The trade-migration nexus: Multilateral stalemate versus regional and bilateral dynamics

19 November 2018
  • The proliferation of regional and bilateral preferential trade agreements has spurred a dynamic evolution of “mode 4” provisions well beyond the standard acquired in the WTO General Agreement on Trade in Services.
  • Free trade agreements signed by China and India also cover non highly skilled workers delinked from commercial presence, contain more provisions facilitating mobility, and even include social and economic rights for spouses and dependants of “mode 4” workers.
  • In some regions, the mobility of service providers overlaps with more encompassing provisions on the free movement of persons. In regions more hesitant towards freedom of movement, limited provisions on labour mobility have been introduced in conjuncture with the liberalisation of service trade.

 

International migration is a relative newcomer on the “trade and” agenda. International rules regarding the mobility of persons within the General Agreement on Trade in Services (GATS) of the World Trade Organization (WTO) have remained limited, favouring the interests of big business. Basically, multilateral commitments are limited to facilitating the mobility of highly skilled managerial staff within multinational companies.

However, the inclusion of the mobility of natural persons in the GATS as one essential mode of cross-border trade in services, so-called “mode 4,” has opened the agenda for more far-reaching developments at the level of regional and bilateral free trade agreements (FTAs). It is in these venues that the nexus between trade instruments and migration has evolved dynamically, opening opportunities for more types of labour migrants beyond the cosmopolitan class of intra-corporate transferees and capital-rich business people.

The proliferation of regional and bilateral preferential trade agreements has thus spurred a dynamic evolution of “mode 4” provisions well beyond the standard acquired in the GATS.

Two transformative forces in the international arena have been key to these dynamics. Power shifts in the global economy and the proliferation of trade deals outside the confines of the WTO have allowed emerging countries pursuing active labour export policies to widen the “mode 4” agenda beyond the level originally agreed by the traditional trade hegemons, the European Union or the United States. In parallel, the wave of regional economic integration since the 1990s has been accompanied by a deepening of corresponding commitments as part of regional market-building.

FTAs as venues for labour export

Bilateral negotiations have the advantage that interested states can move forward with particular deals that would not be consensual in the multilateral setting. Countries with attractive markets, including emerging powers, have particular leverage in inciting partner countries to make concession in areas where they hold particular preferences. On labour mobility, China and India have clearly exploited their economic weight in negotiating far-reaching provisions facilitating the export of domestic workers.

India has so-far concluded four FTAs covering trade in services, with Singapore (2005), Korea (2010), Malaysia, and Japan (2011). China has concluded thirteen, among which can be found well-established OECD economies, such as Australia, New Zealand, and Switzerland.

These FTAs concluded by China and India include commitments on sub-categories of service suppliers delinked from commercial presence – that is not moving within multinational companies, and at all skill levels such as contractual service suppliers and independent professionals.

Commitments also go further in terms of the concessions the partner countries have made on domestic regulations potentially limiting the mobility of these workers. This includes for instance the abolition of “economic needs test” requiring employers to give preference to domestic workers or quota restrictions on foreign personnel. Partner countries have also agreed to make the living conditions for certain categories of foreign service suppliers more attractive by extending mobility and working rights to family members of first applicants including spouses and dependents.

The China-Australia FTA is particularly far-reaching, with Australia granting China “guaranteed access” for a quota of up to 1,800 contractual service suppliers annually in certain occupations along with up to 5,000 visas issued annually for a “Work and Holiday” arrangement. The two countries further commit to expeditious and transparent immigration procedures and cooperation on mutual skill recognition. In addition, a memorandum of understanding allowing for investment facilitation arrangements gives Chinese-owned companies registered in Australia an engaged in large infrastructure projects the possibility of bringing Chinese workers for the duration of the projects.

FTAs as venues for labour import

Countries that have used FTAs as venues to attract temporary labour include Japan and South Korea. They have opened up sectoral commitments to semi-skilled labour and to categories delinked from commercial presence such as independent professionals or contractual service suppliers.

Nurses and caretakers have been among the first labour migrants to be targeted by trade agreements, such as in the Japan-Philippines Economic Partnership Agreement of 2008. Free trade agreements concluded by Japan with other Asian countries such as Thailand, Indonesia, and India also contain such provisions, with nurses being trained to develop language and additional professional skills in programmes sponsored by Japan.

South Korea has concluded deep commitments with the Association of Southeast Asian Nations (ASEAN) bloc, and also with individual members such as Vietnam, Singapore, as well as India and China, including for contractual service suppliers and independent professionals. Important mode 4 concessions have been also granted to countries outside Asia, such as Peru, Colombia, and Chile, which cover mobility rights including for family members of main applicants.

Regional integration as a motor for the trade-mobility nexus

Apart from bilateral FTAs, several regional economic agreements have taken up and deepened the GATS mode 4 agenda.

Indeed, in some regions the mobility of service providers overlaps with more encompassing provisions on the free movement of persons. In regions more hesitant towards freedom of movement, limited provisions on labour mobility have been introduced in conjuncture with the liberalisation of service trade.

The North American Free Trade Agreement (NAFTA) and ASEAN are regional economic communities where member countries have retained reservations towards the free movement of persons. However, (service) trade integration has entailed partial mobility rules.

Chapter 16 of the NAFTA between Canada, Mexico, and the US establishes procedures for the temporary entry of business people, covering similar categories as provided for by the GATS.[1] These include business visitors; traders and investors carrying out trade in goods or services, and providing advice for investment; intra-corporate transferees; and professionals with minimum baccalaureate degree working in specific sectors. Contrary to the GATS, however, these business people are not limited to services and may include persons engaged in activities related to agriculture or manufacturing.

In ASEAN, “mode 4” was introduced with the 1995 ASEAN Framework Agreement on Services (AFAS), adopted the same year as the WTO GATS. The AFAS commitments were incorporated in the 2012 Agreement on Movement of Natural Persons, and are accompanied by mutual recognition arrangements (MRAs) in different professions that further promote the mobility of selected skilled professionals. Regional trade integration has thus spurred partial openings – although national migration systems have remained opposed to a more ambitious mobility agenda.

In conclusion, the multilateral arena may well remain closed towards more ambitious mobility norms in trade agreements. In the meantime, countries have introduced more far-reaching provisions in bilateral and regional deals, thus altering the status quo for future negotiations.

 

Sandra Lavenex is Professor of European and International Politics at the University of Geneva.

The post is part of the ICTSD blog series on Understanding Trade and Migration in the Global Economy.


[1] Chapter 16 of the new trade accord that will replace NAFTA, the US-Mexico-Canada Agreement (USMCA), contains very few changes to the current NAFTA Chapter 16.

 

This blog post draws on the following publications:

EU/US Migration Policy Towards Emerging Countries: Regulatory Power Reversed? by Sandra Lavenex and Flavia Jurje.

Regional Migration Governance by Sandra Lavenex, Flavia Jurje, Terri Givens, and Ross Buchanan.

The Migration-Trade Nexus: Migration Provisions in Trade Agreements, by Sandra Lavenex and Flavia Jurje.

Mobility Norms in Free Trade Agreements: Migration Governance in Asia Between Regional Integration and Free Trade by Flavia Jurje and Sandra Lavenex.