MOVEMENT OF LABOUR KEY DIMENSION OF TRADE IN SERVICES - RECOMMENDATIONS OF
WORKSHOP ON NEW GLOBAL TRADE PARADIGM
Date : 24 Mar 2004
Location : New Delhi
The freer flow of human labour across borders (MODE 4 Services) could result in substantial welfare gains on account of remittances. Developed countries are increasingly becoming labour deficit on account of demographic structure reflecting a higher age median and documented global migratory labour alone accounts for about 170 million people contributing to $94 billion in annual remittances. Movement of persons is a key dimension of trade in services and is of enormous importance to labour rich developing countries, even as political and cultural sensitivities persist on the issue, that need to be addressed at the appropriate level. These were among the observations made by participants at a one-day brainstorming session hosted on 22nd March here by the United Nations Conference on Trade and Development (UNCTAD) and the London School Economics and Political Science (LSE) on the 'New Global Trade Paradigm'. The meeting was convened to take into account whether the present situation offered policy options to India and other Developing countries that needed to be carefully evaluated. Lord Meghnad Desai and Mr N. K. Singh, Member-Planning Commission, were key speakers at the event. Sir Howard Davies, Director of the LSE also attended the event.
The discussions were candid and reflected both paradigmatic and specific concerns that stakeholders had on the issues of globalisation and trade. It was stressed that globalisation presented both opportunities and challenges in a globalised environment where the distinction between economic policy and trade policy was fast beginning to blur.
While taking on board the concerns of poverty and development, it was felt that growth continued to remain a fundamental strategy towards poverty alleviation and that trade was increasingly becoming an important driver of
growth. It was acknowledged that the need for higher productivity and technological efficiency indeed produced challenges for assuring adequate human employment. This is a dilemma that confronts even developed countries like the US. Developing countries could address this issue in terms of both accelerated growth and strategic sector positioning to ensure that efforts were directed towards labour intensive sectors like services.
Domestic supply side capacity restraints were viewed as one of the critical factors that prevented developing countries from capitalising on the potential that North markets and other developing country markets offered. While fair regulatory and legal frameworks existed in countries like India, the efficiency of these processes often acted as a disincentive for movement of capital towards these countries, including lack of transparency and tedious administrative procedures in developing countries. While the 90s saw a rationalisation of the tariff regime in India, it is clear that further improvements would only advance the cause of development. There was a need to make tariffs more moderate and widen the tax net while giving more emphasis to the serious issue of enforcement. Hope was expressed that political consensus would be generated towards adopting a broad based Value Added Tax model.
On Cancun and likely future position of the WTO, it was acknowledged that there was a stasis in multilateral trade negotiations at the WTO. It was felt that progress at Cancun was limited to a large extent on account of the excessive defensiveness of certain developed countries on Agriculture and over-ambition in the case of Singapore issues and underlined that above all it was political will on the part of the US, the EU & other OECD countries and 4 major developing countries (Brazil, China, India and South Africa) that would be critical to the effective re-propping of the WTO.
The increase in bilateralism and regionalism in trade arrangements was noted as also that such trends would tend to increase if effective multilateralism was not put back on track. On the importance of South-South trade, it was noted that developing countries often limited welfare gains between themselves because of their market access restrictions. Larger developing countries also required to examine whether they were treating their poorer cousins (LDCs and poor DCs) in the same manner in which they wanted to be treated by developed countries, it was stated.