Sri Lanka trade talks mull market access for migrant labour

Lanka Business Online, June 21, 2010
Opening up labour markets in developed countries for migrant workers from South Asian countries like Sri Lanka is of critical importance for the region at world trade talks, an economist said.

Remittances sent by migrant labour are important for almost all countries in the region, Deshal De Mel told a regional consultation seminar on South Asian positions in the World Trade Organisation talks on opening up trade in services.

Services is one of the most dynamic sectors in South Asia, growing faster than the overall economy and accounting for almost half of regional gross domestic product, said De Mel, a research economist at the Institute of Policy Studies of Sri Lanka.

The seminar was jointly organized by the IPS and Consumer Unity & Trust Society.

It considered how South Asian countries could adopt a common approach in talks on the General Agreement on Trade in Services at the WTO as they have many common interests.

The GATS aims to progressively liberalize trade in services through four modes of supply: cross-border supply (Mode 1), consumption abroad (Mode 2), commercial presence (Mode 3) and movement of natural persons (Mode 4).

De Mel said Mode 4 provides potential benefits for South Asia given the importance of migrant labour in their economies.

“It is an area where it’s important to seek commitment s at the multi-lateral level,” he said.

Many South Asians are working abroad in construction, nursing and health care, and in personal care as domestic assistants.

“Trade in services through Mode 4 and remittances which result from it are very significant for balance of payments and poverty mitigation,” De Mel said.

“Therefore, the primary interest of South Asian nations is in the liberalization of Mode 4. However, Mode 4 is the most protected of all modes in the GATS framework, particularly in the low skilled area, which accounts for the bulk of South Asian migrant labour, where very few commitments have been made.”

While it is important to secure access for workers with low skills, it is also important to secure higher skill level liberalization in the longer term to move up the value chain.

A critical need for the region was to secure the elimination of the economic needs testing which is used as a protective mechanism by many countries, De Mel also said.

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