RESTRICTEDWORLD TRADE
ORGANIZATIONS/C/W/75
8 December 1998
(98-4927)
Council for Trade in Services
PRESENCE OF NATURAL PERSONS
(MODE 4)
Background Note by the Secretariat
I. INTRODUCTION
1. This Note was prepared in the context of the information exchange programme currently
conducted by the Council for Trade in Services.  Complementing the Notes on developments in
individual services sectors, it discusses issues related to a particular mode of supply, the presence of
natural persons.  As with previous Notes, it is by no means intended to be exhaustive, but to stimulate
an exchange of views and information among Memb ers in preparation for the next round of services
negotiations.  Its focus on trade-related issues is not meant to detract from many other important
aspects – both social and political – which may govern Members' policies towards the movement of
natural persons.
2. The Note is in five parts .  Section 2 briefly discusses the potential economic effects of labour
migration, from the perspective of both originating and receiving countries.  Statistical sources ofinformation are described in Section 3, supplement ed by some empirical observations.  Section 4
presents an overview of main types of barriers affecting movements of natural persons, drawing from
the limitations listed in Schedules of Commitments.  The final Section summarizes the relevant entries
in the horizontal part of Members' schedules. Due to time and resource constraints, the Note does not
extend to issues related to economic and labour market integration agreements;  however, the
Secretariat stands ready to prepare a supplementary Note if considered useful by Members.
3. The presence of natural persons, otherwise referred to as Mode 4, is one of the four possible
forms of providing a service under the GATS.  Memb ers' commitments under this mode relate to the
temporary admission of foreign nationals or foreign permanent residents as services providers in their
territory (Annex).  However, there is no agreed definition in the literature of what constitutes
"temporary" presence;  nor is there a definition, or a specified timeframe, in the GATS.  The
Agreement merely exempts from its coverage measures regarding citizenship, residence andemployment on a permanent  basis.
1  A cursory look at Members' schedules shows that the maximum
length of stay permitted under Mode 4 varies with the underlying purpose.  Thus, while business
visitors are generally allowed to stay up to 90 days, the presence of intra-corporate transferees,
another important category, tends to be limited to periods of between two and five years.
4. The economic impact of movements of natural persons may differ widely between sectors and
economic activities.  For analytical purposes, it may be useful to distinguish three scenarios:
(i) Situations where movements of persons are the only feasible  mode of supply .
This is the case whenever (a) the physical presence of a supplier is the
determinant factor for the provision of a service and (b) the consumer, or his
property, are regionally immobile. Hospital and social services as well as
                                                     
1 See the Annex on Movement of Natural Persons Supplying Services under the Agreement.S/C/W/75
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many construction, restoration and repair services are cases in point.  In these
circumstances, service providers "carry the border with them";2   their direct
physical access to another market is a precondition for supply.
(ii) Sectors and activities where movements of persons are one among several
possible modes;   they may be replaced, for example, by cross-border
communication links between suppliers and consumers of a service
(e.g. doctor and patient;  teacher and student;  accountant or lawyer and their
clients).3   In general, such links may prove easier to achieve in relatively
sophisticated, knowledge-intensive fields of activity, including advisory or
consultancy work.  Thus, while it may be possible for doctors, lawyers or
architects to provide certain services across borders, distance appears to
remain a more fundamental barrier for midwives, nurses or constructionworkers.
(iii) Cases in which temporary movements complement and facilitate trade under
other modes.   Direct personal contacts may help to promote a company's
reputation, bridge information gaps and cultivate business links.  In turn, this
may increase deliveries across borders, attract foreign consumers or lift salesthrough subsidiaries established abroad.  For example, although an architect's
design work may be done in his home country offices and delivered via mail,
the quality of the final product may depend on his (or his collaborators)
presence for some months to supervise the construction process.
4
5. In addition, the introduction and proliferation of new information technologies – as a result of
technical progress, deregulation and trade liberalization in telecommunications – has thrown open
new possibilities of goods and services trade.  For example, the software incorporated in a PC may
obviate searches in libraries, consultations with experts and/or purchases of additional software
packages.  This suggests that trade in advanced  electronic equipment may substitute for trade in
(communication, consultancy, etc.) services, thus expanding merchandise at the expense of servicestrade, including through Mode 4.  On the other hand, however, such trade may well create demand for
new, complementary services activities under various modes.
6. A cursory look at Members' GATS schedules shows that levels of commitments vary strongly
across modes of supply.  Within a given sector, trade conditions for Mode 4 tend to be significantly
more restrictive than conditions, in particular, under Mode 2.  This is to a certain extent reflected in
the pattern of horizontal limitations in current schedules applying across all sectors.  Slightly over
20 such limitations with regard to Mode 2 compare with 100 cases for Mode 4 (Section 5.1).  In turn,this reflects many Members' basic approach to scheduling Mode 4 entries;  contrasting with other
modes, they normally started from a general "unbound" which was then qualified by liberalisation
commitments applying to specified types of persons (e.g. managers), movements (e.g. intra-corporate)
and stays (e.g. up to four years).
                                                     
2 See B. Ghosh "Gains from Global Linkages. Trade in Services and Movement of Persons" (1998).
3 From a pure efficiency standpoint, however, such substitution may require consumers and/or
producers to accept a second-best outcome. If a supplier is prevented from entering a foreign market, some
potential consumers may decide to move abroad, some  may finally accept a domestic service (despite lower
quality or higher costs) and others may simply forego consumption.
4 Among the many buildings designed by Le Corbusier, only one house - in Mathes (Océan, France) -
was reportedly completed without the architect or his associate never having visited the site.  This was due onlyto tight budget constraints.S/C/W/75
Page 3
7. Many schedules have established links across modes of supply.  For example, one-third of the
Mode 4 entries examined in the context of this Note cover intra-corporate transferees.5  S u c h
commitments are of limited interest to Members which, given their level of economic development,
are not significant foreign investors.  Other commitments relate specifically to persons establishing a
commercial presence.  However, the question may be raised, whether these commitments add legaland economic value to what has already been bound under Mode 3.  Failure to accept such entrants
could be considered tantamount to violating existing obligations.
