Mode 4 of the GATS

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• Mode 4 of the GATS
• Taking Stock Moving Forward
• WTO Symposium
• 22-23 September 2008

Mina Mashayekhi, Head, UNCTAD TNCDB, Geneva
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Outline

• Development Benefits of Migration
• Some figures
• Triple benefits of migration
• Zooming in on Mode 4
• Services sector
• Temporary movement
• Categories of movement covered in schedules
• Way Forward
• Ensuring pro-development movement
• Overcoming reluctance in receiving countries
• Co-operation, co-development solidarity
  frameworks

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• The Case for Liberalizing Migration

4
Todays Reality of Migration

• 200 million people
• live outside their country of birth
• in todays economic reality
• movement is increasingly taking place for
  delivering services
• there is a global competition for skills
• more pro-active migration management policies

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The Case for Liberalizing Migration

• Calculations cover more than GATS-type movements
• which is limited to temporary movement for the
  provision of services
• Estimated gains vary, but they are
• significant, expected to exceed gains from
  liberalization of merchandise trade, have
  pro-development distributional implications
• Examples include
• double world income
• if full liberalization of movement (Whalley,
  1984)

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The Case for Liberalizing Migration

• USD 200 billion annually
• if multilateral temporary work visa scheme (quota
  for skilled unskilled DC workers at 3 of IC
  labour force for 3-5 years) (Rodrik, 2002)
• USD 156 billion annually (world welfare gains)
  (that is 0.6 of world income)
• if IC increase quota for workers' entry from DC
  by 3 per cent (Winters 2001, 2003, 2005 etc.)
• 15 67 of world GDP worldwide efficiency gains
  
• when eliminating global restrictions on labor
  mobility (UN-WIDER, 2003)
• global output gain USD 356 billion by 2025
• if DC migration equal to 3 per cent of IC labour
  force (Worldbank, 2006)

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How to Improve Data on Mode 4 ?
Interagency Task Force on Statistics of
International Trade in Services (OECD, EC
Commission, IMF, UNCTAD, UNSD, UNWTO/OMT
WTO/OMC)
INCLUDED EXCLUDED, e.g.,
Duration of stay Temporary presence as well as non-specified periods of stay (temporary undefined in GATS, period set by host country) Permanent migration (Undefined but GATS does not apply to measures affecting residence, citizenship or employment on a permanent basis)
Purpose of stay Presence of natural persons for supply of commercial services Persons seeking to access the employment market Services supplied under governmental authority
Skill level All skill levels
Main categories of natural persons CSS self-employed CSS employees ICTs and directly recruited foreign staff Service sellers/persons responsible for setting up commercial presence Foreign employees of domestically owned juridical persons
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The Case for Liberalizing Migration

• Greater benefits promised by lower-skilled
  movement
• Some figures
• while movement of labour can generate gains (15
  67 of world GDP) movement of only skilled
  labour would generate much smaller gains (3 11
  of world GDP) (UN-WIDER, 2003)
• ICs DCs to benefit more from liberalization of
  restrictions on low-skilled labour than on
  skilled labour
• low-skilled temp migrant from DCs would gain USD
  38 billion their remittances would more than
  offset their original low contribution to home
  output, so welfare of those remaining behind also
  rises (Winters 2002)

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The Case for Liberalizing Migration

• Greater benefits promised by lower-skilled
  movement
• Additional sources of benefits
• irregular migration is concentrated among lesser
  skilled, hence more benefits from regularizing
  such movement
• less potential for brain drain, more brain gain
• lower skill levels comparatively more restricted,
  hence greater gains from liberalization
• potential to build on bilateral labour movement
  schemes which frequently cover activities at
  lower skill levels
• migration of low-skilled workers is usually
  beneficial low skilled migration has contributed
  to poverty alleviation findings on impact of
  high-skilled emigration are mixed (Worldbank 2006)

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Push Pull Factors Costs Benefits

• Pull factors
• demographic changes, labour market needs, higher
  wages
• Push factors
• poverty, unemployment, lack of economic
  political stability
• Balance in potential costs benefits
• varies across countries, level of skills
  economic, social specificities
• varies for sending receiving country migrant
• Need to ensure movement
• that generates pro-development outcomes
• crucial multi-stakeholder approach, involving
  sending receiving countries, migrants,
  employers unions

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Country of Origin Benefits

• Additional benefits derive from
• remittances (among largest sources of external
  finance for DCs, USD 240 billion, 2007)
• relieve from unemployment
• experience skills acquired
• poverty alleviation gender empowerment (MDG)
• investment of remittances Diaspora investments
  into building productive capacities
• increasing trade flows
• entrepreneurship business climate
• social remittances
• e.g., impact of migrants on ideas, behaviors
  social capital in sending country

