests (ENTS) but thereare no restrictions on the number of service suppliers that may enter amarket.

Currently, EC Directives on Mutual Recognition of ProfessionalQualifications only apply to EU nationals. The EPA provides for negotiationsbetween professional associations from the Cariforum and EU states on the

development of mutual recognition agreements. These will then besubmitted to the Joint Committee established under the EPA in order toassess the agreements compatibility with the provisions of the EPA andWorld Trade Organization commitments.

Article 24 of the Cotonou Agreement provides for cooperation in the field oftourism and for the liberalisation of tourism services. The Tourism Sectionof the EPA safeguards the interests of SMEs in the tourism sector in theCariforum countries. It does so by an article on the prevention of anti-competitive practices through tourism distribution networks. Provision ismade for consultation and dialogue through the Cariforum-EC Trade and

Development Committee. In addition to provisions for assistance and


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training to the service suppliers and support for training institutions, thereare also provisions for mutual recognition of qualifications in the tourismsector.

Title 2 of the EPA contains provisions for the development of common rulesfor e-commerce e.g. on electronic signatures and consumer protection.

Title 3 deals with current payments and capital movement. The aim is toease the process through which payments for commercial transactions canbe made and the process by which capital related to investment is movedbetween the two sides.

2. Mutual Recognition of Professional Qualifications in the EU

European Union citizens have a right to establish themselves and/or theirbusiness and to provide services anywhere in the EU. These arefundamental freedoms established under the Single Market. There are EUrules guaranteeing mutual recognition of professional qualifications (MRQs)between Member States. These cover, amongst other things:

Harmonisation of training requirements in specific sectors which giveautomatic recognition of professional qualifications. These are mainly tobe found in the health professions.

Mutual recognition which applies to all professions for which MemberStates require a qualification (the general system), with the exceptionof the specific sectors mentioned above.

Coordination of the laws of Member States on self-employment,commercial agents, harmonising the civil law on the relationshipbetween agent and principal.

The EU system was recently reformed to:

Make labour markets more flexible. Further liberalise the provision of services. Encourage more automatic recognition of professional qualifications. Simplify administrative procedures.

Directive 2005/36/EC consolidates and modernises 15 existing directivescovering the whole range of MRQs except those relating to lawyers,commercial agents and activities relating to toxic substances. The 20October 2007 was the end of the transposition period. The preamble to this

Directive on the Recognition of Professional qualifications states:

(4)there should be specific rules aimed at extending the possibility ofpursuing professional activities under the original professional title.

(8)The services provided should be subject to the application of thedisciplinary rules of the host Member State having a direct and specificlink with the professional qualifications, such as the definition of theprofession; the scope of activities covered by a profession or reservedto it; the use of titles; and serious professional malpractice which isspecifically linked to consumer protection and safety.


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(10)The Directive does not create an obstacle to the possibility ofMember States recognising, in accordance with their rules, theprofessional qualifications acquired outside the territory of the EuropeanUnion by third country nationals. All recognition should respect in anycase minimum training conditions for certain professions. .

The Directive contains provisions on the following, amongst other things:

Professional experience. Professional associations. Professional cards, certificates, diplomas, etc. Contact points for recognition procedures. Lifelong learning provisions. The effects of recognition. The principles of free provision of professional services. Exemptions. Administrative cooperation. Information to be given to the recipient of the service. A general system for recognising evidence of training. Levels of qualifications. Equal treatment of qualifications. Conditions for recognition. Knowledge of languages. Use of academic titles. Use of professional titles.

The Directive applies to EU citizens wishing to pursue their profession inanother Member State, whether on a self-employed or employed basis. Itapplies to natural persons not to juridical persons (e.g. companies). It alsoapplies to a person who acquires a professional qualification in anotherMember State but wants to practice in his/her own state.


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III. METHODOLOGY

1. Introduction

In addition to researching the trade in services and the opportunities that

might arise from the liberalisation under the EU-Cariforum agreements, theconsultants researched the regulatory regimes currently in force in Estonia,France, Germany, Italy, Malta, Netherlands, Spain and the UnitedKingdom. In respect of the following professions and trades:

Accountancy, Auditing and Book-keeping. Architecture. Engineering Management Consultancy Tour Operations. Tourist Guide Services.