8. The terminology used in many Schedules suggests that implementation of the commitments
under Mode 4 may entail more scope for discretion than under other modes of supply.  The relevant
terms and their definition, such as "business visitors", "senior executives" etc., tend to be vague, and
their interpretation lies in the hands of numerous immigration officials at ports of entry and consular
offices.
Issues for discussion:
• Is there scope for replacing movements of natural persons with other modes of supply
(e.g. cross-border) higher for knowledge-intensive activities?
• What is the prevailing impact of new info rmation and communication technologies on Mode 4
trade?
• Do Members feel that implementation of Mode 4 commitments presents greater difficulties in
practice than implementation of other commitments?  Have they encountered interpretation
problems?
II. TRADE AND LABOUR MOVEMENT – SOME BASIC CONSIDERATIONS
9. The traditional theory of international trade, focusing on trade in goods, takes a country's
factor endowment – typically capital and labour – as given.  Trade occurs in place of migration.Under standard assumptions, including identical conditions of production and the absence of
economies of scale, trade tends to eliminate international differences in factor income.  Theories of
migration normally take as their starting point existing incentives for migration – typically cross-
country disparities in employment and income opportunities - in order to examine the effects of
migration on the countries, markets or persons concerned (Box 1).
10. From a development perspective, the consequences of international labour migration are hotly
debated.  Even though positive effects may exist over the long-run, for the short-term it has proved
difficult empirically to identify "transmission mechanisms" by which international migration
promotes development.
6   It is generally the younger, better trained and more dynamic workers who
tend to migrate.  On the other hand, migration contributes to the inflow of remittances which may be asignificant income factor for remaining family members.  Remittances may be used either for
investment, with positive developmental implications, or consumption.  Since they benefit directly the
final recipients, unlike government-to-government aid, there are no significant transfer losses.
11. In the area of services trade, however, a different paradigm may be needed:
(i) The standard models used to analyse trade in goods cannot simply be applied
to services trade as covered by the GATS.  While these models may still be
relevant for Mode 1 and, possibly, Mode 2 (cross-border flows andconsumption abroad of services), their application to Modes 3 and 4 poses
                                                     
5 However, the definition of the groups of persons actually covered may vary significantly among
Members (Section 5).
6 See World Bank, "International Migration: Implications for the World Bank", Human Capital
Development and Operations Policy Division, No. 54, May 1995.S/C/W/75
Page 4
problems.  In the latter cases, trade is associated with changes in factor
endowment, thus breaking with standa rd assumptions.  The distinction
between trade and factor movements becomes blurred.
(ii) Models used to analyse international migration may also fail to capture
important aspects related to the movement of natural persons under theGATS.  In particular, these movements are not only temporary by definition,
but normally occur only within, but not between, sectors. (A nurse from
country X may be denied entry into Y, although Y has committed on nursing
services, if she wants to exercise some other activity.)  Mode 4 suppliers tend
to be mobile between countries, but im mobile between sectors.  This implies
that the effects on production, employment and wages associated with such
movements have a stronger sectoral focus than inflows of an equivalentnumber of workers under immigration or asylum legislation.
12. A reasonably comprehensive discussion of these issues would lead, however, beyond the
scope of this Note.  The following two sections are thus confined to listing, based on a cursory review
of existing literature, the economic effects generally associated with movements of natural persons
across borders.  In turn, this may assist Members in their assessment of current schedules.
BOX 1
The causes of international labour migration
While there is no single theory of international labour migration, five main explanations can be identified:
1. Neo-classical macroeconomic approach – sees geographic differences in wages, productivity and, thus,
supply of and demand for labour in origin and destination countries as the major driving forces behind
individual migration decisions.
2. Neo-classical microeconomic approach – views migration as the result of a cost-benefit analysis of rational
individuals.  Wage differentials and employment rates are critical determinants.
3. The new economics of migration – focuses on migration as a way for families to diversify sources of
income, minimize risks, and obtain credit and capital.  Migration is driven mainly by market failures (e.g. in
the insurance or capital markets).
4. Dual labour market theories - employers' demands for low-wage migrants in developed economies are
considered as the main force behind international migration.  Recruitment policies in the countries of
destination shape migration flows.
5. World systems theories – the disruptive impact of capitalist economic structures on traditional, peripheral,
non-capitalistic societies is deemed to generate migration.
Once the migration process has started, mechanisms of ci rcular causation (or perpetuation) may emerge.  These
include the creation of migrant networks, which serve to reduce the costs and risks of migration, the emergence
of private and voluntary institutions supporting the movement of migrants and, more fundamentally, widening
wage and employment disparities between the regions involved.  The latter effects may result in particular from
economies of scale and the selective effects of migration on the quality of the workforce, touching on the issue
of "brain drain" (see Box 2).
Literature:  World Bank, "International Migration: Implications for the World Bank", Human Capital
Development and Operations Policy Division, No. 54, May 1995.S/C/W/75
Page 5
2.1 Effects of Labour Movements on the Originating Country
13. In general terms, trade may be expected to assist countries in specializing in productions for
which, based on their factor endowment, they have a comparative advantage.  In turn, increasedspecialization, and the resulting economies of scale and scope, are welfare enhancing.  As noted
above, however, these expectations are based essentially on "standard" models for goods trade.  In the
case of trade-related factor movements, additional considerations come into play.
14. From the perspective of originating countries, these considerations include the risk of losing
domestic resources (skills and expertise), which are already relatively scarce, and suffering a transfer
of educational investment.
