Liberalizing the Temporary movement of Individuals as Service Suppliers: GATS Mode 4 Hanoi, May 2005

Liberalizing the Temporary Liberalizing the Temporary movement of Individuals as movement of Individuals as

Service Suppliers: GATS Service Suppliers: GATS Mode 4Mode 4

Hanoi, May 2005Hanoi, May 2005

Structure of the presentationStructure of the presentation The context for mode 4 - temporary movementThe context for mode 4 - temporary movement Defining GATS mode 4 Defining GATS mode 4 Restrictions on mode 4 Restrictions on mode 4 Gains from liberalizationGains from liberalization What are the issues to manage?What are the issues to manage?

• labor market impactlabor market impact• Brain drain/overstayingBrain drain/overstaying• Recognition Recognition • Remittance managementRemittance management• SecuritySecurity

Concluding thoughtsConcluding thoughts

The contextThe context

Migration flows no larger now relative to Migration flows no larger now relative to population size than in 1850-1915population size than in 1850-1915• Much is inter-regional and inter-developing Much is inter-regional and inter-developing

countrycountry But temporary movement is increasingBut temporary movement is increasing

• More countries are exporters and importersMore countries are exporters and importers New driversNew drivers

• Technological change Technological change • Declining transport and communication costs Declining transport and communication costs • Global businesses and production chainsGlobal businesses and production chains


Considerable movement taking place Considerable movement taking place despite very limited GATS despite very limited GATS commitments commitments • e.g., UKe.g., UK: 85 000 work permits in 2002, : 85 000 work permits in 2002,

mostly new technologies, health and mostly new technologies, health and education Concentrated in certain education Concentrated in certain sectors – ICT, healthsectors – ICT, health

• Some countries prominent - India H1-B, Some countries prominent - India H1-B, Philippines labor exporterPhilippines labor exporter

Temporary movement: a snapshotTemporary movement: a snapshotCountryCountry 2001 figure2001 figure % increase over 2000% increase over 2000

USUSH1BH1B

Unskilled non-agUnskilled non-ag

201 000201 000

72 40072 400n.a.n.a.

5050

AustraliaAustraliaSkilledSkilled 43 00043 000 >10>10

JapanJapanEmployment permitsEmployment permits 142 000142 000 9.39.3

KoreaKoreaSkilled workersSkilled workers

TraineesTrainees

28 20028 200

100 000100 0006060

n.a.n.a.

FranceFranceEngineers./ICTEngineers./ICT

SpecialistsSpecialists

1 4001 400

2 6402 6404040

6363

The contextThe context But figures are not comparable and do not equate with But figures are not comparable and do not equate with

mode 4mode 4 Temporary is slipperyTemporary is slippery

• Statistically, cut off is 12 monthsStatistically, cut off is 12 months• Some countries have temporary workers for 20 yearsSome countries have temporary workers for 20 years• Others permit change of visa to permanent migrationOthers permit change of visa to permanent migration

Different definitions of “foreign”Different definitions of “foreign” Social context – labor market, social security, cultureSocial context – labor market, social security, culture Mode 4 is a trade, not a migration conceptMode 4 is a trade, not a migration concept

• Don’t distinguish between service and non-service activitiesDon’t distinguish between service and non-service activities• E.g., “business visitors” , “company managers” E.g., “business visitors” , “company managers”

• Activities may not be commercialActivities may not be commercial• Amateur and professional athletesAmateur and professional athletes

• Combinations of modesCombinations of modes• Working holiday makersWorking holiday makers


Migration

Temporary migration

Labor-related temporarymigration

Mode 4

Structure of the presentationStructure of the presentation The context for mode 4 - temporary mobilityThe context for mode 4 - temporary mobility Defining GATS mode 4 Defining GATS mode 4 Restrictions on mode 4 Restrictions on mode 4 Gains from liberalizationGains from liberalization What are the issues to manage?What are the issues to manage?

