OECD — WORLD BANK — IOM Seminar on Trade and Migration

Geneva, Palais des Nations,

12-14 November 2003

A QUICK GUIDE TO THE GATS AND MODE 4

Julia Nielson and Daria Taglioni

Trade Directorate, OECD

Background document for Day 1, “What is the relationship between Trade & migration?”
Session 1: Trade and migration contexts

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 A QUICK GUIDE TO THE GATS AND MODE 4

Julia Nielson and Daria Taglioni

Trade Directorate, OECD

This paper was prepared under the authors’ own responsibility and does not bind the Member States
of the OECD or WTO in any way.

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 TABLE OF CONTENTS

........................................................................................................................................................................ 2
THE GATS AND MODE 4: A BACKGROUND PAPER ............................................................................ 1
PART I. BACKGROUND ........................................................................................................................ 5
I. What is the GATS? .............................................................................................................................. 5
II. What is mode 4? ............................................................................................................................... 6
(i) Who is included in mode 4?........................................................................................................ 6
(ii) What is temporary? ..................................................................................................................... 7
(iii) What is a service supplier? ......................................................................................................... 8
(iv) Summary..................................................................................................................................... 8
III. How does the GATS operate? .......................................................................................................... 9
(i) What is a commitment? .............................................................................................................. 9
(ii) What are market access and national treatment? ...................................................................... 10
(iii) What are the options in making commitments?........................................................................ 11
IV. What has been achieved so far on Mode 4? ................................................................................... 12
PART II. THE CURRENT NEGOTIATIONS......................................................................................... 13
I. The story so far… .............................................................................................................................. 13
II. What is on the table on mode 4 in the GATS negotiations?........................................................... 15
(i) Phase one: general negotiating proposals ................................................................................. 15
(ii) Phase two: requests and offers.................................................................................................. 15
III. Rules negotiations .......................................................................................................................... 19
(i) Emergency safeguard negotiations (Article X)......................................................................... 19
(ii) Government procurement (Article XIII)................................................................................... 20
(iii) Subsidies (Article XV).............................................................................................................. 20
(iv) Certain types of domestic regulation (Article VI.4) ................................................................. 20
ANNEX I: MFN EXEMPTIONS AFFECTING MOVEMENT OF NATURAL PERSONS ..................... 22
ANNEX II: NEGOTIATING GUIDELINES............................................................................................... 26
I. The Guidelines for the Negotiations .................................................................................................. 26
II. Negotiating Guidelines for Least Developed Countries................................................................. 27

Boxes

Box 1: What is the current picture of mode 4 commitments?................................................................... 12

Box 3: what are request and offer negotiations? ....................................................................................... 18

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 PART I. BACKGROUND

I. What is the GATS?

1. The General Agreement on Trade in Services (GATS) is a multilaterally agreed framework

agreement for the trade in services which applies to all 148 WTO Members. It has three main objectives:

• To progessively liberalise trade in services through successive rounds of negotiations which

should aim at promoting the interests of all members of the WTO and achieving an overall
balance of rights and obligations.

• To encourage economic growth and development thought liberalisation of trade in services, as

the GATT does through the liberalisation of trade in goods;

• To increase the participations of developing countries in world trade in services and expand
their services exports by developing their export capacity and securing export opportunities in
sectors of export interest to them.

2. The agreement has a wide scope and applies to all services supplied on a commercial basis. It
excludes most air transport services as well as services supplied in the exercise of governmental authority
(defined as service supplied neither on a commercial basis nor in competition with one or more service
suppliers).

3. The agreement includes both rules and a framework for countries to make commitments to open
particular service sectors to foreign suppliers. These market opening commitments are referred to as
“specific commitments” and set out the service sectors in which foreign suppliers will be permitted and the
conditions under which they will be permitted.

4. Accordingly, the GATS is divided in two parts. The first part of the GATS consists of general
obligations, as well as some obligations which apply only where commitments for particular sectors are
made. An example of a general obligation is the “Most Favoured Nation” or MFN requirement, which
requires WTO Members to treat all other WTO Members as well as they treat their most favoured WTO
Member. That is, treatment offered to one WTO Member must be extended to all other Members. (There
are some exceptions to MFN, see paragraph 28 and Box 1 below).

5. Some transparency requirements are also general obligations (e.g., the requirement to publish or
otherwise make publicly available at the national level all relevant measures of general application which
pertain to the agreement). Other transparency requirements apply only where a commitment has been
made (e.g., the requirement to notify other WTO Members via the WTO Council for Trade in Services1 of
any new or changes to existing laws etc which significantly affect trade in services covered by a
1
The Council for Trade in Services is a body made up of representatives of all WTO Members. It normally
meets around 4 times per year. The WTO Secretariat Trade in Services Division serves as the Secretariat
to that body and its subsidiary bodies: the Working Party on Domestic Regulation; the Committee on
Financial Services; the Working Party on GATS Rules and the Committee on Specific Commitments.

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commitment). Another example of these types of obligations is the requirement that, in sectors where
specific commitments are undertaken, measures of a general application affecting trade in services be
administered in a reasonable, objective and impartial manner (Article VI.1).

6. The second part of the GATS sets out the framework under which countries decide which service
sectors they want to allow foreign suppliers to enter, and under what conditions. The commitments made
under this framework are referred to as “specific commitments”. The commitments undertaken by each
WTO Member are contained in individual schedules of commitments which are annexed to the GATS.
The text of the GATS and the schedules of commitments for each WTO Member are available on the WTO
website at www.wto.org.

7. For the purposes of making commitments, a list of 12 service sectors and around 160 sub-sectors
was developed. The Services Sectoral Classification List (MTN.GNS.W/120, known as “W/120”)
includes cross-references the United Nations Central Product Classification (Provisional CPC). While its
use was not obligatory, many WTO Members used W/120 in making their GATS specific commitments.

8. As a further tool for making market-opening commitments, the GATS also sets out 4 possible
modes, or ways, in which services can be traded between WTO Members. Mode 1 (cross-border supply) is
where the service crosses the border (e.g., a Mexican architect faxes a plan to a client in Japan). Mode 2
(consumption abroad) is where the service is consumed in the territory of the service supplier (e.g., a
Mexican tourist goes to Japan for a holiday; a ship pulls into a foreign port for repairs). Mode 3
(commercial presence) is where the service supplier establishes a commercial presence in another WTO
Member to provide the service (e.g., a Mexican architecture firm opens a branch in Japan). Mode 4 is
where an individual service supplier moves temporarily to another WTO Member for the purposes of
supplying a service (e.g., a Mexican architect visits Japan for 6 months to supervise construction of the
building she designed).

9. Mode 3 and mode 4 are, in a sense, counterparts. When the agreement was being negotiated,
developed countries argued for the inclusion of investment in services (i.e., movement of capital) and, in
response, developing countries insisted on similar treatment for movement of labour. This led to the
development of “commercial presence” (mode 3) and “presence of natural persons” (mode 4) in the
agreement [Mattoo (2003)].

II. What is mode 4?

10. The movement of labour from one country can vary along several lines - length of stay, level of
skills and nature of the contract. A person can move for one day or permanently; be relatively unskilled or
be a specialist in a particular field; move as an independent professional or be transferred from company
headquarters in one country to a branch office in another country [Mattoo, 2003]. The question of which
aspects of these variations are covered by GATS mode 4 is discussed below.