7   The threat of "brain drain", especially its negative implications for
development and potentially adverse effects on income distribution, has been discussed intensively inthe literature;  it seems to be particularly relevant in the case of permanent migration.  (However,
temporary and permanent movements are not always easy to distinguish;  regions experiencing a
persistent outflow of temporary migrants tend to suffer an enduring reduction of their skills-base by a
certain percentage.)  Such developmental and distributional implications for the "labour exporting"
countries might be exacerbated by lopsided regu latory regimes in importing markets which provide
access predominantly for skilled persons - doctors, engineers, senior lecturers, etc. - rather than for
basic labour.
15. On the other hand, a more detailed assessment would need to include the question of whether
the persons moving abroad would alternativ ely have found employment at home in "their"
professions.  Moreover, as far as temporary movements are concerned, the home country's loss ofskills – and, thus, educational investment - needs to be set against the experience gained abroad which
may be available for use upon return.  Temporary labour movements also present an advantage over
(permanent) migration with respect to remittances.  Empirical studies suggest that remittances are
higher in the former case, as the persons involved return home within a well-defined future.
8   While
remittances improve the income status of the actual  beneficiaries, their effects on income distribution
may (again) be influenced by the skill and income characteristics of the persons who have moved
abroad.
16. Although available data on remittances and labour-related income flows are subject to various
qualifications (Section 3), the magnitudes involved in dicate potentially significant effects for the main
recipient countries such as India, Mexico and Portugal (Annex Table 2).  For example, the remittances
received by India in 1996, US$ 7.6 billion, were almost three times as high as net direct investment
inflows in the same year.  In terms of foreign currency earnings, they came close to the contributionof the country's entire textiles and clothing industry (US$ 8.6 billion).
                                                     
7 See, in particular, Myrdal G. "An International Economy", 1996.
8 Galor, O. – Stark, O. "The probability of return migration, migrants' work effect and migrants'
performance", Journal of Development Economics, No. 35, 1991.S/C/W/75
Page 6
BOX 2
The "brain drain"
The concept of "brain drain" is associated with highly skilled workers seeking to move abroad to increase
returns on the educational investments they - or their governments - have made.  Between 1961 and 1983, at
least 700,000 highly educated professional workers are estimated to have moved from developing countries to
the United States, Canada and the United Kingdom.  This has meant the loss of a significant proportion of
trained professionals for some countries:  for example, sub-Saharan Africa alone is said to have lost 30 per
cent of its highly skilled labour force between 1960 and 1987, mainly to the EC.  Between 20 and 40 per cent
of all graduates in the countries of Central America and the Caribbean choose to emigrate.
A recent study by the IMF suggests that the majority of migrants from developing countries to the OECD are
much better educated than the rest of the population of their countries of origin.  This may be partly explained
by the immigration policies of OECD countries, which te nd to favour skilled workers, and partly by the fact
that it is generally easier for better educated individual s to cover migration costs.  In a number of countries,
especially in the Caribbean, Central America and Africa, over 30 per cent of individuals with tertiary education
have moved abroad.  A significant share of individuals wi th tertiary education has al so left countries such as
Iran, Chinese Taipei and the Philippines.  By contrast , most migrants from Central American countries have
reportedly been educated up to a secondary level.
For the originating countries, "brain drain" may represent a significant loss, even if it is difficult to quantify.
The United States Congressional Research Centre estimated that in 1971-72 the developing countries had
made an average investment in each skilled immigrant of around US$ 20,000.
However, some countries may be training more skilled workers than their labour market is likely to absorb.
Migration may therefore also reflect a lack of opportunities in the country of origin.  In Somalia, for instance,
the output of graduates has been estimated to be five times higher than demand; a survey found that in 1985,
40 per cent of graduates in major cities of Côte d'Ivoire were out of work.. Governments may have over-
invested in certain skills under pressure from vocal population groups (e.g. the urban middle class) with
disproportionate policy influence.
In many cases, developing countries are losing talented people who go abroad to study without returning
home.  In the 1960s, more than half the Africans who went to the United States to study chemistry and physics
never sought employment in their home countries.  This may also happen in more economically advanced
countries: in 1988, for instance, it was estimated that around 1,350 Koreans with PhD were working as
scientists in the United States.
Literature: Stalker, P. "The Work of Strangers: A Survey of International Labour Migration", ILO Geneva,
1994;  Adepoju, A. "South-North Migration: The African Example", in 'International Migration', 1991,
Vol. 25, no. 2;  Diaz-Briquets, S. "The effects of International Migration on Latin America", in Papademetriou,
G. – Martin, P. (eds.) 'The Unsettled Relationship:  Labour Migration and Economic Development", 1991;
International Monetary Fund, "How Big Is the Brain Drain?", Working Paper 98/102, Prepared by W.J.
Carrington - E. Detragiache, July 1998;  United Nations Development Programme, "Human Development
Report", 1992;  Ong, P. – Cheng, L. "Migration of Highly Educated Asians: Some Theoretical
Considerations", Paper presented at the "Conference on International Manpower Flows and Foreign
Investment in the Asian Region", Tokyo 1991.
2.2 Effects on the Recipient Country
17. As is the case for the originating countries, the economic consequences of labour movements
for host countries are difficult to predict.  A variety of factors – including timing, sector, occupation
and type of movement – may come into play.  Empirical evidence is scarce, however, especially for
developing countries.S/C/W/75
Page 7
18. From an economic point of view, a variety of questions arise:  In particular, how do the
welfare gains expected to result from enhan ced specialization compare with potentially
counterbalancing effects associated with changes in the factor intensity of production?  For example,
does the movement of typists from country X into the United States encourage residents, who may
otherwise have worked as typists, to seek more lucrative employment in other sectors and/orprofessions?  Or do the immigrants predominantly add to the supply of typists, thus depressing wages
and encouraging over-extensive use of the relevant services?  From the perspective of resident
workers, are the foreigners predominantly substitutes or complements?