Our approach to the level of disaggregation in the selected serviceindustries was based on UNCPC classifications. An important point to noteis that the selected services in this assignment are typically defined at theUNCPC 3 or 4-digit level (UNCPC classification is the internationalclassification usually used when categorizing services - seehttp://unstats.un.org/unsd/statcom/doc02/cpc.pdf).

This means that the selected service industries are broadly defined andcould be disaggregated further. For example, under the UNCPC,Management Consulting Services is classified as 8311 which is the 4-digitlevel; however this is broken down in six 5-digit categories as follows:

1. General Management Consulting Services.2. Financial Management Consulting Services.3. Human Resources Management Consulting Services.4. Marketing Management Consulting Services.5. Production Management Consulting Services.6. Other Management Consulting Services.

On the other hand, Engineering Services is defined as 833, which is the 3-digit level. However, this is broken down into six 4-digit categories whichare each, in turn, broken down into four 5-digit categories (which means

that there are 24 sub-categories of engineers). There are similar sub-classifications of architectural and accounting &auditing services.

In this assignment we will treat the selected service industries under thebroad UNCPC 3 or 4-digit categories but if any exceptions or significantdifferences are identified, they will be included.
http://unstats.un.org/unsd/statcom/doc02/cpc.pdfhttp://unstats.un.org/unsd/statcom/doc02/cpc.pdf


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The consultants researched the regulatory regimes currently in force inEstonia, France, Germany, Italy, Malta, Netherlands, Spain and the UnitedKingdom in respect of the specified professions and trades. All of thesestates, with the exception of the UK have a legal system based on theRoman Law and are described as Civil Law systems.2

It should be noted that the United Kingdom has three separate legaljurisdictions; England and Wales, Scotland and Northern Ireland. England,Wales and Northern Ireland are part of the Common Law tradition found inthe Anglophone Caribbean countries. So too is the Republic of Ireland.Scots Law has its roots in the Civil Law tradition of continental Europe butwith substantial Common Law influences. Both are covered in this report.Some of the professional bodies for Northern Ireland are arranged on anall-Ireland basis and these are also covered.

Some countries (UK, Germany, Italy and Spain) have considerabledecentralization and whilst differences are pointed out in the report, wehave given a general national overview.

The review was based on:

Legislation 3. Regulations. Administrative procedures. Industry practices.

The consultants have identified and referred to the specific laws andregulations and provide a database of contacts of all relevant professionalorganisations and regulatory bodies. In particular, the consultants

gathered information on the following: Academic qualifications. Accreditation bodies. Professional training. Professional affiliations(s). Professional curriculae and examinations. Licensing, certification, registration, permits and fees. Language requirements. Citizenship, visas etc. Administrative processes. Professional standards.

Processes for incorporating new companies. Processes for establishing joint ventures or other alliances. Capitalization requirements.

2They are based on the Roman Law ius civilis, hence Civil law. The Dominican Republic, Haiti and

Surinam also have Civil Law systems.3

Where possible, the title of the legislative provision is given in the original language and according to

the official legal formulary. This varies considerably across the Member States and particularly between

Common Law countries (e.g. England and Wales) and Civil Law countries (e.g. Germany).


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The methodology included the following:

Internet research - to obtain information on the business environmentand relevant regulatory framework issues

Telephone interviews to collect information from relevant officials andindustry players

Field research by consultants to collect information not available on theinternet and to hold face to face discussions with critical industryplayers

Visits to relevant staff at DG Trade, DG Dev, DG Enterprise andIndustry, Internal Market and Competition to obtain information on EUpolicies and requirements.

Visit to France, Belgium, The Netherlands, The U.K., Estonia and Maltato a) develop a feel for cultural aspects of the countries, b) establishbusiness relationships, and c) collect any outstanding data.

Conduct a two day workshop in Barbados with relevant persons fromthe Cariforum countries to outline the main findings and to obtain theirfeedback and input.

In some countries information was more readily available than others andthis will be evident in this report. This may be an important indicator ofhow open to business under the EPA they are.

We have referred to titles being protected in law. This means that thereis legislation or regulations laid down by the State as to who may use thistitle. Even where a title is not directly protected in law it will usually becriminal offence to pass oneself off as being a member of a professionalassociation or holder of professional qualifications when that is not thecase.

