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108 QUANTIFICATION OF BENEFITS FROM ECONOMIC COOPERATION IN SOUTH ASIA<br />
engineering profession as well, India may allow existing<br />
engineers associations to negotiate with their<br />
counterparts in other SAFTA countries to develop<br />
MRAs that will ensure hassle free movements of<br />
engineers in the region. As regards architectural services<br />
since the regulatory body exists there should be less<br />
problem in negotiating MRAs.<br />
Pakistan<br />
During the Uruguay Round like India, Pakistan had<br />
also undertaken very limited commitments in the<br />
construction and related engineering services sector. Its<br />
commitments covered only one subs-sector, i.e.<br />
construction work for civil engineering and that too<br />
only for bridges, elevated highways, tunnels and<br />
subways leaving aside many other segments of this sub<br />
sector. Further, its commitments under Modes 1 and 2<br />
were unbound albeit for the lack of technical feasibility.<br />
Mode 3 commitments had been subject to partnership<br />
and/or joint venture with Pakistani engineers or<br />
engineering companies. However, in the initial offer the<br />
scope of commitments has been expanded marginally<br />
by including some more segments such as waterways,<br />
harbours, dams and other waterworks from the same<br />
sub sector- construction work for civil engineering.<br />
Moreover, Modes 1 and 2 have now been fully<br />
committed though there is almost no change in the<br />
status of Modes 3 and 4. As regards horizontal<br />
commitments, which apply to this sub sector as well, it<br />
is stipulated that except in the case of representative<br />
offices, commitments under Mode 3 are subject to<br />
incorporation in Pakistan with maximum foreign equity<br />
participation of 60%. In this regard, Burki and Hussain<br />
(2007) explain that transfer of technology appears to<br />
be the motivation behind this limitation. However, this<br />
could be considered as a major restriction on Mode 3.<br />
Further, all expenses of representative offices shall<br />
be met by remittances abroad. Such offices shall restrict<br />
their activities to the undertaking of liaison work or of<br />
representing the interest of the parent company abroad.<br />
Under Mode 4 while the entry of intra-corporate<br />
transferees (ICTs) – managers, executives, and<br />
specialists – was already allowed during the Uruguay<br />
Round, now four new categories of natural persons –<br />
business visitors, professionals, independent<br />
professionals, and persons having other skills – have<br />
been added. Out of these four new categories of natural<br />
persons, the categories of independent professional and<br />
persons possessing other skills – are relevant to the<br />
construction sector. The category of independent<br />
professionals is akin to that of the Indian category and<br />
offers meaningful market access particularly to the<br />
export of professional services by developing countries<br />
to Pakistan. The category of persons possessing other<br />
skills has specifically been mentioned for construction<br />
engineering services though this is limited to imparting<br />
training in Pakistan.<br />
As the construction services sector also bank on<br />
the smooth supply of related professional services, we<br />
need to look at the state of commitments in these<br />
services. In this regard, it is noted that while in<br />
engineering and integrated engineering services Pakistan<br />
had undertaken commitments; during the current round<br />
it has proposed fresh commitments in architectural<br />
services. However, the level of liberalisation as reflected<br />
in the initial offer does not seem to be encouraging<br />
because Mode 1 remains unbound in all three services<br />
and for integrated engineering services even Mode 2 is<br />
unbound. Since architectural and engineering designs<br />
can be conveniently supplied through trans-border data<br />
flows (Mode 1), countries having relative comparative<br />
advantage are likely to benefit from liberalisation<br />
commitments under Mode 1. In light of this, it has very<br />
rightly been suggested that Pakistan has a pool of<br />
experienced and qualified professional engineers and<br />
architects, which is a source of comparative advantage<br />
to Pakistan (Burki and Hussain 2007). Therefore,<br />
liberalisation commitments under Mode 1 would be in<br />
Pakistan’s export interest.<br />
Burki and Hussain further suggest that Pakistan<br />
may also want to further rationalise its commitments<br />
under Mode 3 to enhance benefits from Mode 1,<br />
because arguably Pakistan may be able to export more<br />
through Mode 1 by attracting more foreign firms or<br />
joint ventures in architectural, engineering and related<br />
engineering services.<br />
Under Mode 3 there are quite a few restrictions in<br />
engineering and integrated engineering services –<br />
foreign shareholding of maximum of 51% in<br />
engineering consultancy companies is allowed. This<br />
however, is not applicable to those companies that are<br />
registered with the securities and exchange commission<br />
of Pakistan. In addition, the Mode 3 commitment is<br />
subject to partnership and/or joint venture with<br />
Pakistani engineers or engineering companies. As<br />
already noted, this restriction has been existing since<br />
the Uruguay Round and the only modification<br />
suggested in the initial offer is that this restriction also<br />
does not apply to those companies which are registered<br />
with the securities and exchange commission of<br />
Pakistan. In architectural services while Mode 2 is without<br />
any restrictions, Mode 3 has three limitations –