Australia-United States Free Trade Agreement

Review of the Implementation of Annex 10-A - Professional Services

Report to the Third Meeting of the AUSFTA Joint Committee

2 June 2008

Under Annex 10-A of the Australia-United States Free Trade Agreement (AUSFTA), the Parties agreed to encourage the relevant bodies in their respective territories to develop mutually acceptable standards and criteria for the licensing and certification of professional services suppliers. The Parties established the Working Group on Professional Services (WGPS) to facilitate the activities listed in the Annex. Article 10-A.10 requires the Joint Committee to review the implementation of the Annex every three years. The following provides an assessment of the Professional Services Annex.

2. The WGPS has proved a useful forum for exchanging information on national developments relating to the regulation of professional services and plays an important role in highlighting the two governments’ interest in and support for mutual recognition initiatives for professional services.

3. The WGPS has met five times since the AUSFTA entered into force. These meetings took place on 20 June 2005, 7 March 2006, 18 May 2006, 3 May 2007 and 29 May 2008 in Washington DC. The first meeting agreed to focus work initially on three priority professions – accounting, engineering, and law. The Working Group also acknowledged at this meeting the responsibilities of Australian and U.S. states and territories for the regulation of professions and highlighted the importance of working with regulators from the states and territories. Subsequent meetings provided opportunities to report on profession-specific initiatives supported by the WGPS and to seek information and support for those initiatives.

4. At the last meeting on 29 May, the WGPS agreed that good progress had been made in the priority professions of accounting, engineering and law. The WGPS agreed to continue work in the three priority professions, setting out a number of recommendations below.

Accounting Profession Initiative

5. Mutual recognition agreements (MRAs) between CPA Australia and the Institute of Chartered Accountants in Australia (ICAA) and the National Association of State Boards of Accountancy’s (NASBA) and the American Institute of Certified Practising Accountants (AICPA) were renegotiated in 2006. These MRAs recognize Australian Certified Practising Accountants and Chartered Accountants with three year accounting degrees as eligible to sit for the International Qualification Examination IQEX – the international version of the U.S. national CPA Exam.

6. The WGPS is pleased to note that, according to the 2007 edition of the IQEX Candidate Bulletin, 38 U.S. jurisdictions recognise CPA Australia’s MRA and 41 U.S. jurisdictions recognise the Institute of Chartered Accountants’ MRA. The WGPS was also able to confirm that any additions to this list will be reflected in the 2008 edition, to be published in August and available on the NASBA website. The WGPS is also pleased to note, given the recent widespread adoption of mobility laws by U.S. states, the greater the ability of Australian accountants licensed in a U.S. state to gain a practice privilege in additional states where they may be serving a client or an employer.

7. The WGPS also notes that discussions are continuing on a MRA between the National Institute of Accountants (NIA) and the United States International Qualifications Appraisal Board (USIQAB).

Engineering Profession Initiative

8. In nearly all U.S. jurisdictions, an applicant for licensure needs to hold recognised qualifications, have completed a minimum period of supervised experience and have successfully passed the National Council of Examiners for Engineering and Surveying’s (NCEES) Fundamentals of Engineering Exam (FE) and Principles and Practice of Engineering Exam (PE). To be registered on the National Professional Engineers Register or certified as a Chartered Engineer in Australia, an applicant needs to hold recognised qualifications, have completed a minimum period of supervised experience, produce a practice report and undergo a Competency Assessment Interview. While both processes are different the competencies of the engineers produced is comparable. Therefore there is scope for MRAs to be reached.

9. The WGPS is pleased to note good progress in the discussions between the Texas Board of Professional Engineers and Engineers Australia on a mutual recognition agreement (MRA). This MRA will provide Australian engineers with a temporary three year licence to practice in Texas, renewable subject to the engineer maintaining Australian registration, and the recognition of Texas-licensed engineers for registration and Chartered Professional Engineer status in Australia. The WGPS encourages the relevant professional bodies and state and regulators to use this as a basis for discussions in other states.

Legal Profession Initiative

10. The WGPS is pleased to report on the improvement of professional mobility for Australian lawyers in the state of Delaware. Developments include a Memorandum of Understanding between the Delaware Supreme Court and the Law Council of Australia, the adoption of a foreign legal consultant rule in Delaware and the amendment of the Supreme Court of Delaware’s temporary practice rule removing the registration requirement.

11. The WGPS is also pleased to report the signing of a Memorandum of Understanding between the Law Council of Australia International Law Section and the International Section of the State Bar of California.

Recommendations

In light of progress to date, the WGPS makes the following recommendations for consideration by the Joint Committee.

1. That the WGPS continue to support initiatives to promote mutual recognition discussions between relevant authorities of Australian and U.S. federal government, states, and territories involved with regulation of the accounting, legal and engineering professions.
2. That the WGPS encourage the NCEES and Engineers Australia to discuss processes and procedures to facilitate the mutual recognition of qualification and licensure/registration requirements.
3. That the WGPS continue to support initiatives to promote mutual recognition discussions between relevant Australian and US national, state and territory authorities involved with the admission and regulation of the legal profession, including with respect to legal education.
4. That the WGPS continue to support ongoing efforts to promote mutual recognition for accountants.
5. That the WGPS continue to be open to approaches from other professions seeking support for mutual recognition initiatives between Australian and U.S. professional associations through inclusion on the WGPS list of priority professions.
6. That the WGPS, consistent with Article 10-A.10 review the implementation of the Annex in three years.