Reducing the barriers to international trade in accounting services

Reducing the Barriers to

International Trade

in Accounting Services

AEI STUDIES ON SERVICES TRADE NEGOTIATIONS

Claude E. Barfield, series editor

REDUCING THE BARRIERS TO INTERNATIONAL

TRADE IN ACCOUNTING SERVICES

Lawrence J. White

INSURANCE IN THE GENERAL AGREEMENT ON TRADE IN SERVICES

Harold D. Skipper, Jr.

Reducing the Barriers to

International Trade

in Accounting Services

Lawrence J. White

The AEI Press

Publisher for the American Enterprise Institute

WASHINGTON, D.C.

2001

Available in the United States from the AEI Press, c/o Publisher

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ISBN 8447-7157-0

1 3 5 7 9 10 8 6 4 2

© 2001 by the American Enterprise Institute for Public Policy Research,

Washington, D.C. All rights reserved. No part of this publication may be

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The AEI Press

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Printed in the United States of America

v

Contents

FOREWORD, Claude E. Barfield v

ACKNOWLEDGMENTS xi

1 INTRODUCTION 1

2 BACKGROUND 3

3 WHY INTERNATIONAL TRADE IN SERVICES IS

(AND IS NOT) DIFFERENT FROM TRADE IN GOODS 5

4 ACCOUNTING SERVICES IN INTERNATIONAL TRADE 11

5 THE IMPEDIMENTS TO TRADE IN ACCOUNTING SERVICES 18

6 DIFFERING ACCOUNTING STANDARDS: HOW

IMPORTANT IS HARMONIZATION? 22

7 THE CURRENT FRAMEWORK FOR NEGOTIATIONS 28

8 THE ROAD AHEAD 34

9 CONCLUSION 37

NOTES 39

REFERENCES 43

GLOSSARY OF TRADE TERMS 47

ABOUT THE AUTHOR 55

vii

Foreword

The service sector accounts for more than 70 percent

of the gross domestic product (GDP) of advanced

industrial economies. Though trade in services is dif￾ficult to calculate and many transactions still go uncounted,

current estimates place the worth of such trade as at least

$2.5 trillion, or about a third of total world trade.

For the United States, the world’s most advanced indus￾trial economy, the service sector looms even larger. Services

account for almost 80 percent of U.S. production and U.S.

employment (while manufacturing accounts for 19 percent

of U.S. GDP and 18 percent of U.S. employment). The sur￾plus in U.S. services trade also partially offsets persistent

U.S. merchandise trade deficits. In 1999, the services trade

surplus was $76 billion; the merchandise deficit, $347 bil￾lion.

Despite the increasing importance of services trade and

investment, only in 1995 did the multilateral trading system

establish rules for opening markets in these economic sec￾tors by negotiating the General Agreement on Trade in

Services (GATS). This first effort at a discipline for services

trade and investment created a framework of general princi￾ples and rules but left the large-scale liberalization of indi￾vidual sectors to later negotiations.

Subsequently, under a mandate established as a part of

the Uruguay Round negotiations, important advances