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GLOBALISATION: THE WISDOM AND FOLLY OF OPEN SESAME

©RAHMAT MOHAMAD^[1]
MOHAMMAD RIZAL ABIDIN 

GLOBALIZATION AND THE CONTRIBUTION OF SERVICES TO ECONOMIC DEVELOPMENT

‘Globalization’ can generally be referred to as a process of widening economic integration, increasing economic openness and growing economic interdependence between countries in the world economy^[2]. The process involves the increasing movements of people, goods, services and capital across national borders, all of it have been made possible by revolutions in communications, information and other technologies as well as important political changes. 

Much has rightly been said of globalization and its impact on contemporary society. While globalization is not new, what we are witnessing today is the beginning of a wave of globalization that is likely to be deeper than previous waves of globalization. The globalization that is taking place today, together with the other forces that are sweeping the world, e.g. technological change and advances in science, are forcing us to confront change on a sweeping scale. Some of these changes are positive and have the potential to make life better for humanity and hopefully, for all other living creatures that humankind shares this world with. Others are painful. Certain skills have become less important leading to employment difficulties for those concerned. Traditional cultures and lifestyles are threatened. The list of positives and negatives can be a long one both ways from the perspective of different groups of persons.

While in the past the growth of services was perceived as a by-product of development in the primary and secondary sectors and the slow growth of productivity in the service sector was thought to be a drag on long-term economic growth, today this perception of the service sector has changed dramatically. Services have taken center front on the stage of economic development. This is due to the so-called ‘services revolution’ characterized by the rapid expansion of knowledge-based services and the growing tradability of services. Information technology has transformed service industries to the point where the development of services is regarded not as a consequence but as a precondition of economic growth^[3]. Knowledge-based industries, including professional and technical services, information technology services, banking and insurance, and education, are the driving forces behind the transformation of the service sector.

Rapid technological change is allowing services to be provided in different forms and with greater speed than ever before. Many services which were considered non-tradable only recently are now being actively traded through the application of information technology and advances in telecommunications. The expansion of electronic networks has opened possibilities for trade in long-distance services. It has also allowed for the unbundling of production and consumption of information-intensive services activities such as research and development, computing, inventory management, quality control, accounting, secretarial, marketing, advertising, distribution, and legal services^[4]. Data entry, development of computer software, and processing of financial products are activities that are now being ‘out-sourced’, that is provided by economic agents in other countries and re-transmitted electronically to the demander. Developing countries are participating intensively in the provision of such services.

Dramatically declining costs of information technology are permitting the development of the service sector to effectively bridge the income gap through ‘leapfrogging’ various stages of economic development. Efficient and competitive service suppliers from developing countries can foster economic convergence with high-income countries. These bold statements are based on the remarkable changes that have taken place in the world economy in the service sector over the past two decades. For example, the cost of information technology, called the cutting edge of the services revolution, has fallen dramatically, allowing developing countries to exploit their relative cost advantage and to supply certain services such as data processing and software programming on a long-distance basis through electronic transmission. Demand for these activities is expected to continue to expand in the future, reflecting the continuous fall in communication costs. Thus information or knowledge-based services are both a promoter and a result of the process of globalization.

Efficient producer services are important for developing countries as they pursue outward-oriented strategies of development. Efficient services allow for more competitive production and export of goods. Access to global networks in communications and transport helps promote competitiveness in manufacturing industries, especially time sensitive products. Efficient producer services allow firms to improve their responsiveness to changing consumer demands. Lastly, access to information technology-based international services is also essential in raising the quality of domestic social services, of the type that are characterized by slower productivity growth, namely health, government services, and education.

LIBERALIZATION OF SERVICES

Interest in the area of services liberalization is a very recent one on the part of developing countries, both in Southeast Asia and in the Western Hemisphere, and has been manifested only since the completion of the Uruguay Round. However, ambitious efforts are underway at present to incorporate services within the scope of many of the sub-regional arrangements to which developing countries are parties. This is also occurring at the broader regional level; both the APEC grouping and the Free Trade Area of the Americas (FTAA) process in the Western Hemisphere have included services among their wide-ranging liberalization objectives.

