trade in engineering services australia and the european union dec 2009

7/30/2019 Trade in Engineering Services Australia and the European Union Dec 2009

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Trade in Engineering Services

Australia and the European Union

Submission to theDepartment of Foreign Affairs and Trade

December 2009

Contact: Kathryn HurfordAssociate Director, Public Policy Engineers Australia

11 National Circuit Barton ACT 2600Tel: 02 6270 6570 Fax: 02 6273 4200

Email: [email protected]

www.engineersaustralia.org.au


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Trade in Engineering Services Australia and the European Union

ENGINEERS AUSTRALIA December 2009 Page i

Table of Contents

1. Introduction 1

2. Regulation of Engineering in Australia 1

3. Non Tariff Barriers ... 3

4. Licensing and Registration 5

5. Mutual Recognition Agreements .. 8

6. Closer Services Engagement with the EU .. 10

7. Conclusion 10


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ENGINEERS AUSTRALIA December 2009 Page ii

Appendix A Profile of Engineering Exporters. 12

Appendix B Engineering Mutual Recognition Agreements. 24

Appendix c Registration/Licensing in European Union Countries 26

Figure 1: Companies ranking of most significant non-tariff barriers whenworking overseas. 4

Figure 2: Increased costs of doing business attributable to non-tariff barriers.. 4

Figure 3: Methods used by companies to overcome licensing barriers 7

Figure 4: Countries where licensing barriers should be removed as a priority... 7

Figure A.1: Type of work undertaken... 14

Figure A.2: Overseas work as a proportion of revenue in a financial year 15

Figure A.3: Regions where clients of companies are based. 16

Figure A.4: Regions where companies have overseas offices. 16

Figure A.5: Motivation for leaving Australia... 17

Figure A.6: How often Australian engineers work overseas.. 18

Figure A.7: Period of time spent overseas each visit.. 18

Figure A.8: Regions where engineers have worked in country 19

Figure A.9: Percentage of design work sourced overseas 20

Figure A.10: Use of outsourcing: domestic and overseas projects.. 21

Figure A.11: Reasons for outsourcing... 22


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ENGINEERS AUSTRALIA December 2009 Page 1

1. Introduction

Engineers Australia is the peak body for engineering in Australia, representing all disciplines andbranches of engineering. Membership is now almost 90 000 engineers Australia wide makingEngineers Australia the largest and most diverse engineering association in Australia. AllEngineers Australia members are bound by a common commitment to promote engineering and tofacilitate its practice for the common good.

Globalisation has led to increased integration of the worlds economies and technicaldevelopments have driven the growth of traded goods and services. The ease with which peoplecan now travel and communicate across international borders has made international transactionscommonplace. In this environment, Australian engineers have the expertise and capabilitiesnecessary to succeed in exporting goods and providing professional services in the rapidly growinginternational market place.

The international engineering community, including Engineers Australia, has invested a largeamount of time and energy in developing and facilitating trade in engineering goods and servicesat a multilateral level, most significantly through the negotiation of mutual recognition agreementsfor licensing and registration. In this environment, Engineers Australia appreciates the opportunityto provide information to the Department of Foreign Affairs and Trade Europe Division.

In 2006, Engineers Australia surveyed members to discuss the nature of global engineering and tobuild a profile of Australian engineering exporters. Two surveys were undertaken, one forindividuals and one covering the activities of companies. Information was gained on the type, size,cost and length of projects being undertaken overseas, the international movements of members

including what countries they work in and for what time periods, what barriers to trade theyencounter and information on the internationalisation and outsourcing of engineering designservices. A profile of the international activities of the Australian engineering profession can befound as Appendix A.

This submission outlines the survey work undertaken by Engineers Australia to profile engineeringexporters. It also outlines Engineers Australia existing linkages with European engineeringorganisations and information on market access issues and the operation of the engineeringservices sector within the European Union.

2. Regulation of engineering in Australia

There is no one single regulatory regime in Australia governing the engineering profession and nonational legislative restrictions on the use of the title professional engineer. Engineers do notneed to be a member of a professional association in Australia in order to offer engineeringservices to the public. This is in contrast to the compulsory regulation systems found in manyoverseas countries.

In all States and Territories of Australia the principal regulatory instruments governing the practiceof engineering in Australia include:

self-regulation by Engineers Australia, the principal professional body for engineers in Australia

www.engineersaustralia.org.au;


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self and co-regulation by the National Professional Engineers Register operated by theNational Engineering Registration Board www.nerb.org.au; and

government regulation in the State of Queensland by the Board of Professional Engineers,under the Professional Engineers Act 2002http://www.bpeq.qld.gov.au.

Other than in Queensland, the engineering profession operates under a self regulatory system withtwo voluntary registration schemes membership of Engineers Australia as a CharteredProfessional Engineer (CPEng), or registration on the National Professional Engineers Register(NPER). Engineers can be registered on NPER without being members of Engineers Australia.

Engineers Australia has successfully made the case for the excellence of Australian engineersoverseas by promoting the accreditation and registration system used in Australia. The highstandard of Australian engineers have been developed and maintained through:

2.1 Accreditation of university programs

Since 1965, Engineers Australia has undertaken the accreditation of university programs. Everyengineering school in Australia is reviewed on a five-yearly cycle and accreditation of each degreeprogram is confirmed or withheld, as appropriate, and developmental advice is offered.

Engineers Australia looks upon accreditation as a community of interest between the professionand its educators, and is acutely conscious of the importance of maintaining high accreditationstandards. Australian engineering programs are accredited to internationally benchmarkedstandards.

2.2 Chartered Professional Engineer - CPEng

Membership of Engineers Australia is offered in various grades. Membership denotes experienceand recognition as an engineer and is a means by which purchasers of engineering services candetermine the experience level of the practitioner.

