The Presence of Natural Persons (Mode 4)

Hamid Mamdouh

Director, Trade in Services Division, WTO

September 2007

What is mode 4?

How can one trade services under the GATS?

Four modes of supply (Article I):

(1) Cross border supply

(2) Consumption abroad

(3) Commercial presence

(4) Presence of natural persons

GATS Definition -Mode 4 is ...

The supply of a service by:

“a service supplier of one Member, through presence of natural persons

of a Member in the territory of any other Member”

What types of natural persons?• Natural persons who are service suppliers of a

Member

–Self-employed service suppliers• Natural persons of a Member who are

employed by a service supplier of a Member in the territory of any other Member

–Intra-corporate transferees–Business visitors–Contractual Service suppliers

Mode 4 does not cover:

• natural persons seeking access to the employment market

• measures regarding citizenship, residence or employment on a permanent basis

Plus ...

Governments are free to regulate entry and temporary stay, provided these measures do not nullify or impair the

commitments

Including by applying differential visa requirements

Relative importance of mode 4 trade

Estimates are:-Mode 1 35%-Mode 2 15%-Mode 3 50% -Mode 4 ~ 1-2%

Source: WTO Secretariat

Mode 4 commitments – where do we stand?

Extended Negotiations(Third Protocol)

• A number of developing countries were dissatisfied with level of mode 4 commitments

• Negotiations were extended until June 1995• But no major breakthrough - improvements

by Australia, Canada, EC, India, Norway, Switzerland

A snapshot of commitments

• Governed by horizontal commitments• Absence of full liberalization• Positive listing: “Unbound except ...”• Linked to commercial presence• High-level of training/expertise, often as

intra-corporate transferees • Specified duration of stay: 3 months to 5

years

Main limitations scheduled

• Limited categories included

• Pre-employment requirements

• Economic Needs Tests/Labour Market Tests

• Quotas

• Residency and nationality requirements

• Training/Education/ Qualification

• Authorisation, approval, registration requirements

• Training of locals

Structure of Horizontal Commitments(% of commitments covering various categories, 2003)

ICT43%

E,M,S27%

BV23%

Indep1%

Other6%

BV = Business VisitorsICT = Intra-Corporate Transferees

E,M,S = Executives, Managers, Specialists

Mode 4 commitments by the 8 ESCWA WTO Members1

Categories Number of commitments

ENTs/Quotas

Usual duration of stay

Business visitors

4 - 90 days

ICT andM, E, S

7 2 ENTs5 quotas

2-4 years

CSS 1 1 ENT 1 year

IP - - -

Other - - -

ICT = Intra-Corporate Transferees; E,M,S = Executives, Managers, Specialists; CSS = Contractual Services Suppliers; IP = Independent Professionals

1 Bahrain, Egypt, Jordan, Kuwait, Oman, Qatar, Saudi Arabia, UAE

Why less liberal commitments in mode 4?

• Political sensitivity?• Regulatory concerns?• Enforcement concerns and the problem of

temporary entry leading to permanent entry?• Effect on labour market?• Impact on wages of locals?• Bilateral arrangements provide for greater

flexibility?

THANK YOU