At the sub-regional level, both the ASEAN members countries of Southeast Asia and the MERCOSUR member countries of Latin America have chosen to follow the liberalizing modality of the World Trade Organization^[5] (WTO) General Agreement on Trade in Services (GATS) and to open their services markets on what would appear to be a piecemeal, gradual basis^[6]. However, within the Western Hemisphere the NAFTA model of comprehensive liberalization for services and investment has been successfully promoted by Mexico and adopted by several Latin American countries. This latter approach appears to be a more promising one for significant expansion of trade in services than the GATS-type approach. At the broader regional level, the modality for liberalizing services markets chosen by APEC is a voluntary, concerted one, and is proceeding slowly. Within the FTAA, participants are in the process of defining the modality under which they will carry out liberalization of services^[7].

Common to all of these efforts is the stated desire by developing countries to promote more efficient services markets. Yet this desire is placed alongside a hesitation to open such markets rapidly or comprehensively due to historically strong and entrenched protectionism in this sectors and to a lack of knowledge regarding the regulatory measures in place which impede services trade. While it might be presumed that liberalization of services would be easier on a sub-regional basis, among countries at similar stages of development, liberalization of services at the broad regional level is an ambitious and difficult goal that will most likely move slower than liberalization of services at the sub-regional level and possibly even slower than that at the multilateral level under the WTO where a new round of services talks scheduled to begin in the year 2000 may well eclipse the recently-begun regional efforts^[8].

Services sector is important to Malaysia and has been identified as one of the three pillars of its economy. Malaysia, in 2004, is the 29^th largest exporter and the 28^th largest importer of commercial services^[9]. Malaysia’s services sector constitutes about 56 percent of the national economy and remains highly protected. Malaysia has yet to submit an offer for further liberalization of its services sectors in the current round of WTO negotiations^[10].

MALAYSIA’S LEGAL SERVICE AND ITS COMMITMENTS UNDER GATS

Legal services encompass a wide range of activities of economic and social consequences both in the developed as well as in the developing world. An important aspect regarding law is that it has a national character because it is part of local culture and life. This creates the main obstacle to cross-border trade in legal services. But amongst all national laws there are good deal of similarities specially in the basic principles abstructed from the observed practices. Further, in the past decades international trade in legal services has increased rapidly as a result of internationalization of the economy. Sectors such as corporate restructuring, privatization, cross border mergers and acquisition, intellectual property rights, new financial instruments and competition law have generated an increasing demand for more and more sophisticated legal services. Increasingly, lawyers are faced with transactions involving multiple jurisdictions and are required to provide services and advice in more than one jurisdiction. Whereas international trade, commerce and industries are pooling the legal system closer, too much of traditionality in the qualification requirements in legal services on the knowledge of national law hinders internationalization of the profession. With the integration of economies of the world, it would naturally require gradual globalization of legal profession.

Increasingly, lawyers are faced with transactions involving multiple jurisdictions and are required to provide services and advice in more than one jurisdiction. The demand for lawyers to be involved in foreign jurisdiction mostly comes from their corporate clients, who do business across borders and choose to rely on the services of the professionals, who are already familiar with the firm’s business and can guarantee high quality services. Recent regulatory and technological developments have increased the prospects for trade in legal services. With more and more countries introducing regulatory reforms and moving towards greater market orientation and with technological improvements enabling electronic transmission of certain legal services, trade in legal services is becoming increasingly important. In this context, the negotiations on legal services at the WTO negotiations on trade in services assume great significance.