The Chartered title (CPEng) is exclusive to Engineers Australia and is based on competence. Thetitle is offered at the professional engineer, engineering technologist and engineering officer level.The title stands for the highest standards of professionalism, up-to-date expertise, quality andsafety, capacity to undertake independent practice and to exercise leadership within theengineering team.

An engineer who is a member of Engineers Australia at the Chartered level is committed tomaintaining the currency of their skills and knowledge and meeting established ethical standards.Purchasers of engineering expertise can be assured that Chartered engineers are competent to belicensed in foreign jurisdictions and practice internationally.

2.3 National Professional Engineers Register - NPER

Engineers Australia, in conjunction with the Association of Consulting Engineers Australia; theAssociation of Professional Engineers, Scientists and Managers Australia; Institute of Public WorksEngineering Australia; State and Territory governments and community groups, has establishedthe National Professional Engineers Register (NPER). The register is open to Engineers Australia

members and non-members alike.


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NPER identifies those persons whose academic qualifications, cumulative and current experienceand competencies, and commitment to ethical conduct and continuing professional development

are of the standard considered appropriate by the engineering profession for independentprofessional practice.

NPER is divided by areas of practice and registration in an area of practice on NPER is basedsolely on the demonstrated professional competence of the applicant. This provides an objective,fair and equitable system of assessment for applicants.

As with CPEng, engineers registered on NPER are committed to maintaining the currency of theirskills and knowledge and meeting established ethical standards and are competent to be licensedin foreign jurisdictions and practise internationally.

2.4 Continuing Professional Development - CPDPractitioners seeking renewal of registration on NPER or membership of Engineers Australia at theCPEng level must confirm their involvement in 150 hours of continuing professional developmentover the previous three years. Continuing professional development activities must relate to thepractitioners area of practice. Compliance with this requirement is subject to regular randomaudit.

2.5 Code of ethics

All members of Engineers Australia are bound by a code of ethics. The first tenet of the Code ofEthics obliges members to place the welfare, health and safety of the community before sectional or

private interests. Other tenets of the Code bind members to act with honour, integrity and dignity, andto be aware of the social and environmental consequences of their actions.

The most secure protection for the community lies in the fundamental requirement of the Code thatmembers must practise within the limits of their personal and professional competence, and in theassurance that they will be subject to effective disciplinary action if they fail to observe that constraint.Engineers Australias Code of Ethics and disciplinary procedures are another guarantee thatAustralian engineers are competent to be licensed in foreign jurisdictions and practiceinternationally.

3. Non Tariff Barriers

Major impediments to international trade in Australian engineering expertise arise from non-tariffbarriers. Non-tariff barriers regularly occur after a service supplier has entered the market. Thesemeasures take the form of government regulation and are usually aimed at domestic policyobjectives rather than trade policy objectives. As a result, there is usually little consideration of theeffect of domestic regulation on market access for foreign service suppliers.

The Engineers Australias survey results show that for both companies and individual engineers,obtaining visas and work permits, the non-recognition of Australian standards, and the inability tobecome licensed to practice in overseas countries, are the key problems when attempting toundertake work overseas as outlined in Figure 1.


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Figure 1: Companies ranking of most significant non-tariff barriers when working overseas.

0% 5% 10% 15% 20% 25% 30% 35% 40%

Inability to gain license

Restrictive foreign ownership

laws

Difficulties repatriating profits

Lack of protection of IP

Complex taxation requirements

Restrictions on setting up a local

office

Non recognition of Australian

standards

Restrictive work permit

regulations

Long and onerous visarequirements

Percentage of respondents

Figure 2: Increased costs of doing business attributable to non-tariff barriers

62%

57%

59%

71%

53%

67%

81%

15%

21%

24%

14%

33%

20%

6%

23%

22%

17%

15%

14%

13%

13%

Registration of firms where

Directors must be registered

engineers

Inability to gain registration

for company

Registration linked to

residency or citizenship

Education and experiencethat differs from Australian

standards

Inability to gain registration

for employees

Non recognition of

Australian qualifications

Mandatory requirements for

membership of professional

associations

Inceased costs less than 10% Less 25% More 25%-100%


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Thirty-five percent of companies indicated that long and onerous visa requirements were the mostsignificant barrier. Twenty-nine percent identified restrictive work permit regulations and 26

percent the non-recognition of Australian standards as additional key problems.

In the Engineers Australia survey, when engineering companies were asked how much do non-tariff barriers increase the costs of doing business,70 to 80 percent of companies believed thatnon-tariff barriers increased their costs by up to 25 percent.

The inability to gain registration for employees increased costs by more than 25 percent for 14percent of companies, while the registration of companies where Directors must be registeredengineers increased costs by more than 25 percent for 25 percent of companies as represented inFigure 2 above.

In light of the survey responses and ongoing information from members, Engineers Australia

believes that the Australian government must support initiatives to remove establishmentrestrictions working to limit the ability of foreign service providers to establish physical outlets in aneconomy and supply engineering services through those outlets.

Establishment restrictions regulating the entry of foreign service providers into a host country areimmediate breaks to trade in engineering expertise. These restrictions may include: unpredictableapplications of economic needs tests, restrictive quotas, restrictions on the nature of the servicesthat may be provided by foreign professionals and mandatory membership of professional bodiesthat is limited to citizens.

The issue of the mutual recognition of professional qualifications only arises when foreign servicesuppliers have actually gained access to the market of a given sector. The experience within the

European Union suggests that recognition of qualifications remains a significant barriers to themovement of professional service suppliers, but only when establishment restrictions have beenremoved or met.

4. Licensing and Registration

Obtaining registration or a license to practice engineering in an overseas country can be afrustrating experience. This non-tariff barrier frequently prevents engineers and engineeringcompanies from providing services in overseas countries and it is a barrier that is difficult toovercome as the way domestic regulation and licensing regimes are administered varies from

country to country.

