LIBERALIZATION OF LEGAL SERVICES IN NIGERIA: THE WTO PROPOSAL

The NBA Section on Business Law recently concluded a one day workshop on the WTO proposal to liberalize professional services under its General Agreement on Trade in Services (GATS). The Workshop specifically looked at the implication of this initiative for the Legal Profession since one of the proposals is the opening up of legal services.

It must be said from the outset that the legal profession like so many other professions like accountancy, advertising etc is considered by the WTO as part of the global infrastructure of commerce. It is therefore not surprising to find that there is a strong clamour for its globalization so that providers of these services can have easy and perhaps unfettered access to each other’s markets. To understand the subject a bit more we need to take a brief look at the origins of the WTO and the way it operates.

The WTO finds it origins in the General Agreement on Tariffs and Trade (GATT) which was signed in 1947 in Havana by 23 countries who believed that protectionist trade policies pursued by Nations was harmful to peaceful co-existence among them in a largely inter dependent world. Infact the intolerance bred by this behaviour pattern was partially to blame for the 2 nd world war. GATT dealt essentially with Goods and contracting countries could pick and choose what area they wanted to be bound by. Nigeria joined GATT after independence. The core principles of GATT could be summarized as follows:

• Non – discrimination (under the most favoured Nation – MFN)
• Transparency
• Market Access
• Special and differential treatment for developing countries.

The operation of GATT was trailed by a lot of controversy. Accusations of dumping especially on the part of the industrialized nations leading to the demise of factories in developing countries left many signatories looking for alternatives. This unsatisfactory situation led to the Uruguay talks where GATT was completely overhauled leading to the birth of the World Trade organization (WTO) in 1994.The WTO is more comprehensive than GATT because in addition to regulating the trade in Goods (i.e. GATT was retained); agreement was reached on the Trade in services (GATS) – this had hitherto been treated under GATT as Invisible Trade. The WTO works on a single undertaking principle so once a country signs to become a member, it becomes a party to all the agreements including those reached before it became a member. In other words, unlike GATT you cannot pick and choose which agreements you want to be party to. Nigeria became a member of the WTO in 1995. The core principles of the WTO are:

• Enthronement of the dominance of market forces
• Privatization
• Multilateralism
• Deregulation, including foreign exchange markets
• International legislation diminishing state sovereignty
• Liberalization of trade and investment regimes – capitalism without borders.

The principles very clearly suggest that the WTO is driven by those countries who dominate world trade. Consequently the least developed and developing countries are effectively excluded from participating in making decisions that are of immediate concern to them. Poor infrastructure, disease, poverty and general underdevelopment in these countries ensure that they remain receptacles for the industrialized nations. The attempts by the poorer nations to industrialize are often unsuccessful since their industries cannot compete with cheaper and sometimes subsidized goods from the industrialized nations.

To answer this dilemma some countries have delayed signing on to the WTO to give them time to prepare local industries for the competition that would come from an uncontrolled entry into their markets. This explains why China is a relatively late entrant into the club and Russia still has its application under consideration. Perhaps we could have borrowed a leaf from the approach of these countries. Today they are ready to play in the ‘big league’. For us in Nigeria we will be hard put to take full advantage of our membership of the WTO until we can overcome amongst others the challenges of poor infrastructure (industries are hardest hit here) and poor human capital in highly technical fields. Some say if you don’t open up you cannot overcome these problems, others say opening up too fast will ensure you remain the way you are for a very long time. It has become a chicken and egg situation.

The WTO is headed by a Ministerial Conference which meets every two years. Nigeria is represented on the ministerial conference by the Minister of Commerce. The ministry of commerce generally handles all WTO negotiations but they do so in consultation with stakeholders in sectors where discussions about opening up arise. There is a General Council responsible for the day to today administration of the body which has its headquarters in Geneva. The General Council metamorphoses into a dispute settlement body to deal with disagreement among members. It is also responsible for renewing trade policies. There are bodies that are responsible for Trade in Goods, Trade in Services and Trade related aspects of intellectual property rights (TRIPS).

Countries can make commitments on any area of trade they wish to be opened up. These are then debated in various rounds of negotiations (the rounds generally bear the name of the city hosting the negotiations) until agreement is reached. Decision is reached by consensus. A country is not bound to commit to every area in its schedule of commitments but once agreement is reached then it becomes binding on the country without the requirement for its domestication unlike several other treaties! Members are the obliged to repeal or amend any legislation that negates its commitment under (GATS). Contraventions are punished by retaliatory sanctions and by the imposition of counter measures.