The General Agreement on Trade in Services (GATS)^[11], which came into being with the WTO in 1995, locks in commitments to liberalize trade in services. It also provides the framework for negotiations on further liberalization of services trade. The services negotiations take place on a so-called request-offer model^[12], whereby WTO Member governments submit requests to their trading partners that they open up certain sectors to

foreign competition. In their offers, Members outline how far they are willing to open different services sectors. Most services negotiations are conducted bilaterally around the two countries’ requests and offers, but any commitments made bilaterally are then extended to all Members, under Most Favored Nation.

Members can decline other countries’ requests for liberalization in the current negotiations. They can also decide which sectors, and under what conditions, to open to liberalization. However, developing countries very often come under pressure to open up their service sectors, as a ‘trade-off’ for developed countries’ concessions in other areas, such as agriculture and better market access for industrial goods. Given that many developing countries’ main exports are agriculture products, this ‘trade-off’ can be an extremely powerful tool for industrialized countries to extract services offers in the sectors of their choice. Once a country agrees, through negotiations in the WTO, to liberalize a sector, it has certain obligations:

1. It must list that sector in a schedule of specific commitments. This makes the liberalization commitment legally binding on the Member, and prevents it from limiting the number of foreign service providers in that service sector, or the conditions in which they may operate. The government can put limitations on the level of market access and national treatment in its schedule.

2. By committing a services sector to liberalization a WTO Member is legally bound by GATS to provide national treatment, and market access to all foreign services suppliers of other Members in that sector^[13].

3. Once a GATS commitment is made, it cannot not be withdrawn or modified, unless compensation is given to all Members affected. Therefore, it is important to realize that by making a commitment, a government is effectively ‘locked’ into its schedule, which limits its future policy options.

Malaysia’s commitment on legal services is limited in scope both in the range of services offered and geographically. Malaysia’s commitments have limitations on market access and national treatment in the interest of achieving national objectives. Among the limits are:

1. Foreign equity participation at 30%;

2. incentives/preference given to Malaysian owned corporations; and

3. intra corporate transfers for key personnel for maximum of five years^[14].

Under legal services in GATS, Malaysia is committed to liberalize ‘advisory and consultancy services relating to hoe country laws, international law and off-shore corporation laws of Malaysia and in terms of limitation on market access, legal services offered, however shall only be supplied to off-shore corporations established in the Federal Territory of Labuan^[15].

Thus, at the moment, foreign lawyers may not practice Malaysian law or operate as foreign legal consultants, nor may they affiliate with local firms or use their international firm’s name. Foreign law firms may not operate in Malaysia except as minority partners with local law firms, and their stake in any partnership is limited to 30 percent. Under the Legal Profession Act of 1976, the practice of Malaysian law is normally restricted to Malaysian citizens or permanent residents who have apprenticed with a Malaysian lawyer, are competent in Bahasa Malaysia (the official language), and have a local law degree or are accredited British Barristers at Law^[16]. The Attorney General has authority to grant limited exceptions on a case-by-case basis, provided the applicant has seven years of legal experience. Malaysia limits foreign attorneys’ scope of services to advice concerning home country and international law. Malaysian law does not allow for foreign legal consultancy except on a limited basis in the LabuanInternationalOffshoreFinancialCenter^[17]. Persons not licensed as lawyers are subject to criminal penalties if they directly or indirectly undertake activities relating to the Malaysian legal system, including drafting documents. However, there is no restriction on cross-border supply by foreign lawyers of legal services to residents in Malaysia through fax, telephone etc. or Malaysians going abroad to obtain legal services from foreign lawyers^[18].

Like any other legal profession in the Common Law jurisdiction, the legal profession in Malaysia is still exclusive in nature and it is a resident-based profession. At present, qualified legal practitioners dominate most legal services offered in Malaysia. Unlike their counterpart in Singapore, lawyers in Malaysia are largely engaged in domestic laws and the bulk of the legal services provided by Malaysian Law firms relate mainly to the law of Malaysia. Only a handful of the more established firms can be said to have an international outlook (associated or has close links with firms abroad). Fewer have established branches abroad^[19].

