India moots GATS guidelines on visas, work permits

by Chakravarthi Raghavan

Geneva, 5 Dec 2000 -- India has suggested formulation as part of the rules and disciplines to be developed in the new round of services talks under way multilateral guidelines and administrative procedures for grant of visas and work permits for professionals travelling to other countries for supply of services through Mode 4 of GATS—movement of natural persons.

The Indian proposal is in a communication on movement of professionals to ensure meaningful liberalisation of trade in services under Mode 4.

The paper assesses the nature of liberalisation in trade in services under GATS that has taken place under Mode 4, and the extent to which the objectives of Art.IV of GATS (for increasing participation of developing countries in the services trade) have been operationalized through liberalization of services supply in Mode 4. The paper identifies the various limitations against movement of Professionals and the specific problems with the existing commitments of members and puts forward some ideas to resolve them.

The Indian communication brings out the “considerable asymmetry” in the commitments between different modes of supply and with “minimum level” of commitments by developed countries on Mode 4, with many limitations and administrative hurdles—immigration and labour market policies, wage parity and economic needs tests etc that are used to frustrate the inadequate level of commitments. The existing commitments, the paper points out, are largely linked to commercial presence—a mode of supply for investment and establishment, favoured by the developed countries, but of very limited use to developing countries.

The paper suggests strategies and approaches to achieve meaningful liberalization including multilateral guidelines and norms in the administrative procedures for visas and work permits, horizontal commitments for ‘individual professionals’, detailed and specific sectoral commitments, super-imposing the International Standard Classification of Occupations (for nine major occupational groups) on the WTO classification list.

The paper notes that there is “considerable asymmetry” in commitments between different modes of supply and points out that the horizontal commitments in mode 4 is subject to limitations in the case of 100 countries as opposed to only four countries for Mode 2 (supply of service in the territory of one member by consumers from other members). The effectiveness of even these limited commitments have been further reduced through a host of limitations and administrative hurdles.

The paper points out that at present the number of aggregate entries for movements of natural persons in horizontal commitments are: 135 inter-corporate transferees, 70 business visitors, 104 executive managers and specialists and three independent contract suppliers.

Only 12 members have made commitments in the category of independent professionals, including those providing a service within a service contract.

The existing commitments are thus largely linked to commercial presence which is of very limited use to developing countries who are interested primarily in movement of independent professionals and other persons.

Even within the specific commitments, India points out there are specific problems. The commitments in mode 4 are primarily horizontal and such commitments are subject to many kinds of limitations. They are also bound for only a small subset of service personnel related to commercial presence and at higher levels and very few commitments extend to independent movement. They also suffer from lack of clarity and uniformity—the personnel categories are either not well defined or differ widely in their scope and coverage.

The sectoral commitments for most Members are not bound and refer to the commitments made under horizontal schedules which in turn are subject to many conditions and limitations—making them more restrictive and with predictable market access at all in sectors of interest to developing countries.

“Not only have important sectors (where professional movement is important) been left out by many countries in their scheduling exercise, but that even when such sectors have been scheduled, partial commitments with critical limitations exist, says India.

The administrative and procedural problems relating to the commitments effectively rule out market access for professionals from developing countries.

One important restriction originates in immigration and labour market policies of individual countries. Since temporary movement of labour (for GATS Mode 4) is not separated from permanent movement of labour, it comes under the purview of immigration legislation and labour conditions. The restrictions range from strict eligibility conditions for application and processing of visas and work permits and limitations on length of stay and transferability of employment in the overseas market. All these restrictions raise the direct and indirect costs of entering the foreign market, thereby eroding the cost advantage of foreign service suppliers.

Another restrictive eligibility condition is wage parity, thus negating the cost-based advantage of developing countries in exporting labour-intensive services. Wage parity is an important part of the labour certification process in many countries and constitutes an administrative hurdle delaying issuance of work permits and visas.

There are also constraints in the form of quantitative limits on visas in important developed countries for movement of professionals.  Restrictions also apply to natural persons after they enter the foreign market such as limitations on the transferability of work permits and mobility of the provider after he enters the host country. There are also limits on the duration of stay for service providers.

A major entry barrier is in the form of Economic Needs Tests (ENT), Local Market Tests and Management Needs Tests to ascertain the need for entry as well as the number to be allowed to enter. The ENTs are artificial barriers preventing free movement of labour. Further, the conditions on which they are based have not been clearly specified and defined, leaving complete discretion in their application—thus reducing the predictability and certainty of the commitment.

Use of such discretionary ENTs is widespread and in only three out of a total of 54 cases have criteria been specified in the schedule, says the Indian paper.

Another barrier in the ability of developing country professionals to supply services in developed county markets is the lack of recognition of professional qualifications and licensing requirements which either prevent market access for the foreign service provider causing a rejection of the work permit or visa application, or may limit his scope for work to specific activities once he enters the overseas market, preventing him from practising.

Article VII of GATS, the paper notes, provides for mutual recognition agreements (MRAs) and provides an opportunity to Members to participate in negotiations to such agreements. But these provisions remain largely unused.

Developing countries have normally been kept outside the ambit of such MRAs, which are limited to developed countries.  Besides, Members are not complying with the notification requirements under Article VII.4.

Members have also not informed in advance regarding opening of negotiations and interested Members are not getting adequate opportunity to participate in them.  All this has greatly reduced the scope for qualifications being recognised, leading to complete discretion and lack of multilateral/bilateral norms.

Professionals of the Third World are also subjected to payment of social security contributions in the host country “even though they are not eligible to get any benefits from such contributions, since their period of stay under GATS is invariably lower than the minimum period required for such benefits.”

