EUROPEAN PARLIAMENT International Trade Committee Hearing « Trade in Services in Mode 4 and Circulation of the Workers » Brussels, Room 2Q2 Building JAN

EUROPEAN PARLIAMENTInternational Trade Committee Hearing

« Trade in Services in Mode 4 and Circulation of the Workers »

Brussels, Room 2Q2 Building JAN19 January 2009

Perspectives of the European Services Industry

Pascal Kerneis, Managing DirectorESF (European Services Forum)

« The voice of the European Service Industries for International Trade Negotiations »

« The voice of the European Service Sectors for International trade Negotiations in Services »

WHO DOES ESF REPRESENT?

• 30 European services companies, most of them major multinational companies

(represented at CEO or Chairman level in the European Services Leaders Group – ESLG)

• 35 European trade federations of various services sectors (e.g. banking, insurance, telecommunications, express, architects, engineers, accountants, shipping, tourism, etc.)

« The voice of the European Service Industries for International Trade Negotiations in Services»

ESF covers most services sectors, including:

• Insurance• Banking• Business services: IT &

Computer; consulting, advertising, after-sales services

• Professional services: legal services, accountants, architects, engineers

• Construction services• Distribution services

• Postal & Express Delivery services

• Audio-visual services

• Environmental services

• Telecommunication services

• Tourism

• Air Transport

• Maritime Transport

But no members in Education or Health services

For more information, see www.esf.be


ESF MEMBERS INCLUDE:

For more information, see www.esf.be

« The voice of the European Service Sectors for International Trade Negotiations in Services »

Reality of today’s migration?• +/- 200 millions economic migrants in 2007 (+/- 3%/Y)• +/- 240 Bio US$ : workers remittances (35 Bio in EU27 (2006)• 50% South/South (incl. workers remittances)• If 3% of world work force would move, +200 Bio $ gain/Y

(Rodrick) or +150 Bio $ (Winter) - Value of statistics?• Confusion between economic migration and GATS Mode 4• US H1B visas were 195000/Y in 2000, and 65 000/Y since

11/9/2001 attacks (US GATS commitment of 1994); but many different kinds of visas (B1, L1, F-1, J-1, H-2B, TN’s, etc); In fact, more than 200 000 economic migrants in US/Y

• In the EU, estimates: inflow of Third-country High Skills workers was 74 300 in 2003 in EU 25

• More accurate and detailed data: in 14 MS, 34 219 work permits were issued for High Skills Workers in 2005.


EU Basic Background• The labour markets of many EU member States face

the prospect of a shrinking and ageing workforce. EUROSTAT figures indicate that Europe’s native-born workforce will fall by 48 million by 2050 out of a total today of +/- 200 mio in EU27, i.e. +/- 24%).

• In many countries, companies already find it difficult or impossible to fill vacancies due to labour and skills shortages, incl. in engineering and informatics.

• Facilitating legal migration can help boost the size of the labour force and enable companies to fill current job vacancies, in particular for highly qualified workers.


• Immigration is the most effective way of defusing Europe’s demographic timebomb (originating from people growing older & too few babies born in the EU)

• Without countermeasures, EU social system will not be sustainable in 21st Century,

• Competing economies such as USA, Canada, Australia, New Zealand & Switzerland are attracting the highly-skilled immigrant much more successfully than EU

• Economic migrants don’t come to EU, and even skilled workers from the EU migrate outside EU!


Temporary movement of workers is already taking

place in the EU in many services sectors;• Difficult to gather reliable statistics;

– Lack of data (only 14 Member States have “solid data”)– Mix between Manufacturing and services sectors;– Mix with single and multiple entries– Mix with temporary and permanent jobs by Non EU nationals,– Mix between high skills and low/all skills– Mix between Intra Corporate Transferees (ICT) and Contract

Services Suppliers (CSS)

• Estimates: inflow of Third-country High Skills workers was 74 300 in 2003 in EU 25

• More accurate and detailed data: in 14 MS, 34 219 work permits were issued for High Skills Workers in 2005.


Some 10 EU Member States are already applying or putting into place immigration policy favouring entry of high skilled workers (« immigration choisie »):1)United Kingdom (already into place), 2) Germany, 3) France, 4) Sweden, 5) Denmark,…

But we are late in the process and there is no big visibility! There is a need for a EU economic migration policy.


EU Internal Legislative Proposals To improve temporary entry of third country nationals into the EU

ESF and BUSINESSEUROPE welcome the two legislative proposals dated 23 October 2007 (still in the pipeline – Adoption in 1st reading by EP late 2008 - Final text expected in 2009 – implementation in 2011, but not to UK, Ireland and DK):

1. A directive on the admission of highly qualified immigrant workers (the “blue card” proposal),

2. A directive on a single application procedure for a single work/residence permit and a common set of rights.

Good to improve legal migration, But potential difficulty with minimum salary requirement (3x existing minimum wage !)


• Proposals aiming at facilitating cross-border mobility of third-country nationals already legally residing and working in a Member State and holding a blue card (valid for 2 years, renewable) is of value to European employers.

• Quick and simple admission procedures such as the fast-track procedure should facilitate recruitment for highly qualified employment (response after 30 days for HQE; for Single Application procedure (SAP): “One –stop-shop”, 90 days deadline, single act for residence and work permit, etc.

• Common criteria for admission proposed in the directive, such as a work contract, ability to prove professional qualifications, travel document, evidence for sickness insurance and a minimum salary level (?), might increase the transparency and reduce the complexity of admission procedures.

