ࡱ> q 5ubjbjt+t+ AAp]y,y,    8 7 | R) ) (Q Q Q , , , $8, , , , , ,  Q Q  " , Q Q  ,  N Nn $(x@ Q T0jT L @ JOINT ϲʹ-WORLD BANK SYMPOSIUM ON MOVEMENT OF NATURAL PERSONS (MODE 4) UNDER THE GATS ϲʹ, Geneva, 11-12 April 2002 Temporary Entry of Natural Persons as service Providers: Issues and Challenges in Further liberalization under the Current GATS Negotiations Richard Self B. K. Zutshi Introduction It was in the post-World War-II period that the growth of services in the OECD countries showed dramatic increases. This growth was largely driven by advances in information technology and telecommunications. Services were considered largely non-tradable before the advent of these technological developments because of being non-storable and having to be simultaneously produced and consumed. Computerized storage of data and remote delivery of services by modern means of communications helped in dramatically increasing the tradability of services. This fostered bilateral trade exchanges in many service sectors with developed countries being the major suppliers. This in turn resulted in pressures within developed countries to seek changes in the regulatory environment to make it possible for services to be exchanged on cross border basis. Inclusion of trade in services as an issue for negotiations in the Punta Del Este Ministerial Declaration, which launched the Uruguay Round Negotiations in Sept. 1986, was preceded by a long and controversial debate on the tradeability of services and hence on its relevance as a subject for multilateral trade negotiations. This included the issue of applying trade rules to investment in services, since regulations and the marketplace required establishment in the host country as a condition for doing business. Investment had never been recognized as trade under the GATT, and this contributed to the difficult debate on treadeability. The debate continued well into the Round and was coloured by sharply differing perceptions between the developed and the developing countries on the possible impact of multilateral rules and disciplines in services trade on their economic and developmental interests, even though there was no clarity about the nature of such rules and disciplines. The possible application of the GATT paradigm for goods raised, not only doubts about its appropriateness for the services sector, but also great fears and anxieties among the developing countries about its implications for their development aspirations, given the significance of the sector in economic terms and its strategic role in development. Reluctant participants in the beginning, developing countries, however, turned enthusiastic supporters of a multilateral regime of rules in services trade towards the end of the Uruguay Round, even more so than the demandeurs, whose earlier expectations of generating trade liberalization were not being realized. This change in attitude of developing countries had to do as much with the emerging structure of the framework agreement as with the autonomous liberalization undertaken by them in their quest for greater integration into an increasingly interdependent global economy, greatly fostered by technological developments in computing and telecommunications. A major achievement of the Uruguay Round Multilateral Trade Negotiations was bringing services into the multilateral trading system through the General Agreement on Trade in Services (GATS) and the initial commitments made under the agreement through extended negotiations. Having said that it may also be pointed out, (and as is generally accepted now) that the actual commitment to liberalize trade in various sectors was modest, with the exception of telecommunication services and, to a lesser extent, financial services. The present commitments, except in these two sectors, indicate a standstill, or even a roll-back in some cases i.e. the then applicable regimes were more liberal than those bound under the agreement. If Members take account of autonomous liberalization since the conclusion of the extended negotiations, the gap between the applicable and the bound regimes has further widened, particularly in case of developing countries. Even by these modest standards of liberalization, little was achieved in case of the temporary entry of natural persons (known as mode four under the GATS framework). Commitments were horizontal, mostly for movement associated with the establishment of a commercial presence (known as mode three under GATS). and confined to intra-corporate transferees at senior levels and high-skill professionals and specialists. Additionally, commitments were subject to conditions and qualifications such as various kinds of needs tests, wage-parity requirements etc. which further reduced their value in providing effective market access. The procedural requirements for grant of visas and work permits remained unchanged as the result of Uruguay Round commitments and subject to considerable discretionary powers to the issuing authorities, resulting in further erosion in access opportunities. In the case of professional services, there are strongly held views that the recognition of qualifications and verification of professional competence, without which no effective access is possible, has left much to be desired in implementation. There is, however, a contrary view on this issue which suggests that in practical terms absence of mutual recognition agreements and harmonized rules does not act as a constraint to temporary movement in most licensed professional services, as the professional provides his service as a consultant, leaving it to a locally licensed associate to meet the legal requirements of authenticating, by signature, say audit reports and architectural plans. On that basis it is held that recognition and harmonization of qualifications are less relevant to providing services through mode 4. This argument also holds that, in a negotiating environment, it will be difficultprobably impossibleto achieve improved temporary entry regimes and to harmonize professional qualifications. This will need to be explored further. Issues which have a bearing on equity (contributions without benefits) and possibly on the conditions of competition (raising costs) such as social security payments were left unresolved, as participants differed over the ability to manage such complex issues through negotiations over temporary entry and stay under mode 4. The present negotiations provide an opportunity to address all of these issues, substantive and procedural, that are seen as standing in the way of effective market access under mode 4. Fortunately, the present is a propitious time to do so in view of the revolutionary developments in computing and information technology, the demand- supply imbalance in skilled manpower among groups of countries, demographic changes in global population, resulting in age- profile changes; all of these several factors resulting in labour shortages in developed countries` markets. This is evident from recent changes effected in Germany, France and the UK in their immigration policies and regulations to attract foreign workers. The United States has also enhanced the H-1-B quota ceiling. Developing countries, on the other hand, are labour- abundant and some of them have this abundance in skilled and professional categories. There is, therefore, mutuality in the needs and benefits from movement of natural persons between developed and developing countries. The opportunity provided by the ongoing services negotiations in the ϲʹ must be exploited to promote liberalization in temporary movement of natural persons under the GATS to the mutual benefit of developed and developing countries. The process for the realization of this objective has to start by involving all stake holders in a discourse on the issue, including in particular labour representatives and immigration authorities, the service industry, academicians, trade policy experts and negotiators. This discourse has to start with a better understanding and appreciation of the GATS provisions on MONP, on the one hand, and, demystification of immigration laws and regulations relating to temporary movement, on the other. This joint ϲʹ-World Bank symposium is a commendable initiative in setting up of this discourse and we hope that it is the first of a series of such initiatives. One of the principle objectives of this debate between stakeholders should be to allay apprehensions about a possible inundation of developed country labour markets by cheap labour from developing countries, which is a sensitive issue in a number of developing countries as well. Apart from the fact that the GATS only seeks to liberalise cross-border movement of natural persons on a temporary basis for the provision of services, developing countries themselves do not appear to be interested in the migration of their skilled manpower as that is not in the interests of long term prospects of their growth and development. The other area of concern is the possibility of abuse of temporary entry under the GATS for entry into the labour market of developed countries on a permanent basis. This concern has to be addressed and one of the ways of doing so may be home and host country cooperation in enforcement. The rest of this paper is organized as follows: Section 1 deals with scope and coverage of mode 4, giving a brief history of negotiations establishing the definition of trade in services and the emergence of mode 4, in addition to interpretation of the legal provisions of the GATS relevant to mode 4. Section 2 examines the up to date mode 4 specific commitments, their brief negotiating history, analysis of commitments by major developed countries and an assessment of the political and regulatory dynamics leading to mode 4 commitments to date. Section 3 is on issues and challenges in the current negotiations in respect of mode 4, starting with an analysis of the negotiating mandate, an assessment of the current negotiating environment in regard to mode 4 liberalization compared with that of the Uruguay Round. This section also covers issues relating to classification of natural persons as service providers and approaches to liberalization negotiations, barriers to and challenges in effective market access through and under mode 4. It also addresses possible means of facilitating temporary entry of service providers under the GATS. The section closes with an examination of related GATS disciplines having a bearing on effective market access under this mode. Section 4 draws some conclusions and makes some recommendations. Section 1 Mode 4: Scope and Coverage a) Establishing the definition of trade in services and the emergence of Mode 4 Although still a long way from the definition of trade in services in Article 1 of the GATS, an important step towards this definition was taken in the mid-term review Ministerial Meeting in Montreal in December 1988. Ministers directed that work on definition should proceed on the basis that the multilateral framework may include trade in services involving cross-border movement of services, cross-border movement of consumers, and cross-border movement of factors of production where such movement is essential to supplies(MTN/TNC/11). This conceded the principle of parity/symmetry in the treatment of capital and labour , a core demand of developing countries in any multilateral framework of rules in services trade. For developed countries, the language had its own significance, as it represented a breakthrough in gaining agreement to include investment in services. The definition was also to be examined further in the light of: cross-border movement of service and payment, specificity of purpose, discreteness of transactions and limited duration. Inclusion of these