(i) Who is included in mode 4?

11. Technically, mode 4 is defined in Article I.2(d) of GATS as being "the supply of a service… by a
service supplier of one Member, through presence of natural persons of a Member in the territory of
another Member". This definition applies to nationals as well as, in certain circumstances, permanent
residents, of WTO Members seeking to supply services abroad (permanent residents are covered where the
Member does not have nationals or accords substantially the same treatment to permanent residents and
nationals) [Article XXVIII(k)].

12. Further elaboration is provided in the GATS Annex on Movement of Natural Person Supplying
Services under the Agreement. The Annex applies to "measures affecting natural persons who are service

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suppliers of a Member, and natural persons of a Member who are employed by a service supplier of a
Member, in respect of the supply of a service". The first category is clear - "natural persons who are
service suppliers of a Member" covers self-employed or independent service suppliers who obtain their
remuneration directly from customers. However, there is some confusion about what is covered by the
second category ("natural persons of a Member who are employed by a service supplier of a Member").

13. The WTO Secretariat background note on mode 4 [1998] has noted that this wording could be
read to suggest that foreigners employed by host country companies are also included under mode 4.
However, as Article I.2(d) seems to cover only foreign employees of foreign firms established in another
Member, the Secretariat background note suggests that foreigners working for host country companies
would fall under GATS mode 4 if they worked on a contractual basis as independent suppliers for a
locally-owned firm, but would not necessarily seem to be covered if they were employees of that firm.

14. Nonetheless, a number of GATS specific commitments (i.e., the market opening commitments
made by WTO Members) actually refer to short-term employment. As specific commitments also form an
integral part of the GATS, there is thus a certain degree of legal uncertainty with regard to coverage
[Karsenty, 2000]. This situation can be further complicated by the fact that some WTO Members deem
almost all types of foreign temporary workers to be employees for the purposes of bringing them under
domestic labour law (with implications for their wages, conditions and social protection).

15. Generally, GATS mode 4 is seen as covering:

• persons providing services where a foreign service supplier obtains a contract to supply services
to the host country company and sends its employees to provide the services;

• independent service providers abroad: an individual selling services to a host country company or
to an individual;

• persons employed abroad by foreign companies established in the host country (but excluding
nationals of the host country).

(ii) What is temporary?

16. Mode 4 encompasses natural persons providing services in any of the services sectors on a
"temporary" or non-permanent basis. However, further clarification may also be required on the issue of
"temporary". There is no standard definition of temporary in the GATS and, for the purposes of specific
commitments, WTO Members are free to interpret the term as they wish, and to set varying definitions for
different categories of service providers. In practice, many WTO Members' specific commitments
distinguish between:

• "business visitors" - i.e., short-term stays of a few months (often limited to 3 months), with no
remuneration received in the host country;

• temporary movements of between a few months to a few years, including:

- existing employees transferred within the same foreign controlled company (intra-
corporate transferees, generally limited to 2-5 years)

- service suppliers on specific term contracts with foreign or nationally owned firms

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 - self-employed service providers whose remuneration is wholly or only partly received
in the host country [Arkell, 1998].

17. While "temporary" may not be defined positively in the GATS, it is defined negatively - i.e.,
permanent migration is explicitly excluded. The Annex of Movement of Natural Persons Supplying
Services under the Agreement states that GATS does not apply to measures affecting individuals seeking
access to the employment markets of a Member nor to measures regarding citizenship, residence or
employment on a permanent basis. The Annex also states that, regardless of their obligations under the
Agreement, Members are free to regulate the entry and stay of individuals in their territory provided that
the measures concerned "are not applied in such a manner as to nullify or impair the benefits accruing to
any Member under the terms of a specific commitment". The operation of visa requirements for natural
persons from some Members but not others is not per se regarded as nullifying or impairing such benefits.

18. However, some commentators have queried the GATS' distinction between service providers and
persons entering the labour market in a country. They argue that, given that temporary entry under GATS
commitments can last for up to 3 years (or in some cases longer), the service provider has in effect entered
the local labour market, even though they are not applying for citizenship, as they are providing a service
which a local person could probably do [Young, 2000].

(iii) What is a service supplier?

19. The GATS only covers services and service suppliers, but it may not always be easy to know
what constitutes the supply of a service. For example, should fruit-pickers be viewed as temporary
agricultural labourers (outside the scope of mode 4) or as suppliers of fruit-picking services? The answer
may in part depend upon how broadly WTO Members interpret the scope of the category "services
incidental to agriculture" in the Services Sectoral Classification List (W/120).

20. Equally, tasks performed on a fee or contract basis, without ownership of the inputs or outputs,
are sometimes deemed to be services, even when they would appear to be technically manufacturing in
nature. For example, a factory which receives a ream of fabric and a contract to sew 300 shirts is a
supplier of tailoring services, whereas a factory which owns the cloth and produces 300 shirts which it then
sells under its own mark is a textile manufacturer. In the world of increased out-sourcing of activities
along the production chain, there is some debate over to the extent to which activities previously classified
as manufacturing can now be broken down into, and classified as, services. There is thus some scope for
differing interpretations on what constitutes a service.2

21. Further, while technically, mode 4 includes service suppliers at all skill levels, in practice WTO
Members' commitments have been generally limited to the higher skilled - managers, executives,
specialists - although these terms are generally not further defined.

(iv) Summary

22. While there is no single, clear definition of mode 4, a useful approach might be to consider both
duration and purpose of stay. That is, mode 4 service suppliers:

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It has been questioned whether it makes sense, including in terms of the commercial reality of firms
supplying both goods and services, to limit labour mobility solely to service suppliers [Feketekuty, 2000].
Indeed, a growing number of regional trade agreements apply mobility provisions not only to service
suppliers, but also to providers of goods and investors.

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 • gain entry for a specific purpose (to fulfil a service contract as self-employed or an employee of a
foreign service supplier);

• are normally confined to one sector (as opposed to workers who enter under general migration or
asylum programs who can move between sectors); and

• are temporary (i.e., they are neither migrating on a permanent basis nor seeking entry to the
labour market).

23. These elements, however imperfect, could help to distinguish mode 4 temporary service suppliers
from wider groups of temporary workers (see Table 1).

Table 1: Summary of mode 4 coverage

Included Excluded Differences of view exist

Temporary movement (temporary Permanent migration (residence,

is undefined) citizenship or employment on a
permanent basis)

Related to the supply of services Persons working in non-service Scope of activities included in
sectors – e.g., agriculture, “services incidental to agriculture”
manufacturing (e.g., temporary agricultural
workers or suppliers of fruit-
picking services?) or services
incidental to manufacturing”

All skill levels included (but in

practice commitments to date are
limited to the highly skilled)

Foreign employees of foreign Domestic (nationals of host Foreign employees of domestic

companies established in the country) employees of foreign companies
host country companies established in the
host country

Business visitors Persons seeking to enter the

employment market
Intra-corporate transferees

Contractual service suppliers

(self-employed or as employee of
a foreign service supplier)

III. How does the GATS operate?

(i) What is a commitment?