The Malaysia Legal market remains more conservative than many other jurisdictions in Asia. Indeed, until 2001, the Bar Council rules on advertising and marketing were among the most stringent in the world. Lawyers could only describe themselves as an ‘advocate and solicitor’ and websites were strictly prohibited. Even today, only a handful of firms have embraced online marketing. Pressure by local commercial firms to alleviate the strict rules in the face of overwhelming competition from foreign firms has borne fruit. The Legal Profession (Publicity) Rules 2001 were issued in November 2001^[20]. Firms can now advertise abroad and in approved publications. They may also have brochures, newsletters and restricted advertisements in the Malaysia press. Websites are allowed but with a number of restrictions. Rules are still being liberalized gradually.

WISDOM OR FOLLY?

There is tremendous fear that open doors would cause an influx of lawyers particularly those form the developed countries. Fear that mega firms from the west would dominate our local industry is clearly visible. The question of whether our local lawyers would be able to compete and survive the onslaught of the foreigners remains. On the other hand, it also allows our lawyers to practice in other foreign jurisdiction. However, in reality, developing countries such as Malaysia would likely be the recipient of foreign legal service rather than the exporter. Competing with lawyers from developed countries equipped with long established legal traditions and mega firms, as of today, would be out of the question.

The current scenario proves that foreign lawyers are already here doing work for both the Government and the private sector. They have definitely made their presence felt. A worrying trend among Malaysian companies and Malaysian in general is that foreign is always better. Malaysian companies do prefer the services foreign lawyers for the more sophisticated legal services. Prohibition in the Legal Profession Act does not deter this from happening. In a borderless world, as a result of extensive developments in technology, one can render service in another jurisdiction without having to be physically presence. 

Globalization presents new opportunities and challenges to our local heroes. In order to survive globalization, local lawyers must be prepared and able to face the challenges. Inability to compete with the foreign lawyers must be addressed as soon as possible. Local companies preference towards foreign lawyers over the local ones is because the skills and range of legal works by Malaysian lawyers are no longer sufficient to meet their requirements. Local lawyers must be prepared for complex commercial transactions for raising capital, locally and internationally, regulating the flow of capital inward and outward, and securing investors’ guarantees, and enabling investment related disputes to be settled effectively and expeditiously. Further, as a consequence of the growth of international trade, a plethora of new fields has surfaced. Sectors such as corporate restructuring, privatization, cross border mergers, and acquisitions, intellectual property rights, new financial instruments and competition laws have generated an increasing demand for more sophisticated legal services^[21].

Opening up our market to the world needs careful consideration. The interest, welfare and well-being of our local lawyers must be, to a certain extent, taken care of. The experience of our neighbor must serve as a lesson to us. In Singapore, many local law firms have suffered as a result of the liberalization of the legal service in that country as many of lucrative jobs are being monopolized by the joint law ventures^[22]. As a result, the legal market becomes very competitive and many lawyers have left the profession.

Globalization also brings with it certain benefits for clients and the industry alike. Some of the benefits are as follows:

1. Providing a one-stop shopping for clients needing international transactions. Clients will benefit from the offer of multi-jurisdictional expertise.

2. The increase in the breadth (legal expertise in other fields such as information technology) and quality of legal services.

3. Reduction in legal fees as granting access to foreign lawyers will create a more competitive market.

4. There will be greater professional transparency and improvements in governance through the adoption of international standards. Local firms will have to acquire internationally recognized accreditation such as ISO certifications, which can be an additional marketing asset in promoting services abroad. They must consider accreditation schemes for qualifications that are in conformity with international standards, to facilitate foreign recognition of local professional qualifications. Local firms must also consider concluding mutual recognition agreements to increase the international mobility of Malaysian professional service providers.

5. Domestic firms will benefit through the transfer of technology. Joint law ventures between established foreign firms and local firms would bring home good practices, management style, know-how and technology that were once exclusive to international firms.

