RESTRICTEDWORLD TRADE
ORGANIZATIONWT/GC/W/131
22 December 1998
(98-5148)
General Council Original:  English
PREPARATIONS FOR THE 1999 MINISTERIAL CONFERENCE
General Council discussion on mandated negotiations and the built-in agenda
23-24 November 1998
Communication from Pakistan
The following statement made by Pakistan at the Informal Intersessional General Council
meeting on 23-24 November, together with an annexed discussion paper on movement of natural
persons under the GATS, is being circulated at the request of that delegation.
_______________
In our intervention on issues pertaining to Para 9(a)(ii) of the Geneva Ministerial Declaration,
my delegation would like to highlight some of the substantive aspects of the mandated negotiations
which we feel need to be addressed, and on which the General Council may consider makingrecommendations.
However, before doing so, I would briefly like to refer to what may be termed the
"procedural" issue raised in para 9(a)(ii) of the Ministerial Declaration, i.e. the question of ensuring
that mandated negotiations begin on schedule.
We should not countenance any delays in commencing the mandated negotiations on
agriculture and services.  The possibility of a delay can arise firstly if there is an attempt to link the
mandated negotiations with new issues outside the Single Undertaking.  Such a move would beclearly contrary to the commitments we have made and, hence, should not be acceptable to the broad
membership of the WTO.
Negotiations on Agriculture and Services could also be delayed by delays in the preparation
of the negotiations.  While we are happy to note that the preparations have been initiated, we wouldstress the need to expedite the work on analysis  and information exchange in the services and
agriculture sectors.  A slow pace of work in the preparatory phase must not become a pretext for
delaying the mandated negotiations.
I shall now discuss some of the substantive aspects of the mandated negotiations which are of
special concern to us.
In regard to negotiations on Agriculture, my delegation would like to underscore the
importance of achieving a fair and market-oriented agricultural trading system so as to ensure that
trade in this sector will be conducted on the same basis as in other sectors.
The Uruguay Round had led to progress in bringing agriculture within the general discipline
of GATT 1994.  The Agreement on Agriculture provides for reduction in export subsidies and
restrains domestic support.  It also provides for the tariffication of border measures and reduction of
existing tariffs.WT/GC/W/131
Page 2
However, the objectives we had set for ourselves, i.e. establishing a fair and market oriented
agricultural trading system, is far from being achieved.  In order to progress towards this objective
Article 20 of the Agreement on Agriculture provides that further negotiations should take into account
a number of factors including the particular needs and conditions of the developing countries, andspecial and differential treatment to the developing country members.  Within the broadly defined
scope of negotiations, our delegation feels that there are two areas that will need to be addressed as a
matter of priority at the political level.
The first area of concern is the lack of equity, and the consequent imbalance, that is obvious
in the Agreement, and which would need to be rectified.  The following issues need to be considered
in this regard:
- One, the countries which have been maintaining import restraints, and domestic and
export subsidies have been obliged to reduce these measures to some extent during
the implementation period.  A substantial portion of the measures will, however,
continue in these countries.  On the other hand, the countries which did not have suchmeasures in the past are prohibited from introducing such measures beyond the de
minimis  levels.  This appears patently unfair in the sense that those maintaining
import restraints, domestic and export subsidies in the past are allowed to continue
with these, albeit at reduced levels, but others are prohibited from undertaking such
measures in future;
- Two, the Agreement is based on the premise that free movement of agriculture
products across the borders is the ideal condition.  The underlying inference is that it
is desirable for a country to import food from other countries if it is cheap compared
to its cost of production.  This principle may perhaps be valid for the foreignexchange surplus countries, but most of the developing countries are chronically short
of foreign exchange.  For such countries it may be appropriate to grow their own
food, as far as possible, even if it is more costly than the food stuff available in some
other countries.