24. GATS commitments are guaranteed minimum treatment offered to other WTO Members;
countries are always free to offer better treatment if they wish, but they cannot offer worse. Commitments
are binding – that is, they cannot be changed without paying compensation to other Members (this takes

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the form of a commitment for access in another area of equal value to the one being changed or
withdrawn). Commitments are also MFN – that is, the access offered is open to suppliers from all other
WTO Members (i.e., you can’t offer access to suppliers from some WTO Members and not others –
subject to the exceptions set out in paragraph 29 below).

25. Commitments can be made for each sector or sub-sector and, within this, for each mode of
supply. For example, under “legal services”, commitments can be made for “foreign legal consultants”,
with some access granted under mode 3 and mode 4, but not mode 1. Alternatively, commitments can be
made “horizontally”, covering a single mode of supply across all sectors listed in the schedule. Horizontal
commitments apply to all sectors listed in the schedule unless otherwise clearly specified at the sectoral
level (e.g., a country’s schedule specifies that its horizontal mode 4 commitment does not apply to legal
services). Most commitments for movement of service suppliers under Mode 4 are horizontal, rather than
sectoral, reflecting existing migration regimes3.

(ii) What are market access and national treatment?

26. For each service sector or sub-sector, and for each mode of supply within that, countries make
commitments as to the level of “market access: and “national treatment” they will offer. Read together
market access and national treatment commitments inform a foreign supplier about the access they will
have to the WTO Member’s market and any special conditions that will apply to them as foreigners. In
making commitments, a WTO Member has three main choices:

• A commitment to provide full market access and/or national for a particular mode - that is, to
maintain no restrictions - indicated in the schedule by "None".

• No commitment to provide anything on national treatment and/or market access for a particular
mode, this is indicated by "Unbound" (i.e., no bound commitment undertaken).

• Partial commitments for market access and/or national treatment, with the remaining restrictions
listed in the schedule.

27. There are 6 types of restrictions on access to their market for a given service that countries need
list in their commitment if they want to use them. These restrictions can apply to both nationals and
foreigners or only to foreigners. These market access restrictions are:

• Restrictions on the number of service suppliers, including in the form of monopolies or exclusive
service suppliers;

• Restrictions on the total value of service transactions or assets;

• Restrictions on the total number of service operations or the total quantity of service output;

• Restrictions on the total number of natural persons that may be employed in a particular service
sector or that a service supplier may employ;

• Restrictions on or requirements for certain types of legal entity or joint venture for the supply of a
service;

3
It should be noted that a WTO Member’s mode 4 commitments cover the acceptance of foreign service
suppliers into its territory, not the sending of its own nationals abroad as service suppliers.

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 • Limitations on the participation of foreign capital in terms of maximum percentage limit on
foreign shareholding or the total value of individual or aggregate foreign investment.

28. National treatment means that foreign services and service suppliers are granted treatment no
less favourable than that accorded to like national services and service suppliers. This can mean formally
identical or formally different treatment - the key requirement is that it does not modify the conditions of
competition in favour of services or service suppliers who are nationals instead of foreigners. National
treatment can also cover both de jure and de facto discrimination; that is, even if a measure applies to both
foreigners and nationals it may still be discriminatory if its effect is to discriminate against foreign
suppliers. However, national treatment does not require a Member to compensate for any inherent
competitive disadvantage which results from the foreign character of the relevant service or service
suppliers.

29. A key consideration in national treatment is whether the services or service suppliers are “like”.
The GATS, like other WTO Agreements, does not define "like" and panels under the WTO dispute
settlement system have tended to approach the issue of "likeness" on a case-by-case basis, taking into
account, inter alia, consumer perceptions of the degree to which a particular good is like, and its
substitutability.

30. WTO Members are free to make no commitment on national treatment, or to provide partial
national treatment provided they list the measures they maintain which discriminate in favour of nationals
in their schedule. Unlike for market access, there is no specific list of the types of measures that have to be
scheduled; Members must judge whether a measure breaches national treatment and therefore should be
scheduled. A measure may not be considered discriminatory if it is genuinely open to both national and
foreigners to fulfil it – e.g., a requirement for a degree of proficiency in a certain language need not be
discriminatory if it is genuinely possible for foreigners to be able to learn the language and achieve the
required level of proficiency. Some examples of the types of measures which would need to be listed in
the schedule as limitations on national treatment include: eligibility for subsidies reserved to nationals; the
ability to lease or own land is reserved to nationals; and citizenship requirements for professionals;

(iii) What are the options in making commitments?

31. In making commitments, WTO Members have a number of choices:

• They can exclude an entire sector (e.g., health services) or parts of a sector (e.g., everything other
than general nursing) from their commitments. WTO Members are free to define the sector as
they wish – they can refer to a list developed for the GATS negotiations (the Services Sectoral
Classification List, see paragraph 13 above), or the United Nations Central Product Classification
to which this GATS list refers, or they can use their own definitions;

• They can exclude some modes of supply. For example, a WTO Member may decide to permit its
nationals to study abroad (mode 2) but not permit foreign university lecturers to teach in its
territory (mode 4).

• They can place limits on the “market access” they offer (e.g., they can limit the number and type
of foreign computer professionals and the activities in which they can engage)

• The can discriminate against foreign providers in favour of nationals (e.g., by placing additional
conditions or requirements on foreign computer professionals, or restricting some activities or
benefits to national computer professionals);

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 • They can discriminate amongst foreign suppliers (i.e., they can give better treatment to suppliers
from some countries) if they have an MFN exemption for the relevant service. Countries had a
one-off opportunity to claim exemptions from MFN at the time they joined the GATS
(information on MFN exemptions related to mode 4 is included in Box 1 and Annex I).
Countries which are party to regional trade agreements are also able to discriminate in favour of
other members of those agreements.

• They can commit to providing less access than they currently actually provide (e.g., a country
may commit in the GATS to allowing 40 000 foreign professionals to provide services
temporarily each year, but may in practice under their national law allow 100 000 to enter).
Because a commitment is a binding guarantee of minimum treatment, countries often commit to
less than they currently offer to leave themselves room to manoeuvre (in the example above, to
change the national law to drop the number from 100 000 to 50 000) Indeed, many current
GATS commitments represent significantly less openness than actually exists in the country
concerned.

• They can commit to liberalize at a chosen future date to give themselves time to ensure that the
necessary regulatory frameworks are in place (e.g., they can commit to allowing foreign lawyers
to work in their territory, but only from 2010).

• Developing countries have additional flexibility to liberalize fewer sectors and to attach
conditions to access offered. Additionally, other Members should facilitate their participation in
trade, including by liberalizing modes and sectors of interest to them, and should establish special
contact points to provide information to developing country service suppliers.

IV. What has been achieved so far on Mode 4?

32. Even by the modest standards of services liberalisation in the Uruguay Round, little was done on
liberalising the temporary movement of service suppliers. Most countries made only limited commitments
on mode 4. GATS commitments are also guaranteed minimum treatment, so countries tended to be
conservative, with most committing to a more restrictive regime than they were - or are - actually
employing. Key features of the commitments on mode 4 are outlined in Box 1 below.

Box 1: What is the current picture of mode 4 commitments?