In most countries, engineering is an accredited profession and as a result, engineers are requiredby law to be licensed before they provide professional services or use the title professionalengineer. Many other accredited professions such as accountancy and legal services are alsosubject to licensing requirements.

These licensing requirements can often operate as significant barriers to trade in professionalservices. This is because in addition to having professional qualifications, licensing requirementscontain other conditions such as completing practical training, passing examinations and meetinglanguage, good character and reputation, citizenship or residency conditions.


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While several European Union countries, including the United Kingdom, Denmark, Switzerland andFinland as well as Australia, have no, or very limited legal restrictions on the provision of

engineering services, Greece, Portugal and France operate more restrictive licensing procedures.Research undertaken by Engineers Australia into the registration/licensing system used in anumber of European Union countries are attached as Appendix C.

The removal of these hurdles will rely on increasing the international recognition of qualificationsand professional experience and the negotiation of mutual recognition agreements. Thesedevelopments are an important means for professional service providers to gain internationalmarket access.

Divergence in the regulatory environment for engineering across countries may restrict marketaccess and impinge on the ability of engineers and engineering companies to offer services inforeign countries. As a result, governments are increasingly recognising that advances in market

access will result in little additional trade if the harmonisation of regulatory practices and therecognition of overseas engineering qualifications and practice experience are not undertaken atthe same time. Despite this connection there has been limited international movement towards theharmonisation of regulatory practices and the streamlined recognition of overseas engineeringqualifications and licenses.

The extent to which recognition of qualifications is a problem is likely to vary by sector and bycountry. Given the different regulatory environments operating for engineering professionalsinternationally, the most important issue for Australian engineering service providers becomes theclarity of local regulations and licensing requirements operated by foreign governments.

Instability and inconsistent application of regulation increases difficulties for companies operating

in markets with which they are relatively unfamiliar. There is much that needs to be done tofacilitate trade in engineering services, particularly when methods companies are using to deal withthese barriers are considered.

Barriers limiting the ability of the company and its employees to be registered in overseascountries seem to be particularly problematic. Fifty percent of companies employ locally registeredengineers or choose a company structure - for example, a Joint Venture - in order to overcomeregistration or licensing problems.

What should be particularly concerning is that 27 percent of companies deliberately avoidundertaking work in areas where they would need to try and obtain in country registration for theirstaff and/or directors, as outlined in Figure 3 below.

In some cases, Australian engineering companies are deciding not to pursue overseasopportunities because of the difficulties of gaining registration in overseas countries. In particularone company responded with the comment, For a small company like mine doing businessoverseas has often appeared too hard, hence the priority has been to focus on local business.

When asked to list priority countries for the removal of non-tariff barriers related tolicensing/registration, the European Union was ranked highly. This may be a reflection of marketsize, however, it is difficult for Australian engineers to gain registration in many European Unioncountries and the process for registration is often complex and lacks transparency. The highranking of the European Union may therefore be a reflection of the difficulties faced by companies

in attempting to access these markets.


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Figure 3: Methods used by companies to overcome licensing barriers

0% 10% 20% 30% 40% 50% 60%

Negotiated agreement with

local officials

Other

Persistence with license

process

Only working in areas where

a license is not required

Company structure (eg Joint

Venture)

Employment of locallicensed engineers to sign

off documents


Figure 4: Countries where licensing barriers should be removed as a priority

0

50

100

150

200

250

UnitedStates

U

nited

King

dom

E

uropeanUnion

China

Canada

Singapore

UAE

Hong

Kong

Malaysia

Japan

India

Indonesia

Thailand

SouthAfrica

Russia

Taiwan

Philip

pines

Mexico

No.ofrespondents


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For engineers answering the survey on the international activities of individuals almost everyeconomy in the world was identified by at least one respondent as a priority for streamlining

licensing processes. While the US and China ranked highly, so too did the European Union,Canada and Singapore as outlined in Figure 4 above.

The survey of individuals also queried whether individual engineers had managed to gain a licensein a foreign jurisdiction. Out of 1006 respondents to the survey, only 197 engineers had managedto gain registration in a foreign country.

Common to all discussions about undertaking engineering work in a foreign jurisdiction is the needto obtain registration or a license to practice engineering in an overseas country. All stories arecoloured with frustration. This barrier coupled with restrictions on the temporary migration oflabour dramatically impedes trade in engineering internationally.

5. Mutual Recognition Agreements

A number of mutual recognition agreements (MRAs), or attempts at moving toward internationalstandards for a given profession, have been initiated and undertaken by industry itself, with little orno involvement by governments.

For engineering, accredited Australian qualifications and overseas engineering qualifications arerecognised through formal MRAs with engineering accreditation bodies in other countries. Theseagreements are outlined in Appendix B and include Washington and Sydney Accords and theInternational Register of Professional Engineers.

The key problem faced by profession-led MRAs is that these agreements operate by good will andare at best a private contract, even if the bodies can be considered part of the governmentalstructure and competent to enter into international agreements.

MRAs, particularly those negotiated between professional associations with no specificallydelegated powers, operate as voluntary agreements that can be reversed without engendering

legal responsibility.1

Engineers Australia does not act with the delegated authority of the Australian government andwhile professional associations like Engineers Australia need to be involved in MRA negotiations,especially in view of their considerable expertise, the arrangements reached need to be embedded

in another, broader legal context, and supported by national governments.

Securing a MRA remains an exceedingly complicated and time-consuming task due to the difficultnature of trying to compare registration and licensing frameworks that have been established tomeet differences in cultural, social and economic circumstances.

Engineers Australia has managed to enter into bilateral agreements with several engineeringassociations in other countries. Engineers Australia has established Mutual RecognitionAgreements (MRAs) with Institutions around the world through which a member of such a body, onapplication, will be accorded an equivalent level of membership in Engineers Australia and viceversa.


