The third pillar

Amer Ahmed

Published in the Forum (August  2007)

The article considers what steps we can take to ease the lot of the migrants who are so crucial to the economy

With the World Bank recently describing migration as the third pillar of globalisation, alongside trade and capital flows, it is no surprise that policy discussions on migration and its impacts are gaining importance in Bangladesh. From a few thousand in the 1970s, the number of Bangladeshi migrants has exploded to a gross figure of more than three million by 2002, with about $23.7 billion being sent back in remittances over that period (Kibria, 2004).

As of 2006, expatriate workers’ remittance flows were four times greater than Official Development Assistance (ODA) and eight times more than Foreign Direct Investment (FDI). The importance of the migrant workers and their role in the development of Bangladesh is not lost on policy-makers, with increased attention being paid to other temporary migration mechanisms such as those offered through the Temporary Movement of Natural Persons (TMNP) of the WTO’s General Agreement of Trade in Services (GATS). An understanding of the challenges to, and the potential gains from, increased temporary migration is thus imperative for Bangladeshi policy makers.

The GATS identifies four specific ways that services can be traded. One of these modes, Mode 4, is the TMNP. The GATS describes TMNP as 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 (GATS, 2007).” A liberalisation of TMNP would thus allow for greater movements of workers from one member country to another, for temporary employment, such as through a guest-worker program geared towards highly skilled workers.

Due to the politically sensitive nature of any migration policy, Mode 4 temporary migration has often been given lower priority in services trade discussions and, thus, has relatively limited commitments and scheduled concessions (Winters et al, 2003). However, given the declining labour forces and aging populations of developed countries, there is a growing global demand for workers (van der Mensbrugghe, 2006). Given this increasing demand and the decreasing financial and social costs of labour mobility, increased temporary migration has aroused the interest of policy makers in the North as a viable alternative to permanent migration.

During the Uruguay Round of trade negotiations when the GATS was signed, many Least Developed Countries (LDCs), including Bangladesh, were unfamiliar with the intricacies of the international trade in services. Also, GATS negotiations are often framed in a manner that highlights the differences between the North and the South, leading to defensive posturing by both sides (Grynberg, 2002). The result was an agreement that focuses on other forms of services trade such as increased cross-border supply, and commercial presence abroad — neither of which are areas where developing countries traditionally have an advantage. Specific agreements on TMNP at the WTO have so far only dealt with highly skilled personnel, such as skilled self-employed workers or intra-corporate transferees who move within the framework of agents such as large multinational companies.

The commitments have, thus, offered little to Bangladesh and other LDCs since their relative advantage lies in the services offered by low and medium-skilled workers. As the agreements currently stand, skilled workers like computer engineers and IT personnel have greater opportunities for temporary employment in the US, UK, or other major skilled labour “importers.” However, for less skilled workers — the majority of the developing world’s labour force — the TMNP channels into the labour markets of those countries are closed. These limitations are even more unfortunate given that, in the context of the developing world, increased temporary migration of low and medium-skilled workers can have much larger effects on poverty reduction and sustainable development that are greater than the immediate economic gains to the world arising from greater TMNP.

Bangladesh’s leadership among the LDC group at the WTO puts it in a special position to change the status quo and push for commitments that encourage TMNP liberalisation for less skilled workers. Indeed, the vast majority of Bangladeshi migrant workers are unskilled and low-skilled workers heading out to the Middle East or East Asia. However, the opening up of newer labour markets in the North for Bangladesh’s semi-skilled workers would provide a new and aggressive expansion of our labour exports. The LDCs’ revised request to the other members at the WTO on TMNP commitments now includes a list of services whose trade they want liberalized, with the key feature of this list being that the service categories go beyond the high-skill categories that had been discussed in previous negotiations. While not going so far as to push for a liberalization of the movement of all workers, the LDCs’ request features the

liberalization of the movement of workers who can be described as semi-skilled workers.

Bangladesh would have much to gain through the expansion of the TMNP market access commitments to include less skilled worker groups. Raihan and Mahmood (2007) consider the extreme situation where 200,000 skilled or unskilled workers were sent overseas. Based on these scenarios, the paper estimates the gains from the complete liberalisation of skilled service provider migration at $381 million, with the estimate for unskilled service provider category being $3.5 billion.

Aside from the challenge of negotiating these commitments under Mode 4, Bangladesh must also overcome domestic institutional challenges. The first institutional challenge is the fact that the bureaucracy of the government of Bangladesh suffers from systematic problems that reduce their effectiveness as cogent negotiators. The article “30 Get Training on WTO, Only 3 Remain in Post,” from the March 6 issue of The Daily Star clearly described the woeful human resource management of the country’s WTO cell and other supporting agencies, painting a sad-but-true image of a country with sub-par trade negotiating capacity.

Another, more elusive, institutional barrier is the matter of how authorities will persuade the workers taking advantage of the TMNP liberalisation to return to Bangladesh. As the name implies, the movement is meant to be temporary. Migration is a politically volatile topic in any country, and more so in developed countries with concerns about illegal immigration. Bangladesh and the other LDCs would need to demonstrate the will, if not the mechanism, to enforce the temporary nature of the Mode 4 movement before the developed countries agree to further TMNP liberalisation.

A successful restart of the Doha Round negotiations would give Bangladesh the impetus to successfully negotiate for greater temporary worker migration as part of the greater development agenda. However, as a prerequisite to successful negotiations, the government of Bangladesh needs to take stock of the challenges facing it, and come up with appropriate institutional reforms. If Bangladesh is able to facilitate the temporary migration of its significant semi-skilled work force into the hitherto restricted markets of the developed world, the payoff would not just be billions in remittance income and the development that it would bring, but also the significant secondary social effects of having a workforce that is decently employed and globally integrated.

REFERENCES
GATS (2007). http://www.wto.org /enlish/tratop_e/serv_e/gatsintr_e.htm (April 12, 2007)
Grynberg, R. (2002). “Liberalizing Global Labor Markets: Recent Developments at the WTO.” The Estey Centre Journal of International Law and Trade Policy, V 3, No. 1, pg. 82-105.
Kibria, N. (2004) “Returning International Labor Migrants from Bangladesh: The Experience and Effects of Deportation.” Working Paper #28, Mellon-MIT Inter-University Program on NGOs and Forced Migration.
Raihan, A. and M. Mahmood (2007) “Opportunities and Risks of Liberalizing Trade in Services: Country Study on Bangladesh.” Issue Paper No. 3, ICTSD Programme on Trade in Services and Sustainable Development, Geneva.
van der Mensbrugghe, D. (2006) “The Potential Gains from International Migration.” Global Economic Prospects: Economic Implications of Remittances and Migration 2006. The World Bank, Washington DC.
Winters, L. A., T. L. Walmsley, Z.K. Wang, Z.K., and R. Grynberg (2003). “Liberalizing Temporary Movement of Natural Persons: An Agenda for the Developing Round.” The World Economy, V 26, No. 8, pg 1137-1161.

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