• Rights for migrants: working condition, pay, education, social security, family reunification, etc.


EXTERNAL PROCESS• ESF is advocating for better WTO Mode 4 commitments

since its inception in early 1999, before the launch of the DDA. ESF also favours Mode 4 in regional and bilateral trade agreements (FTA)

• The European services industry is very interested in Mode 4, both ways, i.e.:

– both as bringing its own staff abroad, either to their subsidiaries (ICT) and to their clients (CSS), as well as

– bringing competent natural persons into Europe, either within the company (ICT) or to their clients (CSS).

• ESF pleaded for a good EU offer on mode 4, and believes that the negotiators have delivered a rather good offer, but is very disappointed by the lack of response from trading partners for that specific mode of supply. Mode 4 is not only an offensive issue for developing countries, but also for developed countries


EU current WTO Offer on Mode 4

Preliminary provisions and conditions:

1. EC Directives on Mutual Recognition of Diplomas and of Qualifications do not apply to national of third countries = hence the importance of MRAs

2. All EC and EU Member States’ laws and regulations regarding entry & stay (i.e. visas), work (i.e. work permits) and social security measures (minimum wages, collective agreements, etc.) shall continue to apply.


Categories of Natural Persons Covered under Mode 4:

1. Intra-Corporate Transfers (ICT)1. Managers2. Specialists3. Graduate Trainees

2. Business Visitors (BV)3. Contract Service Suppliers (CSS)

Employees of Juridical Persons

4. Independent Professionals (IP)


Conditions For ITC in the EU:• The natural person must work within the

juridical person for at least 1 Year• The natural person is transferred temporarily

in the context of the provision of a service through a commercial presence in the territory

• No Economic Needs Tests• No limit, no quota• Entry and Stay limited to a max of 3 Years

for Managers and Specialist (LV: 5Y; EE:3 + 2; LT: Managers can be extended) and 1 Year for Trainees


Conditions for Business Visitors (BV):1. Services Sellers:

a. Person not residing in an EU Member Stateb. Person representing a service supplierc. Seeking temporary entry for the purpose of

negotiating the sale of a serviced. Not engaged in making direct salese. Not receiving remuneration

2. Establishment of Commercial Presence (also some conditions depending of the EU countries)

3. No Economic Needs Test, No limit, No Quota4. Period of up to 90 days in any 12 months


Conditions for the Contract Service Suppliers (CSS) (1)

1. The person is employed by a company (juridical person) that has no commercial presence in the EU

2. The juridical person has obtained a service contract for a period of max. 12 months from a final consumer (juridical person?)

3. The person should work for the company for at least one year before the contract

4. The person must posses 1. a university degree or technical qualification required,2. the professional qualification when required3. At least 3 years of professional experience in the sector


Conditions for the Contract Service Suppliers (CSS) (2)5. The service contract must be obtained in the following sectors:

1. Legal services

2. Accounting and bookkeeping

3. Taxation advisory services

4. Architectural services, urban planning

5. Engineering services, integrated engineering services

6. Computer and related services

7. Research and development services

8. Advertising

9. Management consulting services

10. Services related to management services

11. Technical testing and analysis services

12. Related and technical consulting services

13. Maintenance & repair of equipment in after sales of after-lease services contracts

14. Translation services

15. Construction services

16. Site investigation work

17. Higher education services

18. Environmental services

19. Travel agencies & tour operator services

20. Entertainment services

21. Services related to the sale of equipment or to the assignment of a patent

6. Commitments are subject to the application of a Numerical Ceiling (i.e. a minimum quota, but without fix cap) to be determined

7. For 12 new EU Member States: Transition period: 01/01/2011


Conditions for the Independent Professionals (IP) (1)

1. The person is self-employed in a non EU country2. The person has obtained a service contract (but not

through an agency) for a period of max. 12 months from a final consumer (juridical person?)

3. The person must posses 1. a university degree or technical qualification required,2. the professional qualification when required3. At least 6 years of professional experience in the sector

4. The commitment relates only to the activity related to the contract (i.e. not right to stay longer)

5. Temporary Entry and Stay for max of 6 months in any 12 months period, or for the duration of the contract, whatever is less.


Conditions for the Independent Professionals (2)5. The service contract must be obtained in the following sectors:

1. Legal services

2. Architectural services, urban planning & landscape architecture

3. Engineering services, integrated engineering services

4. Computer and related services

5. Management consulting services & Services related to management services

6. Translation services6. Commitments are subject to the application of a Numerical

Ceiling (i.e. a quota) to be determined7. For 12 new EU Member States: Transition period: 01/01/2011


Conclusion:

• The European Services industry is very keen in quick action in all aspects of mobility of foreign workers;

• Progress on movement of natural persons are taking place at all levels in the EU;

• At the Signalling Conference on Services on 26 July 2008 in Geneva, the EC has signalled its willingness to respond positively to Developing countries requests in Mode 4;

• But the EC also insisted that its offer could only be tabled provided that WTO trading partners will somewhere reciprocate on that mode…

Pascal KERNEIS

Managing Director

European Services Forum – ESF

168, Avenue de Cortenbergh

B – 1000 – BRUSSELS

Tel: + 32 2 230 75 14 - Fax: + 32 2 320 61 68

Email: [email protected]


Website: www.esf.be

Thank You for your attention !

Documents

EUROPEAN PARLIAMENT International Trade Committee Hearing « Trade in Services in Mode 4 and Circulation of the Workers » Brussels, Room 2Q2 Building JAN