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Engineers Australia has current membership MRAs with the following organisations in theEuropean Union:

Chartered Institution of Building Services Engineers (CIBSE), United Kingdom

Institute of Marine Engineers, Science and Technology (IMarEST), United Kingdom

Institution of Chemical Engineers (IChemE), United Kingdom

Institution of Civil Engineers (ICE), United Kingdom

Institution of Engineering and Technology (IET), United Kingdom

Institution of Structural Engineers (IStructE), United Kingdom

Institution of Mechanical Engineers (IMechE), United Kingdom

Royal Aeronautical Society (RAeS), United Kingdom

Institution of Engineers (Engineers Ireland), Ireland

These agreements allow Australian engineers who hold Chartered membership of EngineersAustralia (CPEng), or who are on the National Professional Engineer Register (NPER) to obtainmembership of the engineering associations listed.

Foreign engineers who are members of these engineering associations are able to gain CPEngmembership of Engineers Australia and be registered on NPER. A flow of effect is that because

NPER/Engineers Australia is an approved assessment authority for the Board of EngineersQueensland it also streamlines a foreign engineers application to be registered to practice inQueensland. The engineering profession is not regulated in either the United Kingdom or Ireland.As such these MRA agreements only afford Australian engineers membership of the engineeringorganisations listed.

Engineers Australia does interact with other European engineering organisations though theInternational Engineering Meetings, the Washington and Sydney Accords, the Engineers MobilityForum and the World Federation of Engineering Organisations (further information can be found atwww.washingtonaccord.org ).

The European Federation of National Engineering Associations (FEANI) is also working with the

support of the European Commission/Parliament towardsfacilitating the mutual recognition ofengineering qualifications within Europe. An engineer who is registered/licensed in one Europeancountry which is a member of FEANI can apply to be recognised as a EUR ING. The aim is forall FEANI members to recognise EUR ING and allow engineers holding this title to practice in anyFEANI member country. This work is still ongoing and the ability of EUR ING engineers to moveeasily around Europe and have their qualifications and experience recognised is not clear.

Another potential problem for Australian engineers in having their university qualificationsrecognised in the European Union is that the Bologna Accord has moved engineeringqualifications to a five year degree structure, while in Australia (and for all member countries in theWashington Accord) engineering is a four year degree. Often licensing/registration systems callfor a certain number of years university study before an engineer can be considered for a license.

The four year/five year disconnect may prove to be an ongoing barrier to Australian engineerswhen attempting to obtain a license in some European countries.


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6. Support for closer services engagement with the EU

One of the key problems for Australian engineers and engineering firms is the unknown of aforeign market. Particularly the non-tariff and licensing issues discussed previously. There isscope for the government to more proactively supply market information to help counteract thisproblem.

One avenue could be for the Australian government to proactively use the GATS process as amarket analysis tool. A key benefit of the GATS process is that it requires each member country toidentify impediments to services trade and the operation of licensing regimes via the GATSschedules of specific commitments. In these schedules, economies list many of their remainingbreaches of market access and national treatment, greatly facilitating identification of impedimentsrelevant to professional services.

However, not all of these schedules of commitments are publicly available. They are alsodocuments that require the reader to have a technical understanding of the GATS process in orderto understand the commitments made. There is also some evidence that not all market restrictionsare included in these schedules, for example local government level restrictions. The Australiangovernment needs to be pro-active in supporting professional service providers by providinginformation tailored to specific industries and countries on the types of non-tariff barriers andregulatory hurdles operating in overseas markets, and how they can be overcome.

DFAT has made a number of comprehensive requests to overseas countries to liberalise servicesectors under the GATS. To do so, the Department has had to undertake a wide ranging and in-depth research project to gain an understanding of the impediments operating to restrict trade in

services in overseas countries. This information gathering was essential for the Australiangovernment to successfully participate in the GATS process. However, there seems little reasonwhy this information could not also be made publicly available to Australian services exporters.Publication of measures affecting services trade for specific markets and professions reduces thecosts to Australian service providers of learning about domestic laws and regulations in foreignmarkets and decreases the costs of uncertainty.

Technical assistance needs to be provided to professionals to help them meet the standardsrequired by other countries regulatory environments. DFAT could look to partner with Austrade tobetter use the information gathered on overseas countries within the WTO/GATS process tosupport Australian exporters.

Certainly the EU Directive on Services in the Internal Market including single points of contactreflects the importance of these issues and any initiatives to improve transparency of the Europeanmarket for engineering services would be welcomed by the profession and Engineers Australia.

7. Conclusion

As the excellence of Australian engineering companies has become more widely known across theglobe, the amount of work being undertaken by Australian engineers overseas has increased.There is great value, both for individuals, companies and national economies from an internationalskills exchange via the migration skilled workers. Technology transfer, exposure to overseasmarkets, technologies and ways of doing things create better engineers and greater wealth forcompanies which flows into the economies they conduct business with and in.


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However, limits on the ability of engineers to work internationally, combined with licensingrestrictions, interact to make some markets unattractive to Australian engineers and engineering

companies.

Overall, domestic regulation particularly related to licensing and work permits play a key role increating barriers to international trade in engineering services. As the Engineers Australia surveyresults have supported, overcoming barriers to trade in engineering services must be focused onenhancing the ability of Australian engineering service providers to be licensed in foreignjurisdictions and to legally to work. This should be the focus of any attempts to increase linkageswith the European Union and support enhanced trade relationships.


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Appendix A - Profile of Engineering Exporters

In most official statistics, engineering services are absorbed in the broader categories of businessservices, other services or construction activity. However, the engineering sector is a diverse andlarge profession that includes a range of practitioners, such as professional engineers, engineeringtechnologists, engineering associates, and tradespeople.

Engineering is about applying science and technology to develop and implement newtechnologies, placing engineers in a central role in improving the security and living standards ofthe community, improving the standards of environmental care and generating wealth for Australia.