four elements, along with the caveat on essentiality in factor movement, while preserving the negotiating position of developing countries (which at that stage continued to view the inclusion of services in the multilateral trading system as being against their developmental interests), reflected a balance in the perceived interests of the two sides. The three elements of specificity of purpose, discreteness of transactions and limited duration, along with the essentiality caveat on factor movement reflected developing countries reservation about the framework becoming an investment agreement in services and also preserved developed country opposition to uncircumscribed labour movement as a part of the services agreement. As will be seen in the following paragraphs, these elements inform not only the definition of trade in services, but some important elements of the structure of GATS itself, though not necessarily in the way and to the effect intended by participants at the time. We would argue that the modal approach to the definition, if not embedded in these elements, was implied therein. Further that it was also inherent in the insistence on formal parity/ symmetry in factor movement, In the immediate post mid-term review period, negotiations on definition were put on the back burner, for delegations wanted to have a better understanding and feel about the kind of regime appropriate for services before they would come to grips with the issue. In order to gain that kind of understanding, the post mid-term review period examined the implications and applicability of the main GATT rules and principles to particular sectors. This exercise in the fall of 1989 proved of immense help to negotiators in realising the enormous challenges in addressing the diversity and complexity of different service sectors, subject to divers regulatory regimes, across sectors and countries, through a single set of framework rules. It was during this process that the idea of sectoral annexes for the purpose of identifying and addressing sector-specific issues was raised, resulting in the appointment of sectoral working groups consisting of negotiators and sectoral experts. Among the eight groups set up, one was on labour mobility, mandated to examine (i) the need for a specific annotation/annex on labour mobility and (ii) and the possible nature and content of such an annotation/annex. The group was unable to provide any consensus- based recommendations on both the need for and the nature and contents of an annex on labour mobility. The Negotiating Group on Services (GNS), consisting of GNS negotiators and sectoral experts, was appointed in August 1990 to take stock of the work of the sectoral working groups and finalise draft texts of sectoral annexes/annotation wherever these appeared necessary. Although there was no consensus nor even any clarity about the need and contents of an annex on labour mobility, the work in the labour mobility group and informal consultations on definition had led to a consensus on the modal approach to the definition of trade in services. The text of Article 1:2 in the Rev 1draft (page 333) is the same as in the GATS in respect of modes 1,2 and 4., except for the technical change of Party to Member. The text for mode 3 was partly in square brackets as developing countries continued to maintain tactical opposition to establishment based trade, in part because some important mode 4 issues were far from settled at that point in time. Since the Annex on Movement of Natural Persons Supplying Services Under the Agreement (hereinafter referred as Annex on MONP) is a part of the definition of trade in services, we will briefly touch upon the negotiating history of the Annex, before reverting to a further analysis of the definition and scope and coverage under mode 4. The issues in negotiations on a possible annex on labour mobility before the Brussels Ministerial Meeting were: Mobility to relate to temporary movement of physical persons performing particular services in respect of which access commitments have been undertaken. Exclusion of individual job seekers and access to the employment market from coverage. An illustrative list of physical persons performing particular services covering broad categories of sectors and skill levels to be established. Market access commitments specifying the categories for the provision of a particular service to be negotiated in accordance with Article XVI of the framework drawing on the illustrative list. Application of national treatment to persons admitted under a market access concession on mode basis. Flexibility to parties to regulate the temporary entry and stay of natural persons to ensure integrity of and orderly movement across borders on the one hand, and, on the other, to ensure non-frustration of benefits through the application of national laws, regulations and administrative practices relating to the temporary movement of physical persons. Treatment to be accorded to the integration of labour markets. It will be observed from the text of the Annex on MONP that all the issues/elements, other than an illustrative list of physical persons performing particular services and the treatment of labour market integration have been incorporated in the Annex. At that stage in negotiations there was still no clarity on the scope of application of the Annex to temporary movement of natural persons associated with commitments under mode 3. This issue was discussed in the post-Brussels negotiations. It will be recalled that the Brussels Ministerial was designed to conclude the Uruguay Round, but it failed to do so. However, negotiations continued in earnest during 1991, and at the end of the year produced the Draft Final Act under the authority of the Chairman of the Trade Negotiating Committee. The services components of this document, later to become the GATS, were, with some exceptions, kept largely intact at the conclusion of the Uruguay Round in 1993. The labor market integration issue was conceded at the end of the Round and put under article V bis. Negotiating an illustrative list of natural persons performing services did not fructify for want of wide spread support and enthusiasm and the perception that the task would be difficult to bring to a meaningful conclusion in the time frame of the UR negotiations. While some developed country delegations were in favour of drawing such an illustrative list in respect of natural persons associated with mode 3 commitments, some developing countries led by India were looking for an illustrative list covering different levels of skills and not only high-skill professionals and executives associated with mode 3. As has been indicated later in this paper, a remarkable degree of uniformity in classification of professionals and executives associated with mode 3 movement did emerge in the process of commitment negotiations, without a formal decision to that effect. The idea of classification of natural persons for the purpose of undertaking commitments in order help promote liberalization under mode 4 and bring about a degree of certainty and uniformity in commitments has been revived in the current negotiations. The issue has been dealt with later in this paper. Thus it would appear that by the time of the Brussels Ministerial meeting in December 1990, although there were formal and tactical reservations about some elements of the definition of trade in services in Article 1:2, and the precise content of a labour mobility annex, there was a general understanding among negotiators about the modal approach to the definition of trade in services and possible coverage of issues under the labour mobility annex, except for the coverage of natural persons movement associated with modes 3. Not much thought had been given to the movement of natural persons associated with mode 3 from the perspective of the annex. The understanding was clear on the temporary nature of the movement, exclusion of access to the employment market of a Member and of citizenship, residence or employment on a permanent basis and the need for considerable flexibility to members in regulating temporary entry of natural persons subject to non frustration of specific commitments. The contentious issue of the scope of the temporary movement in terms of skill levels was settled by agreeing to leave it to specific commitments negotiations covering all categories of natural persons. It may be observed that the understanding on the natural persons movement under the agreement being temporary, without any such qualification for investment under mode 3, implied a modification in the negotiating stance of developing countries on limited duration as an element of symmetry in factor movement (capital and labour). It was during 1991 that negotiators addressed the issue of natural persons movement associated with mode 3 commitments. The issue had also come up in the negotiations on specific commitments in the financial services sector. It was clear that natural persons movement associated with mode 3 would have to address the same set of concerns applicable to mode 4. It appeared, therefore, logical and necessary to include in the scope of the Annex on MONP measures affecting natural persons movements under both modes. The scope of the Annex thus covers measures affecting natural persons who are service suppliers of a member and natural persons of a member who are employed by a service supplier of a member, in respect of the supply of a service under the agreement. b) Interpretation/Explanation of the legal provisions of the GATS relevant to Mode 4 The definition of mode 4 in the GATS (Article 1:2(d)) as the supply of a service. by a service supplier of one Member, through the presence of natural persons of a Member in the territory of any other Member, read with the scope of the Annex on MONP, covering movement associated with mode 3 also has been seen by some commentators (Grynberg (2001),Young (2000) and Winters et al 2002)) as creating an important ambiguity at the very heart of the GATS( Winter et al) inasmuch as a distinction is sought to be made between service supply and employment on the basis of the nature of engagement of a foreigner in a domestic firm whether as a employee or as a service supplier on contract basis. It has also been argued that since the Annex covers natural persons employed by a service supplier of a Member, this could include foreigners employed by host- country firms, but such employment was not covered by the disciplines of the GATS. Furthermore, as pointed out by winter et al in their paper on Mode 4, a service delivered by a foreign worker under employment contract to a local provider may be treated differently from precisely the same service provided by precisely the same person acting as an unattached service provider or under contract to a foreign company. The present authors do not recall the issue of employment of foreigners by local firms having come up for detailed examination because of the understanding on access to labour market being outside the scope of the coverage under the GATS. The negotiating history on this issue is less than clear, and the descriptive language that emerged for mode four is ambiguous on the treatment of a service supplied by a foreign person who is employed by an indigenous services company or firm. The authors do, however, recall that that this particular issue of legal applicability did not arise when the U.S. offered to bind its h1b visa provision, which would apply. It is certainly arguable that recruitment from foreign sources is a service. It is also true that the use of such services is widespread on bilateral basis and in the context of regional agreements. A sound case can, no doubt, be made in favour of multilateralization of