19. The OECD Secretariat has reviewed the lite rature on the relationship - substitution or
complementarity - between foreign and native workers.  A study quoted  in this context concluded that
the complementarity between foreign and native workers was quite strong, based on the observation
that a 10 per cent increase in the number of immigrants had no statistically significant effects on thewages of U.S. residents.
9   By contrast, a study undertaken by World Bank staff members found
negative effects of immigration into Germany on the wages on blue collar workers.10   Some recent
work corroborates the existence of such effects which, however, seem to be relatively small.11  
Among a variety of factors deemed to lower unskilled relative to skilled wages, immigration was
found to be the weakest.12   In the context of this Note, however, an important qualification needs to
be made:  the above findings apply to labour inflow s in general, e.g. including intra-EC migration
covered by the Treaty of Rome, but not specifically to temporary movements of service suppliers.
20. Through Mode 4 trade, skills and knowledge embodied in foreign personnel may be accessed
at lower than domestic "production" costs.  A country's regulatory regime – and, correspondingly, its
services schedule – may be geared to easing domestic supply bottlenecks.  This may facilitateadjustment to changing market conditions, help to overcome skills and other labour shortages, overall
or in specific sectors, and promote economic growth.  (Shortages may be of a cyclical, regional,
sectoral, qualification or seasonal nature;  Box 3.)  On the other hand, however, potential host
countries have sought to ensure that foreign supp liers comply with domestic arrangements governing
wages, prices and/or other supply conditions.  Such measures may deprive potential entrants of agenuine economic advantage and, by the same token, reduce Mode 4 trade and its impact on both
incumbent suppliers and users.
                                                     
9 Grossman, J.B. "The substitutability of natives and migrants in production", Review of Economics
and Statistics, 1992, No. 64.
10 Zimmerman, K.F. "European Migration: Push and Pull", Washington, D.C., The World Bank,
Annual Bank Conference on Development Economics, 1995.
11 The Economist, "Workers of the world", 1 November 1997.
12 See Cline, W. "Trade and Income Distribution", 1997.S/C/W/75
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BOX 3
Easing skill shortages through movement of natural persons
Recent examples indicate how the movements of service providers may help  to mitigate shortages of skills.
• The U.S. Senate cleared the way for an expansion of the number of visas for highly skilled foreigners by
more than 300,000 over the period 1999 to 2001.  The bill is aimed at meeting the acute shortage of staff in
high technology industries, possibly including service providers (e.g. software development, etc.).  In 1998,
the annual allocation of 65,000 visas was exhausted by May, reflecting strong demand in the computer
industry and a decline in the number of U.S. undergraduate degrees in key science disciplines.
• A shortage of teachers – especially science teachers – has prompted the New York City School Board to
hire English-speaking Austrian teachers.  (The wh ole of the United States is reported to experience
difficulties recruiting U.S. science teachers.)
• By 2002, Western Europe is expected to face a potential shortage of 1.6 million staff in information
technology (IT) sectors, corresponding to 12 per cent of demand.  This is likely to result in strong wage
pressure, supply disruption and delayed investment in the sector, ultimately undermining the IT and related
industries' competitiveness.  Some of these effects ar e already being felt.  Recently wages have increased by
up to 60 per cent per annum, and many projects and investments have experienced delays.  A rising number
of IT jobs are being contracted out to non-European service providers.
• The European biotechnology industry is reportedly suffering from shortages of senior managers, which are
expected to persist in the foreseeable future.  Attempts at hiring senior staff from the United States' larger
biotechnology sector are likely to fail, however, as th e American biotech industry is in a similar situation.
Literature: Financial Times, "US visa plan for high-tech workers", 25 September 1998;  Wall Street Journal,
"U.S. clears way for bill to boost high-tech visas", October 1998;  CNN Web site, "The accent is on maths and
science in New York schools", 8 September 1998;  Financial Times, "Skill shortage hits W. Europe",
23 September 1998;  The Economist, "Management shortfall", 18 July 1998.  See also Box 4.
21. Temporary labour movements may also help to avoid certain follow-up costs associated with
permanent migration, including the costs of using th e social welfare, health and education systems of
the host countries.  While these countries may fear that temporary movement could act as a bridge for
permanent immigration, both legal and illegal, regulatory restrictions might well prove a "two-edgedsword".  A more comprehensive policy assessment would need to include the potential impact on the
economic and social situation – and, thus, on causes of migration - in originating countries.
13
III. AVAILABILITY OF STATISTICAL INFORMATION ON MODE 4 TRADE
22. No reasonably comprehensive data exist today on the value of services trade taking place
through Mode 4.14  However, some information at the international level may be gathered from
sources such as the International Labour Office's employment statistics, the United Nations System of
National Accounts, and the International Monetary Fund's balance of payment (BOP) statistics.
23. From a statistical perspective, a distinction needs to be made between the movement ("flow")
and the presence ("stock") of service providers in a given country at a given time.  The GATS covers
both.15   Statistics collected at the ports of entry are the most widespread sources of information on the
movement of service suppliers, although they provide no indication of the value of trade generated.
                                                     
13 Moreover, a Recommendation of Parliamentary Assembly of the Council of Europe, No. 1306
(1996), states that "temporary employment was identified … as a factor in reducing irregular migration".
14 For a review of services statistics, see the Secretariat Papers S/C/W/5 and S/C/W/27.
15 Article I refers to the "presence of natural persons", whereas the Annex to the Agreement deals with
"movement of natural persons supplying services under the Agreement".S/C/W/75
Page 9
Measuring the "stock" of foreigners providing serv ices poses even greater difficulties.  The WTO
Secretariat is not aware of any Member possessing a data collection system, be it a population
register, a register of foreigners or other surveys or administrative records, which would allow to trace
and keep track of foreign service providers in a reasonably comprehensive way.
