Law of WTO Notes - Movement of Natural Persons under GATS

Visa Stamp

Natural Persons

Mode 4 has been one of the bone of contentions between the developed world and the developing world. During the times of Bretton Woods and GATT 1947, there was not much hue and cry to enter into an agreement regulating the trade in services. However, when GATT merged into WTO in 1994, trade in services was put onto the WTO agenda through GATS. This included the mandate to liberalize the movement of natural persons in the context of trade in services[1]. The developed countries have vehemently opposed the attempts to grant WTO jurisdiction over labour and immigration related issues[2]. A classic example of this is the footnote mentioned in the “Annex on Movement of Natural Persons Supplying Services under the Agreement”. The footnote states that:

“The sole fact of requiring a visa for natural persons of certain Members and not for those of others shall not be regarded as nullifying or impairing benefits under a specific commitment.”

This clearly signifies that much effort has been made to exclude the visa and immigration issues from the ambit of GATS. Mode 4 is one of those very few provisions in International Law that directly attacks sovereignty over the issue of migration[3].

Annex on Movement of Natural Persons Supplying Services under GATS

Para 2 of this annex states that GATS does not apply to measures affecting natural persons seeking access to the employment market of a Member. It also does not apply to measures regarding citizenship, residence or employment on a permanent basis.

Para 3 of the annex states that members can negotiate specific commitments applying to Mode 4 under GATS. However, Para 4 provides that members are free to apply measures to regulate the entry of natural persons or temporary stay in its territory. But it is important to note that such measures are not to be applied in such a manner as to nullify or impair the benefits accruing to any member under its terms of specific commitment[4].

An Analysis of Mode 4

We see that GATS regulates immigration only in a very limited sense. It is generally believed that FTAs are a better tool over Mode 4 commitments both in terms of Market Access and controlling the migration. It is also said that under Mode 4 of GATS, the WTO members have ‘avoided comprehensive commitments’. Most of the Mode 4 commitments are at ‘lower levels of liberalization than those applied in practice’[5].

The main role of GATS in relation to MONP is to progressively liberalize the temporary movement of persons within limited segment of service suppliers from ‘another’ WTO member.

Also, the National Treatment Requirement (Article XVII) is such that it provides a certain degree of flexibility to treat foreign services suppliers differently than a domestic one. This exists because of unfair trade scenarios in movement of natural persons. Countries adopt practices ‘Social Dumping’ and protectionist measures to curb the movement of natural persons. In fact, there are a plethora of National Treatment Limitations under GATS. Some of them are[6]:

1. Restricting Geographical Mobility

2. Employer Switching

3. Restricting or Providing Welfare Benefits

4. No Educational Support to the offspring of migrant

5. Discriminatory Linguistic Requirements

6. Discriminatory Educational Requirements

7. Prohibitions on Ownership of Property

8. Citizenship and Residency Requirements

9. Compulsory Training of Local Staff (Just like ‘Local Content Requirement’)

In the next post, we shall discuss the other issues relating to movement of natural persons under the GATS.

International Trade Law Notes

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[1] Marion Panizzon, Migration and Trade: Prospects for Bilateralism in the Face of Skill-Selective Mobility Laws, 12 MELJIL 95.

[2] Jimmie Reyna, ‘Services' in Terence Stewart (Ed.), The GATT Uruguay Round: A Negotiating History (1986-1994), (Kluwer Law International, 1st Ed., 1999), Vol. IV, 820.

[3] Vincent Chetail and Alexander T Aleinikoff , ‘Freedom of Movement and Transnational Migrations: A Human Rights Perspective’, Migration and International Legal Norms (TMC Asser Press, 2003), page 48.

[4] Aashit Shah and Vaibhav Parikh, Movement of Natural Persons under the GATS in the Software Services Sector, available at www.wto.org/english/tratop_e/serv_e/symp_apr_02_parikh_e.doc

[5] Richard Self and B.K. Zutshi, Joint WTO-World Bank Symposium on Movement of Natural Persons (Mode 4) Under the GATS, WTO, Geneva, 2002.

[6] Marion Panizzon, Dialogue on Globalization, Occasional Papers, Trade and Labor Migration, Friedrich Ebert Stiftung, Geneva, 2010.