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Contributions from
the Column
Focus
Migration demands a
coherent approach
Lawlessness according
to mode 4
“No problem fo us...”
Second-class citizens
From talk to action
04/2006
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Lawlessness according to mode 4
In WTO talks on trade in services, migration is an issue. Poor countries would be interested in the opening of the low-wage sectors in
advanced nations – but that is not on the agenda. Negotiations are about giving high-skilled experts assignments anywhere in the world.
[ By Sarah Bormann ]
During the Ministerial Conference of the World Trade Organisation (WTO) in December 2005, a large number of migrant workers demonstrated
in the streets of Hong Kong. Many of them were women. Members of the Coalition for Migrants’ Rights carried a banner stating: “Migrants say no
to the WTO. No to the commodification of labour.”
Their opposition was triggered by “mode 4”, the fourth mode of the General Agreement on Trade in Services (GATS). Mode 4 regulates
the provision of services through the presence of persons abroad, including staff employees and free-lance service providers. Their residence in the
foreign country is temporary and tied to fulfilling specific tasks. Accordingly, GATS amounts to no less than a global migrant labour programme for
the service sector. Its political scope goes far beyond a conventional trade agreement.
In the countries that traditionally send workers abroad, there have been protests against regulating migration through GATS for years. Migrant
organisations, trade unions and development initiatives fear that the rights of migrant workers will be cut even further. Meanwhile, the topic
has not really caused a stir yet in host countries such as Germany. The reason is simple. We still don’t know any “GATS migrants”.
WTO members are still holding back with mode 4 concessions, so we have not experienced any of its consequences yet.
The controversial issue of services was adjourned in Hong Kong, but it is back on the agenda this year. Even though mode 4 is often presented as
a concession to the developing world, it actually holds tremendous risks for poor countries.
Right from the start, the liberalisation of temporary labour migration was a bone of contention between developing and industrialised countries
in the talks on GATS. When advanced nations pressed to include services in the negotiations, the developing countries initially resisted. They later
changed course, demanding access to the global trade in services.
Diverging interests of poor countries
In general, poor developing countries do not have competitive, capital-intensive service businesses able to set up branch offices overseas. In
newly industrialising countries such as Brazil, Chile, India or South Africa, however, there are companies in a position to accept commissions
abroad. A precondition for doing so, however, is that their employees, some of whom are highly qualified, gain access to client markets. Other
developing countries, however, are only able to send poorly and non-qualified workers abroad. The governments of Colombia, Jamaica, the
Philippines and some least developed countries are interested in doing so. They demand that low-wage sectors of rich countries be opened.
In multilateral talks, the developing countries do not share identical interests. For a long time, India, for example, lobbied for low-wage sector
liberalisation. But Delhi’s diplomats have in the meantime backed away from this demand and are now focussing on India’s primary interests,
such as gaining access to rich countries for skilled service providers. Indian companies, after all, want to send qualified staff to countries where
they don’t have any branch offices. So far, however, rich nation obligations to accept personnel from abroad are tied to the existence of such offices.
In other words, these obligations only serve multinational corporations based in rich countries.
One can safely assume that current negotiations will result in an agreement between advanced parties such as the EU, Australia, the USA and
Canada on the one hand and the large emerging market countries on the other. The interests of the poorer WTO members and particularly the
least developed countries (LDCs) will probably fall by the wayside. There is no indication to date that the low-wage sector could be included
in any commitments. Nonetheless, there are already loopholes, which predominantly serve the interests of the rich. For instance, the EU
has only vaguely defined “high qualified” and does not object to East European agronomists with university degrees picking
strawberries in member countries.
Rather than being a development agenda, mode 4 primarily serves the interests of multinational corporations. Nevertheless, free-trade
proponents claim that liberalising migration in the GATS context would open up new prospects for poor countries. Indeed, migration can
have positive effects with regard to remittances and knowledge transfer. However, the impact of mode 4 on the economic development of
sending countries cannot be empirically proven because there is still no reliable data. At best, the many years of experience with labour
migration from developing to industrialised countries can provide some insight.
In quantitative terms, the importance of migrants’ remittances cannot be overstated. After foreign direct investments, they are the
greatest source of external funds for developing countries. In Lesotho, for example, they make up 27% of GDP and in Jordan, 23%.
Remittances are an important source of foreign exchange. Many people directly depend on the remittances of friends or family members.