PROPOSAL FOR LEGAL SERVICES

Article 19 of GATS imposes obligations on members to move progressively towards attaining higher levels of liberalization. In 2001, the Doha round of negotiations commenced on the liberalization of professional services. More than 45 countries ( Nigeria is not among) have listed legal services as one of the services they would like opened up. The Doha round of negotiations collapsed in June but are expected to resume shortly. Nigeria is under increasing pressure to list legal services as one of the areas it should open up and the reason for the workshop was to take a critical look at the merits and demerits of allowing foreign law firms to establish in Nigeria or for foreign legal practitioners to practice in this country.

The International Bar Association (the global voice for the legal profession) has set up a working group to study the WTO proposal and to fashion out modalities for implementation. Our Mfon Ekong Usoro (D-G NAMASA) is a member of the working group. Notwithstanding the collapse of the Doha round, the IBA is pressing full steam to achieve liberalization among its members. This is a clear sign that globalization is perhaps inevitable. In a series of draft resolutions, the IBA is attempting to set the rules under which cross border practice can thrive. It is important for Nigerian lawyers to become familiar with the unfolding events so we can provide the appropriate response to this initiative.

Why Allow Access?

Some argue that the legal profession in Nigeria has become weak over the years due to a cocktail of factors.

• Poor admissions policy has led to a large annual turnover of law graduates very often requiring retraining.
• Poor remuneration and minimal continuing legal education affect the competence and therefore output of lawyers
• Existing law firms are too weak and generally poorly organized to meet with the challenges of changing times globally. Solo man practices or family practices are a deterrent to continuity that ensures absolute loyalty from associates
• Inability of the NBA to properly direct the profession especially in the area of man power development.

The consequences of the above is that there is a steady infiltration of the legal services market by foreign lawyers. In practically all facets of the privatization programme from the Oil and Gas sector to communications and financial services, there is an unbridled invasion of the profession. In fact foreign law firms are now soliciting work directly from Government departments with or without collaboration with Nigerian lawyers.

The argument is therefore made that allowing market access to foreign firms can strengthen local firms and generally improve on the quality of Nigerian lawyers.

CONTRA.

The Counter to the above arguments are equally compelling.

• If existing trend is anything to go by, instead of strengthening local firms, they will be wiped out. If what is happening to factories in the area of goods is anything to go by, local law firms should not expect too much out of liberalizing legal services.
• Nigerian lawyers who currently practice abroad are reduced to handling immigration matters, family law counseling and other similar areas of law. Access will never be given to high caliber stuff for which there are qualified, capable and extremely competent Nigerians. Even when we work jointly on sensitive transactions, our role is limited to advising on Nigerian law!
• A lot of the countries calling for liberalizing this sector still impose barriers to trade. Visa restrictions are one of the most potent weapons used in this regard. The last IBA conference in Chicago is a case in point. Not only were visas denied many Nigerian lawyers (for a variety of reasons), under pressure from the IBA, visas were then issued to only those Nigerian lawyers who had been to the US before!

These represented the high points which were brilliantly captured in various papers delivered at plenary and working sessions by the Head of Unit, Non-Agricultural Market Access, WTO branch Mr. Nathan Inye Briggs of the Ministry of Commerce, Prof. Yemi Akinseye–George, Special Assistant to the AGF and Minister of Justice, Mr. Desmond Guobadia, Partner in the Law Union and Chairman Committee on International Trade of the SBL and Dr. Myma Belo Osagie who ably stirred one of the two break out sessions – the other was headed by Mr. Guobadia. Our able rappotteur was Mrs. Boma Ozobia.

The very lively exchanges that ensued following the presentations, led to the following conclusions.

1. Globalization is inevitable but not imminent and that Nigeria should not include legal services in its schedule of commitments for a period of time.

2. In the National interest, lawyers should be part of future delegations at WTO negotiations.

3. Access of foreign lawyers to our market must be controlled by the regulatory bodies such as the Nigerian Bar Association and such access should be fully reciprocated in real and measurable terms.

4. The NBA should set up a working group on the WTO to liaise with the IBA working group, the Ministry of Commerce and other stakeholders.

5. The Local Content Bill before the National Assembly must be fully supported by the NBA and that Legal Services should be included.

6. There should be a planned and holistic reform of the legal services sector including the administration of justice system to prepare local practitioners for globalization.

I would like to end this piece on this note. Every Nigerian lawyer including in-house counsel should familiarize themselves with the WTO and IBA proposals on liberalizing legal services.

It is our future.

More information can be obtained from the secretariat of the NBA or the SBL.

George Etomi

Chairman, NBA Section on Business Law