2. Business Environment/Market Related Issues

The analysis of the business environment/market related issues includesthe following:

2.1. Overview of the specific domestic market for each of the selectedcountries

(a) Size of overall market and growth trends

i. Population

ii. GDP

iii. GDP per capita

iv. GDP growth

(b) Other factors important to trade

i. Extent to which English is spoken is language a barrier

ii. Quality of the ICT infrastructure

iii. Availability of air and ground transportation


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(c) Size and structure of domestic market for each service

i. Contribution of selected industries to GDP

ii. Size of firms in each selected industry

1. number of firms in each selected industry

2. average turnover3. number of employees

iii. Survey of associations (or a sample of service providers)in each of the selected industries to determine

1. number of service providers in each of the selectedindustries

2. size of local versus foreign services providers

3. attitude towards foreigners entering the market

4. attitude towards joint ventures and collaboration

5. competitiveness of service providers in eachindustry

6. main challenges

7. main users of particular service

a. public sector

b. multinationals

c. large local private entities,

d. small local private sector entities

e. NGOs

f. foreign governments,

g. foreign private sector

iv. Survey of (a sample of) services users to determine

1. the ease with which these services are availabledomestically

2. the quality of services provided

3. the price competitiveness of local versus foreignservice providers

4. preparedness to use foreign suppliers within the EU

5. preparedness to use foreign suppliers from outsideof the EU

(d) Overview of the EU policies and requirements and, to do so,will visit relevant staff at DG Trade, DG Dev, DG Enterpriseand Industry, Internal Market and Competition.

(e) Indicate to what extent there is currently cross-border tradein these service sectors


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2.2. Trade related issues in the selected industries in the selected countries

(a) To the extent possible, provide data on trade in thementioned services in the target countries (imports andexports)

(b) To the extent possible, identify if there is there outsourcing ofthese services (off-shoring) to firms overseas by large firms inEurope.

(c) What are relevant EU policies and requirements with respectto trade in these services

(d) To what extent there is currently cross-border trade in theseservice sectors

i. Within the EU (intra-European supply of services).

ii. With countries outside of the EU

(e) To what extent does trade take place in all four modes

i. Mode 1: Cross border where only the service movese.g. by internet, courier, telephone, etc

ii. Mode 2: Consumption abroad - Consumer comes toservice provider

iii. Mode 3: Establishment of a commercial presence in theforeign country

iv. Mode 4: Movement of natural persons where there istemporary movement of service providers.

A questionnaire was prepared and was used by the experts and localresources in the EU target markets to elicit the above information (see PartVII: Appendix 5).

2.3. General Framework for Setting up in Business or Supplying Services

For each country we sought to address the following:

The Consultant is considering going to country X to look for work Canhe/she actually go to look for work or must they have a contract beforethey can go.

Do you need a visa to enter that country? How long does it take toobtain it? How much does it cost? Who do you have to apply to? Whatare the likely hitches?

The basic rules (e.g. registration, administrative, fees, permits,licences) governing setting up in business as:

A sole trader.


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A partnership.A company (different types).

Are these rules different for non-EU persons or businesses?

What are the rules re registration for national and local taxes? Also,

does one have to register with the Customs Department?

Are there geographical restrictions on where they can and cannot dobusiness?

Are there local taxes and restrictions?

What are the provisions governing e-commerce?

If qualified with a professional body in the Cariforum countries, doesone have to register with the equivalent in the relevant EU country inorder to provide those services there (e.g. accountancy)? If so, whatdoes this entail time-wise, fees, etc.

Are there restrictions on bringing staff to that country to engage in thebusiness and, if so, what are they? Is there any limitation on the lengthof their stay? Do they need visas and work permits?

What are the rules on repatriating profits?

Are there restrictions on a non-EU citizen opening a bank account?What are they? What does he/she need to do to open an account?

Are there rules governing the charges that can be made for supplyingprofessional services?

2.4. Regulatory and Administrative Issues for the Listed Professions

The following matters were addressed for each profession and each state.We looked at how each profession is regulated, the rules governing accessand rules on establishing a business/professional presence in that EUMember State:

Designation/ Title:

Whether the designation or title of the profession is protected?

