Mode 4 of WTO's General Agreement on Trade in Services: Can it spur Cross-Border Labor Mobility from Developing Countries?

Abstract

AbstractLiberalization of merchandize trade has brought forth extraordinary gains to world economy in recent decades. Available research, however, suggests that even greater benefits can result from the liberalization of global trade in services. Currently only about 20 percent of services are traded internationally although this sector accounts for more than half of global outputs, and exceeds 75 percent of GDP in high-income countries. Temporary movement of natural persons as service suppliers—as envisaged by GATS-Mode 4 of WTO—is one such services area which promises great benefits to both labor sending and receiving countries, but remains mired in a complex quagmire of trade and non-trade barriers as well as widespread misapprehensions. This paper argues that a basic convergence of economic interests seem to exist between the labor sending and receiving countries for liberalizing temporary movement of natural persons as service suppliers, and that, despite growing anti-immigration sentiments in developed countries, GATS-Mode 4 may be capable of spurring greater cross-border labor mobility.