such recruitment from foreign sources. We would strongly encourage participants in the current negotiations to explore this avenue for further liberalization under mode 4. Another issue where commentators have faulted the Annex on MONP, is the absence of a definition of temporary movement in terms of time period. This was extensively debated during the negotiations. It was felt that defining the period for the purpose of temporary movement would introduce rigidity in the framework agreement, as different situations would call for different periods of stay. The commitment itself was seen to be permanent (unless renegotiated), and the movement of individuals thereunder time-limited as specified in the schedule of commitments, resulting from negotiations. In the context of mode 4, one of the issues raised by some delegations was about the treatment to be accorded to stand-alone labour market integration agreements, outside economic integration arrangements covered under Article V. This was a particular concern of Nordic countries. India was also interested because of its integrated labour market with Nepal. The issue was addressed through Article V bis whereunder members have the freedom to enter into labour integration agreements. It may be mentioned in passing that perhaps the provision is redundant given that the Annex on MONP excludes the coverage of access to labour markets and that labour market integration agreements are precisely meant to provide such access. Article XXVIII of the GATS covers definitions. Definitions relevant to mode 4, are those for supply of the service (includes the production, distribution, marketing, sale and delivery of a service a comprehensive as it can get), natural person of another member (means a natural person with residence in the territory of that member as a national or with the right to permanent residence). c) Other provisions relevant to MONP under the GATS The other provisions and general disciplines pertinent to the movement of natural persons include Article VI on domestic regulations, Article VII on recognition and Article III on transparency. Article VI obliges members to ensure that in sectors where specific commitments are undertaken, requirements on qualifications and procedures, technical standards and licensing are based on objective and transparent criteria and do not in themselves constitute a restriction on the supply of the service. It also obliges members to provide for objective and impartial reviews of administrative decisions affecting trade in services. Article VII on recognition gives discretion to members to recognize the education, experience, licensing and certification of foreign service providers either in whole or in part, and either autonomously or by mutual agreement or by harmonization. It prohibits members from using criteria or standards for authorization as a disguised restriction on trade. Article III on transparency requires members to publish all relevant measures of general application which pertain to or affect operation of the agreement. Some of these issues, particularly pertinent to effective market access under mode 4, have been dealt with later in this paper. Section 2 An Assessment of Specific Commitments Undertaken to Date under Mode Four a) Uruguay Round Negotiations. As indicated earlier, the four modes of supply, including, of course, that covering the temporary entry of natural persons, were a well-established part of the draft framework for services when request and offer negotiations initially commenced in 1991. While the Uruguay Round lasted seven years (1986-1993), only the final two years of the Round were devoted to the negotiation of specific commitments among the participants. This was a relatively short period of time in which to negotiate commitments in an area completely new to the GATT/ϲʹ. Trade negotiators ordinarily calibrate their requests and offers on the basis of statistics, as part of the effort to obtain a theoretical balance of concessions among the parties. This was not possible in the case of services, since no reliable data was (and is) available on a sufficiently dis-aggregated basis to enable countries to assess the quality of their concessions. Similarly, participants had very little basis to assess the value of commitments by mode of supply due to the deficiency in services trade and investment data. Inevitably, this led to disagreements among delegations that there was not a rough balance of commitments among the modes of supply, in particular between modes three and four. Generally, participants gave greater attention to the third mode of supply (commercial presence.) In the view of a number of developing countries, the greater concentration of commitments under mode three compared to mode four led to asymmetries in the level of obligation participants were to assume. By the conclusion of the Round in December 1993, there was a consensus that the participants had failed to capture market access and national treatment commitments in several sectors of critical importance to the negotiations, making it impossible to conclude the services portion of the Uruguay Round. Negotiations on basic telecommunications, financial services, and maritime services, were given 18-month extensions of negotiating time, in the hope that a package of improved commitments could be achieved in these sectors. India proposed that the extended negotiations include those governing the temporary entry of natural persons, and this was agreed. The extended negotiations on Mode Four commitments, on the whole, were not successful. The issue of making legally binding commitments affecting temporary entry regimes remained a sensitive issue for most countries, and the environment associated with the extended negotiations in specified areas did not lend itself to greater pressure on countries to consider improvements to their obligations in Mode Four. Regulators responsible for considering new commitments generally remained hostile to incorporating additional obligations, in contrast to their counterparts in the areas of telecommunications and financial services. We will provide an assessment as to why temporary entry emerged as such a difficult issue for countries later in this section. However, at the conclusion of the negotiations, very little progress beyond what was achieved in the Uruguay Round could be measured at all. Indeed, no more than a handful of countries showed a real interest in addressing this issue. When the negotiations terminated in July 1996, this could be described as the low point in efforts to see improvements to mode four commitments. Only eight participants included modest changes to their commitments in mode four, most of which had been pulled from the table at the conclusion of the Uruguay Round to improve negotiating leverage in the extended negotiations. b) Mode Four Specific Commitments and their effect on liberalization of trade in services. Nearly all countries made commitments under mode four. If one were to draw a quantitative assessment of the number of commitments made in this mode compared to the other three modes of supply, mode four would fare quite well. Moreover, nearly all commitments were made with respect to all services sectors listed in country schedules; that is, they were entered horizontally in the Headnotes to Schedules section of country Specific Commitments. This is largely attributable to the manner in which regulation is applied to temporary entry. Most countries apply temporary entry rules on the basis of skills, education, and other factors regardless of the sector involved. However, there are exceptions. In a few instances, rules governing temporary entry address a single service sector, as in the case of the treatment of nurses under United States visa laws. However, these tend to be the exception, not the rule. Horizontal commitments did not, however, capture the breadth of services sectors they would imply, particularly as one assesses the overall coverage of sectors entered in country schedules. An OECD Secretariat analysis (TD/TC/WP (2001) 26/REV2) concludes that developed countries made mode four commitments in only 50% of services sectors and developing countries in 11% of all services sectors. Its analysis of sectors deemed particularly critical to mode four deliveryhealth, legal and accountancy servicesconcludes that entries were limited and largely incomplete. Generally, mode four commitments were made in these sectors at least in 90% of entries, but most of these were limited to the senior manager, executive category, which captures a very small portion of services providers critical to these sectors. The ϲʹ Secretariat Analysis (S/C/W/75), which tabulated the number of entries, underscores these conclusions by worker category. The preponderance of entries (94%) fell in the rarified category of business visitors, senior executives, managers, and specialists with proprietary knowledge of company technology. Only 6% of entries fell into other categories of workers. Thus the quality of commitments made under Mode Four would lead to a somewhat different conclusion. Generally, mode four commitments barely touched the level of activity that is taking place in the provision of services by persons traveling to other countries, as revealed in the ϲʹ Secretariat computation. Most mode four entries had value only if Members had inscribed commitments under the commercial presence mode, since the value of such an obligation depended on the ability of a services provider to establish a commercial presence in the host country market. Furthermore, these entries, while useful in their own right, nonetheless were limited to the very top of the ladder of company hierarchy. The only other category covered by most countries (70%) was that of services salespersons. This is generally a less sensitive category since the individual entering under this category is not allowed to perform a service in the host country. Activity is limited either to marketing a service or otherwise performing work to establish an overseas affiliate office. A survey of country entries in the mode four category reveals a remarkable consistency among country schedules in terms of the extent of the obligations and the manner in which these obligations are inscribed. For instance, there is virtually no distinction among the many entries covering the category of senior managers, executives and specialists with proprietary company knowledge. These similarities reflect a common format around which negotiations occurred in this mode. This relative harmony in the conditions and qualifications under the senior manager/executive/specialist category is partly associated with policies of reciprocity that immigration authorities have practiced for some time. Philosophical differences, to the extent they existed, are subordinated to matching what other countries extended in this particular category. The same is true for the treatment of services salespersons. There are inevitable exceptions to this level of uniformity of commitments, but these exceptions do not represent major enhancements to the overall level of obligations assumed by certain countries. For example, three countries made commitments associated with services supplied without the affiliate office but through a contract with a host country service entity. In the extended negotiations, the EU undertook additional commitments covering a specified list of licensed and unlicensed professionals who had a contract to work within the EU. The visa was subject to a needs test, and, where necessary, having requisite professional credentials recognized by host country authorities. Nonetheless, the EU commitments in this regard were substantially conditioned by a number of reservations taken by its individual