Skill levels: While mode 4 technically covers all skill levels, commitments are generally limited to the higher skilled
(managers, executives, specialists). The majority of commitments concern executives, managers and specialists, with
around half relating explicitly to intra-corporate transferees. Only 17% of all horizontal entries cover low skilled
personnel (e.g., "business sellers") and only 10 countries have allowed some form of restricted entry to "other level"
personnel [Chanda, 1999]. Further, general terms used in commitments such as "managers" or "business visitors" are
not defined, leaving considerable scope for interpretation and discretionary action by officials.

Horizontal rather than sectoral commitments: Commitments on mode 4 generally apply the same conditions to all
service sectors, with no greater access given in sectors of particular relevance to mode 4 (e.g., professional services).
Most of these horizontal commitments generally take the form of "unbound except for…" and then state special access
conditions for particular types of labour (level of skill, type of occupation) and purpose of their movement (e.g.,
establishing a commercial presence).

More restrictive: Fewer commitments have been made in mode 4 than for other modes of supply, by both developed
and developing countries. There are very few cases of full commitments, and fewer cases of partial commitments,
than for other modes of supply. While overall, developed countries have scheduled commitments in 50% of service
sectors and developing countries in 11% of service sectors, sectors where mode 4 is important (e.g., professional and
health services) tend to have fewer commitments.

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Length of stay: There is no standard definition on what classifies as "temporary" movement. Only about one third of
commitments include any specified duration of stay and these are mostly for intra-corporate transferees (generally 2-5
years) and business visitors (generally 3 months).

Economic Needs Tests (ENTs): Economic needs or labour market tests are found in 50 cases. They are mostly
scheduled as part of horizontal commitments (sector-specific ENTs appear in medical, dental and hospital, entertaining
and financial services) and generally apply to specialist personnel, or highly qualified professionals, managers and
executives. 23 countries have made commitments that, for certain categories of natural persons, ENTs will not apply
(generally those related to mode 3 establishment, and to persons holding management positions or experts with
specialised knowledge of the company). Few countries comply with the requirement for information as to ENT criteria.

Other Restrictions: These include: quotas on the number of foreign suppliers, the proportion of total employment met
by foreigners or the proportion of senior staff (80 cases); pre-employment requirements (i.e., person must already be
employed, over 100 cases); technology transfer requirements (i.e., training of local staff, mainly included by developing
countries, 32 cases); restrictions on geographic and sectoral mobility or mobility between firms (10 cases).

MFN Exemptions: There are 38 MFN exemptions relevant to mode 4, of which 32 are preferential agreements and the
rest are reciprocal (or, in 2 cases, preferential and reciprocal - see Annex I). Where measures have been specified in
detail, they relate to, for example, granting of work permits, waiving of ENTs or improved access for certain activities.
Beneficiary countries covered are not always identified, but factors listed include traditional sources of supply,
geographical zones, regional organisations and language.

Wage parity and strike clauses: 50 countries have scheduled conditions relating to domestic wage legislation,
working hours and social security (this does not include general references to domestic legislation, and there may be
more Members with such requirements in practice). In 22 cases, countries have reserved the right to suspend
commitments in the event of a labour dispute (this seems to apply mainly to intra-corporate transferees at senior
levels).

Source: WTO Secretariat, 1998; Chanda, 1999; and Young, 2000.

33. Against this backdrop, expectations are running high amongst some WTO Members for more
meaningful progress on mode 4 in the current round of services negotiations. The structure of those
negotiations, and the progress to date on mode 4, is outlined in Part II below.

PART II. THE CURRENT NEGOTIATIONS

I. The story so far…

1 January 2000: the negotiations commence

34. The services negotiations formally commenced on 1 January 2000. Even though the 1999 WTO
Ministerial Conference in Seattle had failed to launch a broader round of trade negotiations, new
negotiations on services and agriculture were already mandated under the agreements reached in the
Uruguay Round. For services, this mandate is contained in GATS Article XIX, which requires Members
to enter into successive rounds of negotiations, the first beginning not later than five years from date of
entry into force of the WTO (i.e., from 1 January 1995).

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March 2001: the Negotiating Guidelines agreed

35. GATS Article XIX also requires Members to establish negotiating guidelines and procedures for
reach round of services negotiations. In March 2001, WTO Members reached agreement on guidelines for
the current negotiations (see Annex II). Separate guidelines covering Least Developed Countries (LDCs)
were finalised in September 2003 (see Annex II)4. These guidelines note that LDCs have identified
movement of natural persons as service suppliers under GATS mode 4 as important to them and state that
members shall to the extent possible consider undertaking commitments to provide access, taking into
account all categories of natural persons identified by LDCs in their request.

December 2002 – the WTO Ministerial Conference in Doha

36. The Doha Development Agenda (DDA) endorsed the work already undertaken, reaffirmed the
negotiating guidelines and procedures, and established some key elements of the timetable for the
negotiations. These were:

• Deadline for the submission of initial requests for specific commitments: 30 June 2002

• Deadline for the submission of initial offers for specific commitments: 31 March 2003

• Stock taking on all GATS-related matters: WTO Ministerial Conference, Cancun 2003

• Overall deadline for the negotiations: 1 January 2005, as part of the DDA single
undertaking.

37. Two terms need some short explanation. First, the word "initial" reflects the reality that the
negotiating process is a succession of requests and offers (see Box 2 for an explanation of the request-offer
process). Initial requests are not necessarily exhaustive and countries can come back with further requests
at a later stage. Equally, an initial offer can be subject to change — i.e., it can be scaled up or down, with
Members remaining free to withdraw their initial offer at any stage during the negotiations. Individual
WTO Members are also under no obligation to make either requests or offers in the negotiations, should
they choose not to.

38. Second, the “single undertaking” means that all negotiating subjects are concluded as part of a
single package at the same time. The idea of a single undertaking is to help all countries find a balance of
interests in the outcome of negotiations, with countries able to balance concessions granted in some areas
against gains made in other areas.

10-14 September 2003: the WTO Ministerial in Cancun

39. With the failure of the WTO Ministerial Conference in Cancun, the overall deadline of the DDA
negotiations of 1 January 2005 now looks unlikely to be met. Much will depend on whether efforts to re-
start the negotiations in the coming months, including a possible meeting of senior trade officials from
WTO Members in December 2003, meet with success.

4
While developing countries self-select in the WTO, LDC status is based on inclusion in the United Nations
list of 49 LDCs.

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II. What is on the table on mode 4 in the GATS negotiations?

(i) Phase one: general negotiating proposals

40. In the first phase of the negotiations – roughly between their commencement on 1 January 2000
and the WTO Ministerial in Doha in 2002 — a number of members tabled general proposals outlining their
interests in the services negotiations (these proposals are all available at www.wto.org). Out of
approximately 126 proposals in total, 6 proposals were tabled on mode 4 by Canada, Colombia, the
European Communities and its member states, India, Japan and the United States (mode 4 was also
included in a general proposal from Kenya).

41. These proposals contained a number of ideas about how to improve mode 4. Most ideas either
sought to increase market access (mostly developing country proposals) or to increase the effectiveness of
existing market access (supported by most major developed countries). The main ideas include:

• Greater clarity and predictability in WTO Members' commitments: e.g., by (i) agreeing common
definitions for the main categories of personnel included in many WTO Members' commitments,
including by reference to the International Standard Classification of Occupations (ISCO-88);
many Members refer to "executives, managers, specialists", but there is no common
understanding of who is covered by these categories; (ii) providing information on economic
needs tests (i.e., where entry of foreigners is subject to an assessment of needs in the domestic
market), such the criteria used, the responsible authorities, likely time frame for determinations
and record of recent decisions.

