In simple terms, a free trade agreement (FTA) is an arrangement under which barriers to trade and services between two or more states are reduced or eliminated, facilitating the trade in goods and services between those states. In addition to tariffs and quotas on goods, barriers to trade commonly include regulatory restrictions such as licensing and other requirements. FTAs are designed to encourage stronger trade and commercial ties between the signatory countries and are increasingly being used to remove barriers to services, including legal services.
An FTA may take the form of a bilateral agreement between two jurisdictions or a multilateral agreement between numerous jurisdictions. An example of a multilateral agreement is the Trans-Pacific Partnership Agreement (TPP). This article examines the impact of FTAs on the trade in legal services between states, the arrangements that will come into effect under the TPP, and developments between mainland China and Hong Kong.
As noted in a previous article (see China Business Law Journal, volume 4 issue 7: Liberalization and integration of legal services) the international market in legal services is governed by the General Agreement on Trade in Services (GATS). GATS was one of the agreements signed in April 1994, when the World Trade Organization (WTO) was created. It was the first multilateral trade agreement to govern the trade in services. GATT, the General Agreement on Tariffs and Trade, governs the trade in goods.
A former partner of Linklaters Shanghai, Andrew Godwin teaches law at Melbourne Law School in Australia, where he is an associate director of its Asian Law Centre. Andrew’s new book is a compilation of China Business Law Journal’s popular Lexicon series, entitled China Lexicon: Defining and translating legal terms. The book is published by Vantage Asia and available at www.vantageasia.com.