“The direct or indirect effect of all these limitations is to raise costs of entry and operation for service providers, reduce the scope for technology and skill transfer, and force substitution of domestic with foreign service personnel.”

Given this unsatisfactory state of affairs, India has suggested that alternative approaches and strategies need to be adopted in the current round of Services talks to bring about effective market access through Mode 4.

Towards this end, the Indian paper suggests:

·        horizontal commitments to specifically include the category of individual professionals in addition to those that currently exist, and delink the commitments for mode 4 thus from mode 3 (commercial presence).

The relevant criteria for determining eligibility to a particular category should be clearly specified and uniform definitions and coverage of broader service personnel categories including in horizontal commitments need to be drawn up. There should also be further expansion in the scope of categories covered by horizontal schedules by defining the coverage of ‘other persons’ and ‘specialists’ to include middle and lower level professionals.

·        there should be specific sectoral/sub-sectoral commitments in additional to the horizontal commitments for professionals and business services where movement of professionals is important.

The sectoral commitments should be detailed and specific in terms of measures applicable to individual sectors and the categories for which the commitments apply. All the limitations, conditions etc relevant to the individual sector/sub-sector should be clearly laid down in sectoral schedules.

·        There should be finer classification of categories and disaggregated categories of service providers in sectoral schedules, clearly specified relevant to the market needs and potential for each sector/sub-sector.

Towards this end the ILO’s International Standard Classification of Occupation (ISCO-88) should be super-imposed on the WTO services sectoral classification list. The ISCO list has an internationally adopted classification of nine major occupational groups.

The Indian paper sets out in some detail how this super-imposition could be done.

·        There should be multilateral norms set to reduce scope for discriminatory practices in use of economic needs tests (ENT).

Clear criteria should be laid down for applying such tests, establishing norms for administrative and procedural formalities, specifying how results of such tests would restrict entry to foreign service providers.

Fewer occupational categories should be made subject to such tests and consensus should be achieved on such categories.  The specified occupational categories of professionals contained in ISCO-88 under relevant WTO sectors/sub-sectors should be excluded from applicability of ENTs.

And where it is not excluded, its application should be based on multilateral principles and norms in a Reference Paper. The paper should address definition of ENT, Criteria (qualitative/quantitative) for introduction of ENT, procedure for application, guidelines for administration, transparency and full availability of information and duration and review of ENT application.

As regards administrative procedures for visas and work permits, the Indian paper calls for multilateral guidelines, since existing procedures and practices negate even the limited market access available.

Towards this end, India has suggested that member countries should have a more transparent and objective implementation of visa and work permit regimes. Temporary service providers should be separated from permanent labour flows, so that the normal immigration procedures would not hinder the commitments made for temporary movement. This could be achieved either by introducing a special GATS Visa for categories of personnel covered by horizontal and sectoral commitments undertaken by a Member in mode 4 under GATS or through a special sub-set of Administrative Rules and Procedures within the overall immigration policy framework. The conditions for entry & stay in both these alternatives should be less stringent than for permanent immigration.

These could be achieved through finer classification and wider coverage of personnel categories and transparency is reflected in sectoral and horizontal commitments, ensuring minimum discretion and greater degree of certainty. The main features for this could include strict time-frames within which visa must be granted (2-4 weeks maximum); flexibility for visas on shorter notice for select categories of service providers; transparent and streamlined application process; mechanisms to find out the status of applications, causes of rejection, and requirements to be fulfilled; easier renewal and transfer procedures; GATS visas for select Companies for use by its employees deputed abroad temporarily; and “adequate in-built Safeguard mechanisms to prevent such personnel entering into permanent labour market.”

To address social security issues, bilateral Totalisation Agreements need to be entered into by Members for overcoming this problem. There should be exemption from such contributions for developing country professionals so that their comparative advantage is not affected.

The GATS Norms and Disciplines on Recognition of Qualifications should be strengthened by implementing existing Notification Requirements under Article VII of GATS providing for MRAs between Members.

There should be prompt compliance by all Members of Notification Requirements laid down in Articles VII: 4(a), (b) & (c). The full text of existing MRAs on recognition to be made available immediately to the WTO Secretariat and circulated amongst all Members, and this should be done automatically in all future cases. Effective opportunities should be provided to developing country Members to join in negotiations for establishment of MRAs and the Council for Trade in Services should regularly monitor implementation of all the above requirements.

For Professional Service sectors where no formal accreditation or licensing procedures are required, such as for software services, criteria should be laid down for minimum professional experience and minimum professional education.  The idea is to lay down minimalistic international standards to reduce discrimination or excessive discretion.

The norms concerning equivalence of work-related and academic qualifications should be set seeking to draw an equivalence between on-the-job experience and academic degrees so that this could facilitate entry requirements for specific sectors.

As for norms concerning broad-based equivalence and granting recognition through broad-based equivalence of qualifications and standards, bridging mechanisms should be established in case of divergence of requirements and existing standards between  host and home countries. There should also be compensatory system based on Local Adaptation Periods and Aptitude Tests for recognition in host country, to be developed without requiring actual harmonization of standards and qualifications between the host and home countries.

There should also be norms for provisions for temporary licensing to practice in the host country where such licensing procedures are absent in home country e.g. in the case of Engineering profession. The procedures and sectors where such norms could be applicable should be multilaterally determined.

The above article first appeared in the South-North Development Monitor (SUNS) of which Chakravarthi Raghavan is the Chief Editor.

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