• labor market impactlabor market impact• Brain drain/overstayingBrain drain/overstaying• RecognitionRecognition• Remittance managementRemittance management• SecuritySecurity


Defining mode 4Defining mode 4 Article 1.2(d): “the supply of a service…Article 1.2(d): “the supply of a service…

by a service supplier of one Members, by a service supplier of one Members, through presence of natural persons of a through presence of natural persons of a Member in the territory of another Member in the territory of another Member”. Member”. • Annex on the Movement of Natural Persons: Annex on the Movement of Natural Persons:

“measures affecting natural persons who are “measures affecting natural persons who are service suppliers of a Member, and natural service suppliers of a Member, and natural persons of a Member who are employed by a persons of a Member who are employed by a service supplier of a Member, in respect of service supplier of a Member, in respect of the supply of a service”the supply of a service”

Defining mode 4Defining mode 4

Temporary movement of natural Temporary movement of natural persons to supply servicespersons to supply services

TemporaryTemporary Not defined, commitments range from Not defined, commitments range from

several weeks (business visitors) to 3-5 several weeks (business visitors) to 3-5 years (intra-corporate transferees)years (intra-corporate transferees)

• BUT permanent explicitly excluded BUT permanent explicitly excluded Also those seeking access to the Also those seeking access to the

employment marketemployment market

Defining mode 4Defining mode 4 Service suppliersService suppliers

• Not a migration distinctionNot a migration distinction• Temporary agricultural workers or suppliers of fruit-picking Temporary agricultural workers or suppliers of fruit-picking

services?services? What is the scope of category “services incidental to agriculture What is the scope of category “services incidental to agriculture

(manufacturing)” in W/120?(manufacturing)” in W/120?• Tasks performed on a fee or contract basis without ownership Tasks performed on a fee or contract basis without ownership

of the inputs or outputsof the inputs or outputs In the world of fragmented production chains, definition of a In the world of fragmented production chains, definition of a

service is shifting as more production-related activities are broken service is shifting as more production-related activities are broken into a series of outsourced servicesinto a series of outsourced services

Skill levelsSkill levels• Commitments are for high skilled but much existing movement Commitments are for high skilled but much existing movement

is lower skilled (agriculture, hospitality, domestic, personal is lower skilled (agriculture, hospitality, domestic, personal care)care)

• Viewed as greater competition to nationals and greater fiscal Viewed as greater competition to nationals and greater fiscal riskrisk

Defining mode 4 Defining mode 4

• Mode 4 normally includes:Mode 4 normally includes: Self-employed or independent service Self-employed or independent service

suppliers (remuneration received in host suppliers (remuneration received in host country)country)

Employees of a foreign company who are sent Employees of a foreign company who are sent to fulfill a contract with a host country client to fulfill a contract with a host country client

Employees of foreign companies established Employees of foreign companies established in the host country (intra-corporate in the host country (intra-corporate transferees)transferees)

Business visitors (short term stays, no Business visitors (short term stays, no remuneration received in host country) remuneration received in host country)

Defining mode 4Defining mode 4 While foreigners working on contract to domestic While foreigners working on contract to domestic

firms fall under mode 4 it is firms fall under mode 4 it is unclear unclear whether whether foreign foreign employeesemployees of of domesticdomestic companies are companies are covered.covered.• Language of GATS suggests maybe not, but included in Language of GATS suggests maybe not, but included in

commitments of some WTO Memberscommitments of some WTO Members

If includedIf included…… Viewed less as trade than as labor migration - Viewed less as trade than as labor migration -

seen as entering the labor market (although can’t seen as entering the labor market (although can’t change employer without permission)change employer without permission)

Focus of concerns about displacement of local Focus of concerns about displacement of local workers and/or chill effect on wages and workers and/or chill effect on wages and conditionsconditions