FOOD FOR THOUGHT

It must be duly acknowledge that Malaysian lawyers will fail miserably in competing with the foreign lawyers with large international firms unless appropriate measures are taken. Local lawyers have to have to equip themselves with skills in cross border work, acquiring knowledge in new areas of laws particularly those related to trans-national business ventures. At the same time, one must not confine oneself to the glory of law alone. Knowledge and skills in other related disciplines is of utmost importance i.e. politics, economics, information technology as well as biotechnology. Local lawyers must begin to think in term of legally interconnected and interactive world, rather than a disconnected region, area or territory. They must have the ability to deliver integrated services across a variety of practices area^[23].

One of the inevitable effects of globalization of the legal service is that there will be greater competition among law schools. In the past, law schools would generally compete domestically with other law schools from the same area. With globalization, a large middle class, and greater ease of travel and communication, law schools now have to compete in the global arena. In a world where the brightest students can study almost anywhere, what can law schools do to continue to attract the best talent? In a world where employers can hire the best global talent, what can law schools do to ensure that their graduates are sought after? Secondly, how can essentially domestic law schools provide an education that will not only equip its students with the foundation to practice law in that area or economy, but will also have the necessary flexibility and mindset to operate in a world of cross-border legal transactions? One possibility is to inject elements of comparative law into the law curriculum. By this suggestion it is not intended that we should attempt to train our students in the law of other jurisdictions. Most of us are surely not qualified to do this and lack the resources to make such an endeavour a practical one. Instead, what is advocated is that students should be sensitized to different approaches that may arise in other jurisdictions or systems of law so as to both enhance an understanding of the strengths and weaknesses of their own legal system, as well as providing a sufficiently flexible mindset that can operate effectively in diverse jurisdictions.

The legal horizon in the West in the last decade has changed rapidly both as regards the activities of lawyers, especially business and corporate lawyers, and of their law firms. The era of globalization has ushered in the global law firm that seeks to practice on a worldwide basis. A perception has evolved that the traditional structure of law firms is no longer suitable for the expanding legal work and activities of lawyers. The idea here is that law firms should be allowed to incorporate themselves as limited liability entities. Singapore and the United Kingdom have allowed the corporatization of legal firms in their respective countries^[24]. In Singapore this new entity is called by its acronym ‘LLC’ and in the United Kingdom it is called by its acronym ‘LLP’. The objective of the corporatization of law practices is to protect them against crippling legal claims and to provide flexibility to venture out and compete in the global market. The difference between the British and the Singapore model is that the British model is not confined to legal firms but open to any professional firm or business.

Other jurisdictions like the United States, United Kingdom, Australia and Hong Kong have allowed their law firms to either form limited liability companies or limited liability partnerships. Hence, allowing Malaysian law firms to corporatize will enable them to compete on a more level playing field with foreign firms. This move is timely both in facilitating the expansion of overseas operations by Malaysian firms and also in preparing our local firms for the liberalization of the legal market to foreign firms.

Another trend that has become popular in some jurisdiction is the Multi-Disciplinary Practices (MDP). The idea being put forward here is for law firms to partner with professionals of other disciplines. At the outset it should be stated that current legislation governing the legal profession in Malaysia prohibits any arrangement that would involve a firm of solicitors sharing their fees with non-solicitors. An MDP arrangement would accordingly violate the Legal Profession Act.

In short commentators have observed that the demerits outway the merits in permitting MDPs to enter the legal arena. A principal factor is conflict of interest and its increased likelihood under an MDP situation. A solicitor's duty to the court may also conflict with the client's wishes; for example, a client might wish to mislead the court in some way. The non-lawyer members of an MDP, who do not have a solicitor's duties as an officer of the court, might bring pressure to bear on the solicitor to act contrary to this duty. The temptation could, of course, arise in a traditional solicitors' practice - but perhaps in an MDP the risk of pressure is greater^[25].