If so, whether that is that by law, regulation, professionalassociation, educational establishment?

How it is protected and what are the consequences for a personproviding those services without that official designation?

Are there specialist sub-designations? E.g. ManagementAccountant, Public Sector Accountant, Domestic Tour Operator,

Trekking Tourist Guide?


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If there are specialist designations, how are theseregulated/protected? What proof of specialistqualifications/training/experience is needed? Are there specialistprofessional associations?

Can a corporate body be designated a member of the professions

or become a member of the professional association?

Is there associate membership or quasi-membership e.g.paralegals?

Qualifications:

What are the qualifications that are needed to become a memberof/practice that profession or to provide those professionalservices?

How does a person become a member:

Registration procedure, entry qualifications, fees, examinations and otherassessments etc.

Are there rules about where those qualifications were acquired?

What are the rules governing mutual recognition of foreignqualifications?

Must the qualification be acquired at an accredited institution and,if so, who does the accreditation? Are any of these in theCaribbean?

Does the professional association provide courses that lead to theattainment of the qualification? Do they also offer courses toexternal candidates i.e. those overseas?

Are there rules governing the length of time it took to acquirethose qualifications? The number of attempts made? Expiry ofqualifications? Transitional arrangements whereby those whoacquired qualifications under an old regime/system can gainrecognition under the new system?

Is there a fast track system for acquiring the qualifications e.g.intensive training courses or exemptions from some parts of thecourse for those that are qualified in other professions ordisciplines?

Training/ Experience

Is there a special training requirement to qualify for membership ofthe profession?


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Is there a geographical requirement laid down as to where thattraining or experience took place or was acquired e.g. in France,in an urban environment, in both an urban environment and inat least one project of 12 months duration in a rural setting, withat least 6 months experience overseas ?

Are there accredited institutes, firms or professionals that providetraining or work experience?

Is there a system of Accreditation for Prior Experience (APE) whichexempts candidates from some or all of the requirements forformal qualifications?

Are there rules governing the content of the training course?

Are there Continuing Professional Development (CPD)requirements?

Regulatory Authority

What is the name of the Ministry or State body responsible forregulating the profession?

What is/are the name(s) of the professional association(s)? What istheir status e.g. State professional associations, privateassociations, quasi-public bodies?

Is membership of a particular/any professional associationcompulsory? If not, does it provide privileges?

Which body issues the certificate/diploma etc of membership of theprofession? Are there rules about the display of the certificate/logoetc at business premises, in business stationery, online etc?

Is a special licence needed for the provision of all/some of theprofessional services?

Are there rules governing the type of business that a member ofthe profession can provide services through (sole trader, partner,limited liability company, unlimited liability company etc.)?

Are there legal requirements that make it compulsory forindividuals, corporate bodies, public institutions to engage theservices of particular professions (e.g. company accounts must beaudited by a chartered accountant, tour operators must use theservices of a licensed tourist guide etc)?

Can a person be a member of more than one profession? Can thefirm be multi-disciplinary e.g. a firm combining lawyers, architects,engineers and accountants?


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Are there special rules governing conflict of interest? Activities inwhich members of the profession are prohibited from engaging in?

Are there special rules on disclosure of information; on fees andother charges?

What is the disciplinary body for the profession? What are the rulesgoverning disciplinary matters?


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IV. OPPORTUNITIES FOR TRADE IN SERVICES

In this section of the report, each of the eight selected countries will beexamined in turn. In each case the following format will be followed:

The business environment will be initially outlined (subject to theavailability of data) with the presentation of industry GDP data,trade data4and other data on industry size and structure.

A flow Chart will be presented outlining the process of setting up abusiness in each of the selected countries.