Defining mode 4Defining mode 4

If excludedIf excluded Multinational or foreign firms have access to labor Multinational or foreign firms have access to labor

which nationals companies don’twhich nationals companies don’t Can we in practice distinguish between an Can we in practice distinguish between an

employee and a contractual service supplier?employee and a contractual service supplier?• Some Members can deem a range of contracts to be Some Members can deem a range of contracts to be

employment for the purposes of bringing the worker employment for the purposes of bringing the worker under local labor lawunder local labor law

• labor officials don’t want to treat foreign and domestic labor officials don’t want to treat foreign and domestic employees of domestic companies differently employees of domestic companies differently

• Area for further researchArea for further research

IncludedIncluded ExcludedExcluded DebatedDebated

Temporary movement Temporary movement (undefined)(undefined)

Permanent migration Permanent migration (residence, citizenship or (residence, citizenship or employment in a permanent employment in a permanent basis)basis)

Related to the supply of Related to the supply of servicesservices

Persons working in non-Persons working in non-service sectors – agriculture, service sectors – agriculture, manufacturingmanufacturing

Scope of activities Scope of activities included in “services included in “services incidental to agriculture/ incidental to agriculture/ manufacturing”manufacturing”

All skill levels (in practice, All skill levels (in practice, commitments are for highly commitments are for highly skilled)skilled)

Foreign employees of Foreign employees of foreign companies foreign companies established in host countryestablished in host country

Domestic (nationals of host Domestic (nationals of host country) employees of foreign country) employees of foreign companies established in the companies established in the host countryhost country

Foreign employees of Foreign employees of domestic companiesdomestic companies

Business visitorsBusiness visitors

Intra-corporate transfereesIntra-corporate transferees

Contractual service Contractual service suppliers (self-employed or suppliers (self-employed or as employee of a foreign as employee of a foreign service supplier)service supplier)

Defining mode 4 - summaryDefining mode 4 - summary

No clear definition, but can think in No clear definition, but can think in terms of duration and purpose of terms of duration and purpose of stay:stay:• Gain entry for specific purpose (to fulfil a Gain entry for specific purpose (to fulfil a

contract)contract)• Normally confined to one sector (can’t Normally confined to one sector (can’t

move - vs general migrants)move - vs general migrants)• Temporary (not migrating permanently Temporary (not migrating permanently

nor seeking entry to labor market)nor seeking entry to labor market)


• labor market impactslabor market impacts• Brain drain/overstayingBrain drain/overstaying• RecognitionRecognition• Remittance managementRemittance management• SecuritySecurity


Restrictions on mode 4Restrictions on mode 4 Less liberalization under mode 4 than other modes; current Less liberalization under mode 4 than other modes; current

commitmentscommitments• Horizontal, not sectoralHorizontal, not sectoral• Limited to the higher skilled (managers, executives, Limited to the higher skilled (managers, executives,

specialists)specialists)• Linked to investment (intra-corporate transferees), relatively Linked to investment (intra-corporate transferees), relatively

few commitments for contractual service suppliersfew commitments for contractual service suppliers• Economic needs tests – not transparent, can be arbitrary and Economic needs tests – not transparent, can be arbitrary and

unpredictable in application unpredictable in application Regulatory issuesRegulatory issues

Wage parity, social security (including transferability)Wage parity, social security (including transferability) Time consuming and burdensome visa proceduresTime consuming and burdensome visa procedures Licensing and qualification requirementsLicensing and qualification requirements RecognitionRecognition

Natural frictions (intra-national; intra-EU)Natural frictions (intra-national; intra-EU)




Gains from liberalizationGains from liberalization Similar to gains from services trade liberalization Similar to gains from services trade liberalization

– specialisation according to comparative – specialisation according to comparative advantage, technology transfer, enhanced advantage, technology transfer, enhanced competition competition

BUT also different because dealing with BUT also different because dealing with movement of people, with all the social, political movement of people, with all the social, political and cultural factors that involvesand cultural factors that involves• Competition with national workers not necessarily Competition with national workers not necessarily

welcomed; wage adjustment unlikely to occurwelcomed; wage adjustment unlikely to occur Also like migration – large literature on gains and Also like migration – large literature on gains and

losses from permanent migration – less so on losses from permanent migration – less so on temporary migrationtemporary migration

