Big wins for UK legal services in new UK-Australia trade agreement
Legal services are expected to feature prominently in the new free trade agreement (FTA) agreed in principle between the UK and Australia this week, reflecting key asks from consultations with the Law Society and other organisations.
The FTA, which has been agreed in principle, heralds four areas of potential improvement for UK legal services providers wishing to operate in Australia:
- greater opportunities for junior lawyers through a liberalised Youth Mobility Scheme
- increased opportunities for digital trade across all sectors of the economy, while also ensuring world-leading standards for personal data protection and for legitimate public policy objectives
- greater cooperation between regulatory bodies with the aim of addressing remaining barriers to practise as a local lawyer in the other country’s territory
- confirmation of the existing right that UK and Australian lawyers can advise clients and provide arbitration, mediation and conciliation services in the other country’s territory, using their original qualifications and title
After a meeting between the UK prime minster, Boris Johnson, and Australia’s Scott Morrison on Tuesday 15 June, an agreement in principle was made between the two countries.
The deal covers everything from car manufacturing to agricultural produce and the services sector and, according to the UK government, will boost industries employing 3.5 million people in the UK.
A welcome shift in trade negotiation policy
The agreement, and its potential to provide a framework for future collaborative dialogue between the legal professions of Australia and the UK, was welcomed by both the president of the Law Society of England and Wales and the president of the Law Council of Australia.
The prominence of legal services is a significant aspect of the UK’s post-Brexit trade negotiation strategy, with a move away from including legal trade as simply another element in the professional services matrix and recognising the importance of legal services as a trade facilitator in their own right and an integral part of the UK economy.
Total revenue from legal activities in the UK was £36.8 billion in 2019. The concentration of legal and financial services in the City is a key factor to the UK's economic prosperity.
We believe that it’s vital for our trade negotiators to put legal and other professional services at the forefront of forthcoming trade discussions due to the economic importance of the sector, both in its own right and in its role as a facilitator of all international business transactions.
The UK should make sure that it’s negotiating on its areas of strength and so secure ambitious deals for its leading sectors.
With members’ help, we identified greater recognition of qualifications and business structures (namely the UK LLP) as well as eased mobility options as key asks for the sector.
We also support the creation of a clear framework to facilitate further discussions with relevant bodies on these and other issues that may not be possible to address within the text of an FTA itself.
We continue to lobby for the inclusion of these considerations in the final text of the agreement.
The gateway to CPTPP accession?
The new UK-Australia FTA also moves the UK a step closer to accession to the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP).
Countries aspiring to join the CPTPP must demonstrate how they will:
- comply with the existing rules
- undertake to deliver meaningful market-access offers that boost trade with member countries
This is in line with the original signatories’ ambitions to eliminate tariffs and other barriers to goods and services trade.
An important element of the CPTPP is the Professional Services Annex, the mechanism used to address these barriers to services trade within the bloc. This principles-based framework supports the ongoing development of the regulation of foreign lawyers and the legal services sector.
Since Australia is a founding member of the CPTPP, alignment with Australian trade aspirations under the new FTA not only demonstrates the willingness of the UK to agree to terms that reinforce these objectives but also creates a key ally within the group.
The UK currently has trade deals in various states of ratification with seven of the 11 CPTPP members:
This will be the first time that a new signatory has sought accession to the CPTPP and therefore the process of the UK’s accession and its key asks will be a point of interest for other trading partners.
Agreements such as this one – that create greater alignment with the existing members and CPTPP objectives – show the UK’s willingness to adapt to local conditions and provide a sure foundation for ‘playing by the rules’ as the new member of the club.
Barriers to trade remain
Despite the positive news, barriers to trade in legal services remain.
In consultation with the government, we’ve repeatedly raised issues around data protection.
Mechanisms that protect personal data processed by law firms are of crucial importance as they safeguard the principles of client confidentiality and legal professional privilege.
We’ve consistently reminded ministers that personal data handling by law firms is different to other sectors and that these protections should be remembered and safeguarded where provisions on cross-border data flows, data localisation, and personal data protection are proposed.
The final text of the FTA has yet to be released so it’s impossible to say how far it moves the UK and Australia towards a simpler and smoother requalification process and we remain committed to highlighting the importance of these measures.
Recognition of qualifications for UK solicitors also remains a major barrier to trade in legal services.
While Australian lawyers can currently take a test in order to dual-qualify in England and Wales, English and Welsh solicitors must satisfy rigid requirements in order to qualify in Australia. This barrier often proves insurmountable to most UK solicitors wishing to practise in Australia.