The second area of political concern is the shortcomings that have become apparent in the
process of implementation of the Agreement, and that shall need to be removed.  These include:
- One, the over valuation by some major countries of the tariff equivalent of their non-
tariff measures, with the result that their base levels of total tariffs have been recorded
at very high levels;
- Two, the application of domestic support commitments on aggregate basis which has
allowed the developed countries to "re-balance" the support among sectors, thus
permitting the application of much lower reductions in the "sensitive" sectors;
- Three, the non-implementation of the Ministerial Decision on measures concerning
the possible negative effects of the Reform Programme on LDCs and Net Food
Importing developing countries;
- Four, instances of non-compliance of the market access commitments in agriculture
including through late or inadequate implementation, the introduction or maintenance
of non-tariff border measures, non-compliance with export subsidy commitments,
allocation of MFN tariff quotas to preferential suppliers, allocation of export access to
state trading enterprises, etc.WT/GC/W/131
Page 3
Furthermore, the issues that have been left outstanding from the previous round of
negotiations will need to be tackled so that there is a substantive integration of agriculture in the
multilateral trading system.   That is, the forthcoming round of negotiations on Agriculture should
lead to an outcome where tariffs will be the only form of protection, tariff escalation and peaks
characterizing the agricultural sector would be curtailed, and there will be a marked reduction insubsidies and other forms of domestic support.
In the context of Services, we would stress th at the forthcoming round of negotiations should
be conducted in such a manner as to promote the interests of all participants on a mutually
advantageous basis as enunciated in Article 19.1 of the GATS.  The process of liberalization in
services should also take into account the national policy objectives and the level of development of
individual Members as provided in Article 19 of the GATS.
It should be noted that since the completion of the Uruguay Round, developing countries have
undertaken major commitments autonomously, and also as a result of the extended negotiations on
financial and telecommunication services, without obtaining reciprocal benefits.  Thus, there is a need
to restore the overall balance of rights and obligations in terms of sectors and modes of supply, just asthere is a need to provide credit for post-Uruguay Round liberalization by developing countries.
One obvious imbalance in the GATS is the treatment of labour and capital.  There is a
specific provision for allowing cross border movement of capital if such movement is an essential part
of the market access commitment or if a commercial presence is involved.  However, there is noexplicit provision on the movement of natural persons on similar lines.
In the negotiations on services, the further liberalization of movement of natural persons
would be essential for the full implementation of Article 4.1(c) of the GATS, which provides for the
liberalization of market access in sectors and modes of supply of export interest to developingcountries.  It would also contribute to restoring sy mmetry between the four modes of supply.  To this
end, we are circulating a discussion paper
1 on the subject of movement of natural persons which may
advance the debate on this issue.  For the sake of brevity, I shall only mention some of the main points
made in the paper.  These include :
- One:  There is a strong economic rationale for enhanced labour mobility.  A number
of empirical studies indicate the immense benefits to be derived from movement of
persons not least in terms of enhanced international competitiveness, technological
inventiveness, education, and training savings.  Empirical studies reveal that when
barriers to movement of labour are removed, labour reallocates and efficiency gains
occur.  According to one analysis, an international regime of free movements of
people can double the world GDP;
- Two:  The globalized economy generates demands for the freer movement of factors
of production, including that of natural persons.  New technologies, new forms of
organization, and the dynamism of markets create the need for immediate availability
of services professionals;
- Three:  The Uruguay Round resulted in insignificant liberalization in this area.
Despite the fact that the GATS is based on the concept of symmetry in the obligations
between the movement of capital and movement of labour, yet the results have been
grossly asymmetrical.  The sector specific commitments have covered measuresregarding commercial presence substantia lly more than the measures regulating
movement of natural persons as service suppliers.  Horizontal commitments
concerning presence of natural persons merely state the elements of the immigration
                                                     
1 Reproduced in the Annex.WT/GC/W/131
Page 4
and labour laws and regulations.  Also, horizontal commitments do not refer to
movement of natural persons in all categories and occupations.  The main categories
scheduled are limited to intra-corporate transferees, business visitors, and
independent professionals;
- Four:  There are a number of impediments to the freer movement of natural persons.