Sits between two paradigms and still more work Sits between two paradigms and still more work to doto do

Gains from liberalizationGains from liberalization

Developed to developing countryDeveloped to developing country:: Main issue is intra-corporate transfereesMain issue is intra-corporate transferees

• Gains for local economy from exposure to Gains for local economy from exposure to foreign expertise in terms of knowledge foreign expertise in terms of knowledge transmission, productivity growth and flow-on transmission, productivity growth and flow-on benefits for development domestic benefits for development domestic entrepreneurshipentrepreneurship

• BUT developing countries could lose out over BUT developing countries could lose out over time if these reduce opportunities for nationalstime if these reduce opportunities for nationals

And thus reduce incentives for educationAnd thus reduce incentives for education


Developing to developed countries,Developing to developed countries, skilled labor:skilled labor:• Reduces total output and tax baseReduces total output and tax base• Can reduce capacity to entrepreneurship, ability to Can reduce capacity to entrepreneurship, ability to

absorb new technologiesabsorb new technologies BUTBUT

• Workers can be more productive in advanced economiesWorkers can be more productive in advanced economies• Remittances may offset the lossRemittances may offset the loss• Ideas, technology and networksIdeas, technology and networks

Useful if return, but networks will be less developed than Useful if return, but networks will be less developed than permanent migrant who maintain links permanent migrant who maintain links

More widely spread, but perhaps more superficial, More widely spread, but perhaps more superficial, increased skillsincreased skills

• Can increase returns to education thereby encouraging Can increase returns to education thereby encouraging greater investment in educationgreater investment in education

Gains from liberalizationGains from liberalization Net balance will vary by country and Net balance will vary by country and

sectorsector• Very small economies which could not Very small economies which could not

generate market to make skills profitable – generate market to make skills profitable – may gainmay gain

• Very large economies which can create critical Very large economies which can create critical mass of skilled workers – lose some at margin, mass of skilled workers – lose some at margin, but offset by gainsbut offset by gains

• Medium-sized economies may not reach the Medium-sized economies may not reach the critical mass of skills because of migration – critical mass of skills because of migration – could lose more than gaincould lose more than gain

More work and research neededMore work and research needed• WB GEP 2006 Migration and RemittancesWB GEP 2006 Migration and Remittances

Gains from liberalizationGains from liberalization Developing to developed countryDeveloping to developed country, , unskilled laborunskilled labor Skilled workers less friction BUT gains from trade come Skilled workers less friction BUT gains from trade come

from exploiting differencesfrom exploiting differences• Promises higher returnsPromises higher returns

BUT BUT • May not be aware of opportunities and less likely to be able to May not be aware of opportunities and less likely to be able to

use themuse them• Political problems in host countries due to competition with Political problems in host countries due to competition with

vulnerable sectors local labor forcevulnerable sectors local labor force Although arguably less with temporary movement than Although arguably less with temporary movement than

permanentpermanent• Fewer cultural or integration issuesFewer cultural or integration issues• Less call on public/social servicesLess call on public/social services• Could be done as for goods – with appropriate pace and Could be done as for goods – with appropriate pace and

adjustment policiesadjustment policies• Developed countries ageing and likely to face shortagesDeveloped countries ageing and likely to face shortages

Gains from mode 4 liberalizationGains from mode 4 liberalization

Winters – opening of developed country Winters – opening of developed country labor markets to temporary entry by labor markets to temporary entry by foreign workers to equivalent of 3 percent foreign workers to equivalent of 3 percent of current workforce would result in global of current workforce would result in global welfare gains of around US$150 billion per welfare gains of around US$150 billion per yearyear