• Greater transparency: existing access is not always used because service suppliers lack
information on the necessary requirements and procedures. WTO Members could provide one-
stop information on all relevant procedures and requirements via a dedicated web-site covering
all WTO Members; via notifications to the WTO, or by creating a one-stop contact point at the
national level. Other suggestions include prior consultation on regulatory changes, timely
responses to applications and the right of appeal.

• GATS visa: to facilitate entry of mode 4 service suppliers, including by avoiding the detailed visa
procedures currently required in many countries (often not separated from permanent migration).
The visa would be issued rapidly, time-limited, cover both independent service suppliers and
intra-corporate transferees, include appeal rights and be backed up by a bond, with sanctions for
abuse.

• More market access: (i) Commitments for particular service sectors of high demand (e.g.,
information and communications technology, professional services) rather than the current
standard treatment for mode 4 entry across all sectors. (ii) Better access for some groups, in
particular intra-corporate transferees, via "blanket" applications by companies or by charging
companies for streamlined processing (including via a GATS visa). (iii) More access for other
types of skilled, but not necessarily highly skilled, personnel such as "technical support
personnel" or "non-professional essential personnel" or for trainees (future executives).

(ii) Phase two: requests and offers

42. To date, initial requests have been received from about 35 WTO Members. As requests are
communicated between the WTO Members concerned (see Box 2), and not via the WTO Secretariat, there
is no central collection point for requests. It is thus not possible to have an exact number of requests, nor
to have an overview of their content. While some WTO Members have made their requests — or

15
summaries of their requests — public, others have chosen not to. It is the decision of individual WTO
Members whether or not to make their initial requests public.

43. Some WTO Members issued summaries of the requests they received. For example, the EU
indicated that over half the requests it received from developing countries included reference to mode 4;
and that of the 26 requests the EU received on mode 4, 24 came from developing countries. The EU also
has its own offensive interests in mode 4, and has made requests of India, Ecuador, Peru, Philippines
Malaysia and Morocco as well as other developing countries to improve their commitments under mode 4
[Niessen, 2003].

44. In terms of initial offers, to date, 37 WTO Members have submitted initial offers. They are:
Argentina, Australia; Bahrain; Bolivia; Canada; Chile; China; Chinese Taipei; Colombia; Czech Republic;
European Communities and its Member States; Fiji; Guatemala; Hong Kong, China; Iceland; Israel; Japan;
Republic of Korea; Liechtenstein; Macao, China; Mexico; New Zealand; Norway; Panama; Paraguay;
Peru; Poland; Singapore; Slovak Republic; Slovenia; Sri Lanka; St Kitts and Nevis; Switzerland; Thailand;
Turkey; United States and Uruguay.

45. Of these offers, 12 have been derestricted by the Member concerned and are publicly available on
the WTO website (in the TN/S/O document series)5. 6 others are available via national or other websites6.
It is the decision of the individual member whether or not to make their initial offer public.

46. Of the 18 offers which were publicly available, offers on mode 4 have been made by 9 WTO
Members: Argentina; Canada; the European Communities and its Member States; Hong Kong, China;
Japan; New Zealand; Norway; Slovenia and Switzerland. Highlights include:

‰ Argentina: Additional categories have been added for businessmen, professionals and
specialists; and representatives of foreign enterprises. Managers, executives and specialists
have been brought under the heading of “intra-corporate transferees”. Additional commitments
have been made for all these groups noting the possibility of multiple entries being granted.
Businessmen cannot receive remuneration in Argentina nor directly sell services to the puvlic and
are granted 90 day stay, extendable for a further 90 days. Professionals and specialists are either
(i) persons carrying out professional or technical activities irrespective of whether or not these are
remunerative, who are granted 15 days stay, extendable for a further 15; or (ii) persons providing
services to a natural or juridical person in Argentina a as permanent employees or freelancers,
who have a 1 year stay, extendable for further 1-year periods as long as they remain a contracted
employee. Similar conditions apply to managers, executives and specialists entering as intra-
corporate transferees. Representatives of foreign enterprises are persons who receive
remuneration from abroad; they cannot provide services in Argentina under a contract which links
them to an enterprise established in Argentina. They are granted stays of 1 year, extendable for
further 1 year periods for as long as they retain the status of contracted employee.

‰ Canada: Business visitors now admitted also to supply after-sale and after lease services and
labour market tests are not required. Entry and stay is specified as being for a period of up to 6
months with the possibility of extensions. Intra-corporate transferees must now have been
employed for one year within the immediately preceding three year period. Definitions of

5
As at 29 October, offers were available in this series from: Australia; Canada; Chile; the European
Communities and its Member States; Iceland; Japan; Liechtenstein; New Zealand; Norway; Slovenia,
Turkey and the United States.
6
Additionally, on the Internet we located offers from Argentina, Hong Kong China, Panama, Paraguay,
Switzerland and Uruguay.

16
 executives, managers and specialists have been clarified. Labour market tests have been removed
for intra-corporate transferees, but work permits are required. The period of stay for managers
and executives is equivalent to the period of transfer, with extensions possible provided temporary
residency status is maintained and demonstrated. Similar conditions apply for specialists, but the
entry and stay, including extensions, must not exceed 5 years. Conditions have also been clarified
for professionals, who are no longer subject to labour market tests. Work permits are required
and period of stay is for an initial period of 1 year or the time necessary to complete the contract,
whichever is less and extensions are possible. Senior computer specialists are limited to 10 per
project. Spouses and common-law partners of qualifying intra-corporate transferees or
professionals are a new category and are not subject to labour market tests.

‰ European Communities and its Member States: Additional horizontal and sector specific
commitments. Definitions of intra-corporate transferees clarified and extended to include
graduate trainees (persons with a university degree transferring for career development or
training purposes). Business visitors in certain categories are permitted for a stay of up to 90
days in any 12 months without application of an economic needs test. Certain restrictions
removed for individual Member States. In the category of contractual service suppliers,
employees of juridical persons are permitted stays of up to 6 months (cumulative) in any 12
month period are permitted. Contracts may be for up to 12 months. Qualification requirements
apply, as well as at least 3 years professional experience in the sector. Additional sectors have
been included such as book-keeping services, related scientific and technical consulting services,
maintenance and repair of equipment, and environmental services. Commitments are subject to
the application of a numerical ceiling (modalities and level to be determined) except where
otherwise indicated for a specific sub-sector, and except in Denmark, Italy, Netherlands, Sweden
and the UK (with the exception of computer and related services in the UK). For independent
professionals who are contractual service suppliers access is subject to the following
conditions: the persons must be engaged in the supply of a service as self-employed; they must
have a bona fide contract for a period not exceeding 12 months; the entry and stay shall be for a
cumulative period of not more than 6 months in any 12 month period or the duration of the
contract, whichever is less; qualification requirements and 6 years professional experience in the
sector apply. Applies to: architectural services, urban planning and landscape architecture;
engineering and integrated engineering services; computer and related services; management
consulting services; services related to management consulting; translation services.
Commitments are also subject to numerical ceilings (modalities and level to be determined)
except in Denmark, Netherlands, Sweden and the UK (except for computer and related services in
the UK).

