India moots guidelines on visas, work permits at the WTO

By Chakravarthi Raghavan

GENEVA, DEC. 10. At the World Trade Organisation, India has suggested formulation of 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 the General Agreement on Trade in Services (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 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 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 limited use to developing countries.

The paper out that the horizontal commitments in Mode 4 are subject to limitations in the case of 100 countries as opposed to only four countries for Mode 2 (supply of services in the territory of one member by consumers from other members). It points out that at present the number of aggregate entries for movements of natural persons in horizontal commitments is: 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 that is of limited use to developing countries which are interested primarily in movement of independent professionals and other persons.

"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. As 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.

Entry barriers

A major entry barrier is in the form of Economic Needs Tests (ENTs), 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 for the ability of developing country professionals to supply services in developed county markets is the lack of recognition of professional qualifications and licensing requirements that either prevent market access for the foreign service provider causing a rejection of the work permit or visa application, or limit his scope for work to specific activities once he enters the overseas market, preventing him from practising. 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, as 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 now exist, and delink the commitments for Mode 4 thus from Mode 3 (commercial presence).

* There should be specific sectoral/sub-sectoral commitments in addition to horizontal commitments for professionals and business services where movement of professionals is important.

* 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.

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

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.

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. There should also be norms for provisions for temporary licensing to practise in the host country where such licensing procedures are absent in home country, example, in the case of engineering profession. The procedures and sectors where such norms could be applicable should be multilaterally determined.

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