ICTSD » WTO Mode 4

Facilitating Temporary Labour Mobility in African Least-Developed Countries

Paolo Ghisu — Thu, 09 Jul 2009 12:31:39 +0000

Least Developed Countries (LDCs) in Africa face significant levels of poverty and vulnerability and a high dependence on international trade. Moreover, they experience high levels of unemployment, low wages and labour productivity, and rapid population growth. The General Agreement on Trade in Services (GATS) and its provisions regarding the temporary movement of natural persons (Mode 4) could be extremely beneficial to address some of these countries’ supply-side constraints.
The following Issue Paper (No. 10) on “Facilitating Temporary Labour Mobility in African Least Developed Countries: Addressing Mode 4 Supply-Side Constraints” by Sabrima Varma, an International Consultant, argues that temporary labour mobility from LDCs should be embedded in a broader skills development strategy, which addresses skills formation and long-term development objectives in the context of national development plans and Poverty Reduction Strategies Papers (PRSPs) in LDCs.
Labour mobility can have important development implications for LDCs. Remittances represent a crucial source of national income. Of the top 10 remittance recipients in LDCs, five were in Africa (e.g. Sudan, Senegal, Uganda, Lesotho, and Togo). In these countries, resources from remittances have been directed to investment in infrastructure, education and health, among others. Moreover, labour mobility may be an important alternative to permanent as well as illegal migration and brain drain, which would be largely beneficial to both sending and host countries. Likewise, temporary labour mobility could provide an immediate strategy to stabilize the economies of LDCs.
However, in order to contribute to sustainable development temporary labour mobility should be properly and effectively planned and monitored in source and host countries. If not, it risks to contribute to brain drain, worsen existing skill and labour shortages in key areas of the economy, and thus undermine crucial economic and social development goals of LDCs. Currently, the costs and risks of temporary labour mobility are unequally shared by the public and the private sector. Source and host countries should address these costs and risks, and ensure issues relating to the duration of the stay in host countries, the enhancement of skills, and return and reintegration of workers in LDCs. Ultimately, though, temporary labour mobility should not be an end in itself, but an important element of human capital development through the provision of training, work experience, and upskilling for LDCs.
The purpose of this paper is thus to contribute to a knowledge-based discussion on how LDCs could capture the potential benefits and reduce the risks of temporary labour mobility while at the same time building their supply-side capacity. Moreover, this paper aims to show the importance of embedding temporary labour mobility schemes into sustainable development plans in LDCs.

Advancing Services Export Interests of Least-Developed Countries

Paolo Ghisu — Thu, 09 Jul 2009 12:12:12 +0000

The temporary movement of natural persons in the context of international trade is a crucial issue for Least Developed Countries (LDCs). Indeed, LDCs could successfully satisfy the increasing demand for low-skilled and semi-skilled workers in developed and developing countries. According to Alan Winters (2003) an increase in industrial countries’ quotas for both skilled and unskilled temporary workers equivalent to three percent of their work force would generate an estimated increase in world welfare of more than USD 150 billion a year.
The present Issue Paper (No. 9) on “Advancing Services Export Interests of Least-Developed Countries: Toward GATS Commitments on the Temporary Movement of Natural Persons for the Supply of Low- Skilled and Semi-Skilled Services” by Daniel Crosby, a partner at the Budin & Partners Law Firm, shows how LDC supply of low-skilled and semi-skilled services could successfully respond through the temporary presence of natural persons in developed and developing countries to satisfy the increasing demand for such services in these countries. Moreover, it illustrates where market access should be bound through GATS commitments as well as in other regional and bilateral trade agreements.
Although LDC potential gains in these negotiations are highly relevant for these countries’ long- term development objectives, most developed and developing countries seem reluctant to negotiate either the binding of existing regimes or reductions in trade barriers that inhibit the most important LDCs’ service exports.
Moreover, the overwhelming majority of GATS Mode 4 commitments only apply to highly-skilled professionals. Within this “highly-skilled” category, commitments are linked to Mode 3 establishment, which refers to foreign services suppliers that invest in another Member’s territory have limited rights to bring highly-skilled natural persons temporarily to supply services related to their investment. Currently, thus, GATS commitments are of little economic and social relevance to LDCs since they are not in a position to make Mode 3 types of investments in services.
At a regional and/or bilateral level some countries accord preferential treatment under temporary worker programmes. However, this access is not bound in Members’ commitments under the GATS. Existing temporary worker programmes may though provide useful lessons for the improvement of these mechanisms as well as for a potential ‘multilateralization’ of currently unbounded market access for the supply of low-skilled and semi-skilled services from LDCs.
The purpose of this paper is thus to contribute to a knowledge-based debate in this area on how GATS negotiations, in general, and Mode 4, in particular, can successfully address the competitive advantages and concerns of LDCs. Ultimately, this paper’s objective is to shed light on how potential Mode 4 benefits could effectively be turned into tangible sustainable development results in Least Developed Countries.