An assessment will be made of opportunities in each of the selectedindustries for each country using a scoring system based onresponses to questions asked to industry associations and users ofthe selected services. The assessment will be made using thefollowing template:

Industry specificopportunities

Measurement Criteria

Industry size 1= up to 5000 Firms or up to 25000 employees;4=>5000-15000 Firms or >25000-50000 employees;7=>15000-25000 Firms or >50000-100000 employees;10=>25000 Firms or >100000 employeesVery large is a sign of more opportunity

Industrycompetitiveness

Very competitive=1, Moderately competitive=4,Not competitive=10Very competitive is a sign of less opportunity

Pricingopportunities

Local prices cheaper =1, Prices same as foreign = 4,Local more expensive = 10Local prices cheaper is a sign of less opportunity

Quality relatedopportunities

International Standard =1, Fairly Good =4, Poor=10,If the country has international standards there isless opportunity for Cariforum service providers

4 It should be noted that the Euro was introduced in 12 EU countries on January 1, 1999, at an exchangerate of 1:1 with the ECU, which was the unit of currency used for official transactions up to that point.

Many transactions in the EU were therefore measured in EUC/Euro. In this document, wherever one

observes in 1000 million ECU/EUR, it is equivalent to in billions.

It should also be noted that in most cases, industry specific trade data were unavailable in the eight (8)

selected countries. However, in all cases trade in Other Business Services was available. Other

Business Services" is a relatively broad category which includes: merchanting and other trade related

services, operational leasing services, legal, accounting, auditing, tax consulting, book-keeping,

management consulting, public relations, advertising, market research, public opinion polling, research

and development, architectural, engineering, other technical services, agricultural, mining, on-site

processing, waste treatment depollution and services between affiliated enterprises).


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Cont

Industry specific basedopportunities

Measurement Criteria

Skill shortage opportunities Services readily available=1, Moderatelyavailable =4, Not easily available = 10

If services are readily available then there isless opportunity for Cariforum service

providers

Niche opportunities different user groups 1=Multinationals and foreign private sector

are not main users; 4= local private sectorare main users; 10= Main users aremultinationals and foreign private sector

When multinationals and foreign private sectorare not main user groups there is lessopportunity

circumvention ofchallenges

10= Challenges faced by the local industrycan be capitalized upon by Caribbeanservice provider, 1=where there are nochallenges faced by the industry or theycannot be capitalized on

Attitudes towards jointventures/partnerships

1=Negative; 10 =positive

Perceptions towardsforeigners

openness andappreciation

1=Negative attitude towards foreignservice providers entering the market; 10=

Positive attitude towards foreign serviceproviders entering the market

willingness to useforeign serviceproviders (userperception)

1=Not willing; 4=Somewhat willing butskeptical; 10=Very willing

Opportunities created throughEU regulations

10= If there are no EU restrictions thatdiscriminate against foreign servicesproviders

Different Mode opportunities 10=Price and skill shortage opportunitiescan be exploited using certain modes


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1. Estonia: Opportunities for Cariforum Service Providers

Country specific

opportunities

Score Assessments

Country specific opportunitiesa. Positively disposed to

diversity8 A quite diverse history Baltic,

Scandinavian, Sovietb. Language 7 Most business people speak Englishc. Proximity to other regions 10 A natural gateway to the former

Soviet, Baltic and ScandinavianStates

d. Persons willing andprepared to coordinate andcooperate

10 Consultants made linkages withChamber of Commerce which isfavorably disposed to coordinating

trade missions and conductingmatchmaking

1.1. Size and structure of domestic market for each service

Contribution of selected industries to GDP (in Euros Millions)

Industry 2003 2004 2005 2006 2007 2008

Accountancy services& auditing 95.62 115.83 122.00 144.15 167.97 190.32

Architecture andengineering(only consolidatedinformation isavailable) 286.86 328.15 388.17 458.65 534.46 570.95ManagementConsultancy 52.16 57.91 66.54 91.73 122.16 111.02Tourist GuideServices and TourOperators (onlyconsolidated

information isavailable) 669.33 772.11 865.07 1009.03 1145.27 1189.47Source: Statistics Estonia and calculations by Chamber of Commerce.