Another area of concern is the clients' right to privilege and confidentiality. This is likely to erode significantly in an MDP situation where the accountant partner carries out audit duties in respect of a client corporation. The duty of an auditor to make disclosure in cases of suspected fraud is incompatible with the work of a solicitor who must not breach confidentiality of his clients' affairs in ordinary circumstances^[26].

The WTO has identified that the main obstacle to trade in legal services is represented by the predominantly national character of the law and by the national character of legal education. The current position restricts the right to practice to authorized persons under the Legal Profession Act. In order to become an authorized person, one has to be a qualified person as defined under the Legal Profession Act. Therefore, any liberalization for the purpose of admitting foreign lawyers would require extensive changes to the Legal Profession Act specifying the qualification and conditions to be fulfilled before a foreign lawyer may be allowed to practice locally and the areas of practice that they can venture into.

CONCLUSION

Crucially as Malaysia opens up its economy and enters the global trade and commerce mainstream, any form of prohibition on the use of legal and/or financial advisers will be adversely viewed by overseas investors. Lawyers are perceived as an integral part of the investment process and foreign companies want their preferred lawyers with them as much as their own bankers. It has been continuously argued that opening up the market should not be perceived as a threat but rather an opportunity. Some of the potential advantages of liberalization are the creation of a stronger and more competitive legal profession, it will give Malaysian lawyers access to the multi-jurisdictional knowledge and technical expertise of the international law firms. Foreign lawyers could also bring modern know-how to practice management which would be of great benefit to Indian law firms; which are frequently dynastic rather than performance oriented in their management practices. Malaysian business also stands to benefit greatly from improved contractual documentation which could come in with foreign law firms.

We need to recognize that the Government is increasingly skeptical as to the need for many of the various regulatory restrictions that affect the provision of legal services from one country to another.  Trade negotiators tend to disregard as ‘special pleading’ the claims of the profession to special consideration based on its unique role in the preservation of the rule of law as the mainstay of democratic societies. It is up to the legal profession itself to find ways of adapting to the needs of a globalized society in ways that protect and preserve our shared core values.  If we do not do so, the Government will, eventually and inevitably, take the matter into their own hands.  It is highly doubtful that we will be happy with the results.

BIBLIOGRAPHY

1. Carlos A. Primo Braga, The Impact of the Internationalization of Services on Developing Countries in Finance and Development, March 1996.

2. Dato' Dr Cyrus Das, Should Law Firms Restructure: Is the Trends Towards Incorporation or Limited Liability or Multi-Disciplinary Practices?, 11th Malaysian Law Conference 8-10 November 2001, Kuala Lumpur, Malaysia.

3. Developing countries’ goods share surges to 50-year peak, WTO: 2005 Press Release 2005, 14 April 2005.

4. Kuthubul Zaman Bukhari, The Legal Profession – Direction & Challenges in an Era of Globalisation, INSAF (2004) XXX111 No 2.

5. Legal 500 Series Comments at www.Legal500.com.

6. Malaysia Country’s Report at http;//www.ustr.gov/assets/Document_Library.pdf.

7. Mah Weng Kwai, Current Status and Developments on Liberalization Initiatives for the Legal Services: Bar Council’s Prospective.

8. Rahmat Mohamad, Cross Border Legal Practice in ASEAN under WTO, ASEAN Law Association, The 8^th General Assembly and Conference, 29 November – 2 December 2003.

9. Rahmat Mohamad, Globalization, Legal Practice and the Role of Law Schools in Malaysia, 2003.

10. Rahmat Mohamad, Internationalisation of Legal Services in the Asia Pacific Region: A New Outlook for Malaysian Lawyers, 1994.

11. Rahmat Mohamad, Should Foreign Lawyers Be Given Rights of Practice in Malaysia: Are We Ready for Full Entry or Joint Law Ventures?, 2003.

12. Sherry M. Stephenson, OAS Trade Unit Studies: Analyses on trade and integration in the Americas Approaches to Services Liberalization by Developing Countries, A Publication of the Organization of American States Trade Unit February, 1999.