24. BOP statistics capture labour-related flows in the following three categories:
(i) Labour income – it includes wages, salaries and other compensation received
by individuals working abroad for less than one year.  It is assumed that these
workers retain residence in their home country.  This category can be found
under "Current income" in the IMF BPM-5.16
(ii) Worker remittances – these are transfers from workers who stay abroad for a
year or longer, and who, from a balan ce-of-payment perspective, are assumed
to have changed their residence.  This item can be found under "Currenttransfers" in the IMF BPM-5.
(iii) Migrants' transfers – they represent the flow of goods and changes in
financial assets associated with international migration.  They are reported
under "Capital and financial account" in the IMF BPM-5.
25. From the perspective of this Note, BOP statistics are subject to important qualifications.
First, the recorded income flows also cove r the compensation of persons working in the
manufacturing and agricultural sectors, of government employees (embassies)
17 and of foreigners
employed in locally owned companies.18   They further include payments to social security schemes,
private insurance schemes and pension funds in the host country.  On the other side, as noted above,
the labour income of persons staying abroad for more than one year is not taken into account.  Theirearnings and spending are treated as domestic transactions, and only cross-border transfers are
recorded.  The relevant statistics may be misleading, however, as a significant proportion of
remittances does not flow through official channels due, among other factors, to foreign exchange
restrictions and taxes on remittances.  An additional problem is related to the distinction between
labour income and worker remittances, which may be arbitrary as it is often difficult to know inadvance the length of stay of a foreign worker.  Not long ago, the IMF reclassified US$ 5 billion of
labour income as worker remittances.
19
26. Any quantitative assessment of trade through Mode 4 is thus subject to significant data
problems.  These are compounded by the fact that movements of persons may only be one element of
a larger "services package" involving trade under other modes as well.  It is unclear, for example, how
the value generated by service-providing firms established abroad (Mode 3) could be separated from
the value attributable to intra-corporate transferees working there under Mode 4.  What is the "true"value of the service they supply?
27. Because of the problems noted above, the quantitative importance of trade in services
attributable to the presence of natural persons is difficult to gauge.  Balance-of-payment statistics
show that, over the past few years, ten countries have accounted for a large and growing share of the
world's remittances.  In 1996, the top ten payers and receivers, respectively, accounted for 94 and74 per cent of total remittances (Tables 1 and 2, Annex).  On the debit side, Saudi Arabia ranks first,
                                                     
16 BPM-5 is the abbreviation frequently used to  indicate the IMF "Balance of Payment Manual",
5th Edition, 1993.
17 Services provided in the exercise of governmental activity are beyond the scope of the GATS.
18 The latter category does not seem to fall under the definition of Mode 4 trade (see Annex).
19 See IMF, "World Current Account Discrepancy", Washington D.C. International Monetary
Fund, 1987.S/C/W/75
Page 10
followed closely by the United States, while on the credit side India is far ahead.  Whereas the ranking
of the top ten debtors has remained remarkably constant over recent years, significant changes have
taken place among the top receiving countries, with Egypt, Portugal and Turkey being gradually
overtaken by India and Mexico.  China has also exhibited spectacular growth in its receipts of
remittances.
28. Labour income statistics show a lower degree of concentration.  In 1996, the top ten countries
paid and received, respectively, 65 and 56 per cent of total labour income (Tables 4 and 5, Annex).
Over the past few years, Switzerland has been  the biggest debtor, while Belgium-Luxembourg,
Germany and France have generally held the top ranks among creditors.
29. The following Table shows that, between 1980 and 1990, total labour-related exports and
imports (credits and debits) of developed countries have increased substantially faster than those of
developing countries.  Although these data need to be interpreted with care, given the limitationsnoted above and numerous reporting problems, they may be taken as an indication that Mode 4 trade
has expanded most rapidly between developed countries.  Table 7 of the Annex expresses labour
earnings (i.e. labour income plus workers' remittances plus migrants' transfers) of selected countries
as a percentage of their merchandise exports;  the results exhibit notable variations.
Direction of labour-related flows, 1980 – 1990
a
(US$ million, percent)
1980 1990Growth rate
(1980/90)
Developing countries
Credits 29,279 45,955 57%
Debits 8,153 9,250 13%
Balance 21,126 36,705 74%
Developed countries
Credits 13,072 25,186 93%
Debits 24,461  50,333 106%
Balance -11,389 -25,147 -121%
aLabour-related flows include labour income, workers' remittances and migrants' transfers.
Source:  Computations based on UNCTAD; World Bank (1994).
30. The OECD Secretariat has noted that ".. [tem porary] worker movement, especially between
certain OECD countries, applies more and more to skilled labour and over the past few years the
migration of highly qualified workers has been  growing in importance."  (Table 8, Annex).20  These
flows are in part related to the general expansion of world trade and the growing role of intra-firmlinkages.  They reflect the development of intern al labour markets within multinational firms and the
establishment of institutional frameworks to facilitate international exchange of skills.  Demographic
changes in developed countries, with low fertility rates and aging populations, are also likely to have
had an impact on the demand for specialized service providers (e.g. doctors and nurses).
                                                     
20 OECD, "Trends in International Migration.  Annual Report 1997", 1998 edition.S/C/W/75
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BOX 4
Temporary labour migration in the OCED area
The demand for temporary foreign workers in OECD countries area has been increasing in recent years, as it
provides greater labour market flexibility and helps to alleviate sectoral labour shortages in the country of
destination.  Most OECD countries allow foreign worker s to enter and stay under temporary or seasonal work
permits, within the framework of a contract of employment or training.  Four main categories can be identified
in most countries: (highly) skilled workers, seasonal workers, trainees and students.  However, legislation
differs substantially in these areas;  the maximum length of stay allowed for temporary workers may vary
between three months and four years.
