The Temporary Movement of Natural Persons

The Temporary Movement of Natural Persons Challenges and Opportunities for Egypt Presented by: Dr. Magda Shahin

Introduction For Egypt and the Egyptian private sector, the potential benefits of increased labor mobility under Mode 4 are considerable. As with other developing countries, Egypt has faced challenges negotiating at the multilateral level, which have rendered Mode 4 virtually impotent. In view of these challenges, Egypt has looked to bilateral and regional frameworks; Pan Arab Free Trade Area, COMESA, and the European Partnership Agreement. Bilateral and regional agreements, however, are considered interim and partial solutions. The GATS framework must always remain as the foundation of any of these agreements. ِ

Background • Value of Egyptian services industry • Current patterns of permanent and temporary migration • Draw of the European labor market • Migration management vs. TMNP • Dialogue between the public and private sector

GATS Article I:2(d) Mode 4 “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.”

External Impediments Interpretation Classification Host Country Regulatory Regimes Internal Impediments Unemployment & Skills Deficit Lack of Private Sector Awareness Lack of Ministerial Coordination Main Barriers to Mode 4 Temporary Movement of Natural Persons

External Impediments Interpretation • Confinement to ‘intra-corporate transferee’ • Bias toward high skills • Distinguishing between ‘service supplier’ and ‘employment seeker’ • Nature of the contract: who qualifies as a subject of Mode 4 and under what circumstances?

External Impediments Interpretation: Nature of the Contract Strict interpretation • Persons who are employees in firms owned by nationals of the home country • Self-employed persons of the host country Broad interpretation • Persons who are also employees in firms that are not foreign affiliates, but are rather wholly owned by the host country

External Impediments Interpretation: Nature of the Contract Annex on Movement of Natural Persons Supplying Services under the Agreement “This Annex applies to measures affecting natural persons who are service 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.”

External Impediments Classification • In the absence of a common approach to scheduling, members have inscribed their commitments by category: ICT, BV, CSS, IP and job type: manager, executive, specialist, etc. • WTO categories should be employed in tandem with ILO ISCO

External Impediments Host Country Regulatory Measures • Visa and administrative restrictions • Non-recognition of qualifications • Economic needs tests

Internal Impediments Unemployment & Skills Deficit • Unemployment concentrated among educated persons; University graduates and vocational diploma holders constitute 80% of unemployed • Labor force projected to increase to approx. 34 million by 2020 (increase of 80%) • Mismatch between education supplied and skills demanded on the international labor market • Quantity vs. quality; skills catering to fill market gaps?

Internal Impediments Lack of Private Sector Awareness • ‘Commercial nature’ and ‘tradability’ of services unrecognized • Failure to capitalize on Mode 3 and Mode 4: the case of ORASCOM Mobinil • Lack of transparency in negotiations; government vis a vis private sector • De facto exclusion of private sector from trade agenda • Lack of coordination and exchange amongst service suppliers in Egypt

Internal Impediments Lack of Ministerial Coordination • Lack of coordination between Trade and Labor Ministries; Egypt-Italy Labor Agreement 2005 (Readmission Agreement 2007) • Lost opportunities for GATS Mode 4 liberalization • France-Senegal Covenant 2006, potential model of preferential labor agreement

Policy Initiatives and Reforms to Facilitate Mode 4 TMNP • Bilateral vs. Multilateral Agreements • Egypt-EU: A Win-Win Formula • Public-Private Partnership • Recommendations

Policy Initiatives and Reforms to Facilitate Mode 4 TMNP Bilateral vs. Multilateral Agreements • Preference for bilateral arrangements • Absence of MFN allows for preferences and obligations • Significant shortcomings: discriminatory skills targeting, unilaterally determined recruitment measures, focused on migration management vs. trade liberalization • Challenge is reconciling GATS Mode 4 rights and obligations within Bilateral framework

Policy Initiatives and Reforms to Facilitate Mode 4 TMNP Public-Private Partnership: Private Sector as a Key Stakeholder • Unique knowledge of Egyptian services sector; strengths and weaknesses • Target and identify strategic areas to focus on in negotiations • Benefit from increased competitiveness through skills-enhanced labor force • Greater market access

Policy Initiatives and Reforms to Facilitate Mode 4 TMNP Public-Private Partnership: Engaging the Private Sector • Lack of organization in services sector = lost opportunities for private and public interests • Development of Egyptian Services Coalition • Coordination between organized private sector and government for successful negotiations

Recommendations • Ensure use of WTO/ISCO categories, and that all additional categories fall under the rubric of TMNP • Sectors and sub-sectors of TMNP must be negotiated • Preserve built-in safeguard mechanisms of the GATS structure • As bilateral agreements are ‘GATS-plus,’ strategic preferences should be maximized to enhance the competitiveness of Egypt’s labor force and services sector • Seek avenues for recognition; transitivity clause

Conclusion While acknowledging that bilateral and regional agreements are currently at the fore of negotiations, it is merely by default due to the ongoing stalemate at the WTO. These arrangements can never substitute for a well-functioning multilateral framework. Still with the weaknesses of bilateral and regional frameworks in mind, Egypt must forge ahead to capitalize on the potential of Mode4. Therefore, the need for a practical and operational mix of venues that merge additional preferences and capacity building in bilateral and regional frameworks with the inherent fairness and strength of a multilateral framework should be the ideal path for Egypt and other developing countries to take in their quest for Mode 4 liberalization

The Temporary Movement of Natural Persons