A major limitation on market access is posed by the widespread use of the economic
needs tests.  Due to their discretionary nature, the economic needs tests create a major
barrier to trade in services and result in un certainty as to the level of market access
commitments.  In addition, problems with visa requirements, work permits,
qualification standards and licensing regulations create further barriers to freer
movement of natural persons;
- Five:  A usual objection to liberalization in this area is the question of migration and
its impact on domestic social and political conditions.  This is a misleading, even a
non-issue, since the GATS is strictly limited to providing access to natural persons as
service providers in the receiving country.  The specific service is to be provided for agiven length of time and according to the conditions inscribed in a country's schedule
of specific commitments.  Also, the GATS does not impinge on the sovereign right of
countries to control migration and access to the labour market, nor on the need to
guard against illegal entry;
- Six:  Given the obvious economic benefits both for sending and receiving countries in
further liberalization in this area, and also th e need to fulfill the provisions of Article
4 of GATS, it is necessary that significant progress be made in forthcoming
negotiations.  A possible way to advance the negotiations on the movement of natural
persons would be to adopt the occupational approach.  A list of occupations could bedrawn up for which countries would agree to abolish economic needs tests.  In
categories which would not be covered by this list, the criteria for the application of
ENTs would be clearly laid down;
- Seven:  Consideration needs to be given to measures which would result in more
transparent and objective implementation of visa and work permit regimes.  Such
measures could include the publishing of the relevant legislation and administrativerules that define the conditions of entry and national treatment.  Also Member
countries should bind their current immigration legislation related to all the relevant
categories in their specific commitments;
- Finally, measures should be taken to overcome barriers created by qualifications and
licensing regulations.  These measures could include the participation of developing
countries in mutual recognition arrangements, the development of international
standards for qualifications, and use of partial mutual recognition of qualifications.
The forthcoming negotiations on agriculture and services offer an invaluable opportunity for
partly rectifying the asymmetry in benefits that have accrued to various groups of countries.  We need
to ensure that, by squarely addressing the concerns of the developing countries, this opportunity is
fully availed.WT/GC/W/131
Page 5
ANNEX
Movement of natural persons under GATS :
The rationale for and approaches to further liberalization
Discussion Paper
This discussion paper briefly reviews the results of the Uruguay Round in respect to
liberalization of the movement of natural persons.  It gives the legal and economic rationale for
further liberalization in this area.  The paper then identifies the key impediments to the freer
movement of natural persons, and, finally, suggests possible approaches to further liberalization of
movement of natural persons under the framework of GATS.
Outcome of Negotiations on MNP
The Uruguay Round, and even subsequent negotiations, have lead to an unbalanced coverage
of different modes of supply, with especially unsatisfactory results for the movement of labour.  Thesector specific commitments have covered measur es (partially or in full) regulating commercial
presence substantially more than the measures regulating movement of natural persons as service
suppliers.
Horizontal commitments concerning the presence of natural persons have been made by
ninety two WTO member countries.  These usually state the elements of the immigration and labour
laws and regulations.  The present horizontal commitments do not refer to movement of natural
persons in all categories and occupations.  The main categories scheduled are limited to the following:
(a) intra-corporate transferees (covered in 62 schedules of commitments); (b) business visitors
(included by 32 member countries); ( c) independent professionals, including those providing serviceswithin a service contract (commitments by 12).  Th is has meant that developed countries, who have a
greater number of higher level personnel, have largely been in a position to benefit from the GATS
commitments on movement of natural persons.
In the aftermath of the Uruguay Round, extended negotiations on the Movement of Natural
Persons continued, but resulted in modest commitments by 6 countries, of which four have specified
these commitments for selected services sectors or professions.
The Case for Further Liberalization
Strong legal and economic arguments exist for the further liberalization of movement of
natural persons.
The Marrakesh Agreement establishing the WTO clearly enunciates that ensuring that
developing countries secure a share in the growth in international trade commensurate with the needs
of their economic development is amongst the fundamental objectives of the WTO.
This theme is further picked up in preamble of the GATS which speaks about the Members
desire to facilitate the increasing participation of developing countries in trade in services.  Article IVWT/GC/W/131
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of GATS gives this solemn expression of intent an operational form by providing that increasing
participation of developing country Members in world trade would be facilitated through the
“liberalization of market access in sectors and modes of supply of export interest to them.”
