The Presence of Natural Persons (Mode 4) Hamid Mamdouh Director, Trade in Services Division, WTO September 2007

What is mode 4?

How can one trade services under the GATS? Four modes of supply (Article I): (1) Cross border supply (2) Consumption abroad (3) Commercial presence (4) Presence of natural persons

GATS Definition - Mode 4 is... 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”

What types of natural persons? Natural persons who are service suppliers of a Member –Self-employed service suppliers Natural persons of a Member who are employed by a service supplier of a Member in the territory of any other Member –Intra-corporate transferees –Business visitors –Contractual Service suppliers

Mode 4 does not cover: natural persons seeking access to the employment market measures regarding citizenship, residence or employment on a permanent basis

Plus... Governments are free to regulate entry and temporary stay, provided these measures do not nullify or impair the commitments Including by applying differential visa requirements

Relative importance of mode 4 trade Estimates are: -Mode 1  35% -Mode 2  15% -Mode 3  50% -Mode 4 ~ 1-2% Source: WTO Secretariat

Mode 4 commitments – where do we stand?

Extended Negotiations (Third Protocol) A number of developing countries were dissatisfied with level of mode 4 commitments Negotiations were extended until June 1995 But no major breakthrough - improvements by Australia, Canada, EC, India, Norway, Switzerland

A snapshot of commitments Governed by horizontal commitments Absence of full liberalization Positive listing: “Unbound except...” Linked to commercial presence High-level of training/expertise, often as intra-corporate transferees Specified duration of stay: 3 months to 5 years

Main limitations scheduled Limited categories included Pre-employment requirements Economic Needs Tests/Labour Market Tests Quotas Residency and nationality requirements Training/Education/ Qualification Authorisation, approval, registration requirements Training of locals

Structure of Horizontal Commitments (% of commitments covering various categories, 2003 ) BV = Business Visitors ICT = Intra-Corporate Transferees E,M,S = Executives, Managers, Specialists

Mode 4 commitments by the 8 ESCWA WTO Members 1 CategoriesNumber of commitments ENTs/ Quotas Usual duration of stay Business visitors 4-90 days ICT and M, E, S 72 ENTs 5 quotas 2-4 years CSS11 ENT1 year IP--- Other--- ICT = Intra-Corporate Transferees; E,M,S = Executives, Managers, Specialists; CSS = Contractual Services Suppliers; IP = Independent Professionals 1 Bahrain, Egypt, Jordan, Kuwait, Oman, Qatar, Saudi Arabia, UAE

Why less liberal commitments in mode 4? Political sensitivity? Regulatory concerns? Enforcement concerns and the problem of temporary entry leading to permanent entry? Effect on labour market? Impact on wages of locals? Bilateral arrangements provide for greater flexibility?

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