The agreement should pave the way for China to join the World Trade Organisation by the end of the year. When this occurs, a series of commitments made by China relating to the liberalisation of its trade in services and goods will come into effect for all existing WTO member countries.
This includes an agreement forged with the USA last November, which confirmed that the Chinese government was prepared to allow foreign accountants to operate independently in China, offering basic accounting, bookkeeping and auditing services, so long as they were licenced by the Chinese authorities.
Under this deal, however, firms wishing to provide tax advice andmanagement consultancy services, would still be forced to arrange a joint venture with a Chinese practice to offer services.
As a result, China came under pressure during its talks with European Union negotiators last week to abandon this anomaly and a concession was finally wrung from the Chinese by EU trade commissioner Pascal Lamy.
A particular boon for accountancy practices is that companies offering only management consultancy and tax advice will still have to seek joint ventures for five years after China joins the WTO.
Martin Manuzi, deputy head of the Brussels office for the Institute of Chartered Accountancy of England and Wales said: ‘This is very encouraging. China, for the accountancy sector, has been a fairly problematic area. We’ve been hoping for some time that the Chinese government would create a regulatory and operational framework that would be more amenable for the development of the profession.’
A spokesman for Arthur Anderson told Accountancy Age: ‘As we’ve been operating in China for a number of years, we welcome the regulatory changes and liberalisation of the professional market.
‘We wait with interest to see whether the Chinese will begin to recognise foreign qualifications such as those from the ICAEW and US certification organisations.’
Under the WTO Most Favoured Nation rule, any trade concessions made to a member country are automatically considered to have been made available to all WTO member countries, so the openings won by the EU would apply to all non-Chinese accountancy practices.
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