Unexpected: US Mulls India's Mode 4 Proposals

After the seemingly endless stream of negative rhetoric which has poured forth from Geneva thus far, this news is potentially welcome: The United States has actually begun to consider India's proposal to allow freer migration of service professionals to perform temporary contract work in the US. What's more, the EU signals that it too may be amenable to such overtures. Needless to say, this development could be something big. In the past, the US has treated so-called "Mode 4" migration of the sort described above as a migration and not a trade issue (see earlier post for an overview). However, it seems to be softening its stance here. I suspect that while India with its large pool of knowledge workers stands to benefit a great deal, the US is also considering repeated requests by American technology firms to allow more skilled foreign workers to ply their trade Stateside.

One of the things I keep telling my students is not to treat the "Third World" as a monolithic bloc. Divergence in their economic fates means that their interests by no means coincide on a multitude of issues. In the context of "green room" service negotiations, the Latin left of Bolivia, Cuba, Nicaragua, and Venezuela is not quite keen on availing of South-North Mode 4 migration in exchange for concessions on national treatment and market access for services. The Economic Times notes that the Latin left felt ambushed when developing countries which stand to gain on Mode 4 migration agreed to a services negotiation text that went beyond what the Latins felt comfortable with. In any event, here is the an update on the state of services care of Reuters:

The United States is prepared for the first time in world trade talks to discuss allowing more service professionals from India and other developing countries to work there, a U.S. industry official said.

U.S. trade officials were given permission to discuss the visa issue this week after months of consultation with White House national security officials and key members of Congress, Coalition of Service Industries president Bob Vastine said. "Whether they are in position to make an offer or even signal a specific kind of offer, I don't know. It may partly depend on the dynamic of the meeting," he told reporters on the fringes of a trade ministers meeting trying to reach a breakthrough in the nearly 7-year-old Doha round.

The Doha talks aim to open markets for farm, manufactured goods and services around the world but have struggled to overcome differences between rich and developing nations and they risk being put on hold for a couple of years unless a breakthrough is reached soon.

The issue of granting more temporary-entry visas for information technology engineers and other professionals from poor countries has been controversial in the U.S. Congress since the Bush administration did so several years ago in free trade pacts with Singapore and Chile. Many lawmakers objected to inclusion of what they said were "immigration" provisions in a trade agreement.

The new move addresses a key demand of developing countries as the United States tries to persuade India and others to open their markets in sectors like financial services, distribution, telecommunications and computer-related services.

The EU is expected to make an improved offer to open its market to foreign professionals on Friday, when discussions in Geneva are scheduled to turn to services after several days of negotiations on agriculture and manufacturing. "They're (the EU) probably not going to give the final figure because that's probably going to be the last thing they give in the negotiations in this round," said Pascal Kerneis, managing director of the European Services Forum.

Although India has made "very good offers" to open its market in areas such as telecommunications, distribution, computer-related services and energy services, it has not done so in financial services, Vastine said.

Indian Commerce Minister Kamal Nath told a news conference India needed to see what the United States and the EU were prepared to do on the visa issue before he could make his offer on financial services. "Let me make it clear India has no demand on immigration," Nath added, saying New Delhi only wanted to make sure burdensome rules do not block Indian professionals from performing contract work in the United States and the EU. At the same time, he said the outcome of services negotiations would be critical in India's assessment of proposed deals on agriculture and manufacturing.

The services talks suffered a setback on Wednesday, however, when Bolivia, Cuba, Nicaragua and Venezuela blocked adoption of a report laying out the future path for the negotiations, a participant in the meeting said. The four Latin American countries argue that a separate formal negotiating document on services is not needed.

The WTO's mediator on services, Mexican ambassador Fernando de Mateo y Venturini, had submitted a draft to the meeting which called on members to submit revised offers on services by Oct. 15 and final commitments by Dec. 1. Mateo will now report to the final session of this week's meeting of ministers, which may still decide to adopt dates for new services offers.