7:21 AM May 15, 1997

VISA HARMONIZATION FOR SERVICE PROVIDERS ADVOCATED

Geneva, 14 May (Chakravarthi Raghavan) -- Millions of new jobs (6 to 30 million), and billions of dollars of additional export earnings (over $210 billion over time), can be generated in the Third World if they can compete and deliver, through telecommunications and temporary movement of natural persons, to the world market services where they have comparative advantage, a new publication says.

But to enable developing country service enterprises to compete and deliver such services and benefit, the standards for issuance of visas for temporary trade-related business visitors need to be harmonised globally, the author of the study, Prof. Bimal Ghosh, said Wednesday at a briefing.

Ghosh, a senior consultant for the International Organization on Migration (IOM), formerly worked as an official in the UN system at the ILO and the UNDP. The book, 'Gains from Global Linkages: Trade in Services and Movement of Persons,' published by McMillan and the IOM, is the outcome of a study for the IOM.

Asked whether the harmonization of standards for 'trade-related visas' could be negotiated at the World Trade Organization, and whether it would not bring the domestic policies of developed countries under the WTO (and therefore would be unacceptable to them), Ghosh suggested that universal harmonization of standards, to enable 'temporary natural movement of persons' by the service providers from the South could be done at the IOM.

He cited the moves in ASEAN and under APEC and other groupings for facilitating business travellers (where such travellers could visit many countries with only one identity card without need for applying and getting individual visas) as an example of what could be done.

But if the industrialized world (given the domestic backlash against immigrants and globalization seen as competition from low-wage countries) is unlikely to be very forthcoming even in a WTO negotiation where they could trade this to gain more from the South, they seem to be even more unlikely to do so at the IOM.

And even developing countries may not find an IOM or UN accord much useful in the context of the WTO rules, concessions there, and the enforceability, trade officials note.

As the IOM Director-General, James Purcell Jr, puts it in a foreword, the Ghosh's study brings out:

* the importance of the services sector in creating more and better jobs in labour-surplus developing countries and its potential contribution to 'increased orderliness' in migratory movements - by reducing pressures for disruptive movements, whether caused by unemployment or lack of better opportunities,

* the challenges and new opportunities opened by liberalisation of trade in services for developing countries, underlines the importance of freer movement of persons as an essential requirement of the process and spells out the enormous potential for creating new employment - up to 30 million jobs - and generating additional income over time - over $210 billion,

* how trade-related, temporary movements of persons can be a partial substitute for longer-term migration, especially skill migration in the form of brain drain, and can serve the interest of both developed and developing countries in a more efficient global economy, and

* highlights the need for initiating an internationally harmonized special visa and migration regime to facilitate, monitor and manage trade-related movements (of service producers and consumers) as distinct from longer-term migration (for e.g. for employment and permanent settlement).

The study covers the characteristics of the services sector and its contribution to economic growth, employment and upgrading jobs, its implications for 'orderly migration', market-access opportunities under trade in services and the importance (to developing countries) of movement of natural persons for delivery of services, the differences and issues in such temporary movements visavis migrations, main constraints in the way of movement of natural persons to provide services, the various GATS provisions, the areas where international aid and cooperation could enable developing countries to enhance their services capacities, and the contribution all these can make to the growth and development prospects of developing countries.

The book has brought together in one place the various issues involved, the national laws (on visas, work conditions for 'guest workers' etc) and their limitations, and the asymmetric and unbalanced outcome of the Uruguay Round negotiations in GATS, and need for the developed world to be forthcoming in the second round of negotiations -- in their own interest.

In terms of the constraints on movement of persons as a mode of delivery, Ghosh (and the IOM) advocate global harmonization of visa issuing standards and rules, insofar as they apply to service providers and business representatives, so as to enable service enterprises in developing countries using their comparative advantage to produce skill- and knowledge-intensive services, deliverable in most cases via telecommunications systems, but still needing temporary visits and stay by 'natural persons' to compete and deliver services.