13. World Bank, Global Economic Prospects and the Developing Countries, WashingtonD.C., Chapter 3 (1995).

[1] Rahmat Mohamad PhD (Wales); LL.M (Bristol); LL.B (Hons) (UiTM) is a Professor of Law at the Law Faculty of UiTM. He currently holds the position of Assistant Vice Chancellor, Institute of Quality & Knowledge Advancement, UiTM. Mohammad Rizal Abidin MCL (IIUM); LL.B (Hons) (UKM) is a lecturer at the Law Faculty of UiTM and a Fellow at the Centre for ASEAN Studies, UiTM.

[2] Kuthubul Zaman Bukhari, The Legal Profession – Direction & Challenges in an Era of Globalisation, INSAF (2004) XXX111 No 2.

[3]Carlos A. Primo Braga, The Impact of the Internationalization of Services on Developing Countries in Finance and Development, March 1996, page 35.

[4] World Bank, Global Economic Prospects and the Developing Countries, Washington D.C., Chapter 3 1995.

[5] WTO is an international organization established on January the 1^st 1995 and based in Geneva. It functions by negotiating multilateral agreements which are then ratified by the member nations in order to protect their trading rights. It also provides a forum for further negotiations which are often held when these agreements are implemented.

[6] ASEAN member countries have agreed to enhance co-operation in the new area of economic co-operation and to liberalize trade in services. In 1995, ASEAN concluded a Services Agreement, namely, the ASEAN Framework Agreement on Services (AFAS). AFAS is an agreement governing the progressive liberalization of trade n services in ASEAN.  It was signed on December 15 1995 at the 5^th ASEAN Summit by Brunei, Malaysia, Indonesia, Philippines, Singapore, Thailand and Vietnam. In moving towards this increased liberalization of trade in services, offers under AFAS are GATS Plus, meaning that it must be improvements over the ASEAN Member Country’s existing GATS commitments or the addition of a new sub-sector which was not previously committed under GATS. The objective of this plan is to have in place, a free flow of services by 2020. 

[7] Sherry M. Stephenson, OAS Trade Unit Studies: Analyses on trade and integration in the Americas Approaches to Services Liberalization by Developing Countries, A Publication of the Organization of American States Trade Unit February, 1999.

[8] The law has an important role to play in this more globalized system, as the law is one of the instruments that can play a facilitative role. The law provides a framework within which the global system operates. At the same time, the law must adapt to globalization and other forces that operate on society. Some of this adaptation will come about through multilateral arrangements such as the WTO, regional arrangements such as AFTA and the EU, and bilateral arrangements such as Free Trade Agreements between countries, all of which will add to the legal framework regulating international trade and investment. From the perspective of the legal practitioner, this is likely to mean that an international trade in legal services will become even more prominent in the years ahead. The legal profession must adjust to these new realities.

[9] Developing countries’ goods share surges to 50-year peak, WTO: 2005 Press Release 2005, 14 April 2005.

[10] Malaysia Country’s Report at http;//www.ustr.gov/assets/Document_Library.pdf.

[11] GATS is one of the 28 agreements of the World Trade Organization. The purpose of GATS is liberalization. Its aim is to increase international trade by removing unnecessary restrictions and internal government regulations that are barriers to trade between countries. The keystone of the GATT is the most favored nation (MFN) principle whereby each Contracting Party (member state) must be accorded treatment no less favorable than any other Contracting Party.  The GATT also provided for successive rounds of tariff reductions and elimination of non-tariff barriers, a process known as ‘progressive liberalization’ of trading rules. The agreements resulting in the formation of the WTO were concluded in the course of the Uruguay Round of Multilateral Trade Negotiations under the GATT.

[12] A country receiving requests is under no legal obligation to agree to any request.