Gains shared between developed and Gains shared between developed and developing countriesdeveloping countries• Numbers not to be taken to strictly, but clear Numbers not to be taken to strictly, but clear

that gains significantthat gains significant


Quotas increased by 3% of host work force Quotas increased by 3% of host work force (traditional sending and receiving (traditional sending and receiving countries)countries)• Equivalent to 8 million skilled workers and 8.5 Equivalent to 8 million skilled workers and 8.5

million unskilled workersmillion unskilled workers E.g., USA: +2.7m unskilled; +2.4m skilled; China: -E.g., USA: +2.7m unskilled; +2.4m skilled; China: -

2.4m unskilled; -.5m skilled2.4m unskilled; -.5m skilled

• Workers make up half of the productivity gap Workers make up half of the productivity gap (e.g., differences in education etc mean that (e.g., differences in education etc mean that the wage gap persists to some extent) the wage gap persists to some extent)

Gains from liberalizationGains from liberalization Main gains go to those workers in Main gains go to those workers in

developing countries who move - as a developing countries who move - as a result of higher incomes earned.result of higher incomes earned.

Those who stay behind in developing Those who stay behind in developing countries may lose (remittances countries may lose (remittances notwithstanding) because decrease in notwithstanding) because decrease in labor supply reduces return to capital. labor supply reduces return to capital. • Depends, Depends, inter aliainter alia, on extent of remittances , on extent of remittances

and initial supply of laborand initial supply of labor Developed (importing) countries benefit Developed (importing) countries benefit

from increased taxes and higher returns to from increased taxes and higher returns to capitalcapital

Gains from liberalizationGains from liberalization Most gains are from unskilled movement Most gains are from unskilled movement

• Developing countries gain more because loss of Developing countries gain more because loss of unskilled workers is less costly than loss of skilled unskilled workers is less costly than loss of skilled workers and remittances more than offset original workers and remittances more than offset original contribution to output contribution to output

• Developed countries also gain – although most of this Developed countries also gain – although most of this comes from the welfare effect of their own mobile comes from the welfare effect of their own mobile workers and this is not well captured by the modelworkers and this is not well captured by the model

BUT this should not be over-stated because the BUT this should not be over-stated because the model does not take account of brain drain, costs model does not take account of brain drain, costs incurred in movement (transportation, incurred in movement (transportation, discrimination)discrimination)

Also, deals with sectors beyond servicesAlso, deals with sectors beyond services• Gains reduced – although not dramatically – when Gains reduced – although not dramatically – when

limited to service sectorslimited to service sectors

Gains from liberalizationGains from liberalization Key role of mode 4 movement in Key role of mode 4 movement in

promoting trade under other modes of promoting trade under other modes of supply by making investors and traders supply by making investors and traders aware of the pool of skilled labor in the aware of the pool of skilled labor in the home country of workershome country of workers

Linkages to mode 3Linkages to mode 3• Encourages investment in home country of Encourages investment in home country of

workersworkers• Mode 3 requires mode 4 movementMode 3 requires mode 4 movement

Linkages to modes 1 and 2Linkages to modes 1 and 2• Outsourcing both spurred by and requires Outsourcing both spurred by and requires

mode 4 movementmode 4 movement




Issues to manage?Issues to manage?

• Impacts also vary according to policy Impacts also vary according to policy frameworks.frameworks.

• Key issues to manage include:Key issues to manage include: labor market impact labor market impact Brain drain / overstaying and migration Brain drain / overstaying and migration

regulator concernsregulator concerns RecognitionRecognition Remittance managementRemittance management SecuritySecurity

Issues to manageIssues to manage

labor market impactlabor market impact Hard to assess impact because countries use so Hard to assess impact because countries use so

many devices to prevent real impactmany devices to prevent real impact• ENTs, wage parity, social securityENTs, wage parity, social security

Wage parity pros:Wage parity pros:• Prevents exploitation Prevents exploitation • While quotas exist, benefits developing country workersWhile quotas exist, benefits developing country workers

