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SERIES OF BLOG POSTS ON MIGRATION AND TRADE PUBLISHED UNDER THE SUPERVISION OF PROF. ELSPETH GUILD

NUMBER 4

Simon Tans, Radboud University Nijmegen

This series of blog posts on Trade & Migration is published upon the initiative of Prof. Elspeth Guild  in relation with the controversial proposal for a regulation on the scheme of preferences for developing countries that the Commission links to the issue of readmission of irregular migrants.

There is a difficult relationship between service trade liberalisation and migration, including the manner in which this topic has played out so far within the WTO framework. The main point is that WTO trade commitments tend to favour the interests of developed countries and that the inclusion of migration related conditionalities in the Generalized System of Preferences (GSP) further undermines reciprocity between the EU and developing WTO Members.

The multilateral trading system has changed significantly in scope as a result from the last successfully concluded round of negotiations, the Uruguay Round concluded in 1994. With the inclusion of trade in services via the General Agreement on Trade in Services (GATS), trade liberalisation has an impact on a much broader range of domestic policies. As is clear from the GATS Annex Movement of Natural Persons, service suppliers and receivers have the right to temporarily move (entry and stay) to a WTO Member if that Member has accepted commitments relating to a specific service sector and modality of supply. Movement rights for service suppliers are granted both to the service supplier, but also to the personnel of service suppliers needed to provide the specifically liberalised service. This means that international trade liberalisation impacts migration policies. While trade liberalisation usually is a topic that sits well with the EU Member States, the same cannot be said in relation to the need to amend migration policies as a result of trade commitments. So why did the EU accept such commitments in the first place? Firstly, these commitments are the result of a trade-off between developing and developed countries. And second, the liberalsation of movement of natural persons can be highly beneficial for both the host state and the home state.

This trade-off is particularly relevant.  Roughly speaking, consensus on including services on the world trade agenda was reached as the result of a balance of interests. Including Mode 3 service provision through the creation of a commercial presence in another WTO Member State (movement of capital) was pursued by developed states. This was acceptable to developing states only if Mode 4 was included as well. However, under the GATS, trade liberalisation is ultimately dependent on a WTO Member’s schedule of specific commitments.

Mode 3 commitments are much more common than the least committed modality, Mode 4. Furthermore, many mode 4 commitments are in practice linked to Mode 3, as these commitments allow for the temporary movement of managers, directors and specialists needed to set-up and operate a commercial presence. The imbalance in reflection of interests between developed and developing WTO Members is not only visible through the limited number of Mode 4 commitments in relation to Mode 3 commitments, but also in the significance of the Mode 4 commitments that were made for developing countries.

Initially, developed and developing countries disagreed on the scope of Mode 4 and whether all natural persons should be covered or only skilled persons and those in management positions. The outcome of this discussion is that the annex Movement of Natural Persons clearly defines Mode 4 to include all categories of natural persons. However, through its schedule of commitments, it is ultimately the WTO Member State who determines the specific categories of natural persons that enjoy liberalisation. While indeed the GATS covers all natural persons, including unskilled persons, in practice the adopted commitments by WTO Members relate to the (highly-) skilled (lawyers, accountants, architects, etc.).

Because of the poor result in relation to meaningful Mode 4 commitments for developing countries, negotiations relating to Mode 4 liberalisation were extended after the conclusion of the Uruguay Round as developing countries were not satisfied. As one of only six WTO Members, the then EC indeed improved its Mode 4 commitments. However, the end result is still very modest.

As indicated, the Uruguay Round was the last successfully concluded round of multilateral trade negotiations. Since 2001, the Doha Round is officially underway. Also referred to as the Doha Development Round, it should have an outcome which improves trading prospects for developing countries. During this round which is to date not concluded, least developed countries (LDCs) have indicated their interest in market access for their low-skilled and unskilled service providers. Remittances and brain circulation (obtaining skills and knowledge abroad and then returning home) are seen by developing countries as important benefits to global trade liberalisation, if Mode 4 is included more broadly, and if it addresses a broader range of natural persons than the (highly-) skilled.

In contrast, during the Doha Round negotiations the EU has argued that Mode 4 for low-skilled and unskilled service providers will not work if the return of these service providers cannot be ensured. The argument used by the EU (and the US) is that while GATS Mode 4 is by definition temporary, if such temporary service providers do not return, trade liberalisation becomes a migration issue. While one of the specific goals of the Doha Development Round, ensuring that developing and LDCs benefit more from trade liberalisation, is unlikely to be reached, it seems that the EU intends to address the issue of return policies through the WTO system after all, not through the negotiation process, but through inclusion in the GSP.

As considered by Vidigal, making the GSP conditional on readmission raises the issue of EU compliance with international law. The WTO negotiation process is based on reciprocity and consensus. However, while return policies conditionality is now slipped into the WTO framework, meeting the needs of developing countries in relation to increased Mode 4 commitments remains an unaddressed issue.

In that sense, explanatory paragraph 26 in the recital of the proposed regulation for a generalised system of preferences would be more fitting if it were included in a memorandum that would explain an increase in EU Mode 4 commitments related to unskilled and low-skilled workers.

(26) Orderly international migration can bring important benefits to the countries 
of origin and destination of migrants and contribute to their sustainable development needs. Increasing coherence between trade, development and migration policies is key to ensure that the benefits of migration accrue mutually to both the origin and destination countries. In this respect, it is essential for both origin and destination countries to address common challenges, such as, stepping up cooperation on readmission of own nationals and their sustainable reintegration in the country of origin, in particular in order to avoid a constant drain in active population in the countries of origin, with the ensuing long-term consequences on development, and to ensure that migrants are treated with dignity. 

The reality however is that this reference to the benefits that have long been advocated in relation to Mode 4 liberalisation is made in relation to the introduction of migration related conditionalities in the EU GSP. Even in relation to commitments that have been made in relation to Mode 4, a reluctance to correctly implement these commitments into domestic law may be observed as well. In relation to labour mobility negotiations developed countries are more likely to accept additional labour mobility commitments and then sidestep such commitments through ‘administrative obfuscation’. Implementation by the EU Member States of Mode 4 commitments is sometimes missing altogether, sometimes incorrect or insufficient, and often included in a complex and restrictive legislative system.

International trade liberalisation is based on reciprocity. One of the main reasons to introduce a multilateral trading system in the form of the GATT/WTO was to move away from a power based system towards a system based on reciprocity, universality and inclusiveness. The lack of progress relating to liberalisation at the WTO level has led to a sharp increase in plurilateral trade agreements. The EU alone is already part of dozens of such Free Trade Agreements (FTAs), various of which are in full force, others which are provisionally applied. This exacerbates the imbalance in international trade liberalisation, it is simply easier for economically powerful states to push their agenda in bilateral FTAs than through the WTO framework.

As was the case almost three decades ago, GATS Mode 4 is still ‘embryonic’, and the huge  potential for development through GATS Mode 4 remains untapped. With the European Commission proposal linking EU trade preferences for developing countries to return and readmission policies of these countries, it is the need of the EU for return policies which did make it into the WTO framework.  It is difficult to accept that the solution for the perceived problem related to Mode 4 movements of the low-skilled and unskilled, a problem which can be questioned to begin with, did make it into the WTO framework, whereas the adoption of commitments related to others than the highly-skilled, are still missing.

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