‰ Hong Kong China7: Turned previous attachment to the schedule into a horizontal commitment.
Applies to intra-corporate transferees who are managers, executives or specialists; detailed
definitions are provided for each category. All must have been employed by their employer for at
least 1 year prior to entry and may not change employer without in HKC without approval. The
commitment applied only to bona fide business establishments and the number of persons who
may enter shall be reasonable having regard to the size and nature of the business operation.
Commitments are limited to temporary stay, with appropriate authority granted prior to arrival.
Stays are limited to one year in the first instance, extendable up to a total of 5 years.

‰ Japan: Time period of one to three years specified for intra-corporate transferees, which now
also includes transfers to representative offices. Specific treatment for legal, accounting or

7
It is unclear whether this actually represents any new offer, or simply a tidying up of the existing access set
out in the attachment.

17
 taxation service suppliers qualified under Japanese law for a period of one to three years which
may be extended. A new category for natural persons who are engaged on the basis of a
personal contract with a public or private organization in Japan for activities which require
technology and/or knowledge at and advanced level pertinent to physical sciences, engineering or
other natural sciences; or activities which require knowledge at an advanced level pertinent to
jurisprudence, economics, business management, accounting or other human sciences; or
activities which require specific ways of thought or sensitivity based on experience with foreign
cultures. A stay of one or three years is permitted.

‰ New Zealand: Executive and senior managers as intra-corporate transferees, specialists and/or
senior personnel, and specialist personnel have , in addition to an initial period of a maximum
of 3 years, a further period of stay up to a maximum of three years, providing the need for the
worker still exists. Specialist personnel in occupations included the Immigration Service’s
Occupational Shortages List are not subject to a labour market test. Service suppliers are now
also permitted for the purposes of establishing a commercial presence in New Zealand.

‰ Norway: temporary entry, stay and work for managers and executives, specialists as intra-
corporate transferees (provided that the service supplier is the corporation to which these are
attached) increased from a two to four year period. Requirement that service be in certain specific
sectors removed.

‰ Slovenia: Removal of the reference to the “business visa” requirement for intra-corporate
transferees.

‰ Switzerland: Periods of stay for essential personnel have been extended from 4 to 5 years.
Experience requirements for persons employed by foreign companies for more than one year
where that company has a contract to provide services in Switzerland have been reduced to 3
years from 5. Additional service sectors are included for coverage: legal consultancy, auditing
services, technical testing and analysis services and maintenance and repair of aircraft.
Additionally, two restrictions are indicated as being under consideration for review:
authorizations being subject to measures fixing the overall numbers of work permits; and
measures limiting professional and geographical mobility within Switzerland.

Box 2: what are request and offer negotiations?

Requests

Under request-offer negotiations, each WTO submits requests to its trading partners. These requests can be made to
other Members individually or to groups of Members. While some countries tailor their requests to specific trading
partners, others have submitted nearly identical, general requests to a number of countries.

Requests can take the form of:

o a request for the trading partner to make commitments in a new sector (i.e., a sector not already included in its
schedule).

o a request to remove an existing restriction or to reduce its level of restrictiveness (e.g. if a country has a foreign
equity limitation of 49% in a given sector, another WTO Member may request that limit to be removed altogether -
i.e., that 100% equity be allowed - or that it be raised to 75%).

o a request to remove an existing MFN exemption;

18
o a request to make an additional commitment in its schedule covering particular regulatory practices aimed at
making sure that liberalisation is effective. For example, additional commitments were used in the negotiations on
telecommunications for countries to commit to providing an independent regulator for the sector.

The exchange of requests as a process has traditionally been purely bilateral, with countries communicating directly
with one another. The WTO Secretariat does not normally have a role to play.

Offers

In the next stage, WTO Members submit offers in response to all the requests they have received. Countries usually
prepare a single offer in response to all requests received. Countries may choose not to offer anything in response to
some requests, or not to satisfy all points in some requests, and they are free to do so. The choice of what to offer is a
decision of each WTO Member. Some countries have already indicated that they will not be making requests or offers
on particular sectors (notably, health and education) in the current round of negotiations.

For the sake of clarity, WTO Members have submitted their initial offers in the form of a revision to their existing
schedule of commitments, with changes indicated in strike-out and bold.

While requests are addressed bilaterally to negotiating partners, offers are traditionally circulated multilaterally (i.e., to
all WTO Members). This is because, under the MFN rule, access offered to one WTO Member is automatically offered
to all WTO Members. Given this, the offer is shown to all WTO Members, and even Members which did not initially
make any requests can consult and negotiate with a country that has submitted an offer. Equally, some countries may
choose not to submit their own requests, judging that their interests are covered by others’ requests and knowing that
whatever those other countries manage to negotiate in terms of access will automatically be extended to them under
MFN (e.g., some countries may not use scarce administrative resources preparing a services request of the US if
Brazil or the EC are going to request the same thing).

The submission of offers can also trigger further requests, including by countries which had not yet submitted requests,
and then the process continues and becomes a succession of requests and offers. As with most types of negotiations
(e.g., pay negotiations), initial requests can be ambitious, and initial offers more minimal, with a compromise emerging
in the process of negotiation.

Source: adapted from WTO website

III. Rules negotiations

47. In addition to the negotiations on specific commitments, there are also negotiations related to
some of the main rules, or disciplines, under the GATS which were left unfinished when the agreement
was first developed in 1994. The key areas left outstanding mainly concern general disciplines, or rules
and include four main areas: a possible emergency safeguard (Article X); government procurement (Article
XIII); possible disciplines on trade distorting subsidies (Article XV)and possible disciplines on certain
types of domestic regulation (Article VI:4). They are explained individually below.

48. These negotiations are all due to be concluded prior to the conclusion of the negotiations on
specific commitments, with the exception of the emergency safeguard which is due to be agreed by 31
March 2004.

(i) Emergency safeguard negotiations (Article X)

49. A safeguard is a mechanism that allows WTO Members to temporarily suspend their
commitments in the event of unforeseen and negative consequences for domestic suppliers. While such
mechanisms exist for goods trade, there is currently no safeguard for services. GATS Article X mandates
negotiations on the question of an emergency safeguard. Negotiations have been underway since 1996, but
the original deadline has been extended several times and is now 15 March 2004.

19
50. Progress in the negotiations has been slow both because of differences of view amongst WTO
Members on the desirability of a safeguard, and technical and conceptual difficulties in developing
safeguard for services. The nature and coverage of any safeguard mechanism is still to be determined. A
number of developing countries have indicated that the quality of any offers they would make would be
influenced by whether or not any commitments they ultimately undertook would have access to an
emergency safeguard.

(ii) Government procurement (Article XIII)

51. A number of important GATS provisions currently do not apply to government procurement. In
particular, three key provisions do not apply: WTO Members are not bound to treat all other WTO
Members equally (i.e., MFN does not apply) and commitments on market access and national treatment in
a sector do not cover government procurement. Government procurement is defined in GATS as “the
procurement by governmental agencies of services purchased for governmental purposes and not with a
view to commercial resale or with a view to use in the supply of services for commercial sale”.