Wage parity cons:Wage parity cons:• Undermines comparative advantageUndermines comparative advantage

Cost advantage developing countries currently shows up Cost advantage developing countries currently shows up more in outsourcing than mode 4more in outsourcing than mode 4

Another administrative hurdle before can hire foreign Another administrative hurdle before can hire foreign workerworker


Social securitySocial security• Competitive advantage to foreign workers if Competitive advantage to foreign workers if

don’t have to paydon’t have to pay• BUT inequitable to pay into schemes from BUT inequitable to pay into schemes from

which may never benefitwhich may never benefit• Possible solutions:Possible solutions:

Pay into separate fund and reimburse on departurePay into separate fund and reimburse on departure Separate short (health cover) and long-term Separate short (health cover) and long-term

(pensions) benefits; pay the former, with latter (pensions) benefits; pay the former, with latter refunded on departure or paid into fund at home refunded on departure or paid into fund at home country ratescountry rates

Issues to manageIssues to manage Do foreign workers drive down wages? Do foreign workers drive down wages?

• Are they complements or substitutes?Are they complements or substitutes? Complement – brought in to fill gaps; do not Complement – brought in to fill gaps; do not

occupy same parts of labor market as nationals; occupy same parts of labor market as nationals; training and turnover expenses mean not training and turnover expenses mean not profitable to use them instead of locals; firms profitable to use them instead of locals; firms claim to look for most skilledclaim to look for most skilled

BUT others argue that availability foreign labor BUT others argue that availability foreign labor undermines pressure for wage rises or undermines pressure for wage rises or improvements in conditions (nurses)improvements in conditions (nurses)• Companies sponsoring foreigners often required to Companies sponsoring foreigners often required to

demonstrate commitment to training nationalsdemonstrate commitment to training nationals Do they contribute to outsourcing in the domestic Do they contribute to outsourcing in the domestic

market and the casualisation of labor?market and the casualisation of labor?

Issues to manage Issues to manage OverstayingOverstaying Distinguish between legal and illegalDistinguish between legal and illegal

• Illegal - a risk with all forms of temporary entry Illegal - a risk with all forms of temporary entry (tourists, students)(tourists, students)

• Legal – can be managed, often used as pre-Legal – can be managed, often used as pre-selection permanent migrantsselection permanent migrants

Cooperation, incentives and enforcementCooperation, incentives and enforcement• Enforcement – withholding part of pay, bonds, Enforcement – withholding part of pay, bonds,

responsibility on domestic company, responsibility on domestic company, monitoringmonitoring

• Incentives – tax incentives, financial Incentives – tax incentives, financial assistance, reintegration assistance, creation assistance, reintegration assistance, creation of opportunities at home (including via FDI)of opportunities at home (including via FDI)


Brain drain/circulationBrain drain/circulation• Less of a problem with mode 4 than permanent Less of a problem with mode 4 than permanent

migration migration • BUT even temporary loss a problem where BUT even temporary loss a problem where

skills are scarceskills are scarce• Codes of conduct (nurses) a possible solutionCodes of conduct (nurses) a possible solution

But hard to control individual migration decisionsBut hard to control individual migration decisions

• Capacity building programs to train excess Capacity building programs to train excess workers, help to offset lost investment in workers, help to offset lost investment in education and ensure returneducation and ensure return


Recognition of qualificationsRecognition of qualifications Without recognition of qualifications, Without recognition of qualifications,

market access benefits significantly market access benefits significantly diminisheddiminished• Non-recognition can also result in brain loss, Non-recognition can also result in brain loss,

where neither country benefits from skillswhere neither country benefits from skills• Non-recognition can increase prospects for Non-recognition can increase prospects for

exploitationexploitation Solutions – MRAs, trade in education Solutions – MRAs, trade in education

servicesservices• BUT recognition can facilitate brain drain BUT recognition can facilitate brain drain