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Country of Origin Challenges

• but benefits are not automatic potential
  challenges include
• loss of human capital public investment in
  education
• emigration rate of tertiary-educated as high as
  81
• health workers e.g., Ethiopia, Uganda, Zambia,
  Liberia
• loss of fiscal revenue
• large remittance flows may lead to currency
  appreciation adverse effects on exports
• dependency on remittances
• social disintegration

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Country of Destination Benefits

• Benefits for destination countries include
• steady supply of needed workers, bridging
  shortages of personnel
• e.g., health, key infrastructure services,
  business services, including IT
• enhanced productivity (including lower prices)
  essential services delivery
• migrants serve as links to business opportunities
  in sending countries
• responds to need of business sector/employers
  (agriculture, IT etc.)

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Country of Destination Challenges

• but there are common fears associated with
  migration
• loss of jobs
• wages being pulled down
• drain on social resources
• security
• political unattractiveness

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Migrants Benefits

• Migrants bear principal risks potentially reap
  largest rewards
• but are often ignored in policy discussion
• Migrating individuals hope to gain through
• access to employment
• wage differential (to sustain family at home)
• enhanced skills
• social exposure
• safer, legal migration from DCs

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Migrants Challenges

• but there are also challenges
• social disintegration long periods of
  separation from families
• brain waste
• potential for abuse, particularly for lower
  skilled female workers
• inability to accumulate real savings
• no integration in host country - not welcome by
  society

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• Zooming in on Mode 4

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Zooming in on Mode 4

• Gains from Mode 4 liberalization expected to be
  substantial
• size of the services sector
• e.g., services contribution to GDP 72 in IC
  52 in DCs
• services sector covers wide range of activities
  where (temporary) migration is - or could occur
• e.g. professional, computer-related, health,
  construction, tourism, agriculture-related
  transport services, or other seasonal activities

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Zooming in on Mode 4

• Temporary/circular migration expected to generate
  particular development benefits
• Country of origin
• pro-development benefits, but less potential of
  brain drain brain gain upon return
• Country of destination
• filling labor market needs without bringing full
  challenges of immigrant integration
• UN High Level Dialogue on Migration
  Development
• Global Forum on Migration Development
• 2008, Manila Protecting Empowering Migrants
  for Development Roundtable 2 Empowering
  Migrants and Diaspora to Contribute to
  Development
• 2007, Brussels, focusing on circular migration,
  e.g. Roundtable 1.4, How can circular migration
  sustainable return serve as development tools

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• Mode 4 Liberalization in WTO
• Taking Stock

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Mode 4 the GATS Approach

• Annex (to GATS) defines natural persons as
• service suppliers of a Member (self-employed)
• employees of a service supplier (i) as ICT or
  (ii) employee of a company outside the territory
  of another Member
• GATS addresses temporary movement
• e.g., not access to employment market not
  covering measures regarding employment on a
  permanent basis
• GATS does not a-priori exclude
• any occupation or any skill level
• Governments free to regulate entry (temp.) stay
• provided this does not nullify or impair the
  commitments

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Mode 4 Current Commitments

• Assessment given in plurilateral request
• categories of natural persons for whom
  commitments are being sought is amongst most
  critical aspects
• specific commitments in Mode 4 primarily
  horizontal
• coverage of categories narrow restricted mainly
  to personnel related to commercial presence
• coverage of categories de-linked from commercial
  presence is extremely low
• substantial improvements in coverage of
  categories substantial removal of market access
  limitations for each of them is key objective

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Mode 4 Impact of Pattern in Current
Commitments

• Mode 4, least liberal
• commitments mainly horizontal
• full bindings almost insignificant vis a vis
  Modes 2 3
• categories
• ca. 75 movement linked to Mode 3
• for CSS bias towards qualified (skilled) labour
• Impact
• facilitating particularly movement of the highly
  skilled
• much of such highly skilled movement is already
  happening
• on North-North, North-South South-South basis
• supported facilitated by national legislative
  framework

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Negotiating Initiatives on Mode 4

• 2 LDC Group requests plus initiative on Special
  Priority (2005/2006 2007/2008)
• Texts in HK Ministerial Declaration (Dec 2005)
• Plurilateral request (2006)
• Language in potential Chairs text (2007/2008)
• Signaling conference (July 2008)
• Plus work in WPDR (Domestic Regulation
  Disciplines)
• Plus academic, research other work
• e.g. Model schedule on Mode 4

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Hong Kong Ministerial Declaration (Dec.2005)