The traditional focus of engineering activities has been in infrastructure the fundamental facilitiesand systems that allow a modern society to function effectively. These include transportation,communication systems, energy and water supply, and waste removal. However, engineeringimpacts on many aspects of community life. For instance, the following lists only some of the areasin which professional engineers commonly practice:

AcousticsAeronauticsAgricultureArbitrationAutomation and controlBiomedicalBridges and viaducts

Building servicesBuilding surveyingCivilChemicalCoastal and oceansCommunicationsComputingConstruction managementDamsElectric power

ElectronicsEngineering educationEngineering surveyEnvironmentFire safetyFood technologyFoundations and footings

Fuels and energyGeotechnicsIndustrialLocal governmentMaintenanceManufacturingMaterialsMetallurgyMilitaryMining and tunnelling

Naval architectureNuclearPetroleum and gasPipelinesProcess controlPublic healthQuality management

RailwaysRiskRoads and highwaysSoftwareSpaceStructuralTelecommunicationsTransportationWater resources

The most commonly traded engineering services are consultancy services typically consisting of

design services, planning and design development, procurement services, field services duringconstruction and project management. These services usually fall within three broad categories.For example:

General services:Feasibility studies, cost estimations, preparation of drawings, specificationsand contract documents and the supervision of construction;

Specialised services:Design and development of process equipment, environmental advisoryand design services, materials testing, software or systems development and projectmanagement; and

Comprehensive services:Turnkey services such as build-own-operate-transfer contracts.


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With advanced communication systems many of these services can and are being supplied crossborder. For example consulting can be performed on-line, with designs, specification, blueprints

and know-how being transmitted electronically.

Despite the increased ease with which engineering services can be provided electronically, itseems that while the cross border supply of engineering services is increasing, the bulk of servicesare continuing to take place through commercial presence or the movement of engineersoverseas.

The Australian engineering industry is becoming increasingly competitive at the international leveland the ability of Australian companies to provide engineering services to overseas countries hasincreased throughout the last decade.

In 2006, Engineers Australia surveyed members to discuss the nature of global engineering and to

build a profile of Australian engineering exporters. Two surveys were undertaken, one forindividuals and one covering the activities of companies.

Information was gained on the type, size, cost and length of projects being undertaken overseas,the international movements of members including what countries they work in and for what timeperiods, what barriers to trade they encounter and information on the internationalisation andoutsourcing of engineering design services.

The aim has been to try and capture some of the non-tariff barriers operating to restrict trade inengineering services, particularly domestic regulations and licensing procedures that may imposerestrictions on trade in engineering services in various countries. Analysis of the survey resultshas been used to build the following profile of engineering exporters.

Company type

Australian engineering companies with Australian offices only (34 percent of survey respondents)and Australian engineering companies with offices in both Australia and in overseas countries (35percent) are involved in offering their services overseas at similar levels. Nineteen percent ofrespondents were also foreign companies with offices in Australia highlighting that Australia is bothan importer and exporter of engineering expertise. Companies falling into the other categorymade up 12 percent of respondents.

Number of employees

Regardless of company size, all survey respondents had staff located both in Australia andinternationally including small companies of up to four employees to larger companies with over1000 employees. Thirty six percent of companies who responded to the survey had 1000 or moreemployees in overseas offices. Twenty seven percent of companies also had 1000 or moreemployees located in Australia. On the whole, companies with the largest number of employeeswere much more likely to be involved in international activities.

Type of workCompanies with international operations are rarely involved in just one area of engineering work.However the survey results clearly show that many companies (over 60 percent) spend asignificant proportion of their time undertaking project management and design and documentationwork as outlined in Figure A.1.


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Figure A.1: Type of work undertaken

0% 10% 20% 30% 40% 50% 60% 70% 80%

Physical maintenance

Sales

Other

Software development

Maintenance planning

Teaching and training

Contract administration

Research and development

On-site supervision

Design and documentation -

documentation work

Design and documentation -

concept work

Project management

Proportion of respondents

Around 17 percent of companies are involved in teaching and training, which is a technologytransfer from Australia to the host economy. It can also be assumed that a significant amount ofinformal technology transfer is taking place on top of this 17 percent, in both directions.

Companies who selected the other category indicated they were also involved in:

Site work regarding conveyor belt condition;

Systems development for civil aviation communications testing;

Risk management;

Estimating, tendering and contract valuations; and

Assessment and assistance to laboratories and certifying bodies

Percentage and value of projects undertaken in Australia and overseasThe percentage of work done by companies for projects both overseas and in Australia identifiessome interesting trends. Over 30 percent of respondents indicated that five to 20 percent of their

companies projects were based overseas. At a similar rate, almost 30 percent of companies alsoidentified that 80 to 100 percent of their work was for Australian projects.


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While this may seem confusing, it actually identifies that companies tend to have two distinctapproaches to working overseas. One type of company undertakes 80 to 100 percent of its work

in Australia and the rest of its work overseas (5-20 percent), while the majority of other companiesundertake 80 to 100 percent of their work overseas and the rest of their work in Australia (5 to 20percent). The value of the international work to companies also reflects this breakdown as shownin Figure A.2.

Figure A.2: Overseas work as a proportion of revenue in a financial year

0%

5%

10%

15%

20%

25%

30%

0-19% 20-39% 40-59% 60-79% 80-100%

Percentageofrespondents

Regions where clients outside Australia are basedThe survey results also confirmed that Australian engineering companies are undertaking work

across the globe. While over 40 percent of companies who responded to the survey undertakework in North America and South East Asia, engineering services work is also being undertaken atsignificant levels in all regions. A high level of engineering work is being undertaken not only inAsia Pacific Economic Cooperation (APEC) countries but also in Western Europe, the Middle Eastand Central America.

Forty eight percent of companies that responded to the survey had clients predominately based inNorth America. Forty five percent had clients in South Eastern Asia while 40 percent had theirmajor clients based in Western Europe or East Asia. Eastern Europe and the Caribbean were alsorepresented with 14 and 12 percent of engineering companies having clients based in theseregions as represented in Figure A.3.