member states, who have the final control over visa policy in the European Union. The United States bound its H1b visa category, which permits temporary employment by foreign nationals with U.S. firms for worker categories of persons with highly specialized knowledge. The U.S. obligations are qualified with a numerical limitation in the form of an annual quota of visas granted, as well as wage parity and labor disruption safeguards. This is not to say that commitments under the other three modes represented a significant success story in trade liberalization. Generally, for all the modes, the maximum level of obligation assumed by participants coincided with requirements of existing laws and regulations that were in place during the course of the negotiations. In virtually no instance did a commitment require the enactment of new measures or changes to existing measures to bring about conformity with ϲʹ obligations. (Some measures that had been enacted autonomously during the course of the Uruguay Round were captured in schedules, which arguably represents a form of rollback to regimes that preceded the Round. On the basis of the Uruguay Round experience, however, this has led some to wonder whether the role of GATS will be limited to being, in the words of Aaditya Mattoo, the grim harvester of autonomous liberalization, rather than a catalyst for generating multilateral liberalization.) In numerous instances, participants did not bind the full measure of market access extended by existing law or regulation. If the standard for measuring the quality of commitments among the four modes rests on the extent participants bound existing measures, those taken under the first three modes are generally superior to those assumed under the fourth mode. This is largely attributable to the exceptionally high skill and management levels that were included in bindings, despite existing visa systems that provide a basis for access in other skill levels. However, it is not easy to make such a generalization. For instance, in the first mode of supplythe provision of a service across bordermost countries did not assume obligations except in specified situations where there is no regulation that prohibits the service from being supplied electronically. Generally, participants gave less attention to this mode of supply because it offered more limited circumstances when a service could actually take place across borders, with the notable exception of telecommunications. (The Uruguay Round time frame preceded the full development of the Internet, making the provision of services via electronic commerce a less important issue than it is today.) GATS is the only legal framework that provides for obligations respecting the establishment of an enterprise abroad, which is given the term commercial presence. Indeed, the commercial presence mode became the principal focus of request and offer negotiations, since most services that were the focus of attention in the Uruguay Round are generally provided through some form of establishment abroad. Numerous restrictions associated with the form of commercial presence (subsidiary, branch, representative office) and the percentage of foreign equity allowed made up the conditions and limitations to schedules of commitments under this mode of supply. Most restrictions to commercial presence were assumed by developing countries, compared to those of industrialized countries, which nonetheless assumed their share of restrictions to mode three. This conclusion is based both on the overall number of restrictions to commercial presence mode, as well as the universe of services sectors incorporated in country schedules. (In GATS scheduling methodology, a sector excluded means that there are no obligations assumed for that sector under the four modes of supply.) Despite developing country reticence to consider investment as part of a trade negotiation, most of their services commitments were confined to mode three. India, for instance, limited all of its commitments (except telecommunications) to mode three despite its position throughout the negotiations that establishment-based trade was not trade at all. While commitments undertaken in mode four generally captured all services sectors included in the schedule, these commitments, in comparison to those of commercial presence, did not capture the universe of temporary entry. Temporary entry regimes contain numerous visa categories that govern the different skill levels of the workforce, and the level of management within company organizations. As indicated earlier, GATS commitments were limited to a very small number of people in comparison to the large workforce pool that is outside the category of senior managers, executives, and specialists who possess an advanced level of continued expertise and who possess proprietary knowledge of the organizations services. For all of the political sensitivity associated with binding lower job categories, any objective assessment of commitments that countries assumed under the four modes of supply would conclude that commitments under the fourth modethe provision of a service through presence of natural persons in another members countrywere the least extensive. Perhaps it is too simplistic to compare levels of commitments among the four modes as one significant measure of balance of benefits assumed by some countries compared to others. There clearly is no statistical basis to do so, unless and until there is improved data in services trade. In the final analysis, the inevitable asymmetries in commitments among the various modes reflected the prerogatives of different regulatory cultures, which have little or no relationship to one another. Those responsible for negotiating commitments had a finite amount of control over these regulatory prerogatives. What seems clear, however, is that commitments under mode four were the least substantive of all the modes. Nonetheless, the intervening period between the Uruguay Round, and the negotiations that resumed in 2000, has generated much greater attention to both the first mode of supply (owing largely to the development of electronic commerce) and, to a comparatively lesser extent, the fourth mode, as services industries have assessed their needs in doing business abroad. As the result of these developments, there is a greater equality of interest among countries in all of the modes, with the possible exception of mode two. c) An Assessment of the political and regulatory dynamics leading to Mode Four Commitments to date. There are a number of issues associated with assuming international legal obligations for the temporary entry and stay of natural persons. Two underlying factors probably have contributed to the relatively limited commitments in the Uruguay Round: 1. Enforcement Concerns. This category of issues relates to the ability of authorities to assure that their laws governing temporary entry are properly implemented. Immigration authorities have reported widespread abuse of their visa systems by individuals purportedly traveling for tourist or business reasons, but whose purpose is to gain permanent residence. This has become a sensitive political issue in a number of countries, and there is considerable sentiment in favor of measures that have the intent or effect of making it more difficult to obtain a visa for temporary entry. Many of these measures are overtly discriminatory, and have the effect of denying market access to legitimate services suppliers. One aspect of the enforcement mechanism enables authorities to treat applicants from certain countries less favorably than those from other countries, on the basis of a pattern of abuse that stems from visa applicants of specific countries. Visa authorities respond by requiring more data from visa applicants from these countries, arguably violating the spirit of MFN that is fundamental to GATS. Any assessment of enforcement concerns outlined above must take into account the exceptions in the GATS framework that permit discriminatory treatment in specified situations. The GATS provides for many of these measures through its Annex on Movement of Natural Persons Supplying Services Under the Agreement. The Annex clearly excludes any measure relating to citizenship, residence, or permanent employment from the provisions of the Agreement. It further provides for the right of governments to regulate entry of natural persons...including those measures necessary to protect the integrity of, and to ensure the orderly movement of natural persons across borders.... Through the Annex, the GATS provides considerable flexibility to enforce measures that address abuse of the visa system. Despite these provisions, authorities remain concerned that bound commitments in country schedules will undermine their flexibility to administer temporary entry measures in a responsive way. These concerns contributed to the relatively modest commitments under mode four in the Uruguay Round. 2. Protection of labor markets. A second principal factor is the protection of the labor market, which, under GATS, relates solely to situations involving temporary periods of stay. The high skill levels authorized in country schedules reflect this concern, which emerged as an issue for all countries, regardless of their level of development. There are sound economic arguments for creating the most open environment for the most competitive wages and salaries possible. In addition, countries can more effectively address the problem of labor shortages in a number of lower skill categories through the use of more liberal regimes that provide for the temporary entry of persons in these categories. The political side of this issue is much less manageable for most countries. Fear of job stability, wage and salary erosion and associated social benefits, remain the paramount concern for governments whose political accountability will always reign over economic logic (and associated labor shortages) on such an issue. Thus the principal issue for a trade negotiation is what is politically feasible in the way of binding skill levels that are to be covered under the fourth mode of supply. There are differences among developed and developing countries over this issue. Developing countries have a comparative advantage when calculating skills and remuneration and can be expected to push for lowest skill levels possible in the environment of a trade negotiation. Nevertheless, industrialized countries have their own limitations that will be dictated by powerful political interests with concerns over employment stability. Any success in progressively liberalizing commitments covering the temporary entry of natural persons will rest on the capacity of all the participants to strike the right balance on this issue; to progress from the existing level of senior managers and executives to a more expanded, but realistic, universe of the work force. Section 3 Issues and challenges in Current Negotiations Negotiating Mandate: Article XIX and Negotiating Guidelines and Guidelines for Scheduling of Specific Commitments Article XIX lays down the rules of engagement for further liberalization in services based on the notions of progressivity of liberalization and balance of benefits in the exchange of concessions. For this purpose, negotiating guidelines and procedures have been approved which closely track the provision of Article XIX, without any value addition. Under these guidelines, the scope of negotiations has to be comprehensive without a priori exclusion of any service sector or mode of supply. Though there is nothing specific to mode 4 negotiations in the guidelines, special attention to sectors and modes of supply of export interest to developing countries is envisaged. The principal mode of