Volume 4






Mode 4: Issues and Concerns for Developing Countries

Amongst the four modes of supply to carry out trade in services, Mode 4 under GATS is the most politicised one. At the outset it was envisaged to deal with service trade and not migration. Due to the latter (Read: Migration) it is therefore the focal point for both national and international debate. Moreover, Mode 4 is comprehended poorly, especially its economic and social implications. Read More...

WTO Issues

Regional Economic Cooperation

Developmental Issues


Mode 4: Issues and Concerns for Developing Countries

Amongst the four modes of supply to carry out trade in services, Mode 4 under GATS is the most politicised one. At the outset it was envisaged to deal with service trade and not migration. Due to the latter (Read: Migration) it is therefore the focal point for both national and international debate. Moreover, Mode 4 is comprehended poorly, especially its economic and social implications.

For instance, a recent study by the Organization for Economic Cooperation and Development (OECD) states:

"If the economic impact of Mode 4 is difficult to assess, it is essentially because the definition of this mode and the instruments used to measure it are very imprecise. In fact, Mode 4 is a fear of the unknown."

Some of the related myths/misunderstandings to which developed economies are prone include: temporary migration for employment becoming a stepping stone to permanent migration; job insecurity in the country of destination due to greater competition for a limited number of jobs; security threats blown out of proportion by recent episodes of terrorism and fuelled by xenophobia sentiments; etc. Mode 4 provisions also seem to attract labour disproportionately from the lower end of the skill spectrum – an outcome which is often perceived as unattractive. In such a scenario it is the developing countries that are unfortunately at the receiving end.

Looking at different research findings, one commonality you come across is about gains made by developing countries on account of higher remittances (transfer of funds). According to World Bank estimates, in 2001 – 2006 remittances have increased by 10% per annum. At the same time one can observe that economic freedom under Mode 4 has increased for developed countries but not for developing countries. Movement of labour is much smoother within the former set whereas movement from developing to developed countries is strewn with paper work and/or lack of clarity about procedures. For instance, economic needs tests, payment of social security without corresponding benefits, and strict visa procedures are some of the hurdles that have to be crossed. Clearly, misperceptions and policy rigidities are preventing the full leveraging of benefits from Mode 4.

Given the limitations and inability to negotiate, it is essential that developing countries adopt a slow and cautious approach by building a comprehensive database cataloging availability of skilled/unskilled labour. Once such a database is created, capacity building exercises can be set in motion. These can be used not only to meet the demand for labour domestically but to also make labour transfers from developing counties more attractive from the point of view of the developed world.

WTO Issues

A Service to the Economy: Removing Barriers to "Invisible Trade"
Although they are part of a large and growing segment of world trade and a prominent feature in healthy, vibrant economies—services are often overlooked in trade negotiations in favor of higher-profile trade in agriculture and manufactured goods. Yet countries with more open services markets benefit from higher growth rates and living standards. Because services are an input to most other sectors of the economy, the benefits from open and competitive markets are pervasive. Indeed, the gains from lowering remaining trade barriers in services …………


Power, Governance and the WTO: A Comparative Institutional Approach
This paper makes three central points. First, it charts the myriad ways in which the United States, the European Community, and influential constituencies within them advance their interests through the World Trade Organization (WTO). They predominate because they wield considerable material and ideational resources that provide them with advantages in economic relations in any institutional context. Second, the paper shows how WTO judicial bodies, as any court, exercise power when they decide legal cases.


WIPO-WTO Relations and the Future of Global Intellectual Property Norms
The intense scholarly debate about the effects of harmonized global intellectual property (IP) rules under the TRIPS Agreement has yet to consider what role an appropriate organizational framework should play in facilitating development of IP norms to address new global challenges. The prevailing assumption has been that the norm-setting role of the World Intellectual Property Organization (WIPO) will remain unchanged despite the primacy of the TRIPS Agreement and the explicit mandate of the WTO for global IP regulation.


Foreign investment and WTO: Measures against expropriation
Foreign investment has become a burning issue today. World economy is going through a transition phase. Companies all over the world are in search of markets in third world countries. Foreign investment is beneficial for everyone. This increases turnover, there is less dependence on the home conditions of trade and the third world countries also gain profits with out having debt obligations. Foreign investment not only profits countries, but it also strengthens their ties. Thus, there is a need to protect such foreign investment inflow, which is the topic of this paper.