52. GATS Article XIII mandates negotiations on government procurement in services within two
years of the entry into force of the WTO Agreement (i.e., within 2 years of 1 January 1995). However, to
date, there has been relatively limited interest in these negotiations for a number of reasons, including: the
greater priority placed by a number of WTO Members on concluding the safeguard negotiations, and the
parallel efforts to develop a multilateral agreement on transparency in government procurement applying to
both goods and services.

(iii) Subsidies (Article XV)

53. There are currently no specific disciplines on subsidies under the GATS8, and understanding of
the issue is still at an early stage. This is reflected in the language of Article XV, which states that
Members recognize that, in certain circumstances, subsidies may have distortive effects on trade in
services. Article XV mandates Members to enter into negotiations with a view to developing the necessary
multilateral disciplines to avoid such trade distortive effects of subsidies.

54. Article XV does not condemn subsidies per se, indeed, it states that the negotiations shall
recognize the role of subsidies in relation to the development programmes of developing counties and take
into account the needs of Members, particularly developing countries, for flexibility in this area.

55. Article XV also mandates that Members shall exchange information concerning all subsidies
related to trade in services that they provide to their domestic service suppliers. In 1996, a questionnaire
developed asking WTO Members to identify any subsidies they thought were relevant. However, the
survey has had relatively few responses, including because Members have experienced difficulty in
identifying what might constitute a subsidy, and a subsidy with trade-distortive effects - in services. Work
on subsidies under Article XV is still at a relatively early stage.

(iv) Certain types of domestic regulation (Article VI.4)

56. Article VI.4 mandates the development of any necessary disciplines to ensure that non-
discriminatory measures relating to qualification requirements and procedures, technical standards and
licensing requirements do not constitute unnecessary barriers to trade in services. That is, these measures
should be:

8
Although it should be noted that discriminatory subsidies should be scheduled as a limitation on national
treatment in sectors where commitments are being made.

20
 • based on objective and transparent criteria, such as competence and ability to supply the service;

• not more burdensome than necessary to ensure the quality of the service;

• in the case of licensing procedures are not in themselves a restriction on the supply of a service.

57. These disciplines do not exist as yet. Progress on Article VI.4 has been very slow and there are
different views amongst WTO Members on sort of disciplines should be developed. Some Members argue
that any disciplines should only focus on increasing transparency, and that any “necessity test” is itself not
necessary. Others argue that other WTO Members should be free to challenge requirements they feel are
trade restrictive and be able to suggest other – equally effective and reasonably available but less
burdensome – ways of achieving the same objective. Some Members have also expressed concern that a
necessity test could allow other WTO Members to “second-guess” the decisions of national regulators;
others argue that a necessity test would only look at whether there were other, equally effective and
reasonably available but less trade restrictive, ways to achieve the same objective.

21
 ANNEX I: MFN EXEMPTIONS AFFECTING MOVEMENT OF NATURAL PERSONS

A. EXEMPTIONS WITH COMPREHENSIVE SECTORAL COVERAGE

OTHER
WTO MEMBERS BENEFICIARIES TREATMENT COVERED DURATION
REMARKS
1. Austria Switzerland Waiving of visa requirement and other measures Indefinite
2. Brunei Traditional sources Preferences for entry and stay Indefinite with
periodic national
review
3. Cyprus EU Member States Permission for limited numbers of EU nationals to be employed or to exercise Until the time of
professions in specific occupations in accordance with criteria to be established full EU
unilaterally or in future agreements with EU membership
4. Portugal Angola, Brazil, Cape Verde, Waiving of the nationality requirement for the exercise of certain activities and Indefinite
Guinea Bissau, professions
Mozambique, Sao Tome and
Principe
5. France Francophone African Facilitation of access procedures for the exercise of certain services activities 10 years
countries, Algeria,
Switzerland and Romania
6. United Members of the British Waiving of the requirement of a work permit for citizens having a grandparent Indefinite
Kingdom Commonwealth born in the UK

7. EC and/or Switzerland Measures with the objective of providing for the movement of all categories of Indefinite Reference to a
Member States natural persons supplying services progressive
process
8. EC and certain San Marino, Monaco, Right of establishment for natural (and legal) persons, waiving the requirement of Indefinite
Member States Andorra, Vatican State city work permits

22
 OTHER
WTO MEMBERS BENEFICIARIES TREATMENT COVERED DURATION
REMARKS
9. EC Member States in Central, Eastern Guarantee of work permits in limited number for temporary contract work Indefinite or, for All sectors
States and South-Eastern Europe certain countries, (principally
including Russia, Ukraine, until an economic construction, hotel
Belarus and Georgia, and in integration and catering).
the Mediterranean basin agreement is Reference to a
concluded or broader initiative
completed
10. Italy States in Central Eastern and Guarantee of work permits for seasonal workers Indefinite
South Eastern Europe and in
the Mediterranean Basin
11. Egypt Greece, Iraq, Jordan, Libya, Full national treatment As long as the
Qatar, Sudan, United Arab agreements
Emirates, Yemen and remain in force
possibly other countries
12. Indonesia Malaysia, Singapore, Brunei Measures concerning movement of personnel (semi–skilled workers). Limited Indefinite
Darussalam, Papua New access to low level occupations
Guinea, Australia
13. Jamaica Caricom Members: Antigua Waiving of work permits Indefinite
and Barbuda, Barbados,
Belize, Dominica, Grenada,
Guyana, Montserrat, St Kitts
and Nevis, St Lucia, St
Vincent and the Grenadines,
Trinidad and Tobago
14. Liechtenstein Switzerland Mutual granting of temporary stay and permanent residency Indefinite
15. Liechtenstein EC and EFTA countries Preferential treatment of persons from traditional recruiting areas with regard to Indefinite
permits for entry, stay and work (applies to persons other than the essential
persons appearing in the schedule of commitments).
16. Liechtenstein All countries Reciprocity concerning the "right of presence of natural persons" Indefinite
17. Malaysia All countries Differential treatment for measures affecting the movement of semi-skilled and Indefinite
unskilled workers on a regional, religious and cultural basis
18. Malta European Union Countries Preferential treatment in the granting of licences and permits to provide services Indefinite Reference to the
integration
process into the
EU
19. New Zealand Kiribati Most favourable entry conditions possible for up to 20 nationals each year Indefinite
20. New Zealand Tuvalu Most favourable entry conditions possible for up to 80 nationals each year Indefinite