The same would be true for potential remittances in the context of mode 4. No doubt, poverty reduction and the maintenance of a certain
standard of living are positive effects.
Nonetheless, they are likely to increase inequality. Populations become divided into those who receive remittances and others who do not.
Furthermore, remittances create new dependence. If they are spent primarily on consumer goods, they scarcely trigger any development
effect at all.
Sometimes, however, remittances are invested productively and used as start-up funds for new enterprises in the country of origin.
Options of starting a new business can become incentives to return and spawn technological transfer. At the same time, though, there is
the danger of “brain drain” when well-trained labour leaves for good.
Mode 4 will enhance the risks of brain drain lasting. It deals almost exclusively with qualified labour. In principle, mode 4 may be
based on limited-term contracts, but this rule will not be of great practical significance. The history of “guest worker”
recruitment in Germany shows what little impact such time restrictions normally have. Migration can only be regulated to a certain degree.
Moreover, there is the option of repeatedly taking on assignment after assignment abroad. As long as nothing is done about the “push
factors” such as poverty and lack of opportunity in the countries of origin, migrants will use mode 4 as a springboard.
Empirical country examples illustrate both the potential positive effects and the negative ones. The growth of the Indian IT sector is an
example of developmental chances. Highly-qualified migrants based in the USA provided companies in their homeland with commissions
and expertise. This was possible, not least because government-run education programmes in India were able to meet the threat of lacking skilled personnel.
However, the Indian success story cannot be generalised. In particular, it does not serve as a model for the health sector, in which outsourcing
and telecommuting are no option. The already devastating migration of doctors and nursing staff from Africa could be given further impetus through
mode 4. While some large emerging nations could benefit from additional migration in the context of GATS, the same kinds of opportunities do not
arise for poorer developing countries.
The social dimension
In addition, a comprehensive development programme would have to take into account social dimensions, with regard to standards of living,
labour laws, social justice et cetera. The development effects of remittances cannot be assessed without considering the social context of migration.
Both the reasons for, and the conditions of, migration must be investigated. A fundamental prerequisite is that migration must be voluntary. Forced
migration contradicts the objective of improving the living and work situation right from the outset. Not least in view of poor economic
opportunities in developing countries, mode 4 suggests that companies will compel employees to take on overseas assignments even if the
persons concerned do not really desire to do so.
As far as migration conditions are concerned, it is crucial whether the social rights of the affected persons will be respected in the host
country or not. GATS certainly does not provide any such guarantees. The rights of migrant workers are not even mentioned in the agreement.
It is completely ignored that regulating the migration of people requires a different format than the trade of goods or financial flows. Migrant
are not considered human beings in mode 4; they are reduced to their economic function as a tradable commodity.
From an employee’s perspective, it is problematic that, within the GATS context, people must work according to the conditions of the country
of origin. Unequal treatment of migrant and local employees would become a matter of course. It is ironic, to say the least, that this kind of
discrimination in terms of remuneration and social security would directly stem from the official WTO principle of non-discrimination,
according to which national standards should not distort global competition. The intra-European row over the EU service directive illustrates
how controversial such matters are.
In reality, however, the flexibility of GATS actually allows the member states to restrict competition. For example, the European Union
had a footnote added, according to which minimum wages and tariff regulations must apply. In Germany, though, this doesn’t apply for most
industries because there are no minimum wages and many tariff regulations were never defined as generally binding by the government.
Therefore, discrimination at the work place would be permitted by law in Germany.
Mode 4 provides no legal protection for migrant workers whatsoever. A migrant worker who is sent within a company, for example,
does not even have the right to be represented by the local staff association. If migrant workers are harassed or the applicable employment
law fundamentally violated, they have no options of changing jobs, as their right of residence depends on the assigned work. GATS regulations
thus make it easy to blackmail migrants. Therefore, migrant organisations, non-governmental organisations and trade unions from developing
countries demand that migration be removed from GATS. In their view, the fundamental problem does not lie in the actual structure of
mode 4 as set out by the member states, but in the fact that it treats migration as a subject of a global trade agreement, turning human
beings into commodities.
Sarah Bormann
is a project adviser at the non-governmental organisation World Economy, Ecology and Development (WEED). Her recently published research paper is “Sie riefen Dienstleistungen und es kamen Migranten” (“They called
’services‚ and migrants came”).
sarah.bormann@weed-online.org
www.weed-online.org/themen/english.html
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