It is, thus, clear that both in the overall framework agreement establishing the WTO, and in
the GATS itself, members have committed themselves to undertaking trade liberalization measures in
areas of particular interest to the developing coun tries, thereby enhancing the latter’s share in world
trade and promoting their development.
These commitments have been blithely ignored in negotiations on one of the most critical
areas of interest for a large number of developing countries, that is, the movement of natural persons.
There, thus, exists a strong obligation for WTO members to seriously address the movement of labourin the forthcoming negotiations on services.
The case for freer movement of labour goes beyond the obligations assumed by the WTO
members to meaningfully address sectors of particular interest to developing countries.  There are
strong economic reasons for further progress in this area.
As has often been pointed out, both developed and developing countries stand to benefit from
liberalizing the movement of labour.  The developed countries would be able to alleviate short-term
labour shortages, and have easier access to skills at a lower cost.  Furthermore, there would be
reduced pressure for wage inflation and developed countries would also gain increased access to the“soft technology” embodied in trained foreign personnel.  As the movement of labour would be trade-
related these countries would avoid the problems, real or perceived, of permanent migration.  The
demand for cheap and irregular migrant labour would fall, discouraging illegal immigration in the
process.
Developing countries, on the other hand, would benefit from greater foreign exchange
earnings and improved employment opportunities. As the movements of natural persons would be
temporary and specific, being trade-related, the problem of brain drain would be attenuated, as these
services would be more widely used in the domestic economy for the export market.  In addition, the
returning personnel would have widened their k nowledge while working abroad and they would
contribute to the human capital development of their developing country of origin.
Empirical studies also indicate that there are immense benefits to be derived from freer
movement of natural persons. A study by Bob Ha milton and John Whalley shows that when barriers
to movement of labour are removed, labour reallocates and efficiency gains occur. Quantitatively, it is
estimated that an international regime of free movements of people can double the world GDP.
2
The process of globalisation, especially the rapid emergence of new technologies and new
forms of business organization, is generating additional demands for specialised expertise.  The
dynamism of markets results in a shorter reaction time to problem solving, which at times calls for the
immediate availability of services professionals.  The impact of new technologies is especially visible
in the area of software development, where the temporary movement of experts is taking placebetween the developed as well as the developing countries, due to availability of different specialised
software products and expertise in different countries.
It can be argued that developments in communications and information technology may
increasingly lead to the substitution of movement of persons by cross border trade.  But this would
                                                     
2 B. Hamilton and J. Whalley, Efficiency and Distributional Implications of Global Restrictions on Labour
Mobility, Journal of Development Economics, 14: pp.61-75, 1984.WT/GC/W/131
Page 7
hold true only with respect to the provision of standardized services.  An example in this respect is the
cross-border procurement of construction projects via the telecommunication networks.  The project
bids could be compared according to their standard features and reasonably assessed with respect to
their quality/cost.  The preparation of a project would involve limited need for visits by specialists to
the market of the consumer.  However, this would hardly be possible in the case of other services,such as architectural services, since the latter depend on the immediate contact, and interaction
between the customer and service provider.  Such services cannot be easily standardized and, thus,
compared.  As a result, the demand for the movement of natural persons will remain strong in the
areas of customized services, related after sale services, and consultancies.  Furthermore, the
development of high-speed, lower cost transport services and communication networks may make it
economical for firms to obtain certain specialised or other services through the temporary movement
of natural persons rather than by hiring staff locally.  The same factors would also make it possible toreduce the duration of such temporary presence abroad, making the movement of natural persons an
even more viable mode of trade.
Major Impediments to MNP
Three broad categories of obstacles exist in the way of freer movement of natural persons.
These include the use of economic needs tests (ENTs); multiple qualifications, licensing and
certification regulations; and finally, non-transparent visa and work permit regimes.
