(DTIS) Update, Volume 1 – Main report - Enhanced Integrated ...

. Adequate regulations that ensure that professionals are equipped with market-relevant skillsneed to be put in place.c. Disproportionate restrictions that limit competition need to be eliminated:ooPrice regulations affecting legal services and public procurement contracts inengineering are supported and introduced by professional associations or thegovernment, who claim that they are useful tools to prevent adverse selection problems.Burundi needs to adopt less restrictive mechanisms, such as better access to informationon services and services providers to accomplish the same goals at lower economic cost.Advertising prohibitions are imposed by Burundi in accounting and legal services. Thecountry needs to allow advertising of professional services, which facilitates competitionby informing consumers about different products and which can be used as acompetitive tool for new firms entering the market. Policy action at the regional and multilateral levelsThe fragmentation of regional markets for professional services and professional education by restrictivepolicies and regulatory heterogeneity prevents Burundi from taking advantage of gains from trade basedon comparative advantage, as well as gains from enhanced competition and economies of scale. Tradebarriers would ideally be liberalized on a most favored nation (MFN) or non-preferential basis, since thiswould generate the largest welfare gains, and complemented with regional cooperation to reduceregulatory differences.(i) Steps need to be taken to relax the explicit trade barriers applied by Burundi to the movement ofnatural persons and commercial presence of professional services.Examples of possible reforms are:- Articulating the economic and social motivation for nationality and residency requirements;- Minimizing restrictions on the forms of establishment allowed;- Developing a transparent and consistent framework for accepting professionals with foreignqualifications.The reduction of explicit trade barriers also needs to be complemented with the reform of immigrationlaws and rules on the hiring of foreign workers.(ii) Trade liberalization needs to be coordinated with regulatory reform and cooperation at theregional level.Deeper regional integration, through regulatory cooperation with neighboring partners who havesimilar regulatory preferences, can usefully complement non-preferential trade liberalization.Regional integration would also enhance competition among services providers, enable those providersto exploit economies of scale in professional education, and produce a wider variety of services.Regional integration brings further benefits in that a larger regional market is able to attract greaterdomestic and foreign investment; and regionalization may help take advantage of scale economies inregulation, particularly where national agencies face technical skills or capacity constraints 107 .107 See World Bank (2010d) for a discussion on the role that international trade agreements, particularly theEconomic Partnership Agreements (EPAs) that are currently being negotiated with the European Union (EU), canplay in supporting coordinated trade and regulatory reforms in Africa. The study discusses the key issues that EPAswill have to address if they are to support the development of service sectors in Africa, while recognizing thatEPAs might not necessarily be the most effective way to pursue service sector reform for all African countries.129 / 153