• Para 27. determined to intensify
  negotiationswith a view to expanding sectoral
  modal coverage of commitments improving their
  quality.particular attention to sectors modes
  of supply of export interest to DCs.
• Annex C On Mode 4
• new or improved commitments on CSS, IP others,
  de-linked from CP, to reflect inter alia
• removal or substantial reduction of ENTs
• indication of prescribed duration of stay
  possibility of renewal
• new or improved commitments on ICTs BVs, to
  reflect inter alia
• removal or substantial reduction of ENTs
• indication of prescribed duration of stay
  possibility of renewal

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Discussions on a possible Chairs Text

• JOB (08) 79
• responses shall, where possible, substantially
  reflect current levels of market access
  national treatment provide new market access
  national treatment in areas where significant
  impediments exist, in particular in sectors
  modes of supply of export interest to developing
  countries, such as modes 1 4, in accordance
  with Article IV of the GATS.

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Services Signaling Conference 26 July 2008

• Acknowledgment of importance of Mode 4 in context
  of development round
• Possible improvements in categories
• ICTs, BVs, CSS, IPs, some de-linked from M3
• Possible improvements in sub-sectors
• numerous business services (e.g. architectural,
  engineering, medical profession, opinion polling,
  RD, computer services)
• In addition willingness to
• extend periods of stay
• clarify, reduce, or eliminate ENTs
• remove definitional uncertainties
• adjust current entries to scheduling conventions
• increase quotas
• extend geographic coverage

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Services Signaling Conference 26 July 2008

• Contributions expected from others
• architecture, engineering, medical, computer and
  related, distribution, certain environmental
  services, installer maintainers,
  tourism/related, logistics, maritime transport,
  space transport
• improve conditions for business mobility, without
  ENTs, call for complete removal of numerical
  ceilings, flag licensing qualification
  requirements, importance of WPDR work
• Attention
• limited participation of Members
• subject to trade off in overall Doha Work
  Program.

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• Mode 4 Liberalization in WTO Moving Forward

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Moving Forward

• Need for more better data, research analysis
• UNCTAD Accra Accord (April 2008)
• remittances significant private financial
  resources for households in countries of origin
  of migration
• international community to pay special attention
  to export interest of DCs importanceof
  effective liberalization of temporary movement of
  natural persons (Mode 4 of GATS)
• UNCTAD to conduct research analysis on
  potential benefits opportunities of trade,
  investment developmental links between
  countries of origin of migrants communities
  abroad

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Moving Forward

• How to ensure that Mode 4 commitments generate
  maximum possible development benefits?
• definitions categories skill-levels scope of
  commitments sub-sectors, facilitating conditions
  of entry stay
• What type of solutions are possible?
• substantive process-oriented solutions market
  access commitments complemented with commitment
  to negotiate (bilateral) labor exchange programs
  (Art XVIII, Reference Paper additional
  commitments)
• What is the link between MFN approaches in such
  bilateral other schemes?
• how to address schemes not covered by Art V V
  bis?

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Moving Forward

• Which elements of bilateral other labour
  movement schemes would be useful in multilateral
  context?
• definitional aspects, policies to ensure
  temporariness, cooperation sending receiving
  countries, working through recruitment agencies
• How to incorporate such elements into GATS
  framework?
• market openness commitments, additional
  commitments, e.g. Art XVIII, Reference Paper etc.

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Moving Forward

• How to address definitional uncertainties in the
  GATS?
• clear understanding needed to move forward in
  useful manner
• How to enhance political will in receiving
  countries?
• ensuring temporariness (sticks carrots)
• safeguards or roll-back for commitments in
  sensitive areas
• creating credible but flexible commitments (e.g.,
  allowing for adjustment to demographic changes
  etc.)
• cooperation in management of migration flows,
  with source countries private sector entities,
  managed migration
• co-development, cooperation solidarity
  frameworks

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Moving Forward

• What are lessons learnt from debate on circular
  migration development?
• traditional policies need to be complemented by
  policies that help migrants reach their goals in
  countries of origin -gt co-development,
  cooperation solidarity frameworks
• How to create a pro-development system for trade
  migration flows?
• need to complement GATS / trade rules with
  policies on e.g., skills HR development,
  incentives for pro-development use of remittances
• co-development, cooperation solidarity
  frameworks
• need for synergy between trade other rules
  initiatives

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In Sum

• Temporary migration, particularly at lower skill
  levels
• can generate considerable development benefits
• in both, countries of origin destination
• GATS offers a useful framework
• but to realize its potential there is need for
  creativity political will better
  understanding on determinants effects of
  migration

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Thank you for your attention!

• Mina.Mashayekhi_at_unctad.org