Entries of temporary workers in Canada, the USA and Australia are particularly numerous, and these countries
have established special programmes for temporary workers to meet labour market needs.  In the United States,
skilled workers represent more than 80 per cent of the entries of temporary workers (not including intra-
corporate transferees and treaty traders and investors).  In  Canada and the United Kingdom, this share is close to
40 per cent, and in the Netherlands, Australia and France it varies between 15 and 30 per cent.  Even if the
heterogeneity of skilled workers makes international compar isons difficult, it is safe to say that the share of
(highly) skilled workers among temporary workers has grown in most countries in recent years.
Literature: OECD, "Trends in International Migration", Annual Report 1997, 1998 edition.
Issues for discussion:
• What is the impact of movement of natural pers ons on the pace and direction of structural change
in the countries involved ?
IV. MEASURES AFFECTING THE PRESENCE OF NATURAL PERSON
31. Measures governing the temporary movement of labour may be categorized in three groups:
general immigration legislation (visa requirements, etc.);  labour market regulation governing the
issuance of work permits etc.;  and regulations defining foreigners' ability to work in individual areas.From the perspective of this Note, the first group of measures does not seem to deserve particular
discussion as they are beyond the scope of the GATS.  The Annex on the Movement of Natural
Persons expressly exempts measures regarding citizenship and residence as well as the rules
governing permanent employment from the discipline s of the Agreement.  Measures falling under the
two other groups, by contrast, may be captured by general GATS obligations as well as, in scheduledsectors, the specific commitments undertaken under Articles XVI, XVII and XVIII.
32. Most Members have avoided comprehensive commitments with regard to the presence of
natural persons under Articles XVI and XVII of the GATS.  In many cases, commitments apply only
to senior executives and managers or persons representing an advanced level of training and expertise,
and business visitors.  (As already discussed in previous Notes, however, actual regulatory regimes
may be significantly more liberal – yet less stable – than those laid down in Schedules.)  Market
access limitations such as numerical quotas may coin cide with measures denying national treatment
or, in terms of Article XVII:3, modifying the conditions of competition in favour of domestic services
or service suppliers.  Relevant measures include residency requirements and non-eligibility under
subsidy schemes.S/C/W/75
Page 12
33. Licensing and qualification systems may result in additional entry barriers.  In many services
areas, governments seek to ensure, for example on public interest grounds, that a supplier has
undergone sufficient education and training before being allowed to offer services.21  In general, there
are two such systems;  publicly regulated systems, where the relevant processes are supervised
directly by governments, and industry regulated systems, where industrial or professional associationsplay a decisive role.  However, there is no difference in legal status under the GATS whenever the
relevant measures, and any resulting benefits, are covered by government regulation.
34. Although frequently referred to in Schedules, licensing requirements and procedures are not
as such captured by Articles XVI and XVII of the GATS, but by the disciplines governing domestic
regulation under Article VI. As mentioned in previous Background Notes (S/C/W/43 and 50), if
licensing is intended to implement restrictions af fecting market access and national treatment, it is
these restrictions that would need to be scheduled.  By contrast, if licensing systems are incompatiblewith Article VI, for example because they are unnecessarily burdensome, they would need to be
modified.  Scheduling would not exempt them from the relevant disciplines.
35. However, it may prove difficult in individual cases to draw the border between, on the one
hand, measures falling under Articles XVI and XVII and, on the other hand, the scope of Article VI.
This is due in large part to the absence of more detailed criteria building on and clarifying the generalprovisions of Article VI (including the concepts of objectivity and transparency and the requirement
not to be unnecessarily burdensome).
22  Work on such criteria for the accountancy sector has taken
place in the Working Party on Professional Services and is close to completion.
36. There may be additional measures having a disproportionate impact on foreigners as against
nationals providing a service within the same territo ry.  Cases in point are restrictions affecting the
mobility, for example, of family members;  regulations curtailing benefits under mandatory social
insurance systems (e.g. denial of pension entitlements) or restrictions on participation in government-
sponsored vocational training schemes.  However, while such measures would need to be assessed
case-by-case, Members may want to discuss potent ially relevant GATS provisions, such as the
footnote to Article XVII:1 which absolves go vernments from compensating for "any inherent
competitive disadvantages which result from the foreign character of the relevant services or service
suppliers".
V. COMMITMENTS UNDER THE GATS
5.1 Market Access and National Treatment
37. The following discussion of Mode 4 commitments is based on the horizontal commitments
scheduled by 100 Members.  A comprehensive analysis at sectoral level, including for those 30 oddMembers without horizontal commitments, proved too time- and resource-intensive within the context
of this exercise.  Moreover, the resulting gains in information might not have changed the general
picture, but rather have caused additional interpretation problems revolving around the relationship
between horizontal limitations and sector-specific entries in certain schedules.  (Horizontal limitations
of the type "unbound except as for the following cat egories …" have been combined in a number of
schedules with "none" or "unbound" at sectoral level;  and it is not always clear whether this is to be
read as a full commitment, as no commitment, or whether the horizontal entry is supposed to prevail.)
                                                     
21 As indicated in the background Note on Hea lth and Social Services (S/C/W/50), however,
professional licensing requirements may well be maintained for more mundane than public policy reasons,
including the objective of protecting current incumbents from new entrants.
22 In the latter context, it may be argued, for example, that strict language requirements are essential for
interpreters, but unnecessarily burdensome and, thus, in conflict with Article VI, if applied to softwarespecialists.  But what about doctors working as general practitioners?S/C/W/75
Page 13
38. The limitations scheduled by Members for Mode 4 are generally based on functional and/or
hierarchical criteria.  These are related either to the type of persons involved (e.g. executive, manager,
specialist, etc.) or the purpose of their movement (e.g. establishment of commercial presence,
negotiating sales contracts).  Annex Tables 9 to 12 summarize the main features of Members'
horizontal commitments in this regard, allocating the limitations found to twelve different types ofsuppliers, movements or stays.  Given the range of limitations made, the relevant figures include
significant multiple counting from the perspective of individual Members and their suppliers.  (A
Member may submit the same group of persons, e.g. company executives, to several limitations and,
conversely, impose the same type of limitation on several groups.)  The category of "not specified"
persons refers to entries in schedules not related to professional or hierarchical status and not
associated with commercial presence;  in the absence of additional qualifications, these cases – they
account for less than 4 per cent of all entries - provide for the most open access conditions.