negotiations is the request and offer mode, although we address other possible negotiating techniques in this paper. The guidelines also envisage negotiations on Article II (MFN) Exemptions in the current schedules. Scheduling of commitments under the GATS is a complex task and calls for a comprehensive understanding of the architecture of the GATS, and its specific provisions. This was recognized during the initial commitments negotiations under the Uruguay Round itself, resulting in drawing up of guidelines on scheduling of specific commitments. In spite of these guidelines, initial commitments have been found wanting, both in clarity and precision. Good examples of this in the current schedules are limitations by way of various types of needs tests. The current schedules do not indicate any criteria for their application. One reason for this shortcoming was also the lack of time during the Uruguay Round for meaningful scrutiny of draft schedules. Building on the earlier guidelines and the actual scheduling experience in the Uruguay Round, Guidelines for Scheduling of Commitments for the current Round have also been approved (S/L/92). The guidelines address two main questions: what are the items to be put on a schedule and how should they be entered i.e. limitations, if any, on market access and on national treatment and scheduling of additional commitments which are not restrictions on market access and limitations on national treatment under Articles XVI and XVII. This is done with illustrations. In addressing these questions, the guidelines cover all relevant issues from the scope of coverage under each mode, the relationship between different modes for effective access, and issues relating to horizontal and sector specific commitments. These guidelines should go a long way in ensuring greater clarity and precision in recording specific commitments. The negotiating process in this Round will have to pay much greater attention to the scrutiny of draft country schedules to ensure this outcome. b) An assessment of the current negotiating environment for mode four compared to the Uruguay Round. We have indicated earlier in this presentation that the Uruguay Round produced modest commitments under mode four. The question is whether the environment is now a better one to generate more substantive commitments in the current negotiations. Generally, the conditions appear to be much more favorable for a more ambitious outcome in this area of activity. For most of the Uruguay Round, mode four issues were framedrhetoricallyas differences between developed and developing countries. Many delegations envisioned a rough balance of concessions measured by commitments developing countries would undertake under the commercial presence mode and those taken by developed countries under mode four. The debate polarized countries unnecessarily and provoked a more defensive posture on the part of both sides. Developed countries generally feared the worst out of such a result, requiring concessions at lower skill levels of workers that they knew were not politically sustainable. In pressing their negotiating leverage, developing countries that placed a premium on this issue did nothing to assuage these fears. As the debate matured, however, a number of developing countries revealed the same problems developed countries were having with this issue. The very modest results in mode four could not be attributable to this dynamic alone. During the Uruguay Round, there were few stakeholders who pressed their interests upon their own governments as well as others. There were some notable exceptions to this. The Indian Software Industry Association (NASSCAM) actively (and effectively) devoted time and resources to persuading countries to make commitments affecting software engineers and their freedom of temporary entry under GATS. In the United States, a very powerful and diverse lobby used the GATS negotiations to generate a U.S. binding of the h1b visa provision covering the temporary employment of highly skilled foreign workers in U.S. companies and firms. In contrast, mode three (commercial presence) stakeholders were widespread and well organized. That mode three commitments were broader and deeper than those in mode four has much to do with the role of stakeholders who convinced governments of their needs. Since the Uruguay Round, many countries have undertaken a more comprehensive assessment of their specific needs in the area of temporary entry and stay. In addition to the more traditional market access issues, greater attention has been devoted to other issues such as transparency, where market access is frequently denied because authorities are less than clear about application requirements and data needed to gain temporary admission to a country. This includes the related issue of utilizing new technologies to make temporary entry requirements more easily obtainable They have given more focused attention to the absence of any criteria that govern admission based on economic needs. In addition, there are more stakeholders in both developed and developing countries. As the world economy has become more globalized, companies and firms must service the needs of their customers and clients in different countries. This puts greater demand on the need for short-term deployment of personnel to meet specific project and contract requirements, many of which must be completed within short deadlines. These companies and firms are frustrated with visa procedures that can delay entry of personnel by months, frequently resulting in the loss of business. The result is that the United States Coalition of Services Industries and the European Services Forum have endorsed improved mode four commitments by all countries to expedite the movement of professional-level personnel. These needs are incorporated in an effort to benefit companies and firms with overseas affiliates, as well as enterprises that do not have overseas operations, thus expanding the benefits of such undertakings for all countries. The specific developments mentioned above do not capture the objectives of all the stakeholders with an export interest. However, what is undeniable is that mode four has emerged as a strategic component of providing trade in services in a large number of countries, which is in total contrast to the environment that existed in the Uruguay Round. In the current negotiations, delegations have presented negotiating proposals that reflect their interests in further liberalizing trade in services. Only six delegations have made specific proposals in the area of temporary entry. Objectives varied widely in these proposals, some of which stopped short of advocating improvements in market access. We summarize four of these proposals briefly: United States. The U.S. proposal focuses on improving transparency of procedures to make the process of applying for temporary entry more easy and predictable. It also places emphasis on the need for additional regulatory disciplines to insure implementation of existing commitments. It also proposes improved transparency in responses by authorities to visa applications and their reasons for being denied. The U.S. proposal does not include suggestions for expanded market access commitments. European Union. The EU proposal calls for expanding market access commitments beyond current levels, although it does not specify those areas where improvements could be made. In addition to a call for improved transparency of procedures, greater access to information, and published criteria for economic needs tests, the EU proposal places considerable emphasis on the harmonization of definitions of mode four categories, including common terms for intra-corporate transferees. Canada. This proposal makes an explicit call for expanded market access commitments, and specifies areas where countries should improve their schedules. These include expansion of coverage to include professionals, including employees of companies and firms that do not have foreign affiliates. Canadas proposal also calls for improved transparency of procedures for obtaining temporary entry, as well as the obligation to specify the criteria governing economic needs tests. India. The Indian proposal is the most comprehensive of the mode four proposals put forward during the negotiating proposal exercise. It incorporates a number of the ideas found in a paper by A.Chanda, Movement of natural persons and trade in services: liberalizing temporary movement of labor under the GATS, World Economy, Vol.24 (5). India proposes improved market access commitments to the movement of individual professionals, technicians and assistant professionals, both on a horizontal and sector-specific basis. It calls for a more dis-aggregated set of categories for scheduling purposes, suggesting the ISCO-88 as a possible reference point. It calls for improved administrative procedures related to obtaining visas and work permits, together with published criteria that define needs tests. In addition, it calls for the binding of bilateral totalization agreements affecting social security payments, with exemption from social security contributions by developing country professionals. Finally, it proposes norms that establish the basis for the mutual recognition of education and qualifications of professionals, thus joining the harmonization of professional qualifications with visa requirements as part of the mode four exercise. It is too early to use these negotiating proposals as a measure of newfound interest by Member countries in mode four. It will be more interesting to assess the level of interest of countries when requests are tabled in June, and offers are submitted next March. Generally, governments have shown a greater willingness to engage the issue in a far more substantive and detailed manner, free of some of its old rhetoric and more focused on specific improvements that can be realized in schedules. It is less than clear, however, just how far governments are willing to commit to binding their systems of temporary entry into international legal obligations. Much of this will depend on the willingness of stakeholders in every country to present their case to member governments and develop the same constituency other services areas have achieved in the past. Substantive Market Access Issues The analysis of the current level of scheduled commitments under the GATS in Section 2 of this paper has brought out that, except in the case of telecom services, and to some extent, in financial services, the actual commitments to liberalize trade were modest. In the case of mode 4, it was even more so; i.e. there was hardly any liberalization. The analysis attributes this disappointing outcome to several factors such as the new and unfamiliar nature of the GATS, paucity of services trade statistics, relative lack of interest of stakeholders in pressing their interests in this area and the political and regulatory dynamics of mode 4 specific commitment negotiations. In contrast, we believe that this time round, there is a positive outlook on all these elements. The framework agreement is better understood today. It has been subject to scrutiny and critically and extensively commented on by trade policy experts and academics. There may not be a consensus on its shortcomings as a trade agreement, but there is recognition of the need for greater clarity in rules and in scheduling commitments. Industry stakeholders have also felt the need for greater clarity and transparency in the implementation of rules governing temporary movement. As to the political and regulatory dynamics for exchange of concessions in this round, it has yet to establish itself, but there is an underlying assumption that the outcome under mode 4 has to be