International Trade in Services.pdf - DSpace at Khazar University

Building Empires Overseas 205
dependent on the short-term circulation of managerial and professional staff and
the medium-term circulation of builders, welders, crane operators, and so on.
In the adjacent engineering and architectural service sectors, which are frequently
incorporated in-house in multinationals, the nonrecognition of professional
qualifications may represent another barrier. Local labor policy may also
impose rules on minimum-wage levels that are well above remuneration levels in
the country of origin of the exporting company.
Trade-impeding regulations are not only imposed at the border. Domestic regulations
affecting foreign providers of services can also have an adverse effect on
trade and working conditions. For example, entities in the Persian Gulf region
employ many millions of foreign construction workers. While the numbers may
indicate an open door policy, local rules that regulate the stay of workers are
prone to abuse (FIDH 2007). For example, temporary service providers who enter
the Gulf countries can only obtain entry visas and residence permits if local citizens
or local institutions employ them. The employer becomes a sponsor
(khafeel) and signs a contract issued by the labor ministry. The contractual agreement
essentially makes the sponsor legally and financially responsible for the
service provider and ties the service provider to the sponsor (see Longva 1999,
Baldwin-Edwards 2005).
Construction workers from low-income Arab, South Asian, or Southeast Asian
countries often make huge financial sacrifices to move to the Persian Gulf, but
they must leave the country if their contracts are refuted or broken. The responsibility
of the sponsor to cover any prospective costs of repatriation has led to a
common practice whereby sponsors confiscate the passports of service providers
to control and circumscribe their ability to move. Longva (1999) has reported that
any dispute with a sponsor leaves the service provider without legal residence, the
possibility of working, or, effectively, the possibility of gaining legal redress.
Bahrain recently abandoned this system, which, according to Crown Prince
Salman, had, in effect, suppressed wages and often created abominable working
conditions for foreign workers (de Boer and Kalkman 2007).
Reviewing additional trade-distorting rules and regulations
Subsidies and other incentive schemes granted to domestic construction service
suppliers in developed (and developing) countries can have a discriminatory
effect on trade. They are provided in many countries for export promotion and to
encourage the development of the domestic construction sector. If the subsidies
are granted exclusively to local companies, they may be inconsistent with the
national treatment obligations of WTO member states. Research and development
are often supported by grants from governments that give companies in
advanced markets a competitive edge through the use of information technology