[13]In the Uruguay Round itself, 45 Members made sectoral commitments in respect of legal services, as have 3 acceding Members, including China. The countries in the Asia-Pacific region making such commitments include Australia, China, Japan, Malaysia, New Zealand, Papua New Guinea, Solomon Islands and Thailand. However, the Secretariat describes a US International Trade Commission study indicating that in some countries that have undertaken specific commitments the actual legal services regime is more liberal than that bound in the schedules and that other countries that had not scheduled legal services maintain rather liberal legal services regimes.With respect to sectors in which a WTO Member has scheduled commitments, the GATS generally prohibits, under the requirement of ‘national treatment’, measures affecting the supply of services by which that Member accords to services and service suppliers of any other Member treatment less favorable than that it accords to its own like services and service suppliers.  However, most of the barriers to the provision of established legal services by foreign lawyers are not discriminatory measures based on nationality but rather are non-discriminatory in nature. In fact, there are two principal barriers to established practice that are the consequence of non-discriminatory regulations and procedures.  These may be described for convenience as the ‘qualification barrier’ and the ‘association barrier’. The ‘qualification barrier’ refers, of course, to the obstacle to the cross-border provision of legal services that results from the education and examination requirements generally imposed as a condition to admission to the practice of law, even by persons who have already qualified in another country. The qualification barrier has been substantially reduced in some countries that have taken unilateral measures to facilitate the admission of foreign lawyers as fully-qualified members of their domestic legal professions.

[14] Rahmat Mohamed, Cross Border Legal Practice in ASEAN under WTO, ASEAN Law Association, The 8^th General Assembly and Conference, 29 November – 2 December 2003.

[15] Rahmat Mohamad, Cross Border Legal Practice in ASEAN under WTO, ASEAN Law Association, The 8^th General Assembly and Conference, 29 November – 2 December 2003.

[16]The vast majority of countries generally do not permit a foreign lawyer to qualify as a member of the local legal profession without completing the same educational requirements as someone with no prior education or training. The length of the full-time educational requirement imposed in most countries renders it impractical for most practicing lawyers to interrupt their careers long enough to qualify in another country. This very seriously impairs the mobility of the legal profession, which is vital to its adaptation to the conditions of globalization.

[17] Foreign countries have made requests for market access for legal services. The request have been for a wide scope of legal services, not just consultation and advise, for foreign firms to be treated the same as domestic firms and the establishment of presence beyond Labuan. Requests made mostly from Australian and New Zealand law firms.

[18] Mah Weng Kwai, Current Status and Developments on Liberalization Initiatives for the Legal Services: Bar Council’s Prospective.

[19] Rahmat Mohamad, Globalization, Legal Practice and the Role of Law Schools in Malaysia, 2003

[20] Legal 500 Series Comments at www.Legal500.com.

[21] Kuthubul Zaman Bukhari, The Legal Profession – Direction & Challenges in an Era of Globalisation, INSAF (2004) XXX111 No 2.

[22] In Singapore, foreign law firms may enter the legal market in two ways: a) through Formal Law Alliances (FLA) and b) Joint Law Ventures (JLV). In a FLA, documentation on an international transaction may be prepared by the foreign lawyer but any legal opinion on local law is within the sole domain of a licensed Singapore lawyer. The JLV allows a wider scope of practice by permitting foreign lawyers to practice local law in respect of corporate, financial and banking work.

[23]Rahmat Mohamad, Should Foreign Lawyers Be Given Rights of Practice in Malaysia: Are We Ready for Full Entry or Joint Law Ventures?, 2003

[24]Dato' Dr Cyrus Das, Should Law Firms Restructure: Is the Trends Towards Incorporation or Limited Liability or Multi-Disciplinary Practices?, 11th Malaysian Law Conference 8-10 November 2001, Kuala Lumpur, Malaysia.

[25]Dato' Dr Cyrus Das, Should Law Firms Restructure: Is the Trends Towards Incorporation or Limited Liability or Multi-Disciplinary Practices?, 11th Malaysian Law Conference 8-10 November 2001, Kuala Lumpur, Malaysia.

[26] Ibid.