23
 OTHER
WTO MEMBERS BENEFICIARIES TREATMENT COVERED DURATION
REMARKS
21. Panama Guatemala, El Salvador, Preferential treatment for suppliers of services of different kinds Indefinite
Nicaragua, Costa Rica, and
Honduras
22. Panama United States Preferential treatment for suppliers of services under the Panama Canal Treaties Indefinite
23. Peru All countries Waiving the limitations of: three years as maximum duration, 20% of the total Indefinite
number of employees and 30% of the payroll
24. Philippines "All countries" /countries Waiving labour market test and simplifying entry procedures Expiry or
with whom a treaty on entry termination date
rights for traders and of the bilateral
investors has been treaties
concluded
25. Sierra Leone Mano River Union and Full national treatment As long as
ECOWAS countries agreements
remain in force or
are extended
26. Singapore "Traditional sources" Measures regarding unskilled, semi-skilled, and skilled persons except specialists Indefinite
and professionals. (Purpose: prevent overpopulation and maintain social order) (periodic national
review)
27. Solomon Members of the Melanesian Waivers for measures affecting the entry and temporary stay of natural persons Indefinite Reference to an
Islands Spearhead Group: Vanuatu, ongoing process
Papua New Guinea
28. Sweden Switzerland Measures with the objective of providing for the movement of all categories of Indefinite Reference to a
natural persons supplying services progressive
process
29. Switzerland Liechtenstein See 14. Indefinite
30. Switzerland EC and EFTA countries See 15. Indefinite
31. Tunisia "All countries" (probably Bilateral social security agreements: extension of social security and health Not specified
with whom Tunisia has or benefits to citizens of other countries
will have agreements)
32. Turkey Libya Restrictions on the transfer of premiums for long-term insurance schemes and on Indefinite
employment of foreign-workers by foreign companies is waived (not applied
de facto).
33. Turkey All countries Consulate duties: if the amount of the consulate duties collected from Turkish Indefinite
nationals by any country is higher than the amount written in the tariff list, the
consulate duties collected from the nationals of that country will be increased
reciprocally.

24
 OTHER
WTO MEMBERS BENEFICIARIES TREATMENT COVERED DURATION
REMARKS
34. USA All countries with whom the Movement of persons for trade and investment: issuance of "treaty trader or treaty Indefinite
United States has a investor non immigrant visas" to nationals of the countries concerned engaged in
friendship, commerce and substantial trade in services or in developing an investment.
navigation treaty, a bilateral
investment treaty; or certain
countries described in
Section 204 of the
Immigration Act of 1990

B. SECTOR-SPECIFIC EXEMPTIONS

SECTOR
WTO MEMBER BENEFICIARIES TREATMENT COVERED DURATION
CONCERNED
1. New Zealand Interpretation Japan and other Most favourable entries conditions if employment for up to two years as Indefinite
services countries with whom interpreters in tourism related industries.
such arrangements may
be desirable
2. Switzerland Distribution services EFTA members Granting of work permits without certain limitations to employees of Indefinite
companies (commerce in goods) from EFTA countries
3. Thailand Services mentioned USA National treatment to U.S. citizens to provide the services mentioned in the 10 years
in the US –Thailand Treaty
Treaty of Amity and
Economic Relations
4. USA Maritime transport Countries that prohibit Restrictions on performance of longshore work when making U.S. port calls Indefinite
longshore work by crew by crews of foreign vessels owned or flagged in countries that similarly
members aboard U.S. restrict U.S. crews on U.S. flag vessels.
vessels
Source: WTO, 1998

25
 ANNEX II: NEGOTIATING GUIDELINES

I. The Guidelines for the Negotiations9

58. GATS Article XIX requires Members to establish negotiating guidelines and procedures for
reach round of services negotiations. These guidelines, agreed in March 2001, include the following key
elements:

• Reaffirmation of some of the general principles of the GATS, including governments’ right to
regulate and to introduce new regulations on the supply of services in pursuit of national
policy objectives and their right to specify which services they wish to open to foreign
suppliers and under which conditions.

• Reaffirmation of the principle of flexibility for developing and least-developed countries, as

well as an undertaking that progress in the negotiations would be reviewed to check the extent
to which Article IV (Increasing Participation of Developing Countries) was being
implemented and to suggest ways and means of promoting the goals of that Article.

• Due consideration to be given to the needs of small and medium-sized service suppliers,
particularly those of developing countries.

• No a priori exclusion of any service sector or mode of supply. This does not mean that all
countries must make requests or offers or liberalise any particular sector, simply that no sector
or mode is in principle excluded. This reflects partially the interest of developing countries in
mode 4 (temporary movement of natural persons as service suppliers) and their concern on
the limited commitments that were made on this mode in the Uruguay Round, as well as the
interests of a range of other countries in maritime services, where negotiations were
suspended at the end of the Uruguay Round without any result and in audiovisual services.

• Establishment of the request-offer process as the main method of negotiation (see Box 2).

• Establishment of indicative deadlines for the negotiations on rules (see below). The
emergency safeguard was due to be completed by 31 March 2003, with negotiations on
domestic regulation (Article VI:4), government procurement and subsidies all to be concluded
prior to the conclusion of negotiations on specific commitments.

59. Article XIX also requires that, for the purposes of establishing the guidelines, the Council fro
Trade in Services shall carry out an assessment of trade in services in overall terms and on a sectoral basis
with reference to the objectives of the agreement, including those set out in paragraph 1 of Article IV (i.e.,
which relate to increasing the participation of developing countries in world trade, including via the

9
See “Guidelines and Procedures for the Negotiations on Trade in Services”, adopted by the Special Session
of the Council for Trade in Services on 28 March 2001, S/L/93, dated 29 March 2001. Available at
www.wto.org.

26
negotiation of specific commitments in sectors and modes of supply of export interest to them).
Assessment remains a standing item on the agenda of the Council for Trade in Services.

II. Negotiating Guidelines for Least Developed Countries10

60. GATS Article XIX also required the development of negotiating guidelines for the special
treatment of least developed countries. These guidelines were agreed on 3 September 2003 and, together
with the general guidelines for the negotiations outlined above, form the basis for the negotiations and are
designed to ensure the maximum flexibility for LDCs. The main points include:

• Members shall take into account the serious difficulty of LDCs in undertaking negotiated
specific commitments in view of their special economic situation and shall exercise restraint
in seeking commitments from LDCs.

• LDCs shall have flexibility to open fewer sectors, liberalise fewer types of transactions and
progressively extend market access in line with their development situation. LDCs shall not
be expected to offer full national treatment, nor are they expected to undertake additional
commitments on regulatory issues which may go beyond their institutional, regulatory and
administrative capacities.

• Members shall given special priority to providing effective market access in sectors and
modes of supply of export interest to LDCs and LDCs should indicate their priorities in this
regard;

• Members shall take measures in accordance with their individual capacities aimed at
increasing the participation of LDCs in trade in services. These could include, for example,
reinforcing import/export programmes and strengthening programmes to promote investment.

• Given that LDCs have identified movement of natural persons as service suppliers under
GATS mode 4 as important, members shall to the extent possible consider undertaking
commitments to provide access, taking into account all categories of natural persons
identified by LDCs in their request;

• the specific interests and difficulties of LDCs shall also be taken into account in the
development of GATS rules;

• targeted and coordinated technical assistance and capacity building programmes shall
continue to be provided to LDCs to help strengthen their domestic services capacity, build
institutional and human capacity and enable to undertake appropriate regulatory reforms.
Assistance shall also be provided for them to carry out national assessments of trade in
services.

10
See “Modalities for the Special Treatment for Least Developed Country Members in the Negotiations on
Trade in Services” adopted by the Special Session of the Council for Trade in Services on 3 September
2003, TN/S/13, dated 2 September 2003. Available at www.wto.org.

27
 REFERENCES

Arkell, J (1998)
“Statistics on the presence of Natural Persons” study prepared for UNCTAD.

Chanda, R (1999)
“Movement of Natural Persons and Trade in Services: Liberalising Temporary Movement of Labour under
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