International Trade in Services.pdf - DSpace at Khazar University

Assessing the Potential of Services Trade in Developing Countries 15
services. The chapter on construction, for example, argues that the sponsorship
(khafeel) policy of several members of the Gulf Cooperation Council is prone to
abuse by employers and acts as a tax on many low-skilled and medium-skilled
workers.
The process of applying for work permits in foreign markets can be a major
impediment. Slow, burdensome, and opaque consular services give rise to higher
transaction costs and greater business risk. In many countries, legal services are
subject to a broad combination of regulations and restrictions. Qualification and
licensing requirements are designed to protect consumers from substandard legal
advice, but the same rules also have an influence on market access and national
treatment and, hence, determine a country’s ability to participate in the trade in
legal services.
Because of the political sensitivities associated with labor mobility, the liberalization
of Mode 4 remains modest. Moreover, from the analysis of the multilateral
commitments negotiated within the framework of the World Trade Organization,
including the rather insignificant progress made in the Doha Round, it follows that
the process of multilateral liberalization will be slow. In addition, while some
progress has been achieved at the regional level, it seems that many countries prefer
a cautious approach. It appears that the political concerns that have emerged are
restricting the possibilities for liberalization regardless of the negotiating forum.
The chapter on labor mobility suggests a way to move forward on negotiating
bilateral labor agreements. Indeed, some developed countries appear willing to
explore such agreements, and these mechanisms may provide the desired flexibility
from a legal and economic point of view. On the one hand, they are less legally binding
than trade agreements; on the other hand, they allow for the regulation of
migration flows based on the internal economic conditions of a country. In addition,
they can be targeted to specific sectors and may even be based at the firm level
if necessary.
A key aspect of the successful operation of bilateral labor agreements is monitoring.
This can be carried out by home and destination countries as a joint
responsibility, rather than putting the burden entirely on the destination country
to determine the legality of workers. In addition, ensuring the temporary nature
of the movement of workers is crucial. This can be achieved through guarantees
that are designed and included in the agreements in the form of bonds or fines for
noncompliance to encourage respect for the provisions by private parties. Finally,
incentives can be designed to ensure that workers return to their home countries.
For instance, the prospect of returning to the labor-receiving country might be
attractive to workers, and they will be more willing to respect their contracts and
return home if there is an opportunity (based on performance and need) to
return to the host country for employment in the future.