39. Due to the absence of generally agreed definitions and vague descriptions in many schedules,
the results discussed below are necessarily subject to interpretation problems.  For example, it has
proved difficult in several cases to distinguish between the "standard" categories of persons most
frequently referred to in schedules - executives, ma nagers and specialists - and to concord alternative
classifications used by some Members with these categories.
23  Moreover, a particular term (e.g.
executive) may not have been used consistently by the Members concerned to describe the same
function (e.g. decision making at an advanced hierarchical level).  By contrast, the interpretation of
individual measures and their classification in the context of Tables 11 and 12  has proved easier in
general, barring some exceptions.24
40. The classification problems referred to above may entail significant policy implications in
practice.  Vague terms and definitions may lay the ground for administrative discretion.  This is a
particular concern for Mode 4 movements where the relevant rules are normally applied on a highly
decentralized basis.  The predictability of actual entry conditions is further affected by Members'
failure in most cases in which they have reserved the right to operate economic needs tests, to specify
the relevant criteria.25  (This has been done only in three out of a total of 54 cases;  the relevant
criteria are mainly investment-related (value thresholds, etc.))26  Economic needs tests are particularly
frequent within the – theoretically "open" - category of "not specified" persons (Table 11).
41. An overview of commitments for individual supp liers shows that the majority of the entries
scheduled - close to 240 out of a total of 328 – concern executives, managers and specialists.  Of
these, 135 entries explicitly relate to intra-corporate transferees;  their economic value is thus
determined by Mode 3 commitments.  For analytical purposes, they may be combined with other
                                                     
23For example, the Secretariat has grouped "adminis trators" under "executives", "senior personnel"
under both "managers" and "executives", and "experts" under "specialists".  The term "professionals" has been
interpreted as capturing providers of professional se rvices;  any such references have been disregarded.
24References to national laws, without any indication of scope and content, have been ignored as such
references may be considered as legally irrelevant.  Sim ilarly, entries relating to the applicability of immigration
legislation have been omitted, given the relevant provisions of the Annex on Movement of Natural Persons (seebelow). The same applies to general registration or licencing requirements for professionals.  All references to
Government assistance (including public support, tax relief and industrial policy) have been counted as
"subsidy" – there are 118 such cases - and all references to academic qualifications and language requirementsas "qualification requirements" in the relevant Tables.   Work permit requirements not mentioned in connection
with economic needs tests have been counted separately.
25 Paragraph 3 of the addendum to the scheduling guidelines (MTN.GNS/W/164/Add.1) provides that
"the entry should indicate the main criteria on which the [economic needs] test is based e.g. if the authority to
establish a facility is based on a population criterion, the criterion should be described concisely".
26 The total number of horizontal entries subject to an element of discretion is even higher as
unspecified government approval, work and residency permit requirements may need to be added as well.However, from the perspective of an affected supplie r, the resulting figure - 108 – may be inflated by multiple
counting.S/C/W/75
Page 14
entries having similar effects (31 commitments ap ply to executives, managers or specialists in
general, but are combined with limitations related to commercial presence).  The focus of existing
commitments on employed persons is also reflected in Members' frequent use of employment links as
an entry criterion;  "pre-employment" ranks top, by a wide margin, among all relevant restrictions.
42. An additional important feature is the schedules' general bias in favour of qualified labour.
Only 17 per cent of all horizontal entries may cover low-skilled persons as well ("business sellers",
"non specified" and "other").
43. The periods for which entry may be permitted have not generally been indicated.  This is
surprising as one might have expected that, in the absence of a definition of "temporariness" in the
GATS (Annex), Members would provide more precision in their schedules.27  Table 10 summarizes
the entries - they represent no more than one-third of all cases - where time-limits have been specified
nevertheless.  Such entries are more frequent for intra-corporate transferees and business visitors thanfor other groups.  For obvious reasons, the relevant periods are shorter for business visitors than for
executives, managers and specialists.  While visitors are generally allowed to enter for no more than
three months, presence of the latter group tend s to be limited to between two and five years.
44. As already indicated above, pre-employment is the single most important entry criterion,
referred to in over 100 cases.  (Of these, howev er, only four require pre-employment for more than
one year.)  Numerical quotas, with close to 80 cases, and economic needs tests rank next.  While most
of the quotas relate to the total staff of a compan y, some Members also have reserved the right to
operate quotas based on parameters such as senior staff or wages.  Rather than indicating a liberal
policy stance, the low number of quotas relating to "ordinary staff" reflects the general absence of
commitments in that segment.  The quotas scheduled in absolute terms are particularly restrictive as
the number of permitted entries varies between one and four.
45. With regard to the access criteria and conditions used in individual schedules, the following
observations may be made:
(a) Close to 50 entries provide for the application of domestic minimum-wage
legislation.  These entries have frequently been coupled with similar limitationsregarding conditions of work, working hours and social security.
28  However,
minimum wage requirements do not seem to fall under any of the criteria enumerated
in Article XVI:2 nor otherwise discriminate de jure  or de facto  against foreigners.
(Nevertheless, in 44 cases they have been scheduled in the Market Access column.)29
On the other hand, it might be argued that such requirements deprive foreign
                                                     
27 Moreover, the scheduling guidelines (MTN.GNS/W/164/Add.1) stipulate that "in the absence of a
reference to a specific duration for the temporary stay of  a service supplier, no binding is being undertaken in
this respect" (paragraph 4).