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Figure A.3: Regions where clients of companies are based

0% 10% 20% 30% 40% 50% 60%

Caribbean

Eastern Europe

South Central Asia

Africa

South and Central America

Middle East

Oceania

Western Europe

East Asia

South Eastern Asia

North America

Percentage of re spondents

As Figure A.4 outlines, over 50 percent of companies who responded to the survey had set upoffices in North America, South East Asia and Western Europe to service the needs of these

international clients2.

Figure A.4: Regions where companies have overseas offices

0% 10% 20% 30% 40% 50% 60% 70%

Eastern Europe

Caribbean

Africa

South Central Asia

Middle East

Oceania


East Asia

North America

South Eastern Asia

Western Europe

Percentage of re spondents


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International movement of Australian engineers

A number of questions about temporary migration were asked to both companies and individualengineers in the Engineers Australia survey. Individual engineers were motivated by employmentand language opportunities, travel and family links to leave Australia as outlined in Figure A.5.

Figure A.5: Motivation for leaving Australia

0% 5% 10% 15% 20% 25%

Offer of employment from an

overseas company

Other

Travel

Transfer by current employer

to an overseas office

Family links with overseas

country

Language opportunties

Reasons listed in the other category include better remuneration, lower taxes, to accompanyhusband/wife and broader employment opportunities and work experience.

Fifty four percent of individuals who answered the survey worked overseas at least once every 12months, with almost 70 percent of respondents working overseas at least once in a two yearperiod.

Just over 52 percent of individuals normally stayed overseas for less than one year, with over 25percent staying longer than three years. This movement is outlined in Figures A.6 and A.7.


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Figure A.6: How often Australian engineers work overseas

0%

5%

10%

15%

20%

25%

30%

0-3 months 3-6 months 6-12 months 1-2 years 2-3 years 3-5 years 5+ years

Percent

ageofrespondents

Figure A.7: Period of time spent overseas each visit

0%

5%

10%

15%

20%

25%

30%

Under 1

month

1-3 months 3-6 months 6-12 months 1-2 years 2-3 years 3-5 years 5+ years

Percentageofrespondents


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According to the Engineers Australia survey, Australian engineers are working in countries aroundthe globe both for Australian companies with overseas offices and as employees of overseas

companies. Understandably, given Australias geographic location, 91 percent of respondentshave worked in the Asian region, as outlined by Figure A.8.

Figure A.8: Regions where engineers have worked in country

0% 5% 10% 15% 20% 25% 30% 35% 40% 45%

Caribbean


Eastern Europe

Africa

South and Central Asia

Middle East

Oceania

North America

East Asia

Western Europe

South Eastern Asia


Australian engineers also place great value on the experience they have gained from workinginternationally. When asked, Do you believe your career has benefited from your time overseas94 percent answered, Yes. Over 400 individual engineers also listed a variety of skills andexperience that they have gained overseas that they believe they could not have obtained in

Australia including:

Exposure to a broader scope of engineering projects;

Access to innovative expertise;

Opportunity for higher salary and/or lower taxes;

Higher level of responsibility on larger projects at a younger age;

Opportunity for working on challenging projects;

Experience of living in different cultures with different languages;

Opportunity to travel extensively in other parts of the world;

Exposure to alternative engineering processes, standards and techniques;


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Increased number of engineering & business contacts at all levels;

Exposure to a broader range of engineering projects and also more opportunity to work through

various phases of those projects, i.e. maintaining input through investigation, design andconstruction;

Different range of projects, greater budgets and different clients; and

Exposure to different business practices, exposure to a wider range of job responsibilities.

Further supporting the global nature of trade in engineering and the importance of the skillsexchange related to the temporary migration of labour, 54 percent of survey respondents regularlyhad engineers from other countries working with them in Australia.

Use of outsourcingForty-four percent of companies that responded to the survey, indicated that they had design workcarried out overseas for a mix of Australian domestic, and international projects. Of this 44 percent,three quarters sourced up to 40 percent of their design work from overseas. More than one-fifth ofrespondents indicated that they sourced between 60 and 100 percent of their design work fromoverseas. A company, outsourcing all of its design services overseas, would be a significantparticipant in international trade in engineering services, including technology transfer andinvestment flows. These results are outlined in Figure A.9.

Figure A.9: Percentage of design work sourced overseas

0%

10%

20%

30%

40%

50%

60%

5-20% 20-40% 40-60% 60-80% 80-100%

Percentage

ofrespondents


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The main overseas providers of engineering design services, to companies that responded to oursurvey, are based in Western Europe, Asia and North America. Forty percent of companies used

providers based in Western Europe; 30 percent of companies used providers in East Asia or NorthAmerica; while 20 to 25 percent of companies used providers in South, Central or South East Asia.

Combined, 75 percent of respondent companies used providers from the Asian region. Particularcountries, outlined by survey respondents as providers of engineering design services to theircompanies, include: China, the US, Argentina, India, the United Arab Emirates, Germany, thePhilippines, Singapore, Malaysia, Korea and New Zealand.

One company also indicated that its policy was to use design services in the country where thework is being undertaken, which might help explain the distribution of the use of overseas designservices in Figure A.10.

Figure A.10: Use of outsourcing: domestic and overseas projects

0% 10% 20% 30% 40% 50% 60% 70%

5-20%

20-40%

40-60%

60-80%

80-100%


Domestic projects Overseas projects

For domestic projects, almost two-thirds of respondent companies used overseas design servicesfor up to 20 percent of the projects they undertake. For overseas projects, a quarter of thecompanies used an overseas provider to produce 80 to 100 percent of the design work.


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There seems to be a correlation with projects overseas using higher rates of overseas designteams. However, regardless of whether the project is in Australia or not, overseas design teams

are used to a significant extent.

