International Trade in Services.pdf - DSpace at Khazar University

14 International Trade in Services
Common restrictions on service supply through the presence
of natural persons
The temporary movement of natural persons (Mode 4) in service delivery enables
the realization of gains from trade, while averting prospective social and political
costs in host countries and the drain on human resources in sending countries.
Temporary access to foreign providers of services may generate gains in income
and welfare that are greater than the gains from the complete liberalization of all
the barriers to trade in goods; both developed and developing countries would
share in these gains (see Winters et al. 2003). Workers who are based abroad tend
to remit part of their income, and many families in developing countries rely on
these financial flows.
The individual chapters emphasize that Mode 4 trade is significant in many
nonbackbone service sectors. For example, millions of construction workers from
developing countries serve abroad in regions where large investments are dedicated
to infrastructure and building projects. Indian IT companies send tens of
thousands of project managers and IT professionals on assignments to foreign
clients in the economies of the Organisation for Economic Co-operation and
Development every year. The health service sector in some English-speaking
countries relies on nurses and even medical doctors from developing countries.
The accounting service market is dominated by collaboration through global networks,
and the temporary movement of accountants is often the only solution to
relieve short-term shortages of expertise, given the cyclical nature of the market.
There are several common limitations on the temporary movement of natural
persons. These restrictions can be divided into (1) quantitative limitations,
nationality requirements, and residency requirements; (2) the rules and limitations
associated with obtaining work permits and business visas, as well as regulations
affecting the holders of work permits or business visas while they are in host
countries; and (3) inefficiencies linked to the processing of work permits or business
visas, which are typically associated with time, cost, and risk.
Thus, the United States imposes a quota on H-1B work permits for the temporary
employment of foreign workers in specialty occupations (which include
many of the professional services under study). Indian exports of IT services to
the United States are, to a large extent, reliant on H-1B work permits, and, whenever
demand exceeds supply, providers and clients are disadvantaged. In some
countries, foreign citizens are not allowed to practice law under any circumstances
(the zero quota).
Most professional service providers, such as medical doctors, nurses, lawyers,
and accountants, have to be certified to practice their professions. Certification
requirements are generally imposed for quality assurance, but there is occasional
discrimination in the application of the requirements to foreign providers of