Issues to manageIssues to manage Remittance managementRemittance management

At least US$100 billion in 2004 (likely higher)At least US$100 billion in 2004 (likely higher) Over- and under-estimates mode 4 as includes permanent Over- and under-estimates mode 4 as includes permanent

migrants and those in non-service sectors, but only those migrants and those in non-service sectors, but only those abroad for > 1 yearabroad for > 1 year

While not all mode 4, important benefitWhile not all mode 4, important benefit• In the poorest countries, remittances are 2-3 times In the poorest countries, remittances are 2-3 times

larger than FDIlarger than FDI• In most developing countries, remittances>ODAIn most developing countries, remittances>ODA• Remittances are more stable and counter-cyclicalRemittances are more stable and counter-cyclical

Facilitate transfers – e.g., ID cards, competition in Facilitate transfers – e.g., ID cards, competition in financial services financial services

Matching funds to encourage investment in Matching funds to encourage investment in community projectscommunity projects

Issues to manage - remittancesIssues to manage - remittancesSource: Ratha,2004Source: Ratha,2004

Issues to manage Issues to manage

SecuritySecurity• A reality which will complicate the trade A reality which will complicate the trade

facilitation approach to labor mobilityfacilitation approach to labor mobility Question of risk assessmentQuestion of risk assessment

• But security measures should be But security measures should be reasonable and aim to be least reasonable and aim to be least burdensome while still effectiveburdensome while still effective

• Are also costs to lost mobilityAre also costs to lost mobility US scientists (also students)US scientists (also students)





Three major challenges to making progress:Three major challenges to making progress:• Flexibility of migration regimes vs certainty of GATS commitmentsFlexibility of migration regimes vs certainty of GATS commitments• MFN GATS commitments vs special migration arrangements for certain MFN GATS commitments vs special migration arrangements for certain

countriescountries• Lack of understanding between trade and migration policy Lack of understanding between trade and migration policy

communities communities • Limited culture of negotiation in migrationLimited culture of negotiation in migration

These tensions are not easily resolved and a degree of These tensions are not easily resolved and a degree of pragmatism might be necessarypragmatism might be necessary

Need to aim for concrete gains which can actually be achievedNeed to aim for concrete gains which can actually be achieved• Liberalization on the ground more important than seeing all reflected in Liberalization on the ground more important than seeing all reflected in

GATS commitmentsGATS commitments Danger of going backwards if insist on all boundDanger of going backwards if insist on all bound

Increasing dialogue between trade and migration policy Increasing dialogue between trade and migration policy communitiescommunities• Dialogue to understand needs and constraintsDialogue to understand needs and constraints• Policy coordination to identify possible avenues for progressPolicy coordination to identify possible avenues for progress• Identifying necessary complementary measuresIdentifying necessary complementary measures

What can be done under the GATS What can be done under the GATS negotiations?negotiations?

Intracorporate transfereesIntracorporate transferees • Developing countries increasingly becoming investors, Developing countries increasingly becoming investors,

including via joint ventures from own mode 3 liberalizationincluding via joint ventures from own mode 3 liberalization• Link to outsourcing Link to outsourcing

Contractual service suppliers (individuals or companies) Contractual service suppliers (individuals or companies) • Clearly trade, not tied to investment and some scope for Clearly trade, not tied to investment and some scope for

including lower-skilled laborincluding lower-skilled labor HousekeepingHousekeeping

• Common definitions key termsCommon definitions key terms• Transparency, including for labor market testsTransparency, including for labor market tests

LinkagesLinkages• Mode 4 and outsourcing Mode 4 and outsourcing • Mode 4 and FDI/creating opportunities at home Mode 4 and FDI/creating opportunities at home • Mode 4 and trade in education services Mode 4 and trade in education services