Companies identified that the two key drivers of this shift to use overseas design services were toovercome skill shortages in Australia and to lower costs. Time constraints were cited by 14percent of respondents as another key consideration as outlined in Figure A.11.

Figure A.11: Reasons for outsourcing

0% 10% 20% 30% 40% 50% 60%

Time constraints

Other

Lower costs

Skill shortages in Australia


Respondents in the other category cited an additional set of reasons including:

To avoid competition over intellectual property;

To access expert centres of excellence and harness the expertise of employees in our ownoverseas offices; and

Proximity to manufacturing facilities.

Just over 40 percent of companies used 24-hour design teams around the globe to meet projectdeadlines. A similar percentage, though not necessarily the same companies, had themanagement of the design team based in the country where the project was being delivered.Three-quarters of the companies surveyed used 24-hour design teams for up to 20 percent of the

time.


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Growth of international workAs the excellence of Australian engineering companies has become more widely known across the

globe, the amount of work being undertaken by Australian engineering companies overseas hasincreased. Sixty four percent of companies, who responded to the survey, said that the proportionof their overseas work is increasing. As this occurs, more Australians are working overseas in theoffices of Australian companies, and Australian companies are increasingly accessing overseasdesign services for both domestic and international projects.

Driving the growth of Australian engineering companies has been the high quality of the projectscompleted by Australian engineers and engineering companies domestically and internationally.


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Appendix B - Engineering Mutual Recognition Agreements

A number of recognition agreements, or attempts at moving toward international standards for agiven profession, have been initiated and undertaken by industry itself, with little or no involvementby governments. For engineering, accredited Australian qualifications and overseas engineeringqualifications are recognised through formal mutual recognition agreements with engineeringaccreditation bodies in other countries. Detailed information on each agreement outlined below canbe accessed at www.washingtonaccord.org

Washington AccordThe Washington Accord was signed in 1989. It is an agreement between the bodies responsiblefor accrediting professional engineering degree programs in each of the signatory countries. Itrecognises the substantial equivalence of programs accredited by those bodies, and recommendsthat graduates of accredited programs in any of the signatory countries be recognised by the other

countries as having met the academic requirements for entry to the practice of engineering.

The Washington Accord covers professional engineering undergraduate degrees. Engineeringtechnology and postgraduate-level programs are not covered by the Accord. The signatorycountries of the Washington Accord are:

Australia - Engineers Australia (1989)

Canada - Engineers Canada (1989)

Chinese Taipei - Institute of Engineering Education Taiwan (2007)

Hong Kong China - The Hong Kong Institution of Engineers (1995)

Ireland - Engineers Ireland (1989) Japan - Japan Accreditation Board for Engineering Education (2005)

Korea - Accreditation Board for Engineering Education of Korea (2007)

New Zealand - Institution of Professional Engineers NZ (1989)

Singapore - Institution of Engineers Singapore (2006)

South Africa - Engineering Council of South Africa (1999)

United Kingdom - Engineering Council UK (1989)

United States - Accreditation Board for Engineering and Technology (1989)

Provisional members of the Accord include:

Germany - Accreditation Agency for Study Programs in Engineering and Informatics

India - National Board of Accreditation of All India Council for Technical Education

Malaysia - Board of Engineers Malaysia

Russia - Russian Association for Engineering Education

Sri Lanka - Institution of Engineers Sri Lanka

Organisations holding provisional status have been identified as having qualification accreditationor recognition procedures that are potentially suitable for the purposes of the Accord; thoseorganisations are further developing those procedures with the goal of achieving signatory statusin due course; qualifications accredited or recognised by organisations holding provisional statusare not recognised by the signatories.


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Engineers Australia uses the Washington Accord to assess overseas engineering qualifications forthe purposes of skilled migration to Australia, for meeting the educational requirements of the

National Professional Engineers Register (NPER) and membership of Engineers Australia.

Sydney AccordThe Sydney Accord signed in 2001 is an agreement between the engineering accreditation bodiesto recognise as substantially equivalent the Engineering Technologist/Incorporated Engineercourse of study that are accredited and delivered in those countries. The Sydney Accord appliesonly to accreditations conducted by the signatories within their respective national or territorialboundaries.

It is an agreement between the bodies responsible for accrediting technology level engineeringprograms in each of the signatory countries. It recognises the substantial equivalence of programsaccredited by those bodies, and recommends that graduates of accredited programs in any of thesignatory countries be recognised by the other countries as having met the academic requirementsfor entry to the practice of engineering as an Engineering Technologist.

The following accreditation bodies are signatories to the Sydney Accord: Engineers Australia,Canadian Council of Technicians & Technologists, The Hong Kong Institute of Engineers;Institution of Engineers of Ireland; Institution of Professions Engineers, New Zealand; TheEngineering Council of South Africa; The Engineering Board of the UK. The Accreditation Boardfor Engineering and Technology in the United States holds provisional membership.

Engineers Australia uses the Sydney Accord to assess overseas engineering qualifications for thepurposes of skilled migration to Australia, for meeting the educational requirements of the NationalEngineers Technologist Register (NETR) and membership of Engineers Australia.

International Register of Professional EngineersThe Register is governed by the Engineers' Mobility Forum, a grouping of international professionalassociations who enter into various types of mutual recognition agreements for membership.

The following professional associations participate: Engineers Australia (1997), Engineers Canada(1997), Hong Kong Institution of Engineers (1997), Engineers Ireland (1997), Institution ofProfessional Engineers Japan (1999), Korean Professional Engineers Association (2000),Institution of Engineers Malaysia (1999), Institution of Professional Engineers NZ (1997), Institutionof Engineers Singapore (2007), Engineering Council of South Africa (1997), Institution ofEngineers Sri Lanka (2007), Engineering Council UK (1997), United States Council forInternational Engineering Practice (1997). Provisional signatories include the BangladeshProfessional Engineers, Registration Board and the Institution of Engineers India

Through this Agreement, the signatories aim to facilitate cross border practice by experiencedengineers. The signatories have agreed to use their best endeavours to ensure that the bodiesresponsible for licensing engineers to practice in their own economies simplify as much as possiblethe requirements for those on the International Register. Engineers Australia recognises thecompetence of engineers on the International Register to practice engineering in Australia.