Movement of natural persons is one of the modes of delivery for services under the WTO's General Agreement on Trade in Services (GATS). Negotiations on this (along with that on financial services) were extended beyond the conclusion of the Uruguay Round at Marrakesh in April 1994. These 'extended negotiations', and the filing of country-schedules, were completed place in August 1995, (and the financial services schedules are now being revisited), and became public later.

But the schedules show there has been little market-opening concessions by the advanced countries on movement of natural persons. All their schedules in this regard have built-in limitations enabling the 'importing' countries to restrict entry by subjecting the 'service-providing visa applicant' to an economics needs test, a quota and other limitations or conditions, and in some cases subject to domestic visa laws (whose administration is non-transparent) that make the provision of such service uncompetitive.

The argument of Prof. Ghosh, and that of the IOM, is that by harmonizing visa standards, and facilitating the temporary movement of natural persons to deliver the service, not only would developing countries be able to create more jobs and earn more foreign exchange resources, but that it would ease the pressures that advanced countries face from immigration pressures.

The study brings out that very little progress was made in the Uruguay Round (and its accompanying first round of negotiations in GATS) to facilitate delivery of services by temporary movement of natural persons, but that much can be accomplished in the second round of GATS negotiations (due by 2000).

Much of the case rests on the neo-liberal trade policy theory, and treating 'labour' as just 'another commodity in trade', and advantages accruing to countries on the basis of comparative advantage.

The study does not go behind these assumptions in the light of the results of the Uruguay Round negotiations, and see whether they are justified or the balance in the rules need to be revisited.

Major developing countries were "persuaded" to actively participate and "contribute" to the successful conclusion of the Uruguay Round and its important component, Trade in Services, under the argument that while the countries of the North as capital-exporting countries would gain, so could developing countries in labour-intensive services.

In putting the services trade issue on the agenda of the Uruguay Round, the North countries, and particularly the US and Japan (and later the EU) wanted to use the services (most of which need to be produced and delivered on the spot, rather than across frontiers as goods) negotiations to gain MFN rights of establishment and national treatment for their capital, which basically is provided by the TNCs.

And if the US, EU and Japan, succeed in putting the investment negotiations into the WTO and create an multilateral investment agreement, the GATS could easily be 'junked', while many of the provisions of the rules (subsidies in manufacture and agriculture for e.g.) in the goods sector, would be changed (in favour of the developed world) without the public in the South even being aware.

But to 'sweeten' the Uruguay Round pill, and overcome the resistance in developing countries to the 'investment' issue, trade in services was so defined as to disguise capital movement rights under the term 'commercial presence' as one of the modes of delivery (which with the 'positive list' approach enables the host country in its schedules to spell out the various limitations on capital movement for service delivery), and provide for movement of the other factor of production, labour, through the fourth mode of delivery, namely movement of natural persons.

This was presented as a balanced outcome of rules.

Several of the developing countries, particularly of East and South-East Asia, as well as Latin America, 'persuaded' themselves during the negotiations, that the 'movement of natural persons' was a disguised attempt by the large populated countries of Asia to provide for 'migration', and thus was not of interest to them.

As a result, in the market access negotiations in the GATS only a few countries of South Asia, and Egypt and one or two others in Africa were seeking concessions from the US, EU, Canada, Japan.

But when the schedules on 'movement of natural persons' were presented and became public in late 1995, it became clear that the gains for developing countries in services trade was 'illusory'.

That the developing country governments, and even more their public, swallowed the 'promises' on movement of persons in such a gullible fashion, and yielded much more to the North in other areas of services, rules on goods and gave monopoly privileges in TRIPs, may be their fault. Perhaps, as Ghosh and IOM advocate, this could be remedied when there is a general second round of services negotiations by 2000.

But for developing countries to proceed on the same premise as before into another round of negotiations would only lead to a cul-de-sac.

Whether it be for 'temporary movement' of personnel for delivery of services, or even of the affluent of the South for pleasure, the truth is brought home to any visa applicant in the South that while 'money' and 'capital' have no distinguishing colour, visa applicants have.

