Vietnam Investment Review introduces excerpts of the analysis by Professor Claudio Dordi from Bocconi University, Italy and former head of the Hungarian delegation to WTO Dr. Andras Lakatos.

The discipline regulating legal services is, in general, in conformity with GATS obligations.
Concerns include the nationality requirements to be admitted to the local bar, the “regular presence” required to foreign lawyers practicing in Vietnam and the absence of rules for the recognition of foreign diploma in law and in similar disciplines. Some transparency problems are raised by the fact that new regulations do not explicitly repeal the old regulatory acts.

The accounting, auditing and bookkeeping sector is in line with the international commitments. However, there are concerns regarding the consistency of some national provisions with international commitments, especially with mode one and two of the GATS market access commitments. Nevertheless, the enactment of implementing regulations giving effect to the priority of international commitments over conflicting national legislation, already contained in many legislative and executive acts, would solve the problem.

Regarding taxation services, legal consulting companies are not provided by specified suppliers, but mainly by auditing companies and to some extent taxation services. As a consequence, taxation services are not subject to a single set, but a number of regulations.
The current regulations on taxation services are somewhat complex, incomplete and ambiguous. The adoption of a “uniform code” for the three services (auditing, accounting, tax advisory and book keeping) is recommended. Moreover, qualification criteria and procedures for practicing accountants should be drafted clearly.

In general, the national discipline of the insurance sector seems to be consistent with GATS obligations. However, some rules could be considered incompatible with GATS obligations, such as the admission of foreign-invested insurance businesses in Vietnam is subject to an economic needs test which has not been clarified; the many limitations regarding the access to the market of foreign insurance companies and these restrictions have not been listed in the GATS schedule of commitments.

The criteria for the approval by the prime minister for the establishment of foreign insurance outfits should be clearly listed and the procedures disclosed to be fully consistent with GATS obligations.

The acceptance of insurance broking services provided by a foreign insurance broker not licenced to operate in Vietnam is considered as an “administrative offences in insurance sector bond”. This could be considered to be in conflict with the GATS market access.

In general, GATS banking commitments have been implemented consistently, with some concerns regarding the following issues including the criteria for granting licences should be more transparent and predictable. The special rules for “strategic foreign credit institutions” may give rise to concerns regarding the compliance with MFN and National Treatment provisions quantitative criteria for defining a “strategic foreign credit institutions” would be welcomed as foreign credit institutions can participate in not more than two boards of management of Vietnamese banks (GATS art. XVI and XVII possible violation).

Foreign credit institutions are permitted to assign their shares after some years (GATS art. XVII possible violation); the purchase by a foreign investor of shareholding in a Vietnamese bank has to be approved by the State Bank. The negative decision should be actionable before an administrative tribunal and automatic teller machine regulations have yet to be enacted.

In the area of communication services where Vietnam made specific commitments (telecommunication, courier and audiovisual services), there exists a series of legal shortcomings relative to Vietnam’s commitments.

In the area of telecommunication services, the ordinance on post and telecommunications and the decrees on telecommunications and the internet need further revisions in order to make them more GATS consistent. Furthermore, the sector regulator lacks a statutory basis for intervention to ensure such compliance.

Commitments on better treatment made by Vietnam in the Bilateral Trade Agreement signed with the United States and not extended to other WTO members’ telecom providers may violate the most-favoured nation treatment under the GATS, as the BTA is unlikely to qualify as regional trade agreement.

In the courier services sub-sector, Vietnam has yet to adopt a WTO-compatible licencing regime for express delivery services despite its commitment to do so promptly, but no later than three months after its WTO accession. It is necessary that Vietnam should introduce necessary legislative changes without delay. In the case of audiovisual services, the Law on Cinematography complies with GATS commitments. However, two old decrees implementing the previous law, are in conflict with GATS and the new law still exists.

In the distribution services sector, the government has adopted a series of legislative acts in order to implement Vietnam’s GATS obligations and commitments, including new licencing procedures to allow market entry for wholesalers, retailers and commission agents.

However, some concerns have been raised, including those by the business community, as to the speed of the lawmaking process, as well as some of the new legal provisions. For example, it was observed that an economic needs test, which should be the basis for allowing second and subsequent retail outlets, is not yet in place.

Furthermore, with the implementation process an increase in the number of licensing requirements has been observed, some of which could be made more transparent and streamlined in order to better reflect Vietnam’s commitments in this sector.

The national discipline of the educational services sector can be considered, in general, in conformity with GATS obligations. However, the criteria provided by circular 14-2005-TTLT-BGD&DTBKH& DT are stricter for foreign-invested educational entities than for national ones. This raises concerns regarding the consistency of those criteria with GATS national treatment obligation.

Meanwhile, regarding tourism, the Law on Tourism contains two provisions, which aim at guaranteeing the consistency of the law with Vietnam’s obligations under the WTO. These clauses might be seen as providing direct transposition of Vietnam’s GATS obligations and commitments on tourism and travel services into domestic law. However, whether such “compliance clauses” are sufficient to provide compliance of domestic legal provisions with Vietnam’s GATS obligations and how they work in practice is crucial.

Even the law itself raises doubts about the practicability of such clauses, because it seems to suggest that the prime minister has some discretionary authority over the authorisation of commercial presence of WTO members’ travel agencies through representative offices, although Vietnam’s commitment is to allow without condition the establishment of such representative offices.

Source: VIR.