Challenges, opportunities and options for Pakistan under WTO regime
It is the era of competition and technological advancements. Globalization has become a reality in the world. Agricultural commodities and industrial products are being traded in a state of stiff competition. World Trade Organization (WTO) is regulating the world markets through a platform of trade negotiations. Only those products are now acceptable in the international markets, which are good in quality and available at competitive prices. Pakistan is encountering numerous difficulties in complying with the WTO rules and carrying out structural reforms

Regional Economic Cooperation

Multilateralizing Regionalism: Challenges for the Global Trading System
Besides tariffs and rules of origin regulating trade in goods, many RTAs now include provisions on services, investments, technical barriers to trade and competition rules, as well as a host of issues not directly related to trade. The geographic reach of RTAs is expanding, with transcontinental agreements spreading forcefully alongside intra-regional agreements. 'Multilateralizing Regionalism' was the title of a major conference held from 10-12 September 2007 at the WTO in Geneva.


EU EPAs: Economic and Social Development Implications: The Case of the CARIFORUM-EC Economic Partnership Agreement
This paper analyses the various chapters in EPAs. It begins with general comment and analysis of that particular issue, including in USFTAs and its possible consequences. (On some issues, USFTAs may have worse consequences for development than European ones. It is often a matter of degree as the principles are commonly similar). It then goes on to analyse specific provisions of the interim EPAs. For areas other than goods, the analysis is of the CARIFORUM- EU EPA as that is the only ACP-EU EPA which goes beyond goods.


Hindi-Chini Buy-Buy
Are Chinese growth figures (or even foreign investment data) under-estimates or over-estimates? The over-estimate argument is an old one, going back even to the Great Leap Forward. For the 1980s and 1990s, several China scholars argue that growth figures need to be scaled down by a factor of around one-third. Two-thirds of 10 per cent is still almost 7 per cent and sustained over more than two decades, is still a fantastic rate of real GDP growth. The under-estimate argument is of more recent vintage and one doesn’t mean the impact of SARS alone.


Cooperation and investment in poor regions are key to recovery
The world has yet to achieve the macroeconomic policy coordination that will be needed to restore economic growth following the Great Crash of 2008. In much of the world, consumers are now cutting their spending in response to a fall in their wealth and a fear of unemployment. The overwhelming force behind the current collapse of jobs, output and trade flows is even more important than the financial panic that followed Lehman Brothers’ default last September. There is, of course, no return to the situation that preceded the Great Crash.


The European Union and New Leading Powers: Towards Partnership in Strategic Trade Policy Areas
This article analyzes the potential of partnerships of the European Union (EU) with the so-called BRIC countries. The scope of analysis will be the EU vis-a-vis these countries, using three types of trade liberalization: unilateralism, bilateralism/regionalism, and multilateralism. The article argues that the EU's objective of engaging with the BRIC countries on trade matters is to establish peace, security, and prosperity in the XXI century. Trade creates economic ties and generates more wealth; thus it contributes to peace and security.


Developmental Issues

Are we missing a Trick on Employment, Development, Policy and Poverty Reduction?
With job losses and the financial crisis in rich countries dominating the media, this Opinion asks why employment issues are not high on the agenda when it comes to development policy debate. It suggests that there are key reasons for this: ideological, political, and analytical. The Opinion also gives three reasons why employment and labour markets should be more prominent on the agenda. First, labour is the main source of income and wellbeing for the world's poor. Second, because jobs protect people from sudden shocks, such as rising prices.


Growth Without Development: Looking Beyond Inequality
This Briefing Paper argues for a stronger focus on the measurement of polarisation, rather than inequality, to get a more nuanced picture of poverty, and generate effective policies for poverty reduction. It suggests that polarisation may explain why economic growth does not always translate into lasting human development. Inequality is often blamed for the poor links between economic growth and human development, but data show that links between economic growth ………


Implementing Physical and Virtual Food Reserves to Protect the Poor and Prevent Market Failure
The 2007–08 international food price crisis caused hardship on a number of fronts. The steep rise in food prices led to economic difficulties for the poor and generated political turmoil in many countries. The crisis could also result in long-term, irreversible nutritional damage, especially among children. There is a global interest in preventing such events from recurring. The price crisis was triggered by a complex set of long-term and short-term factors, including policy failures and market overreactions. One important factor in the crisis was the entry of ………….


When Speculation Matters
The food price crisis of 2007–08 had several causes—rising demand for food, the change in the food equation through biofuels, climate change, high oil prices—but there is substantial evidence that the crisis was made worse by the malfunctioning of world grain markets. Dozens of countries imposed restrictions on grain exports that resulted in significant price increases, given the thinness of markets for major cereals. A number of countries adopted retail price controls, creating perverse incentives for producers. Speculative price spikes built up, and the gap ……….


Multidimensional deprivation: poverty and Medical and Health care
With the healthcare reform of the year 2004 in mind and coming from a multidimensional conception of poverty the article asks for the contribution of the welfare state institutions to the prevention of poverty. To answer the question the inter-relation between income poverty and health care is analyzed. The analysis undertaken show that the intersection did increase in relation the years subsequent to the healthcare reform of the year 2004.


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