1. AN INTRODUCTION TO TRADE AND LABOUR MIGRATION: GATS AND AGREE- MENTS ON TEMPORARY LABOUR MOBILITY Draft Note prepared for the ICTSD NCCR Joint Workshop 20-22 April 2007 Trade and Labour Migration: Developing Good Practices to Facilitate Labour Mobility by Marion Panizzon Dr. iur., LL.M., Senior Research Fellow WTI/NCCR-Trade, University of Bern, Switzerland; If labour migration is a good thing and economic evidence shows that openness to immigration leads to more growth both in receiving and sending countries the GATS seems to endorse this assumption. In particular, GATS mode 4, which is defined as the supply of a service by a service supplier of one Member, through presence of natural persons of a Member in the territory of any other Member, 1 promotes the liberalization of labour markets, the movement of certain categories of natural persons by committing WTO Members to open access to services supplying natural persons from abroad. However, WTO Members are reluctant to use the GATS/mode 4 potential. As it stands today, market access commitments are limited to intra-corporate transferees and highly-skilled professionals, and self-employed service providers and low-skilled professionals are regularly excluded from liberalization. In addition, WTO Members have been using the GATS services sectoral classification list the W120 as a protectionist tool to justify why certain services and service providers are exempt from GATS. 2 1 GATS Article 1.2 (d) 2 See WTO Document MTN.GNS/W/120 of 10 July 1991.
To liberalize and regulate labour mobility, receiving countries have instead resorted to bilateral agreements and unilateral practices. A renewed interest and use of temporary migration programmes can be observed. The rise for bilateral preference may firstly reflect the fear of many receiving countries from engaging in GATS and risking an overbroad opening of their markets to foreign service providers. Secondly, bilateral agreements lend themselves more effectively for tailor-made solutions in labour mobility: unlike in GATS, in a bilateral agreement, the opening of employment market can be traded-off against concessions in investment protection or security, it can be conditioned on human rights protection in the sending country or it can be embedded in development aid. However, once WTO Members will bring bilateral agreements in violation of the MFN clause or preferential agreements unjustified by the MFN exception of GATS V regionalism before the WTO dispute settlement system, the multilateral solution to labour mobility will prevail over bilateral agreements. If commitments are made under GATS mode 4, they are being used and not unduly restricted by immigration laws (quotas, discretionary eligibility for entry visas, permits of stay and employment) or protectionist labour market regulation (labour market tests, work permit fees), GATS mode 4 is certainly a good practice to facilitate labour mobility. Currently, there is no other international agreement holding the same potential for full liberalization of access to a labour market as the GATS, even if the GATS is restricted to services supplying workers and even if immigration law can lawfully operate as a GATS-consistent impediment to worker migration and even if the degree of liberalization can be limited by a WTO Member s commitment. Bilateral or regional temporary migration schemes may step in where GATS has left a gap of failing to liberalize access for migrant workers that are not service suppliers. The scope of liberalization of such bilateral agreements is often perceived to be restrictive, because the receiving country will try to manage labour migration by accommodating through labour
market regulation the need to protect the domestic worker from chilling effect of migrant labour on wages and labour conditions. While such labour market tests and worker permit fees (the fee an employer has to pay in order to be allowed to employ a migrant worker) may be challenged under GATS provisions on domestic regulation and non-discrimination, if and when a WTO Member has made a GATS mode 4 commitment unrestricted as to national treatment, there is usually no dispute settlement system in a bilateral agreement. Nonetheless, a bilateral agreement may have the advantage that it may better reconcile the sending country s interests with the receiving country s fears in a more effective way than the GATS could do. Even if bilateral agreements on temporary labour mobility are better than no access to a labour market at all, they often remain more restrictive than GATS mode 4. But since GATS mode 4 is restricted on services supplying natural persons, which often are highly-skilled professionals at the exclusion of other migrant workers, the only solution to multilaterally liberalizing and regulating such other categories of migrant work will be to create a new international agreement, comprehensively addressing labour mobility that would codify those bilateral practices which have been identified in bilateral agreements and throughout unilateral practices as workable concepts and solutions to liberalizing access to labour markets and regulating labour movement. A multilateral approach, perhaps within the framework of the WTO, may offer the additional advantage that tradeoffs between GATS and other WTO agreements could become possible. For instance, agriculture is a sector of industrialized economies traditionally benefiting from migrant labour. At the same time, agriculture is heavily subsidized in industrialized countries, to the detriment of market access for produce from developing countries. Given that these same industrialized countries relying on seasonal migrant workers heavily restrict immigration, one could envisage, for example, a trade-off between agriculture and services sectors, whereby an industrialized country wishing to upkeep its high protection of farming subsidies would in return have to eliminate more barriers to migrant workers and let in more migrant