And behind the conflicts, and issues about social standards in trade, lurk these issues of race and colour, and these can be resolved only through political actions (and not neo-liberal economics).

Merely arguing, as Ghosh does, that service contracts between supplier and consumer of services, could be separated and distinguished from the work contracts between the 'person' and the enterprise providing the service, with the service enterprise made responsible in every way (including the return home of the natural persons after delivery of the service) does not meet the problem. For unlike 'competition' in goods (where workers are distant), in services, the providers will be on the spot, competing with local labour in that service.

Studies at ILO, and elsewhere, have brought out that in many service contracts, whether of ordinary skilled labour (domestic servants and the like) or even of highly skilled engineers and other professionals, the work conditions are worse than bonded labour, and there is hence a need to cover contract or subcontracted work.

The case for liberalisation of barriers to services exports from developing countries, through liberalisation of 'temporary movement of natural persons' for such delivery, is sought to be buttressed in the study of Ghosh by citing some estimates of gains that would accrue to developing countries that are based on some questionable methodologies and data for calculating gains and losses in the trade in services.

Several of these estimates, and studies (by the World Bank, GATT/WTO, UNCTAD's TNC division in its World Investment Reports, and various publications of neo-liberal trade policy consultants and think-tanks in the North) initiated or made even before the Uruguay Round was completed (that on movement of natural persons was only completed in late 1995), have since proved wrong or assumptions of gains illusory.

Trade data of services trade, as Ghosh notes, are based on IMF balance-of-payments data (whose inadequacies in this area are well-known) and gains from the services trade cannot be easily quantified.

But "enlightened conjectures" suggest they can be substantial, he argues, citing a World Bank study referred to in its 1995 annual, 'Global Economic Prospects and Developing Countries', which said that by competing in the trade of long-distance services alone, developing countries can increase their export income by an amount equal to that of their current commercial service exports - a $140 billion based on IMF figures.

That calculation, he notes, is based on the assumption that developing countries can effectively contest 10-30 percent of the available service jobs with a high technical potential for long-distance delivery -- services which are information-intensive and whose cross-border supply is facilitated through modern communication and information technology as the main mode of delivery.

But that 10-30 percent estimation, a footnote brings out, is based on the experience of TNCs in the manufacturing sector, namely that the ratio of total employment in foreign affiliates of TNCs originating in the G-7 countries to total manufacturing employment in the home country, is in the range of 10-30 range.

Much critical analysis and studies since those cited in the book, have shown that econometric models based on manufacturing trade cannot be transposed into services trade. And UNRISD studies prepared for the Copenhagen Social Summit, have shown the hollowness of many claims about TNCs creating employment in the South, since the claims don't take account of the jobs destroyed in local enterprises.

In addition, there is the further assumption (and scope for error) for the calculation (in the World Bank estimate) found in the footnote of the last chapter of the Ghosh book:

"The value of the potential market for developing countries is derived from the number of outsourced jobs multiplied by the expected wages. In the light of survey results showing that companies seriously consider outsourcing when cost savings reach 30-40 percent, expected wages were assumed to be two-thirds of those in the respective G-7 countries..." (emphasis added).

And even the protagonists of the factor-price equalisation theorems on gains of trade are now trying to abandon it in order to explain away the loss of skilled and unskilled jobs and wages in the North which are due to macro-economic policies, but blamed on trade competition.

Developing and developed country governments 'sold' the WTO and the Uruguay Round accords, and the adjustment to comply with them, on the basis of trickle-down advantages of globalization and growth promised by neo-liberal economics and trade and liberalization theories.

Whatever 'comfort' theorists could draw from such econometric models and estimates of long-run benefits, governments both in the North and the South are now confronted with the problem that the public no longer have faith in all these data thrown at them, but judge things from their own life experiences.

In that arena, theories have not delivered.

Looking to the second or third and subsequent rounds of WTO trade negotiations, when the liberalization agenda itself is stacked against the South countries, to deliver on the promises of Punta del Este and Marrakesh, may be sound in economics, but does not sell in politics.