RESTRICTEDWORLD TRADE
ORGANIZATIONTN/S/W/14
3 July 2003
(03-3559)
Council for Trade in Services
Special SessionOriginal:  English
COMMUNICATION FROM ARGENTINA, BOLIVIA, CHILE,
 THE PEOPLE'S REPUBLIC OF CHINA, COLOMBIA, DOMINICAN REPUBLIC, EGYPT,
GUATEMALA, INDIA, MEXICO, PAKISTAN, PERU, PHILIPPINES AND THAILAND
Proposed Liberalization of Mode 4 Under GATS Negotiations
The following communication has been received from the delegations of Argentina, Bolivia,
Chile, The People's Republic of China, Colombia, Dominican Republic, Egypt, Guatemala, India,
Mexico, Pakistan, Peru, Philippines and Thailand with the request that it be circulated to the Members
of the Council for Trade in Services.
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I. INTRODUCTION
1. Proposals for liberalization of Mode 4 have been presented by some Members which have
been discussed in the Special Sessions of the Council for Trade in Services.  Members have also
deliberated upon issues relating to Mode 4 in the bilateral request – offer meetings.  This proposal is
submitted for consideration by Members in the light of the above experience.1  Its purpose is to
highlight some elements related with Mode 4 issues that have been presented in different phases of
the current negotiations and that require a deeper discussion in the Special Session of the Council for
Trade in Services.  The document aims to address some of the crucial issues that have been discussed
in the bilateral request – offer meetings and during the discussions that have taken place in the on-going negotiations.
2. Current negotiations provide an opportunity to address a number of substantive and
procedural issues concerning the liberalization of  temporary movement of natural persons with the
objective of attaining effective liberalization.  Developing countries in general have comparativeadvantages only across a narrow range of service activities.  The primary mode for most of these
relates to Mode 4.  Consequently, liberalization of this Mode would provide effective market access to
service providers from developing countries and contribute significantly to the implementation of
Article IV: 1(c) of GATS.
3. There is a much greater convergence of interests in Mode 4 between the developed and the
developing countries in the current negotiations as compared to Uruguay Round.  A strong impetus to
                                                     
1 This proposal is not a legal text.  It is submitted solely for the purpose of negotiation and does not
prejudge the position of any Member regarding the issues raised in it.  The proponents reserve their right to
modify or complement the contents of this proposal at a later stage.TN/S/W/14
Page 2
such movement is the large gap between the projected  needs and the local availability of certain
categories of personnel in developed countries, further accentuated by their increasingly aging
populations.  Welfare gains from freer movement of natural persons would, therefore, accrue to both
groups of countries as has been documented in recent studies.  For example, studies by Prof. Alan
Winters has shown  that increasing developed countries’ quotas for incoming Mode 4 by 3% of their
labour forces would generate annual gains of more than US$ 150 billion.2
4. Till date, 26 Members have submitted initial offers of specific commitments.  Most of these
offers do not include any substantial improvemen ts to existing specific commitments in Mode 4.
Some Members have not introduced any improvement to the existing commitments, others have
introduced some minor changes aimed at clarifying and in some cases expanding the scope of
commitments.  Commitments continue to be basically limited to categories of personnel related to
commercial presence while developing countries are interested in commitments for categoriesdelinked with commercial presence also.  While it is recognised that this is the first set of offers, many
developing countries have expressed disappointment at the level of ambition shown in this area,
which is crucial for many of them.
5. In view of the facts mentioned above, we consider that these issues need to be discussed
multilaterally in order to provide effective market access in Mode 4 including in the context of the
“Implementation of paragraph 15 of the Guidelines and Procedures for the Negotiations on Trade in
Services (S/L/93)” established in the Agenda of the Council for Trade in Services in Special Session.
II. ELEMENTS THAT NEED TO BE DEALT WITH IN THE SPECIAL SESSION OF
THE COUNCIL FOR TRADE IN SERVICES
A. NATURE OF COMMITMENTS
6. Commitments in Mode 4 are primarily horizontal and bound for only a small subset of
personnel related to commercial presence and at higher levels of skills.  There is an asymmetrical
absence of commitments for categories of personnel delinked from commercial presence  and at lowerskill levels, areas in which developing countries have comparative advantage.  Recognition of
common categories of movement, both linked to as we ll as delinked from commercial presence in the
horizontal commitments of Members could prove useful and valuable.  The objective is not to achieve
perfect harmonization of categories in the domestic regimes of all Members, but use of certain
common categories of interest to all Members.  Such categories could include:  (a) Intra-corporateTransferees (b) Business Visitors (c) Contractual Services Suppliers (d) Independent Professionals.
7. Sector specific commitments for most Members are unbound and refer to the commitments in
the horizontal section.  This does not seem to address specific sectoral commitments where deeper
liberalization is being sought compared to the general horizontal commitment and cases of additional
skill levels not covered in broad horizontal commitments.
8. To provide adequate certainty and predictability in the commitments that would lead to
effective liberalization, it is necessary to analyse the extent to which sector specific commitments
could complement the horizontal commitments.
                                                     
