From Socialist Voice, September 2010

What is WTO GATS mode 4, and should you be concerned?


GATS stands for General Agreement on Trade and Services. This is a treaty under the control of the World Trade Organisation that entered into force in January 1995 as a result of the Uruguay Round negotiations. The treaty was created to extend the multilateral trading system to the service sector, in the same way that the General Agreement on Tariffs and Trade (GATT) provides such a system for trade in merchandise.
     The GATS defines four modes of trade in services. “Mode 4” refers to the temporary migration of workers to provide services or fulfil a service contract. The present framework of mode 4 allows only for temporary movement of workers across borders to provide services; their visa as well as their right to stay and work are tied to their original terms of employment or contract and to their employer.
     A bloc of developing countries is demanding that the European Union offer workers from developing countries new mode 4 access to member-states to perform work in the service sector. This demand has been positioned as a condition in exchange for developing countries offering the developed countries new access in mode 3—the right to establish a presence, i.e. to set up or acquire a service business within another country. Essentially the European Union is negotiating a global guest-worker scheme that in return will allow EU firms to freely set up in low-wage economies.
     Developing countries, most notably India, are demanding that the right to trade people by means of guest-worker visas be included in the current Doha trade talks. The Lisbon Treaty facilitates free EU involvement in this process through exercise of the “principle of an open market economy with free competition” cited in article 105 and reinforced by the fact that “the internal market as set out in Article [I-3] outlining the objectives of the Union includes—at Protocol 6—a system ensuring that competition is not distorted.” So, undistorted competition is one of the Union’s organising principles which can be applied not just to goods but also to people.
     The objective of the Commission is to make offers opening a “market” in all services to transnational companies through the GATS. At present, and under the treaty, neither the EU Parliament nor Dáil Éireann is informed which services are “offered” for trade until the deal is finalised. It is this process that leads to the privatisation of services such as water and sewerage and increased costs to the average citizen. A similar process is followed for “offers” under mode 4.
     These changes conform to a general policy for “the achievement of uniformity in measures of liberalisation” (article 188)—or deregulating who can provide goods and services. EU trade policy seeks to “encourage the integration of all countries into the world economy, including through the progressive abolition of restrictions on international trade”; and it would appear that this now extends to trade in people.
     Some developing countries, particularly India and China, have a big interest in seeing progress in this area of services: liberalisation of the movement of labour for people to travel to fulfil contracts, under “mode 4.”
     India also wants a discussion of services because of its big IT sector and abundance of graduates. The India Times tells us that the country is looking forward to the easing of restrictions in the temporary movement of workers and professionals (mode 4) to other countries and securing business flow in the outsourcing segment (mode 1) in the GATS negotiations.
     Meanwhile the Business Standard (New Delhi) reports that India wants to know what it is going to get on the issue of movement of short-term service providers under mode 4 and the removal of restrictions on cross-border services. A demand is being made on developed countries and the European Union.
     The “posted workers” situation is the internal EU parallel to mode 4, with similar language and concepts, for example “cross border establishment” and “movement of service suppliers.” The posted worker situation is proving problematic for workers, and when this has gone to law the decisions of the European Court of Justice in the Laval, Viking, Rüffert and Luxenbourg cases have clearly shown that the tide is against workers’ rights to protect their wages and conditions. So we can look to the “posted worker” situation as a precursor of the potential effects of mode 4.
     The argument that mode 4 is for temporary labour movement does not lessen this, because temporary workers are generally less likely to be unionised, and would not be allowed to join unions, and their comparative advantage—or the comparative advantage that transnational corporations can gain through mode 4—would be lost if they did.
     It is a very significant shift when any policy-making is lost from the arena of the democratic process and put instead into the hands of corporations, particularly when that shift is irreversible, as is effectually the case with trade commitments. The European Union is negotiating on mode 4 and making offers without the knowledge of the citizens of EU member-states and without any public debate.
     This is a major issue and points once again to the fundamentally undemocratic nature of the European Union, to the reality that any vestige of “Social Europe” is long dead, to the interests of big business coming before those of citizens and workers, and to the longer-term threat to the wages and conditions of workers in EU member-states posed by these secret negotiations.
[KF]

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