The Mode 4 Issue and LDCs

Paolo Ghisu — Wed, 25 Feb 2009 15:00:51 +0000

The objective of the roundtable is to deepen the substantive knowledge of policymakers and stakeholders able to influence policy decisions of (i) those services sectors and modes of supply that could act as drivers to growth and sustainable development in Least Developed Countries and (ii) the rules and flanking measures which need to be in place to realise this potential

Three studies, two commissioned by ICTSD and one by QUNO, will be presented and discussed:

Daniel Crosby will present the findings of his study ‘Advancing services export interests of Least Developed Countries: Toward GATS commitments on the temporary movement of natural persons for the supply of low-skilled and semi-skilled services’,
Sabrina Varma will share her perspective on the study ‘Facilitating Temporary labour mobility in African LDC’s: Addressing Mode 4 related Supply-side constraints’
Additionally, David Zafar Ahmed will contribute to the discussions by presenting the study he did jointly with Uri Friedman titled ‘Ensuring Temporariness: Mechanisms to Incentivise return Migration in the Context of GATS Mode 4 and Least Developed Country Interests’

The studies identify and assess the specific sectors and sub-sectors in which LDC’s have a concrete interest in supplying services, especially through the temporary movement of natural persons, an analysis which few developing countries have successfully undertaken with requisite clarity.

To prepare for future resumption of GATS negotiations on the issue of Mode 4, LDC’s would benefit from developing a stronger substantive basis for the preferential market access they seek under the Special Modalities for LDC’s. The output from this exercise will hopefully also contribute to the ongoing negotiations on trade agreements between the developed and least developed countries, including the EPAs.

QUNO - Ensuring Temporariness Mechanisms to Incentivise Return Migration in the Context of GATS Mode 4 and LDC Interests

David Zafar Ahmed’s Presentation

Sabrina Varma’s Presentation

Useful resources services trade - modal approach

Andrew Aziz — Thu, 21 Aug 2008 08:36:58 +0000

Mode 1

Cross-Border Trade in 2000 and Sales Through Affiliates in 1999, Michael A. Mann, Maria Borga, OECD, 2001

National Accounts - International Trade Statistics: Cross-border Electronic Commerce and International Trade Statistics, David Ruffles, OECD, STD/NA/ITS(2001)1, 24 October 2001

Cross-Border Trade in Financial Services: Economics and Regulation, Steering Group under- the Committee on Financial Markets, OECD, Financial Market Trends, No. 75, March 2000

International Provision of Trade Services, Trade and Fragmentation, Alan V. Deardorff, World Bank Project, 2000

Unrecorded Cross-Border Trade Between Kenya and Uganda, Chris Ackello-Ogutu, Protase Echessah, SD Publication Series, Office of Sustainable Development, Bureau for Africa, AFR/SD and REDSO/ESA, Technical Paper, No. 58, July 1997
Mode 3

Trade Rules Behind Borders - Essays on Services, Investment and the New Trade Agenda, Pierre Sauvé, Cameron May Ltd., International Law Publishers, 2003

Foreign Bank Entry: Experience, Implications for Developing Countries, and Agenda for Further Research, George Clarke, Robert Cull, Maria Soledad Martinez Peria, and Susana M. Sánchez, World Bank, Prepared as a background paper for the World Development Report 2002: Institutions for Markets, October 2001

Mode of Foreign Entry, Technology Transfer, and Foreign Direct Investment Policy, Kamal Saggi, Aaditya Mattoo, Marcelo Olarreaga, World Bank, Research Working Paper N° 2737, 2001

Scaling Back Ambitions on Investment Rule-Making at the WTO, Pierre Sauvé, Journal of World Investment, Vol. 2, No. 3, September 2001, pp. 529-536

Foreign Direct Investment in Services and the Domestic Market for Expertise, James Markusen, Thomas F. Rutherford, David Tarr, World Bank, 2000
Mode 4

Liberalizing Labor Mobility Under the GATS, Alan Winters, Terrie Walmsley, Zhen Kun Wang, Roman Grynberg, Commonwealth Secretariat, Economic Paper, N°53, 2003
Moving People to Deliver Services: Labor Mobility and the WTO, Aaditya Mattoo (Editor) and Antonia Carzaniga (Editor), World Bank Publications, June 2003
Movement of Natural Persons (Mode 4) Under GATS: An Assessment of the Current Negotiations, Werner Raza, Austrian Federal Chamber of Labour, BAK Position Paper, June 2003

Service Providers on the Move - Labour Mobility and the WTO General Agreement on Trade in Services, OECD, Policy Brief, August 2003

Movement of Natural Persons (Mode 4) Under the GATS: A Joint World Trade Organisation-World Bank Symposium, Remarks by Mike Waghorne, Public Services International, Geneva, 11-12 April 2002

Service Providers on the Move: A Closer Look at Labour Mobility and the GATS, Julia Nielson, Working Party of the Trade Committee, OECD, TD/TC/WP(2001)26/FINAL, 20 February 2002

Temporary Movement of Natural Persons (Mode 4) and the GATS, Jolita Butkeviciene, UNCTAD

GATS Mode 4 in the Doha Development Round: Making progress on market access, regulatory and other issues in the run up to Hong Kong and beyond

Andrew Aziz — Fri, 08 Jul 2005 08:30:59 +0000

Organised in cooperation with the Quaker United Nations Office (QUNO).

Café & Croissant on free movement of natural persons and GATS

Andrew Aziz — Wed, 03 Jun 1998 09:24:57 +0000

Speaker:

Professor Bimal Gosh, International Organisation for Migration