workers, while a country willing to cut down on its subsidies and dismantling barriers to imported agricultural goods, could be allowed to have a more restrictive immigration practice in place. Any multilateral approach will have to address the fears, risks, concerns and interests of sending and receiving countries. That there is much scepticism against the multilateral liberalization of labour and regulation of migrant work that needs to be overcome can be seen by the following statement by renown trade scholars, albeit in 1995: Few, if any countries are likely to be willing to open their borders in a general way. Thus, while governments are willing to accommodate individual salesmen or professionals and while mechanisms have been developed through bilateral agreements to establish appropriate ground rules, no government has been willing to undertake generalized obligations vis-à-vis the world as a whole. This reluctance is due to a variety of political, social and cultural concerns which dominate national policymaking in this area, and which inevitably override trade concerns. The United States does not believe that it would be useful or appropriate to negotiate immigration problems in a trade forum such as the GATT nor does it believe that immigration rules should be subordinated to trade rules. Efforts to deal with disputes over the legitimacy of the rules governing the movement of labour should be dealt with under existing consular mechanism. 3 There lies a lot of work ahead to seek multilateral avenues for more labour mobility. Before identifying which kind of international institutional support for liberalizing international 3 Jackson, John, H., Davey, William, J., Sykes, Alan O., Legal Problems of International Economic Relations, Third Edition, St. Paul, MI, 1995, p. 902.
capital and trade flows, 4 we first need to analyze the differences in interests and concerns among sending and receiving countries and try to see which model addresses these concerns most effectively. The optimal model would accommodate both the interests and concerns of both sending and receiving countries. A selection of possible interests and concerns both general and more specific beyond the three R s of recruitment, remittances and return both sending and receiving countries are faced with, when negotiating bilateral labour mobility agreements or establishing unilateral practices are outlined in the two lists below. Sending Country s Concerns brain drain brain waste non-acceptance of migrant worker credentials in host country mutual recognition agreements GATS rules domestic regulation exploitation and vulnerability of migrant work disrespect for human rights and labour standards non-portability of temporary work permits (no change of employer) migrant workers as units of labour, factors of production prohibition of free travel during stay abroad (decreases return and maintenance of networks in home country) 4 Ruhs, Martin, The Potential of Temporary Migration Programmes in Future International Migration Policy, in: International Labour Review, Vol. 145, 2006, p. 21
non-portability of social security benefits (hinders return migration and contributes to informal employment in host countries) over-extensive labour market tests (protection of domestic worker) work permit fees/foreign worker levies deducted from migrant wages asymmetric labour market liberalization: access to labour market regulated multilaterally, while entry and stay regulated nationally immigration law carve-out of GATS; admission and stay remains at discretion of national immigration authorities lack of harmonized admission criteria throughout receiving countries insufficient access to justice integration of returned migrant (alleviating frustration, fostering social acceptance, integration into employment market) Sending Country s Interests remittances return escape from poverty and unemployment work access to knowledge economy acquisition of new skills abroad acquisition of education career move establishment of diasporas/ networks, which may act as facilitators for FDI in sending country start-ups by return migrants in sending countries
absorption of democratic ideals (if sending country has non-democratic form of government and there is repression of civil liberties and human rights) Receiving Country s Concerns chilling effect on wages for (less skilled, less flexible) domestic workers substitution of domestic workers substitution or delay of necessary modernizing production processes in industry diminishing quality of education and professional training overstay move into illegality of informal economy development of new ethnic minorities xenophobia loss of national cohesion fragmentation of identities break-up of family units radicalisation of migrant youth undermining democratic values of a free society willingness to trade off economic gains for restrictions of personal rights cultural differences vis-à-vis role of women, religion, free speech integration problems (lack of language skills, cultural differences, civic duties) fiscal burden costs of access to public services social alienation
unemployment migrant health Receiving Country s Interests cheap and more competitive labour filling in labour market shortage the short-term skill gap (professionals) longer-term labour shortages (cleaning, construction, health, housekeeping, hospitality, food processing, agriculture) due to ageing and education complementarity of migrant work (landscaping, hospitality/catering) diversity of society lowers price of imported goods due to more demand created by migrant population reform tool in public administration/ government integration of immigration and labour law departments into foreign trade departments poverty reduction strategy worker migrants (as opposed to ethnic, political migrants, refugees, asylum seekers) are transnational and may contribute to integration of other non-citizens