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Size of each selected industry

Industry Numberof firms

AverageTurnover/Sales

(million/)

Number ofEmployees(average)

Largest two firms(by relevant

businessorganization)

Accountancyservices &auditing

2500 0.35 10 1.KPMG Baltics AS,2.PricewaterhouseCoopers AS

Architecture 950 0.13 5-9 1.EA Reng AS,2.SWECO Projekt AS

Engineering 2550 0.29 7-12 1.K-Projekt AS,2.Nord Projekt AS

ManagementConsultancy

540 0.26 1-5 1.BDA Consulting O,2.Christiansen

Consulting OTourist GuideServices

200 0.09 1-5 1.Gotravel O,2.Risiekspert O

Tour Operators 250 0.64 10 1.Estravel AS,2.Kalevatravel AS

Source: Industry Associations in Estonia, 2009

Number of Local and Foreign Firms in Each IndustryIndustry Total #

firms%

foreignfirms

Numberof localfirms

Number offoreignfirms

Accountancy services &auditing

2500 20%2000 500

Architecture 950 15% 808 143

Engineering 2550 20% 2040 510Management Consultancy 525 35% 341 184Tourist Guide Services 200 15% 170 30Tour Operators 250 35% 163 88

Source: Compiled from Data provided by Industry Associations in Estonia, 2009

Distribution of Local Firms by Size Based on Number of Employees (% ineach category)Firm Size (No. employees) 1-10 11-20 21-50 Over 50


60% 25% 10% 5%

Architecture 75% 15% 7% 3%Engineering 75% 10% 8% 7%Management Consultancy 50% 35% 10% 5%

Tourist Guide Services 85% 10% 5% 0%Tour Operators 50% 30% 15% 5%

Source: Industry Associations in Estonia, 2009


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Distribution of Foreign Firms by Size Based on Number of Employees(% in each category)

Firm Size (number ofemployees)

1-10 11-20 21-50 Over 50


15% 15% 20% 50%

Architecture 45% 50% 3% 2%Engineering 45% 50% 3% 2%Management Consultancy 40% 45% 10% 5%Tourist Guide Services 75% 10% 15% 0%Tour Operators 40% 40% 15% 5%

1.2. Trade in Services

Overall Export of services5

Chart 1 shows the steady growth of Estonias export of servicesbetween 2000 and 2007. The country saw steady growth in exportsrising from 1.6 billion in 2000 to 3.2 billion in 2007.

Chart 1: Overall export of services (in billions)

0

0.5

1

1.5

2

2.5

3

3.5

2000 2001 2002 2003 2004 2005 2006 2007

Year

Overall export of services

5It should be noticed that the Euro was implemented in 12 EU countries on January 1, 1999, at an

exchange rate of 1:1 with the ECU which was the unit of currency used for official transactions up to

that point. Many transactions in the EU were therefore measured in EUC/Euro. In this document,

especially in charts, wherever one observes in 1000 million ECU/EUR, it is equivalent to in

billions.


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Overall Import of Services

Chart 2 shows the trend in Estonias import of services between 2000and 2008. Services imports grew from 1 billion in 2000 to 2.2 billion

in 2008.

Chart 2: Overall import of services ( billions)

0

0.5

1

1.5

2

2.5

2000 2001 2002 2003 2004 2005 2006 2007

Year

Overall import of services

Net overall balance of trade on services

The net overall balance of trade on Estonias services is revealed inchart 3 below. It was in surplus throughout the 2000-2007 period,increasing from a surplus of0.6 billions in 2000 to 1 billion in 2007with some fluctuations along the way.

Chart 3: Net overall balance of trade on services(in billion)

0

0.2

0.4

0.6

0.8

1

1.2

2000 2001 2002 2003 2004 2005 2006 2007

Year

Net overall balance of trade

on services


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Exports of other business services

Chart 4 outlines the trend in Estonias export of other business servicesfor period 2000 2007. These exports increased from 0.2 billion in2000-2002 after which it rose steadily to 0.6 billions in 2007. Otherbusiness services include several categories of professional servicesincluding some of those being covered in this study.

.Chart 4: Exports of other business services (in billion)

0

0.1

0.2

0.3

0.4

0.5

0.6

0.7

2000 2001 2002 2003 2004 2005 2006 2007

Year

exports of other business

services (1000 million

ECU/EUR

Imports of other business services

Chart 5 outlines the trend in Estonias import of other business servicesfor period 2000 2008. Similar to its other business services exports,Estonias imports of other business services was 0.2 billions in 2000-2002 after which it rose slightly to 0.3 in 2003, but then remainedconstant for the next 3 years, after which it rose to 0.5 billions in2007.