A major limitation on market access is due to the widespread use of the economic needs test
(ENT).  With the exception of 12 countries which stated that ENT does not apply in a few categories,
most commitments specify that they are subject to an economic needs test (in the case of 34
members), or refer to legislation that may c ontain ENTs.  The ENTs imply that the relevant
Government agency would grant market access if certain conditions were met which reflect economic
needs of the population or their demand for such services.  These conditions may be qualitative orquantitative, taking into account the local market conditions and availability of the local service
suppliers, characteristics of the population, or any other criteria. Due to its discretionary nature, the
economic needs test poses a major barrier to trade in services.  ENTs detract from the predictability of
the trade through this mode of supply of services and nullify the opportunities for market access
otherwise extended in the commitments.  This suggests that further progress in negotiating the
removal of barriers for market access of the natural persons would depend to the extent that the
application of the ENT could be restricted or made more predictable.
The ability of persons to supply services in export markets is also affected by the lack of
recognition of professional qualifications and licensing requirements. These requirements have to
meet the test of “necessity”, that is, they should not be more burdensome than necessary to ensure
legitimate objectives, e.g. the quality of the service.  This work is particularly important and needs tobe given greater attention in the next round of negotiations.
Even where persons meet the criteria set under mode four, whether or not subject to an
economic needs test, the administration of the visa and work permit regimes can pose another barrier
to trade through movement of persons.  The lack of transparency in these regimes is the most obviousproblem.  Most disturbingly, this allows countries to apply different conditions relative to temporary
entry and stay depending on the country of origin.  Thus, efforts should be made to streamline visa
regimes when visa issuance is required for the trade-related movement of persons.
Finally, it may be useful to mention a ‘psychological’ impediment to advancing the freer
movement of natural persons.  This is caused by the misleading equation of movement of natural
persons under the GATS with migration.  The Anne x of GATS on the Movement of Natural Persons
is very clear.  The GATS does not apply to measures affecting natural persons seeking access to the
employment market of a Member, nor shall it apply to measures regarding citizenship, residence or
employment on a permanent basis. It shall also not prevent a member from applying measures toWT/GC/W/131
Page 8
regulate the entry of natural persons into, or their temporary stay in, its territory, including those
measures necessary to protect the integrity of, and to ensure the orderly movement of natural persons
across, its borders. In addition, 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 specific
commitment.
Thus,  the claim that any commitment under mode 4 in GATS can lead to an uncontrolled
increase in immigrants is completely unfounded.
Approaches to Further Liberalization
In order to advance liberalization of the movement of natural persons, it would be necessary
to squarely address the major impediments in this  area.  The following approaches could lead to
productive results.
Economic Needs Tests
A new approach to the negotiations on the movement of natural could focus on occupational
lines. The ILO International Standard Classification of Occupations (ISCO) has established an
internationally adopted classification of nine major groups. The classification could be used forestablishing a list of occupations relevant for the international trade in services, as the UNCPC has
been used to establish a list of service sectors. The list defines major  and sub-major  group titles which
are further subdivided in the ISCO classification into the minor  and unit group titles.  (Please see
Annex ‘A’).
One of the ways to reduce the scope for the application of the ENT could be for countries to
agree on certain services sectors where the movement of the natural persons would be excluded from
the general application of the ENT.  The horizontal commitments on mode four would, thus, be
supplemented by the list of service sectors where the ENT would not be applied to the movement of
natural persons supplying services in that particular sector. Still, the sector approach in establishing
the ENT exemption list may seem too broad in some cases since commitments in mode four would
apply to all natural persons of all professions supplying services in that sector.  The ENT exemptionlist could, therefore, be supplemented with the above occupation approach. The ENT exemption list
could include professions  (or “trades” as they ar e defined in the ISCO) implying that the ENT would
not be applicable to the market access of the natural persons in these categories in any of the service
sectors.  The ENT exemption list could, thus, be both, occupation and sector specific, indicating that
the ENT barrier does not apply for the selected profession in certain sectors.
The following table illustrates the approach; these commitments would be incorporated into
the respective schedules.WT/GC/W/131
Page 9
List of ENT Exemptions
OccupationServices sector Other limitations
15
1210.     Directors and chief executives
1231.     Finance and administration department
                   managers
1235.     Supply and distribution department managers
1313.          General managers in construction
241.            Business professionals
2441.      Economists
311.            Physical and engineering science technicians312             Computer associate professionals
313.            Optical and electronic equipment operators
315.            Safety and quality inspectors6. Environmental services Authorization is
granted subject to
the total number of
... permits per
annum.