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Appendix C Registration/Licensing in European Union Countries

FranceFrance has two umbrella bodies, the Commission des Titres dIngenieur (CTI) and the ConseilNational des Ingenierus et Scientifiques de France (CNISF).

There is a French register of engineers (the Repertoire) initiated by the CNISF. It is nowadministered by a Comite dhabilitation with members from CNISF, employers bodies andacademic organisations.

There are currently three routes to registration on the Repertoire:

Ingeneiur Diplome: Graduate of a CTI Diploma course: registered automatically;

Ingenieur Reconnu Scientifique: holds another engineering qualification e.g. Maitrise plusfive years experience; and

Ingenieur Reconnu: holds a BTS or DTU (2 years) qualification, or even no highereducation but has 10 - 15 years experience and holds an engineering position of high statuswithin his company

The Repertoire has no legislative backing. The only legally protected title in France is the IngenieurDiplome.

GermanyGermanys 16 Lnder passed engineering laws in 1970 that regulate who are allowed to use thetitle Ingenieur. This title may be used by science and engineering graduates from Germanuniversities, universities of applied science (Fachhochschulen), or an equivalent privateengineering college. The title may also be used by those who acquired the title of Ing. Grad, whichwas common before the 1970 laws. The unlawful use of the expression Ingenieur is an offence.

Apart from certain specialist activities mostly in construction there is no requirement forpostgraduate experience and no register of qualified engineers.

Italy

There are two major organisations concerned with engineering regulation. At the national level theConsiglio Nazionale deli Ingegneri (CNI) and at the provincial level the Ordine Provinciale degliIngegneri (OPI). The CNI is a body set up by public law for the purpose of overseeing theorganisation of the engineering sector at national level. It operates under the jurisdiction of theMinistry of Justice.

Each Ordine has its seat in the provincial capital. The OPI is the juridical body responsible foraccepting applications for enrolment in the ALBO - register of engineers - and for the maintenanceof the ALBO itself. All OPI have the same structure and are self-financed through the annualcontributions of their members who elect the Consiglio de lOrdine (Board) every two years.

By law, any academic title can only be awarded by a university or an Institutis Superiore and abuse

of title is a punishable offence. In theory, professional engineers must be members of their Ordinedegli Ingegnere which requires them to pass a State Professional Examination.


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AustriaAustrias education and qualification system is binary, based on Universities and

Fachhochschulen. For a Diplom Ingenieur (Dipl-Ing), the duration of the course is about 5 years:for a Dipl-Ing (FH)) duration is about 3 years. There is no register: engineers can practice as soonas they graduate but the title Dipl-Ing is protected by law.

BelgiumIn Belgium, a distinction is made between two kinds of engineering degrees:

The Burgerlijk Inginieur (Ir):An academic engineering degree which is offered by theuniversity engineering faculties (lr); and

Industrieel Inginieur (Ing):An engineering degree offered by institutes for higher education.

There is no register in Belgium. Engineers are free to practice as soon as they graduate, howeverthe titles lr. and Ing. are protected by law.

DenmarkThere are three types of degrees in Denmark:

Diplomingenior (Diploma engineer):3 1/2 years minimum;

Civilingenior (Graduate engineer):5 years minimum; and

Eksportingenior (Export engineer):4 1/2 years minimum.

There is no register of engineers in Denmark, nor is the use of the term ingenior protected by law.With one or two exceptions, engineers may practice as soon as they graduate. However, the useof the titles Diplomingenior, Civilingenior and Eksportingenior is restricted to graduates of therelevant engineering schools.

FinlandThere is no register of engineers, nor is there any protection of title. Professional engineers maystart to practice as soon as they graduate.

GreeceThe Technical Chamber of Greece (TEE), functions under public law and keeps the Register of all

qualified engineers. Registration is a prerequisite for practice in the engineering profession inGreece. The basic engineering title in Greece is the Diplomatouchos Michanicos (the five-yearcourse) and it is protected by law.

IrelandThere is no register of engineers in Ireland and the only title protected by law is that of CharteredEngineer. Legal action may be taken by the IEI against any individual who fraudulently representshimself as a C. Eng.

The NetherlandsThere is no register of engineers. Those with the qualification Ir or Ing may practice as soon asthey graduate. There is no protection of title.


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United KingdomIn the United Kingdom the Engineering Council is formally recognised by Government, through a

memorandum of understanding, as the voice of the engineering profession.

There is no direct engineer registration with the Council. To be eligible for registration, an individualmust first obtain membership with a Council nominated engineering institution who in turn willnominate the person for registration with the Council. Registration with the Council requirescompletion of an approved engineering course, a requisite period of practical experience and aminimum age requirement.

The Council licenses its member institutions to assess and accredit academic courses atuniversities and colleges such that their graduates will be eligible for membership of the respectiveinstitution and ultimately the Council itself.

PortugalThe Ordem dos Engenheiros is by law the recognised qualifying body for the profession. It has thepower to set national standards for the registration of individual engineers by examination or byaccreditation of courses. It is the competent authority for the application of the appropriate laws touniversity level engineers and it confers the title of Engenheiro. Registration is obligatory to berecognised as a professional. The title is protected by law.


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1

Beviglia Zampetti, Americo, Market Access through Mutual Recognition: the promise and Limits of GATSarticle VII in Sauve and Stern (eds), GATS 2000: New Directions in Services Trade Liberalisation, HarvardUniversity: Brookings Institution Press, Washington DC, 2000.2

Each company has more than one overseas office. As a result the figures do not add to 100%

trade in engineering services australia and the european union dec 2009

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