significant if the round has to deliver a big liberalizing package. Having said that, it would not be credible to expect any revolutionary developments in liberalizing mode 4 movement. As in all trade liberalizing efforts, the outcome is likely to be evolutionary and incremental. The challenge is to find the right balance between ambition and reality. It is in this context that we look at ways in which mode 4 negotiations may yield significant market opening measures. This subsection will look at improved commitments under mode 4, classification of natural persons and service providers and issues pertaining to skill levels, horizontal v/s sector specific commitments and problem and prospects of formula liberalization v/s model schedule approach. Widen and Deepen Commitments under Mode 4 In terms of the notion of progressivity of liberalization under Article XIX, each succeeding round of negotiations has to deliver a higher level of liberalization, which would mean progressive removal of restrictions and limitations to market access and national treatment in the existing schedules and addition of new sectors and sub-sectors in the them. In mode 4, this will mean covering additional categories of natural persons to the horizontal commitments. This may, however, not be sufficient in itself, and may have to be supplemented by sector specific commitments relevant to modes 3 and 4, for deepening the commitments. Sector-specific commitments can be used to impart greater precision to manpower categories so as to improve transparency and reduce scope for discretionary action. There are proposals to this effect already on the table, which will have to be negotiated. Since horizontal commitments are applicable to only the scheduled commitments, inclusion of additional sectors and sub-sectors, particularly skill-intensive ones (e.g. health, education and other knowledge -based service sectors), will be necessary for widening the scope of commitments under mode 4. Classification of Natural Persons as Service Providers and Issues Pertaining to skill levels In order to promote certainty and predictability of the commitments for temporary movements of natural persons, it is important to have a common understanding of categories of natural persons as service providers. It has already been pointed out earlier in this paper that in the Uruguay Round negotiations it was proposed to establish an illustrative list of natural persons performing particular services covering broad categories of sectors and skill levels and to use the illustrative list for scheduling commitments. This illustrative list of natural persons could not be established during the negotiations, partly on account of lack of time, partly because of the negotiating fatigue generated by the marathon character of the Round. However, as pointed out elsewhere in this paper, the negotiating process, without a conscious effort, did throw up, in case of movement associated with mode 3, a more or less common nomenclature of natural persons in scheduled horizontal commitments. This is not sufficient though to address the basic concern about certainty and precision in scheduling of commitments. A better and improved classification of service personnel has been identified as a possible contributor in improving effective market under mode 4. One of the proposals is to use ILO`S International Standard Classification of Occupations (ISCO-88) for scheduling of commitments. ISCO covers the entire range of occupations from top company executives to unskilled labour categories. The comprehensive nature of ISCO classification and coverage of unskilled categories in the same has been seen as an impediment to its adoption for scheduling purposes. There is also some industry concern that many of the job categories will become obsolete due to changes in job classifications stemming from technological change. There are difficulties in this, but with adaptation and some degree of customization, it can serve as a basis for negotiations and scheduling of commitments. Classification of natural persons on occupational basis should be treated as a procedural issue for imparting precision, specificity and predictability to commitments under this mode, much on the lines of the financial services classification in the Annex on Financial Services in the GATS. This will also help in segregating occupations and skills for conditions like the economic needs test and the criteria for the application of such tests to make the same relevant and specific to a particular occupational category. Although the agreement covers all categories of natural persons and economists make out a good case for movement of even unskilled categories across borders, there are sensitivities regarding job security in movement of natural persons as service providers at relatively low skill and unskilled levels. Yet there are possibilities of expanding the scope of temporary movement at levels below those covered by the GATS schedules now. There are skill shortages in developed countries, which can be made good by the temporary movement of natural persons with such skills from developing countries. In fact a lot of temporary movement of a seasonal kind, even of unskilled labour is taking place between Members on bilateral basis and in the context of economic integration agreements. A suggestion has been made (Winter et al (2002)) that some of the bilateral seasonal labour movement agreements may be multilateralized in the current negotiations. At any rate, a right balance will need to be struck between job security sensitivities and liberalization expectations under this mode. Among the conditions attached to the access commitments under mode 4 in the current schedules are those relating to economic needs and other tests like local market needs and management needs tests. As currently reflected, they appear to be inconsistent with the letter and the spirit of the GATS framework inasmuch as the schedules do not bring out the criteria for the application and administration of such tests. A case has been made out for multilateral guidelines on the criteria for applying such tests in some studies (Chanda, 2001). The criteria themselves must be clear and explicit and included in the commitment schedules, as is envisaged in the negotiating guidelines. Other improvements in this area must aim at reducing the occupational categories to which such tests may be applied. Horizontal v/s Sector Specific CommitmentsFlexible Approach As indicated earlier in this presentation, commitments under the temporary entry mode have been made in a horizontal fashion, producing the same level of obligation for all the sectors that Members have entered into their schedules. The horizontal form of commitment, which is reflected in the Headnotes to Schedules, follows national laws and regulations, which generally classify temporary entry procedures around job skills rather than specific services sectors themselves. The question is whether this approach should remain the preferred approach in the current negotiations, or whether some, if not all, undertakings should be made on the basis of individual sectors. Such a flexible approach might improve the overall level of commitments in mode four. We would observe that Members have not bound the full measure of their existing laws when making commitments horizontally with respect to the services sectors included in their schedules of commitments. At a minimum, horizontal scheduling should be considered through a top down approach, where all services sectors except those that are specifically excluded would be covered by commitments under mode four. This is certainly feasible since most measures affecting temporary do not distinguish among given sectors. For some sectors, of course, this may represent the only commitment to market access and national treatment under the four modes of supply. However, it would be a more faithful reflection of existing law in the Member country. Several delegations, as part of the negotiating proposal exercise, indicated a preference to include both sectoral and generic configurations of coverage. For many participants, there may be certain sectors that either fall into a different set of temporary entry rules, and which require separate entries in schedules. Inevitably, some sectors may present a level of sensitivity that requires their exclusion from coverage. The goal should be to establish a negotiating framework that yields the greatest possible liberalization, regardless of how a Member assumes obligations. Where horizontal scheduling is the rule, some delegations have urged that participants work from a common format of job classification categories, using the International Labor Organizations (ILO) International Standard Classification of Occupation (ISCO-88). ISCO breaks down 9 occupational groups and serves as a possible basis for GATS negotiations. A common nomenclature can benefit a multilateral negotiation. However, the ISCO categories, while useful in their own right, do not necessarily follow the skill structures in national laws that establish the framework for temporary entry. Inevitably, some customization may be necessary among participants that fully reflect their own regimes. For all of the uniformity in existing schedules covering the senior manager and executive category, it may be more onerous to negotiate other job categories that do not fit the peculiar standards set by national laws. Formula liberalization /model schedule approachproblems and prospects Since preparations began for the current GATS negotiations, delegations have considered more efficient ways of negotiating commitments. Services sectors present challenges in this regard, because they lack a single instrument of protection, as the tariff does in the case of goods. This is complicated further by the considerable differences among services sectors, and the unrelated regulatory environments in which each must operate. However, there has been some success in negotiating around common parameters individual services sectors, as was the case for the reference paper commitments in basic telecommunications. A similar effort was attempted in maritime services. In the case of temporary entry, we think it is worth exploring common approaches since most countries use basically the same systems of regulation to control temporary entry. The question is what areas of temporary entry lend themselves to a common approach and how it can be utilized among the participants to further progressive liberalization. A formula approach is, of course, the most ambitious of these techniques, with its aim of achieving identical commitments from all, or nearly all, participants. A formula for aimed at achieving identical commitments to market access under mode four might prove to be counterproductive, since legal regimes differ among countries for meeting temporary entry standards. Inevitably, some countries will be prepared to do more than others in capturing the range of job skills that have different political dynamics in different countries. However, formula approaches to greater transparency of procedures may be more successful in gaining identical levels of obligation. A comparatively more flexible negotiating tool would be the model schedule approach, which sets common negotiating objectives around which participants assume commitments. The formula and model schedule approaches are similar in that they propose a single set of obligations. The difference is that a model schedule is a template around which participants may bind levels of obligations that may be different from the specific goal of the model schedule. At the same time, each participant bears a certain burden in demonstrating why it cannot bind according to the model schedule. Such an