What else can be done?What else can be done? Encourage the development of bilateral or Encourage the development of bilateral or

regional agreements on labor mobilityregional agreements on labor mobility• More likely to cover lower-skilled workersMore likely to cover lower-skilled workers• Can negotiate additional terms not available under GATS Can negotiate additional terms not available under GATS

to address specific issuesto address specific issues Technical assistance and training to combat brain drain and Technical assistance and training to combat brain drain and

loss of investment in educationloss of investment in education Mechanisms for improved remittance transferMechanisms for improved remittance transfer Incentives and cooperative mechanisms to ensure returnIncentives and cooperative mechanisms to ensure return Incentives and mechanisms for recognition of particular Incentives and mechanisms for recognition of particular

professions, including necessary technical assistanceprofessions, including necessary technical assistance• More scope for regulatory experimentation and More scope for regulatory experimentation and

creativitycreativity Greater ability to create of renegotiate flexible deals Greater ability to create of renegotiate flexible deals

What else can be done?What else can be done? Builds the relationships of exchange and trust Builds the relationships of exchange and trust

which will facilitate greater mobilitywhich will facilitate greater mobility• Most successful schemes to date have combined a focus Most successful schemes to date have combined a focus

on national sovereignty with cooperation and capacity on national sovereignty with cooperation and capacity buildingbuilding

APEC Business Travel CardAPEC Business Travel Card Over time, could encourage Over time, could encourage

• Extension of successful agreements to more countries Extension of successful agreements to more countries • Countries to open the opportunity for recruitment of the Countries to open the opportunity for recruitment of the

lower-skilled to any country that can meet the lower-skilled to any country that can meet the requirements requirements

Question of competitiveness, rewards countries which find Question of competitiveness, rewards countries which find solutions to problemssolutions to problems

Analogy to MRAsAnalogy to MRAs

What else can be done?What else can be done?

This process could spur domestic reformThis process could spur domestic reform Encourage OECD countries to acknowledge that they are Encourage OECD countries to acknowledge that they are

buyers buyers Improved regulation of what is already going on, including Improved regulation of what is already going on, including

remittance transfer mechanisms, plus needed transparency and remittance transfer mechanisms, plus needed transparency and public debatepublic debate

Encourage development of strategic policies for labor Encourage development of strategic policies for labor mobilitymobility

Identification of niches, investment in skills, provision of Identification of niches, investment in skills, provision of information to migrants, development of improved opportunities at information to migrants, development of improved opportunities at home (including via mode 3)home (including via mode 3)

Can take a wider development perspective than the GATSCan take a wider development perspective than the GATS• Can include in the negotiations all the elements of the Can include in the negotiations all the elements of the

regulatory framework necessary to ensure that liberalization regulatory framework necessary to ensure that liberalization benefits developmentbenefits development

What else can be done?What else can be done?

Some benefit in a clearinghouse for Some benefit in a clearinghouse for agreements agreements • To aid dissemination of information about To aid dissemination of information about

agreements and best practice agreements and best practice But pros and cons using the WTOBut pros and cons using the WTO WTO legally bound commitments WTO legally bound commitments

(certainty, predictability) but(certainty, predictability) but• Could raise questions about the proper focus of Could raise questions about the proper focus of

the trading systemthe trading system• MFN waiver for agreements?MFN waiver for agreements?

The basic messageThe basic message GATS negotiations are a critical GATS negotiations are a critical

opportunity to get international opportunity to get international negotiations on labor mobility goingnegotiations on labor mobility going• Can deliver some real progress in some areasCan deliver some real progress in some areas• Introduce negotiation to migration community Introduce negotiation to migration community • Create pressure and a sense of urgencyCreate pressure and a sense of urgency

BUTBUT GATS is not the only option for GATS is not the only option for facilitating increased global labor mobilityfacilitating increased global labor mobility• Trade is not limited to WTO negotiationsTrade is not limited to WTO negotiations• labor mobility is not limited to tradelabor mobility is not limited to trade

Need to explore all options to realise gainsNeed to explore all options to realise gains

Thank youThank you

Documents

Liberalizing the Temporary movement of Individuals as Service Suppliers: GATS Mode 4 Hanoi, May 2005