2 Winters LA (2002) – “The economic implications of liberalizing Mode 4 trade” – Paper prepared for
the Joint WTO –World Bank Symposium on “The Movement of Natural Persons (Mode 4) under the GATS”,
Geneva, 11-12 April 2002.TN/S/W/14
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B. ADMINISTRATIVE PROCEDURES
9. Restrictions on the Entry and Stay of Service Providers:  Measures related to the entry and
stay into other Members’ territory like visas or work permits are serious administrative obstacles to
temporary movement of persons, largely eliminating the value of any commitments made by
Members.  The problem relates both to lack of transparency and to procedural delays and hurdles.
The problem seems to be the inability to clearly separate the temporary movement of service suppliersfrom permanent immigration and the application of the normal immigration rules and procedures to
even temporary movement under GATS.  Consequently, the real challenge and solution is to devise
effective ways of differentiating between these two.
10. Some Members have proposed in the past establishment of a separate visa or separate sub-set
of procedures for temporary movement leading to a more transparent, timely and less burdensome
grant of visas for temporary movement under GATS.
3  There is a need to further examine this
concept.  As is also evident from the submissions to the Special Session of the Council for Trade in
Services, there seems to be a growing convergence  on the need for additional commitments regarding
transparency and procedural aspects affecting temporary entry and stay to ensure full implementation
of market access commitments on Mode 4.4  Transparency and due process regarding the granting of
entry visas or permits could be a positive way to ensure that market access concessions are notnullified or impaired by onerous and non-transparent criteria and procedures.
11. Economic Needs Test: major entry barriers exist in the form of Economic Needs Tests (ENT),
Local Market Tests and Management Needs Tests to ascertain the need for entry as well as the
number to be allowed to enter.  The ENTs are artificial barriers preventing free movement of labour.Further, the conditions on which they are based have not been clearly specified and defined, leaving
complete discretion in their application thereby re ducing the predictability and certainty of the
commitment. Elimination of such ENTs for the identified categories of movement of service suppliers
referred to in Paragraph 6 of the proposal could remove one of the fundamental barriers to free
movement.  Some Members have made similar proposals in the past.
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C. RECOGNITION OF QUALIFICATIONS
12. The ability of natural persons to supply services in developed country markets is also
adversely affected by the lack of recognition of professional/ equivalent qualifications and licensing
requirements.  These requirements may either prevent market access for the foreign service providerand denial of work permit or visa, or may limit his scope for work to specific activities once he enters
the overseas market, preventing him from providing service.
13. It may be necessary to look at possible approaches for addressing this issue:
(a) Development of disciplines under Article VI:4 of GATS covering the areas of qualification
requirements and procedures, licensing requirements and procedures and technical standards.
(b) Possibility of undertaking Additional Commitments under Article XVIII of GATS for
verifying a foreign service provider’s competence to provide the service with a view to laying
down a transparent procedure for recognition and to reduce the burdensomeness of domestic
regulations on this score.  The concept could be to introduce a hierarchy of measures with the
burden of proof being placed on the domestic regulator to move from a less burdensome
                                                     
3 Communication from India: S/CSS/W/12,  24 November 2000.
4 Communication from the European Communities and their Member States, S/CSS/W/45, 14 March
2001, Communication from Japan S/CSS/W/42/Suppl.2, 6 July 2001.  Communication from CanadaS/CSS/W/48, 14 March 2001, Communication from the United States S/CSS/W/29, 18 December 2000.
5 Communication from MERCOSUR – S/CSS/W/139, 20 March 2002.TN/S/W/14
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measure to a more burdensome one.  For example, it may be considered that administering a
test of service provider’s competence and/or educational attainment to verify the foreign
service provider’s competence is the least burdensome measure.  Only where it was necessary
would a foreign service provider be required to make up objectively verifiable deficiencies in
their education, training and experience.
(c) Strengthening the framework for Recognition Agreements under Article VII of GATS
through:
(i) Compliance with notification and consultation requirements under Article VII:4(a),
(b) and (c) for improving  transparency and for providing adequate opportunities to
third country Members to negotiate accession to such an agreement or to negotiate
comparable ones with it.
(ii) Development of possible multilateral guidelines and principles guiding the
establishment of such Recognition Agreements taking a cue from the Accountancy
Sector guidelines and building on them with a view to exploring their inclusion as an
Additional Commitment under Article XVIII of the GATS.
D. FRAMEWORK FOR A POSSIBLE SOLUTION
14. In order to build a possible framework for liberalization of Mode 4, Members may consider
devising a Model Schedule for Mode 4 commitments so as to bring about greater uniformity and
predictability in the commitments.  The Mode l Schedule would also address other limitations
mentioned in this proposal relating to administrative procedures, recognition of qualifications etc. so
as to enhance the real value of the market access commitments.
III. MECHANISM FOR MOVING FORWARD THE DISCUSSION ON MODE 4
15. We consider that the following mechanism may be in order to move the process forward:
(a) Given the crucial commercial significance of liberalization in Mode 4 to the developing
countries and its major contribution to operationalization of Article IV:1(c) of GATS, it may
be discussed in the Special Sessions of the Council for Trade in Services under the  Standing
Sub-agenda item of “Implementation of Paragraph 15 of the Guidelines” (S/L/93)
(b) Continuous evaluation and assessment of the exte nt to which Members’ offers would provide
effective market access in Mode 4 to developing countries to ascertain the results attained interms of the objectives of Article IV of GATS as provided for in Paragraph 15 of the
Guidelines for Negotiations (S/L/93).
16. We look forward to active engagement of Members on this proposal.
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