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UNCTAD/CD-TFT 1 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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Presentation on theme: "UNCTAD/CD-TFT 1 Mode 4 of the GATS Taking Stock & Moving Forward WTO Symposium 22-23 September 2008 Mina Mashayekhi, Head, UNCTAD TNCDB, Geneva."— Presentation transcript:

1 UNCTAD/CD-TFT 1 Mode 4 of the GATS Taking Stock & Moving Forward WTO Symposium September 2008 Mina Mashayekhi, Head, UNCTAD TNCDB, Geneva

2 UNCTAD/CD-TFT 2 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

3 UNCTAD/CD-TFT 3 The Case for Liberalizing Migration

4 UNCTAD/CD-TFT 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

5 UNCTAD/CD-TFT 5 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)

6 UNCTAD/CD-TFT 6 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)

7 UNCTAD/CD-TFT 7 INCLUDEDEXCLUDED, 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 levelAll 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 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)

8 UNCTAD/CD-TFT 8 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)

9 UNCTAD/CD-TFT 9 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)

10 UNCTAD/CD-TFT 10 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

11 UNCTAD/CD-TFT 11 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

12 UNCTAD/CD-TFT 12 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

13 UNCTAD/CD-TFT 13 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.)

14 UNCTAD/CD-TFT 14 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

15 UNCTAD/CD-TFT 15 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

16 UNCTAD/CD-TFT 16 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

17 UNCTAD/CD-TFT 17 Zooming in on Mode 4

18 UNCTAD/CD-TFT 18 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

19 UNCTAD/CD-TFT 19 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

20 UNCTAD/CD-TFT 20 Mode 4 Liberalization in WTO Taking Stock

21 UNCTAD/CD-TFT 21 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

22 UNCTAD/CD-TFT 22 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

23 UNCTAD/CD-TFT 23 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

24 UNCTAD/CD-TFT 24 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

25 UNCTAD/CD-TFT 25 Hong Kong Ministerial Declaration (Dec.2005) Para 27. …determined to intensify negotiations…with 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

26 UNCTAD/CD-TFT 26 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.

27 UNCTAD/CD-TFT 27 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, R&D, 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

28 UNCTAD/CD-TFT 28 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.

29 UNCTAD/CD-TFT 29 Mode 4 Liberalization in WTO Moving Forward

30 UNCTAD/CD-TFT 30 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; importance…of 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

31 UNCTAD/CD-TFT 31 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?

32 UNCTAD/CD-TFT 32 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.

33 UNCTAD/CD-TFT 33 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

34 UNCTAD/CD-TFT 34 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 -> 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

35 UNCTAD/CD-TFT 35 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

36 UNCTAD/CD-TFT 36 Thank you for your attention!

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