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 (Edited Image Courtesy: WTO)
 
Brexit + Trump = Trexit? So went the headline in an American publication named ‘Orange Country Register’. Similar headlines splashed across the global media have put crystal ball into an amazing spin.
Analysts are visualizing the likely impact of globalization on Britain's exit from European Union (EU), if it is followed by victory of Donald Trump in the forthcoming US Presidential race. Mr. Trump’s vocal opposition to foreign labour and free trade is a daily staple and thus requires no elaboration.    
What impact this flux would have on negotiations over different trade issues at World Trade Organisation (WTO) and regional or bilateral free trade agreements (FTAs)? What would be the fate of protracted talks on deals such as India-EU Broad-based Trade and Investment Agreement (BTIA)? Would Brexit give wings to the UK-India Joint Economic and Trade Committee (JETCO)?
As both Brexit and Trexit (B&T) symbolize xenophobia including dislike for non-migrant, temporary workers, they are bound to impact services trade. The probability of B&T checkmating already muted mobility of labour is very high. Such supply of manpower comes under ‘Mode 4’ of General Agreement on Trade in Services (GATS).
Mode 4 refers to the fourth mode of supplying services under GATS – Deputation of persons from one country in another country to execute specific assignments/contracts. 
The other three modes for supply of services are: 1) crossborder trade (such as banking and knowledge-driven services provided via telecom & Internet); 2) consumption abroad (e.g. a service consumer such as tourist or patient availing services in another country); and 3) commercial presence (e.g. a law firm opening office in another country). 
Mode 4 is also an important topic of hard negotiations by different stakeholders on FTAs. It is one of the contentious issues in India-EU BTIA talks. 
As admitted by WTO in its brochure on ‘Trade in Services’ released in 2015, “Mode 4 has the lowest depth of commitments, probably due to a number of sensitivities involved with the movement of foreign workers.”
Mode 4 is a trade issue for India and other countries that have demographic & skills advantage. It is, however, a touchy issue for Trump and his ilk as it is perceived to constrain locals’ employment, become an avenue for immigration and a conduit for terrorists. 
This issue has been aptly analyzed by two Oxford University scholars in paper titled ‘Trade-Migration Linkage: GATS Mode IV’ presented in February 2009. The Paper says: “Mode IV is so far very limited in scope, applying only to a narrow group of people – temporary, skilled, contractual service providers engaged in intra-firm movement - and will be limited to the specific visa commitments that individual states are prepared to make in the context of broader WTO negotiations.” 
Should the rising xenophobic wave in the West not be countered by developing countries like India to demand parity between GATS and GATT? Should the restrictions on entry of temporary workers put by the West notably the US not be correspondingly applied by victimized countries on goods exported by the West?
Time is ripe to focus on such issues to redefine globalization as equal opportunity to grow and prosper for all countries taking into colonial legacy and other ground realities of developing nations. 
Whether Mr. Trump triumphs or not, the new global agenda must pitch for fair and faster deal on services trade for the benefit of over-populated countries. This demand should be made keeping in view the fact WTO members are required to progressively open up trade in services through rounds of negotiations under GATS.  
The issues can be raised and debated immediately before WTO’s dispute settlement body (DSB), which should fast-track India’s and the world’s first Mode 4 dispute against American restrictions on Indian workers. On 3rd March 2016, India had formally filed its complaint to DSB on the US decision to hike steeply fees on certain applicants for L-1 and H-1B categories of non-immigrant visas and the annual cap on H-1B visas.
H-1B is a temporary visa granted by the US to highly qualified, foreign professionals selected by US firms to work on special assignments for three years. The validity of visa can be extended by three years. The US govt has put a cap of 65,000 H-IB visas in a fiscal year.
Similarly, L-1 visa is given to managers or other professionals, who are deputed by companies to work in their American offices with the proviso that a visa applicant must have been regularly employed abroad with the concerned firm for three years.
On 15th March 2016, El Salvador requested WTO that it should be included in the dispute settlement talks between India and the US. 
“El Salvador has a trade and systemic interest in the proper implementation of the General Agreement on Trade in Services and its Annex on Movement of Natural Persons Supplying Services under the Agreement,” says the country in its communication to WTO. 
There is nothing in the public domain to suggest whether Indo-US consultations with DSB framework have started. The issue probably did not figure in bilateral talks during Indian Prime Minister Narendra Modi’s recent visit to the US. 
Consultations and their culmination into a WTO ruling would be welcome, if this can happen before the start of voting for election of US President. 
Signed in 1995 under the aegis of World Trade Organisation (WTO), GATS governs global trade in services just as merchandise trade is governed by General Agreement on Tariffs and Trade (GATT)
There is, however, no clause-to-clause parity between GATS and GATT. Both the agreements were conceived to promote and protect the interest of the developed world. The agreements neither factored in fully the harsh realities of developing world nor protected its interests appropriately.
According to WTO, services covered by the GATS are not automatically opened to competition. WTO members guarantee access to their markets only in those sectors and modes of supply specified in their “schedules of commitments”, subject to any “limitations” they wish to maintain. These schedules provide legally binding commitments. The only obligation that applies across all services covered by the GATS is the most-favoured-nation (MFN) principle, meaning suppliers of services from all countries are treated in the same way.
The progress in negotiations on market access to services markets at various WTO meetings has been moving at a pace that would even make a snail giggle at Homo sapiens. Anyone can arrive at this conclusion by flipping through WTO annual report for 2016.
Referring to the last meeting of WTO’s working group on domestic regulation of services, the Report says: “various developing countries expressed concern that cherry-picking “transparency in the services negotiations would undermine the focus on development, particularly given the uncertainty on what the Nairobi package would deliver for development.”
According to the Report, services are the most important economic activity in most countries when measured as a share of overall production, and are the single largest source of employment.
WTO has forthrightly stated that member countries have given Mode 4 commitments on a horizontal basis. These are applicable without distinctions to all sectors inscribed in a member's schedule.
It says: “Overall, the degree of Mode 4 access that has been bound is quite shallow. In most instances, members have scheduled an initial ‘unbound’ (i.e. no binding of access conditions) and then qualified it by granting admission to selected categories of persons, with a marked bias towards persons linked to a commercial presence (e.g. intra‐corporate transferees) and highly skilled persons (managers, executives and specialists).”
The discussion so far conclusively shows that restriction on free movement of labour has become a blot on globalization. Free movement of labour is as important as free cross-border flow of three other factors of production – capital, entrepreneurship and land (read natural resources such as oil & gas, minerals, etc).
It also shows that the West is primarily opposed to free flow of labour and its growing obsession for automation in all spheres of life from shop floor to bedroom
Rationalist in the West and in the developing world ought to take on Brexit and Trexit head on to prevent the world from slipping into turmoil. Let this serve as wake-up for WTO Secretariat. It ought to operate independently. It should intervene to prevent protectionist virus from spreading across the world. 
 
Published by taxindiainternational.com on 4th July 2016
 

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