Islamic Development Bank Multilateral Negotiations on Trade in Services GATS – Mode 4 Daniel C. Crosby - Casablanca, 16 June 2009 Budin & Associés

OUTLINE History & GATS background Scope & Definition Commitments Doha Development Agenda Budin & Associés 2

History & Background UR « package » of tradable interests Developed countries High-tech goods (+ beyond the border) Value-added Services IPRs Developing countries Budin & Associés 3

History & Background Developing countries Low-tech goods, agriculture, textiles Mode 4 Budin & Associés 4

Present Practice Countries invite foreign workers to contribute to their economic growth Services? MFN applicable? Budin & Associés 5

GATS Modes of Supply GATS Article I, four modes of supply : (1) Cross-border supply (2) Consumption abroad (3) Commercial presence (investment) (4) Presence of natural persons Budin & Associés 6

Mode 4 Supply Defined 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 Budin & Associés 7

GATS Annex on Mode 4 “This Annex applies to measures affecting natural persons who are service suppliers of a Member, and natural persons of a Member who are employed by a service supplier of a Member, in respect of the supply of a service.” Budin & Associés 8

Annex Coverage Self-employed Intra-corporate transferees Business visitors Contractual service suppliers Employees of foreign service suppliers Budin & Associés 9

Mode 4 Categories Budin & Associés 10 The GATS covers services supplied by whom? Service supplier of another Member What form can such a “ foreign ” service supplier take? Natural personJuridical person How are services supplied in the host country? Directly to consumer in host country as independent service supplier Through an employee of a “ foreign ” company with commercial presence in host country Through an employee of a “ foreign ” company without commercial presence in host country What categories of natural persons are generally found in Members' Schedules? Independent professional - Contractual service supplier Intra-corporate transferee OR “ temporary ” employee Contractual service supplier

Annex Exclusions No affect on immigration policy Measures affecting natural persons seeking “access to the employment market” Measures regarding “citizenship, residence or employment on a permanent basis” Budin & Associés 11

Regulation & Mode 4 Governments retain rights to regulate entry and temporary stay, but not “nullification or impairment” of commitments MFN exception – Members may apply differential visa requirements Budin & Associés 12

Existing Commitments Limited by “horizontal commitments” No full liberalization Positive listing approach: “Unbound except...” horizontal Often linked to commercial presence High-level of training/expertise Specified durations of “temporary” stay: 3 months for BV, 5 years for ICT Budin & Associés 13

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

Mode 4 ICT Categories  “Intra-corporate transferees” (ICT) – work for an enterprise established in the territory of a Member and are transferred to the enterprise’s commercial presence in the territory of another Member in the context of the supply of a service. Often as executives, managers, specialists.  “Executives” – direct the management, have wide latitude in decision-making, are supervised only by board of directors or stockholders, do not provide service directly  “Managers” – direct organization or department, hire/fire, have day-to-day discretion, supervise other staff  “Specialists” – have essential knowledge at advanced level of expertise, proprietary knowledge of organisation

Business Visitor Categories “Business visitors” (BV) are not engaged in supplying the service or making direct sales to the public, and do not receive remuneration from a source in host Member “Sales” BV – negotiate for the sale of a service, establish business contacts, attend business meetings and similar “Set-up” BV – set-up a commercial presence in another Member, where their employer has none

Contractual supplier commitments “Contractual service suppliers” (CSS) – employees of a juridical person (which has no commercial presence in host Member) who supply a service on the basis of a contract their employer has concluded with a consumer in host Member The employee receives remuneration from the employer while abroad, has appropriate educational and professional qualifications, may not engage in other employment Commitment relates only to the activity which is the subject of the contract

Independent Professionals “Independent professional” (IP) – self-employed person based in the territory of another Member who supplies a service on the basis of a services contract with a consumer in the host Member IP has appropriate educational and professional qualifications Commitment relates only to the activity which is the subject of the contract

Structure of Horizontal Commitments (% of total categories scheduled, 2008 ) BV = Business Visitors ICT = Intra-Corporate Transferees E,M,S = Executives, Managers, Specialists Source: WTO Secretariat (2008)

DDA Negotiations Point of departure: LEAST liberal of all mode of supply in terms of commitments Positive listing Many restrictions / conditions Budin & Associés 20

Problems Identified Structure and coverage of existing commitments Economic Needs Tests (ENTs) Definitional problems Administrative practices: no access to information and lack of transparency Lack of recognition of qualifications Budin & Associés 21

Solutions Proposed More and better commitments more categories, improved definitions, finer classification, “sector-specific” commitments Removal of barriers multilateral criteria for ENTs - more specific, transparent and non-discriminatory Greater transparency and predictability “GATS visa” More regulatory cooperation amongst sending and receiving Members Budin & Associés 22

DDA New Mode 4 Coverage 30 of around 70 offers propose some improvement to horizontal commitments (half developed, half developing countries) The value or importance of horizontal commitments in mode 4 depends on the number of sectors included in the schedule Budin & Associés 23

Nature of Improvements New categories, broader coverage Expanded list of sectors to which the commitments apply Extended periods of stay; possibility of renewal Clarification of the application/reduction of the scope of ENTs Reduction of discriminatory measures Some improvements in transparency Budin & Associés 24

DDA - Mode 4 Objectives Members to be guided, to the maximum extent possible, by the following mode 4 objectives: New or improved commitments on: CSS, IP and Others de-linked from commercial presence ICT, Business Visitors to reflect inter alia removal or substantial reduction of ENTs indication of duration of stay and renewal

Plurilateral Requests Developing country “collective request” on mode 4 From 15 developing to 9 developed countries Seeks commitments on CSS and IP Commitments are called for in a number of sectors, falling under business, construction, environmental, tourism and recreational services Asks for the removal/clarification of Economic Needs Tests (Least-developed countries have also submitted a mode 4 request, with a largely similar focus)

Signalling Conference  Indications were exchanged on own new and improved commitments as well as on the contributions expected from others  Overall, positive indications were given about market access commitments across all major services sectors and modes of supply  “Most participants indicated their readiness to improve access conditions for mode 4. In several statements, these signals were expressly linked to the development character of this Round.” [Report by the Chairman of the TNC, 30 July 2008 (JOB(08)/93)]

IsDB & Morocco MERCI THANK YOU 28