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Chart 5: Imports of other business services (in billion)

0

0.1

0.2

0.3

0.4

0.5

0.6

2000 2001 2002 2003 2004 2005 2006 2007

Year

imports of other business

services (1000 million

ECU/EUR)

Net balance of trade in other business services

The net performance of Estonias trade of other business servicesbetween year 2000 and year 2008 is shown in chart 6 below. For thefirst half of the period examined, Estonia recorded a balanced tradeposition as both imports and exports of other business servicesrecorded the same figures. However, there was a balance of tradesurplus of 0.1 billions in other business services in 2004 whichincreased to 0.2 billions for the remaining years 2006-2007.

Chart 6: Net balance of trade in other business services (in billion)

0

0.05

0.1

0.15

0.2

0.25

2000 2001 2002 2003 2004 2005 2006 2007

Year

Net balance of trade in other

business services (1 000

million ECU/EUR)


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1.3. Steps for Establishing a Business in Estonia

1.

Check the uniqueness of

proposed company name

(1 Day, No charge)

2.Deposit initial capital in bank

and obtain a bank notice

certifying the payment

(1 Day, No charge)

3.Submit the registration application

to the Commercial Register

(1 Day, State fee of 2200 EEK.

If electronic application,

State fee of 2900 EEK.

4.Register for VAT at

National Tax Board

(Up to 3 Days, no charge,General VAT rate is 18%)

5.

Register with the Central Sick

Fund of Estonia(1 Day, No charge)

LENGTH OF TIME: 7 DAYS

TOTAL COST: 140 (PHYSICAL)

OR 190 (ELECTRONIC)


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1.4. Industry Specific Opportunities in Estonia

1. Accounting andAuditing Industryspecific opportunities

OpportunityScore

(Max = 10)

Assessment Criteria

Industry size 1 Relatively small industryIndustry competitiveness 1 Very competitivePricing opportunities 4 Local and foreign prices are

about the sameQuality related opportunities 4 Fairly goodSkill shortage opportunities 1 Local service providers readily

availableNiche opportunities

different user groups 10 Opportunities withMultinationals and foreignprivate sector because they are

two of the main users ofaccounting & auditing services.

circumvention ofchallenges

10 The major challenge faced ishigh labour costs andcompetition so there arepossible opportunities forCariforum services providers

Attitude towards jointventures/partnerships

10 Attitude towards joint ventureswith foreigners is very positive

Perceptions towardsforeigners

openness andappreciation

8 Attitude towards foreignersentering the market to offerservices is quite positive

willingness to use foreignservice providers (userperception)

4 Somewhat willing but a littleskeptical

Opportunities created throughEU regulations

10 There are no major restrictiveEU regulations

Different Mode opportunities 10 There may be some Mode 1 and4 opportunities due to highlabour costs. User interviews

supported the fact that theseModes have already been used


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2. Architecture Industryspecific opportunities

OpportunityScore

(Max = 10)

Assessment Criteria

a. Industry size 1 Relatively small industryb. Industry competitiveness 4 Moderately competitive

c. Pricing opportunities 1 Local prices are cheaperd. Quality relatedopportunities

1 International standardsalready available in Estonia

e. Skill shortageopportunities

1 Local service providers readilyavailable

f. Niche opportunitiesi. different user groups 10 Opportunities with

Multinationals and foreignprivate sector because theyare two of the main users ofservices.

ii. circumvention ofchallenges 10 High labour costs and lack ofprofessional competenceg. Attitude towards joint

ventures/partnerships10 Attitude towards joint

ventures with foreigners isvery positive

h. Perceptions towardsforeignersi. openness and

appreciation10 Attitude towards foreigners

entering the market to offerservices is very positivebecause foreign knowledge is

highly valuedii. willingness to useforeign serviceproviders (userperception)

4 Generally not willing to useforeign service provider buttheir may be a niche for cruisepassengers who come fromthe Caribbean or NorthAmerica

i. Opportunities createdthrough EU regulations

10 There are no special EUregulations or restrictions

j. Different Modeopportunities

3 There may be some Mode 1and 4 opportunities due to

high labour costs. Userinterviews supported the factthat these Modes have alreadybeen used


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3. Engineering Industryspecific opportunities

Date post:	30-May-2018
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Study on Regulatory Regimes in Selected Professional Services in EU Member States

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