approach encourages greater uniformity of scheduling (but inherently does not propose it), and it can facilitate a better climate for negotiations than the more traditional request and offer method. Negotiating through a formula or model schedule will never be successful unless the proposal reflects the delicate combination of ambition and realism, and addresses the totality of regulatory issues of concern to all the participants. Generally, the model schedule approach might be the better negotiating tool in dealing with levels of market access in mode four. A formula effort, which would imply uniformity of scheduling, would seem useful in addressing transparency and other obligations related to best practices. Effective Access Barriers to and Challenges in overcoming them Problems in authorization of entry and issue of work permits and their impact on temporary entry of natural persons. A major objective of all immigration rules and regulations is to control and eliminate unauthorized entry of natural persons into national boundaries. These laws and regulations confer a large measure of discretion to regulators in meeting the ever new ways of circumventing the regulations for unauthorized entry. While perhaps necessary for preventing unauthorized entry, this discretion erodes the value of a scheduled commitment for temporary entry of natural persons under the GATS by delays in processing visa applications and issuing visas. The rules were not originally meant to address trade needs, and certainly not the needs of a multilateral trade commitment. The idea of Members laying down separate fast-track procedures for grant of visas in respect of movement of natural persons under their commitments was by the Indian delegations towards the end of the UR negotiations. This could not be pursued for want of time. Since then the idea has been revived and written about a great deal. It does make sense to separate temporary movement under a GATS commitment from other kinds of movement and provide for quicker procedures and elimination of much of the discretion to the issuing authorities, subject to safeguards involving joint monitoring and cooperation between the home and host countries to prevent abuse. There is a common interest between the host and the home countries in ensuring that movement of natural persons under the GATS remains temporary and is not abused for securing permanent entry into the labour market of the host country. This common interest can become the basis for evolving a separate set of procedures for grant of visa for movement of natural persons related to Members GATS commitments. This has been further explored in the following sub-section. Recognition of qualifications has emerged as an issue in the implementation of mode 4 commitments. It is admittedly a difficult issue to come to grips with and has proved difficult even in the context of economic integration agreements. Nevertheless, the issue deserves attention. Article VII of the GATS envisages transparency, non-discrimination, and objectivity in granting recognition and encourages member countries to enter into mutual recognition agreements or to extend recognition autonomously to other member countries. It appears that nothing much has happened by way of recognition in actual fact, so far. The obligation under Article VI: 6 requiring member countries to provide for adequate procedures to verify the competence of professionals of other member countries, where specific commitments have been made in respect of professional services, has not been discharged, by and large. One problem in this is the absence of any incentives for members to accord such recognition in sectors where mutual benefit in terms of access is not apparent. A number of suggestions to improve the situation in this regard have been made in the Indian proposal for liberalization of movement of professionals under the GATS. They deserve consideration. We have different views on the relationship of harmonized professional qualifications and improved access under mode four. Aside from the challenge of the ϲʹ taking on the task of encouraging and bargaining regulatory changes over the professions, there is some question over the frequency with which qualifications are a condition for entry. As pointed out elsewhere, most professionals provide their service, through temporary entry and stay, as consultants and advisors in their profession, leaving to locally licensed persons to sign audits and engineering plans, etc. The entire gambit of issues in that include improved transparency of procedures, needs tests, and recognition of qualifications, will need to be explored, including the possibility of a set of multilateral disciplines along the lines of the Reference Paper in Basic Telecommunications. The outcome of the work in the Working Group on Domestic Regulation has some relevance in this context. ii) Desirability and feasibility of a GATS Visa as a means of facilitating temporary entry. One of the growing problems in providing services through mode four is the length of time that is required of visa applicants to gain visa approval. Services companies and firms face time-sensitive client obligations that require their presence in other countries. As international trade and investment have expanded over the years, these firms and companies find that their customer needs reside increasingly outside their borders. These enterprises frequently face the loss of business because the current visa regimes of countries make it impossible for them to deploy resources to meet business needs. The idea of a single visa available for entry in all ϲʹ member countries was discussed during the Uruguay Round, but there was not sufficient time to develop the concept, which, at the time was more than countries were ready to discuss. Nonetheless, the GATS visa idea has been elaborated both in the negotiating proposal by the Government of India, as well as a model schedule approach endorsed by the service industry bodies of the United States and the European Union. In the proposal by the service industry coalitions, the Permit would not provide automatic access to every ϲʹ member country, but would require application and approval by each ϲʹ member country to which application is made. Once visa authorities have granted approval to the employee of the enterprise concerned, the individual would have the right to enter the foreign country for life of the visa without having to repeat the lengthy procedures necessary each time the individual travels to that country. The permit would apply to employees of companies or firms regardless of whether there is an affiliate office in the affected country. There are a number of other features to the proposal. However, it is intended to cover professional employees at all levels, requiring a university degree as an educational minimum. The Indian proposal includes a GATS visa, and its features are very similar to those incorporated in the U.S. and European industry proposal. India would use the GATS visa as a way of separating persons seeking temporary entry from those interested in permanent stay. This would separate procedures that affect temporary and permanent entry, with the objective of streamlining those for temporary entry. India proposes strict time frames for obtaining the GATS visa, with easier renewal and transfer procedures. It also calls for GATS visas that can be issued to select companies and firms for use by its employees deputed abroad temporarily. It suggests, but does not specify, adequate in-built safeguard mechanisms against efforts to enter the permanent labor market. Many countries already operate visa systems in a manner similar to the Permit idea. That is, once the visa has been obtained, it is useable for an unlimited number of entries during the life of the visa. But for many countries, this is not the case, and the Permit idea would represent a substantial improvement in the effort to deploy persons on a time-sensitive basis when needed. The GATS visa, however it is formulated, could bring about measurable improvements to the current system of gaining temporary access by services providers in other ϲʹ countries, and could greatly facilitate market access opportunities that otherwise could not be realized. It must, however, respect law enforcement and other regulatory needs or it otherwise stands very little chance of acceptance among a critical mass of ϲʹ participants. As indicated earlier in this paper, Immigration authorities contend constantly with the problem of visa abuses, where the grant of temporary stay results in efforts by individuals to gain permanent stay. To be feasible, the concept must enable authorities to complete the initial screening process in a manner that meets legitimate problems of abuse. It must also recognize the need to streamline the current environment of repetitive, time-consuming procedures, and the concept of expedited entry after initial screening is a feasible way of addressing this problem. Another critical issue is the skill levels of persons to whom the permit applies. As indicated earlier in this paper, negotiating history has demonstrated that it is more difficult to incorporate persons with lesser skills into GATS commitments, in part because of the perceived effects on labor markets and wages. This will be a critical aspect of any such negotiation. iii) Best practices that address issues of transparency in regulation and other regulatory practices, including needs tests. Persons seeking temporary entry are frequently denied timely visas because of lengthy and onerous procedures that are in place in most ϲʹ member countries. The visa application process in many countries lacks any measure of transparency to enable applicants to provide the data requested by authorities. Data requirements may exist in writing but are impossible to obtain because there is no system that insures widespread public availability. This is particularly burdensome for employees of small enterprises that cannot afford to employ specialists who process visa applications and can anticipate the needs of regulators on the basis of experience. In other instances, applicants are victims of egregious requests for data that could not have been anticipated and has very little relevance to the individuals suitability for obtaining such a visa. This is not an easy issue to address, because regulatory authorities deserve some flexibility in asking for supplementary data when questions arise with respect to individual applicants. Nonetheless, anecdotal stories abound with requests for data that clearly seem designed to discourage or otherwise delay the process of obtaining a visa for temporary entry. Examples include family histories of the applicant, including formal evidence of birth by distant relatives and their spouses. Furthermore there is a lack of transparency in too many countries that refuse to provide information as to the status of a visa application. GATS transparency rules, which simply require publication or public availability of measures, are not adequate to meet these procedural problems. We believe that it is critical that Member countries assume additional commitments under GATS Article XVIII that reflect best practices of greater transparency and predictability. The following elements might be included in a best practices set of commitments by all parties, regardless of the level of market access and national treatment obligations they have assumed: Public availability of a full and complete set of procedures that describe in sufficient detail the data and supporting documentation associated with a visa application, along with a description of the complete process for obtaining a visa. Authorities, where possible, should make this information