Mode 4: The U.S. Case

1. Mode 4: The U.S. Case Jian Pak Trade and WTO Issues Team UN-ESCWA Presented at “Movement of Natural Persons and its Implications on Development in the Arab States” Cairo, 5-6 Sept. 2007

2. I. U.S. Negotiations on Mode 4 II. U.S. Schemes on Mode 4 - Characteristics - Temporary Admissions - Trends, Challenges, AlternativesIII. Implications to ESCWA Region IV. Points to Consider CONTENTS

3. Evolution Tokyo Round -No services agreement, U.S. keeps pressing Uruguay Round -GATS enters into force (2000) “Built-in Agenda” (Art. XIX) U.S. submits its proposals WTO’s CTS approves guidelines (2001) 2004 Framework or “package” (services briefly included) Most contentious issues in the DDA I. U.S. Negotiations on Mode 4

4. I. U.S. Negotiations on Mode 4 (cont’d) 2. U.S. Goals and Requests • Market access and national treatment • Quality of commitments and complying • Regulatory transparency • Commercial presence (Mode 3) • Reduce restrictions: ENT, multiple-entry visa (Mode 4) • Liberalization of financial, telecom, professional, computer-related services among others

5. I. U.S. Negotiations on Mode 4 (cont’d) Bound to market access and national treatment Includes horizontal commitments: TMNP, acquisition of land, taxation Offers scheduled commitments: many sectors/subsectors Format: requires members to identify exceptions for each mode, sector and subsector 3. U.S. Offers

6. I. U.S. Negotiations on Mode 4 (cont’d) 4. Ongoing Major Issues at the WTO for U.S. • Regulatory Transparency/Information Access • Definitions/Qualifications: accelerate mutual recognition • Sub-contracting schemes: deepen sectoral commitments (timeframe issue) • Service Personnel Categories: achieve uniform definition and coverage

7. Characteristics of the Mode of Entry “Open door” policy (no set limit on total temp entry) Highly developed visa system Temporary entry increasing Responds to domestic economic needs Attempts to minimize any negative impacts on nationals (e.g., labour market testing) Special facilitation schemes for certain nationals, included on the basis of TAs II. U.S. Schemes on Mode 4

8. II. U.S. Schemes on Mode 4(cont’d) Migration categories (temp/perm, dual intent) Flexible and regulated caps Distinguishes entrants (occupation, country) Qualifications/legibility (Labour certification, high education/skills) Flexible duration of stay, renewals possible Movement of dependents Guarantee Rights: land acquisition, taxation, social security All subject to general visa conditions • Characteristics of the Mode of Entry (cont’d)

9. II. U.S. Schemes on Mode 4(cont’d) 2. Temporary Admissions (Non-immigrants)

10. II. U.S. Schemes on Mode 4(cont’d) 3. Nonimmigrant Visas Issued (2006) Source: DOS FY06 Annual Report and DOL • H Visas (H-1A/B/B1/C, H-2A/B/R, H3, H4) • J Visas (J1/2) • Agreements (NATO, NATFA, Chile/Singapore/Australia FTAs)

11. II. U.S. Schemes on Mode 4(cont’d) 4. A Detailed Look: H-1B Visas H Visas Issued H-1B Cap (Selected years) H-1B (‘000) H-4 H-2B H-2R H-2A H-3 * Excludes 20,000 for those with U.S. MAs, NPOs and government research labs Source: DOS FY06 Annual Report and DOL

12. II. U.S. Schemes on Mode 4(cont’d) 5. Characteristics of H-1B Visas • Definition: Specialized workers admitted on the basis of professional education, skills and/or equivalent experience • “Specialty Occupations” : computer-related, physicians, professors, engineers, accountants… • Duration: 3 years initially with possible extensions not exceeding six years • Requirements for Employer: • Must prove no U.S. citizen is available to fill job • File process at DOL and USCIS • Abide by U.S. labour law (Adhere to prevailing salary, ensure rights, etc)

13. II. U.S. Schemes on Mode 4(cont’d) 6. Trends in H-1B Visa • Country of Origin: • India (28% of total world H visas issued in 2006) • China (5% of total world H visas issued in 2006) • Highest applications for systems analysis/ programming, computer-related, electrical/ electronics engineering and education occupations • Median age = 25-34 years old • Median wage = US$50,000 per year

14. II. U.S. Schemes on Mode 4(cont’d) 7. Challenges for H-1B Visas • Employment-based policies are demand-driven • Inadequate mechanisms to measure labour-market demand • Inter-connected system (Perm vs. Temp) • Inflexibility of ceilings and actual admissions • Processing/admin delays and complexity

15. II. U.S. Schemes on Mode 4(cont’d) 8. U.S. Alternative Systems and Proposals • Lessons Learnt: Bracero Program • Points System • Assign Task Force/Commission • Consistent requirements with labour market • More efficient government apparatus/funding • Expand mobility of H-1B worker • More control on illegal workers • Transparent policies, definitions/requirements

16. Trade Agreements Mode 4 Specific: NAFTA, Chile, Singapore, Australia U.S. TAs with Arab Region General labour provisions/commitments: MEFTA, Oman Supports national labour reforms: Bahrain, Oman, UAE Open market access across recipients’ services regime: Bahrain Free movement of persons (linked to investment/service suppliers): Jordan Guarantees detailed workers’ rights: “Special Working Contract to non-Jordanians” III. Implications on ESCWA Region

17. U.S. temp admissions for ESCWA region increased 11% in 2006, 21% in 2005 Highest increase for temp admissions (2006) in ESCWA region: Saudi Arabia (29%), Yemen (22%), Qatar (21%) and Egypt (20%) Av. increase in temp admissions (2002-2006): Kuwait (20%), Qatar (16%) III. Implications on ESCWA Region (cont’d) Some Statistics for ESCWA Region

18. IV. Points to Consider • Implications of U.S. temporary schemes on ESCWA region? • Range of options for better market access, adjusted to national needs? • Inter/Intra-regional policy coordination and dialogue (mechanisms)? • Implementing commitments and administrative capacity required?

19. وشكرا pak@un.org