To the extent that the remaining sectors and oc cupations would remain subject to application
of ENT, efforts should be made to reduce the scope for arbitrary and discriminatory practices, provide
greater transparency, and introduce more neutral economic criteria.  A reference paper could bedrafted that would lay down the principles for application of ENTs.  The principles should address:
- definition of the economic needs test;
- criteria for the introduction of the ENT, which could be quantitative and/or 
qualitative;
- procedures of the application of the ENT;
- duration or review of the ENT application;
- guidelines for administration of the ENT;- public availability of information;
- institutional provisions.
Visa Regimes :
In order to have more transparent and objective implementation of visa and work permit
regimes, the following measures could be considered :
- Member countries should publish the relevant legislation, implementing regulations
and most important of all, the administrative rules that define the conditions of entryand national treatment.  Administrative rules are of particular importance because if
these are not made transparent countries will retain a discretionary power to change
rules and tighten up entry requirements, thus violating their bindings;
-  Member countries should establish a system allowing business persons to report to
Trade Authorities on examples of frustrations and abuses encountered as they seek
temporary entry and stay under GATS;
-  Member countries should bind their current immigration legislation related to all the
relevant categories in their specific commitments.WT/GC/W/131
Page 10
Qualifications and Licensing Regulations
To overcome barriers created by qualifications and licensing regulations, the following
measures may be considered :
- Developed countries have set up regional and bilateral frameworks on licensing,
qualifications and technical standards which exclude developing countries but
promote labour mobility between them.  The participation of developing countries in
such agreements of mutual recognition should be facilitated;
- International standards would facilitate the movement of labour and further
liberalization in services.  However, harmonisation is a very slow, lengthy anddifficult process.  Perhaps faster progress could be attained if harmonisation were to
be concentrated on industry-regulated services rather than state-regulated services.
Also, a system of partial mutual recognition of qualifications similar to the one
installed by the European Union could be adopted as one of the steps towards
international standards.  This would allo w the licensing authorities of individual
countries to retain some control over the licensing requirements of foreign
professionals;
- Often licensing requirements include conditions regarding nationality and residency.
These conditions constitute a further barrier.  In fact, professional services couldoften be performed more efficiently through cross-border trade with short visits rather
than by the setting up of establishments.  If these conditions must remain in place, the
distinction between consulting and practising could be further developed, allowing
movement of labour for consultancy, while maintaining restrictions on establishing
practice;
- In establishing these standards and when harmonizing the existing regulations it must
be kept in mind that many developing countries have large informal service sectors.
Consequently, service suppliers do not always have formal experience, training or
education.  The danger of international standards actually becoming another trade
barrier must be avoided by ensuring that it does not imply a huge burden on
developing countries to catch up with the standards of services in the developedcountries.WT/GC/W/131
Page 11
Annex 'A'
International Standard Classification of Occupations
(ISCO)
1. Legislators, senior officials and managers
11. Legislators and senior officials
12. Corporate managers
13. General managers
2. Professionals
21. Physical, mathematical and engineering science professionals
22. Life science and health professionals
23. Teaching professionals
24. Other professionals
3. Technicians and associate professionals
31. Physical and engineering science associate professionals
32. Life science and health associate professionals33. Teaching associate professionals
34. Other associate professionals
4. Clerks
41. Office clerks
42. Customer services clerks
5. Service workers and shop and market sales workers
51. Personal and protective services workers
52. Models, salespersons and demonstrators
6. Skilled agricultural and fishery workers
61. Market-oriented skilled agricultural and fishery workers
62. Subsistence agricultural and fishery workers
7. Craft and related trades workers
71. Extraction and building trade workers
72. Metal, machinery and related trades workers73. Precision, handicraft, printing and related trades workers
74. Other craft and related trades workers
8. Plant and machine operators and assemblersWT/GC/W/131
Page 12
81. Stationary-plant and related operators
82. Machine operators and assemblers
83. Drivers and mobile-plant operators
9. Elementary occupations
91. Sales and services elementary occupations
92. Agricultural, fishery and related laborers
93. Laborers in mining, construction, manufacturing and transport.
__________