available electronically in consolidated form. The establishment of deadlines for the completion of applications, together with written explanations for the denial of visas or the absence of required data associated with the application. A full description of the limitations to market access, and other procedures, such as wage parity requirements, quota restrictions, and economic needs tests. The ability of interested parties to comment on regulations prior to their entry into force, for Member countries which have procedures governing prior comment of regulations. Where economic needs tests are entered as a limitation to market access, the Member country must establish and make available the conditions governing economic needs, including quantitative or qualitative criteria that establish the basis for economic needs. Cooperation arrangements among the parties to enable both the home and host country to monitor the return of the person at the end of the temporary period. These suggested best practices rules are hardy exhaustive. However, they provide greater predictability and resulting speed to the visa approval process, and hopefully provide a basis to discourage some requirements, the clear intention of which is to delay indefinitely ones ability to obtain a visa. As we have stated before in this paper, the needs of law enforcement and safety must be respected if there are to be significant improvements in the granting of temporary entry visas. The events of the last half-year underscore this. However, a more transparent and predicable system, stripped of redundancy, surely will complement, not compromise, efforts to improve security and safety, as well as the prevention of abuse. Examination of related issues associated with GATS Articles VI.4 and, and other issues such as social security. Domestic Regulations: Article VI.4 Regulation is a sine quo non for liberalisation in services, whether undertaken nationally or internationally in order to address market failures and public and social policy concerns. The GATS explicitly recognises members` freedom to regulate and to introduce new regulations in services (Preamble). This freedom is practically unrestrained save the transparency obligation of publication and notification of regulations and their reasonable and impartial application. In addition, there is regulatory freedom in certain respects under the General Exceptions Clause and in the case of Financial Services, freedom in prudential regulations. Article VI: 4 has a specific focus on certain types of regulations to do with consumer protection and related public policy concerns. Article VI: 4 mandates development of necessary disciplines relating to qualification requirements and procedures, technical standards and licensing requirements with the objective of ensuring that such requirements are: based on objective and transparent criteria, such as competence and the ability to supply the service; not more burdensome than necessary to ensure the quality of the service; in the case of licensing procedures, not in themselves a restriction on the supply of the service. Under a Ministerial Decision at Marrakech, a working party was mandated to examine and report with recommendations on the disciplines necessary to ensure the realisation of the objectives of Article VI.4 in the case of Professional services, priority being given to the Accountancy Sector. Based on the recommendations of this working Party, the Decision on Disciplines relating to the Accountancy Sector was adopted by the Council for Trade in Services on December 14, 1998. The acceptance of the Decision by members is on a voluntary basis, for the present. Subsequently, by a decision on 26 April 1999, Trade in Services Council set up a Working Party on Domestic Regulations to develop any necessary disciplines under Article VI: 4 mandate. The mandate of the WPDR is to develop generally applicable disciplines for all sectors, but may also develop disciplines as appropriate for individual sectors or groups thereof, keeping open the issue of application of disciplines on horizontal or sectoral basis. The Working Party is currently engaged in the identification and exploration of issues relevant to its mandate. On the basis of the text of Article VI: 4, accountancy sector disciplines, and the provisions of other ϲʹ Agreements on regulations in goods (TBT and SPS), four areas have been suggested for developing disciplines: Necessity, Transparency, Equivalence and International standards. The ϲʹ Secretariat has drawn up a checklist of issues on these and related issues like the scope of ArticleVI.4 itself. It is not possible to go into the merits of the issues in the checklist within the scope of this paper, except to suggest that strong and enforceable disciplines are of critical importance in exploiting market opportunities in professional services. There is merit in developing a common set of disciplines applicable to all the professional services. Some questions have been raised about the relationship between Articles XVI and XVII on the one hand, and, Article VI.4, on the other. There is a fundamental legal distinction in the GATS in these two sets of provisions. While Articles XVI and XVII belong to Part III of the Agreement on Specific Commitment, Article VI belongs to Part II on General Obligations and Disciplines. As a consequence the elimination of restriction on market access and national treatment is subject to the negotiations of specific commitments, the obligation to minimise the trade restrictive elements of domestic regulations is a general obligation which would be subject to the disciplines developed under Article VI.4. The legal status of these measures naturally differs. Measures restricting market access and national treatment are prohibited, unless scheduled, in sectors where specific commitments have been undertaken, whereas they can be maintained in sectors which are not committed. Other Relevant Issues These relate to application of conditions to the access of natural persons on issues like wage parity and social security contributions and benefits.. A case has been made out for developing multilateral understanding on the application of these conditions on the lines of such guidelines for other conditions. Section 4 Conclusions and Recommendations Our effort is designed to introduce the issue of temporary entry for a more comprehensive discussion among the participants to this symposium, with a number of suggestions for how the current negotiations might bring about improvements to the schedules of commitments by ϲʹ Member countries. Our own negotiating experiences from the Uruguay Round bear on some of our proposals, but they are largely drawn from the current environment of trade in services and the needs of services providers in a rapidly changing global economy. Our analysis is based on one fundamental conclusion, which is that trade in services can be facilitated in measurable ways through more substantive commitments in the fourth mode of supply. The current environment is conducive for that purpose. This presents an opportunity for governments to address some of the more difficult political issues associated with the temporary entry issue. The challenge for ϲʹ participants is to develop a negotiating framework that will produce the best possible outcome. Before, however, we come to specific suggestions, it might be in order to recall some important conclusions of this paper. First, that the GATS architecture, and its specific provisions, including the definition of trade in services and the Annex on MONP, is the product of a negotiating foray into what was until recently uncharted waters. It was an attempt to address and reconcile diverse and sometimes conflicting interests, of participants at different levels of development, in an area of great regulatory diversity and complexity, through a single framework. Although some of the North-south controversies in the negotiations look sterile now, the modal approach to definition reflects the acceptance of the central concern of developing countries in the negotiations about parity /symmetry in the treatment of factor movement of capital and labour, and, for developed countries, assurance that investment in services could be part of a trade framework. The notion of parity was, in the ultimate analysis, to find reflection in market access opportunities under modes 3 and 4, notwithstanding the problems of measurement. Second, that the current level of scheduled commitments, except in the telecom and financial services sectors, reflect modest liberalization. In case of mode 4, it is even more so i.e. hardly any liberalization. Third, that the outcome has to produce significant improvements in mode 4 liberalization, (by way of providing effective market access), if there has to be a big liberalization package over all. Otherwise, GATS might end up as a grim harvester of autonomous liberalization in services rather than a catalyst for future liberalization. Lastly and fortunately, that the present is the propitious time to attempt this because of developments in the areas of technology and demographics, greater interest among stakeholders and increasing discourse between trade experts and regulators on how to implement commitments and prevent abuse. There is also a better understanding about the scope of the movement under mode 4 and common interest of host and home countries in keeping the movement temporary. It is in the backdrop of these main conclusions of this paper that we would encourage, at the minimum, the following steps to realize greater liberalization and effective market access under mode 4. To negotiate market access and national treatment commitments from a common template that is sufficiently flexible for parties with differing interests and varying levels of ambition. To mount a priority effort to gain a single text of agreed commitments that would improve the transparency of granting temporary entry to services providers. To aim to arrive at a generally agreed formulation as to the skill levels of workers affected by the temporary entry negotiations, as a part of the negotiating process itself. We realize this is a difficult issue to reconcile among the participants. However, we believe that early consensus, however informally reached, might help expedite the overall level of improved commitments. To impart greater clarity to rules and commitments by negotiating guidelines for the application of rules and conditions to market access commitments.  ϲʹ Document S/L/64, December 17, 1998  ϲʹ Document S/L/70, April 28, 1999  ϲʹ Secretariat JOB(01)/92 (5067/Rev. 1) June 19, 2001 PAGE 31 PAGE 31 $X &356L M ((-----.55 7 7::::XbXcX``hhhKmLmmmmmmmmnn-nB||||eʩêڪp&'(23abԻab@Dors56 5>*CJ 56CJ 56>*>*CJ5CJCJ>*CJ5CJCJ 5>*CJ(R#$IXYwxy %&46ef$$ p#$IXYwxy %&46ef$$S(U((())|*}*T-U---}xn        /18:bc*$$S(U((())|*}*T-U--------..$    & F8 h8$------..3388^<_<gAxAAABBBBlCmC.D/DDDEE:F;FpJqJOþxumje`[OP  *  +  S  T  =  >  HYab    ".3388^<_<gAxAAABBBBlCmC.D/DDDEE:F;FpJ & F pJqJO O U U X X X X XXcXdXp]q]aaddffhhhhmmmO O U U X X X X XXcXdXp]q]aaddffhhhhmmmmmmmnnprqrĿ~ytojda^[V  ;<OP\]"mmmmmnnprqrvvA|B|||>?c$$$qrvvA|B|||>?cd\]deɩʩªê$%op$%&'(23a~ytoVW    ab67ijbc ,-%&U*cd\]deɩʩªê$%op$%&'(23abԻ & F 8$$ddabԻջdeTVbcrsfgLM-.}~AC¿{vspmj}>?$% G HIyz_`STFGա֡cdЦѦ79prab d e(ԻջdeTVbcrsfgLM-.wsgwMV.6hwCjklrP/Q/\//9AAAAQRR.R:R&U'U V VW WXX}Y~Y[[\\]]Lbjbcccccggttѽѽѽ j0JU 5>*CJ5CJj0JCJUmH mH  6CJmH CJmH 5>*CJmH 5>*CJmH >*CJOJQJ5CJ 56CJCJ6CJD.}~ACmnrs?@  & F dh $ & F $8 & F wCmnrs?@}~      ĺ}zukfNN  NPPTTVVZZ [  [ [^^``ccffg  gHjIjnnssSxTxx  xX}Y} } %@}~      w & F w 0   & F  $h $ $&&''++Q/[/\/]///33>7?7h$h$88 & F>  & F 8w&&''++Q/[/\/]///33>7?7G:I:;;7A8A9AAAGGIIJJKKTLULMM|tqif q!  r!"  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