28 Paragraph 8 of the addendum to the scheduling guidelines (MTN.GNS/W/164/Add.1) provides, inter
alia, that "schedules should not contain general references to laws and regulations as it is understood that such
references would not have legal implications under the GATS."  It may well be the case that certain Members,
relying on these provisions, have refrained from scheduling limitations for which other Members have sought
legal cover through entries such as those mentioned above.  To avoid distortions, general references to domesticlegislation governing working hours, social security etc. have not been counted in the context of this exercise.
29 Paragraph 5 of the scheduling guidelines (MTN.GNS/W/164) may be relevant in these cases.  It
states that "that the quantitative restrictions specified under Article XVI (a) to XVI (d) refer to maximumlimitations.  Minimum requirements such as those common to licencing criteria (e.g minimum capital
requirements for the establishment of a corporate entity) do not fall within the scope of Article XVI.  If such a
measure is discriminatory within the meaning of Article XVII and if it cannot be justified as an exception itshould be scheduled as a limitation on national treatment.  If such a measure is non-discriminatory, it is subjectto the disciplines of Article VI:5.  Where such a measure does not conform to these disciplines, and if it cannotbe justified as an exception, it must be brought in conformity with Article VI:5 and cannot be scheduled".S/C/W/75
Page 15
suppliers - who may be at disadvantage in terms of language and other relevant
competitive factors – of the most important economic parameter – wages – they could
reasonably use to compete effectively with national suppliers.  It appears
questionable, however, whether such - economic – arguments would find a legal
counterpart in the GATS and relevant jurisprudence which would call for schedulingunder Article XVII.
30
(b) In at least 46 cases, Members have scheduled horizontal limitations with regard to
real estate.  (Imprecise language and other problems may mask some more cases.)
Such limitations are likely to impinge in particular on activities requiring stays of
significant duration;  most business visitors may not be affected at all.  However, the
actual importance of such entries is difficult to assess because, as noted before, many
Members have failed to specify maximum permitted periods of stay.  In 31 cases, realestate-related restrictions apply to movement of executives, managers and specialists.
(c) "Technology transfer clauses", i.e. requirements to train local staff, have been
scheduled in 32 cases.  As could have been expected, they apply mainly to
executives, managers and specialists (30 cases) and have been included only by
developing country Members.  The main users are Latin American and Africancountries.
(d) In 22 cases, Members have reserved the right – generally as a national treatment
limitation (19 cases) – to suspend commitments in the event of labour-management
disputes.  Although the statistical basis is too narrow for general conclusions, it is
interesting to note that such limitation s apply almost exclusively to executives,
managers and specialists.  They are particularly frequent in the case of persons
explicitly referred to as intra-corporate transferees.
(e) Ten entries imply restrictions with regard to geographical or sectoral mobility.  The
latter restrictions might prevent, for example, executives and managers in multi-
enterprise conglomerates from moving between firms.  Limitations on geographicalmobility may provide cover for:  (a) restrictions related to licensing (e.g. a work
permit issued by one sub-central entity may not be recognized elsewhere);
(b) limitations on establishment or real estate acquisition in certain provinces (there
are at least two such cases);  or (c) variations in access conditions maintained with a
view to benefitting ethnic minorities (one case).
(f) There is a variety of additional cases where Members found it appropriate to include
limitations, although relevant GATS rules do not seem to require scheduling underArticles XVI or XVII.  Thus, in twenty cases, discriminatory tax measures have been
included;
31  in three cases, foreign exchange restrictions have been listed;32  a n d
                                                     
30 Among other considerations, the footnote to Article XVII may be relevant in this context, absolving
Members from the need "to compensate any inherent competitive disadvantages which result from the foreigncharacter of the relevant services or service suppliers".
31 A footnote to Article XIV would seem to provide a carve out for direct taxation of non-residents
under certain conditions.
32 Paragraph 9 of document MTN.GNS/W/164/Add.1 states that "exchanges control restrictions are
subject to the general disciplines of Articles XI and XII of the GATS.  Foreign exchange control restrictionwhich fall under Article XII are exceptions from the obligations and commitments of the GATS and thereforeshould not be scheduled."S/C/W/75
Page 16
several Members have scheduled limitations benefiting foreigners who are related to
nationals or have resided in the country for a minimum number of years.33
Issues for discussion:
The general pattern of Mode 4 commitments, in particular, their focus on movements related to:
● commercial presence and
● well-trained, skilled labour.
The need to develop a common approach for scheduling purposes defining, for example,
● the relationship between horizontal limitations ("unbound except as indicated below") and
sector-specific entries (e.g. "none", "unbound" or explicit reference to horizontal entry);
● main categories of natural persons, e.g. executives, managers and specialists;
● the duration of stay considered to be temporary (taking into account paragraph 4 of
MTN.GNS/W/164/Add.1);
● the relevance of minimum wage and similar legislation under Articles XVI and XVII;  and
● the applicability of Articles XVI and XVII (rather than Article II) to cases where certain
foreigners are preferred over others on the  basis of family links or duration of stay.
5.2 MFN Exemptions
46. It is difficult to provide a reasonably comprehensive overview of the MFN exemptions
affecting movements of natural persons.  This is ma inly for two reasons.  First, MFN exemptions are
not generally expressed in modal terms.  Many of them, not least in the area of professional services,
may affect both movements of natural persons and commercial presence (investment).  Second, a
variety of exemptions relate to regional agreements – notwithstanding the provisions of Article V
and Vbis of the GATS – which are described in such general terms, sometimes merely by name, that
is next to impossible to infer their coverage.  Despite such uncertainties, however, the Secretariat hasidentified 38 MFN exemptions clearly dealing with such movements;  their content is summarized in
Table 13 (Annex) .
47. Of these exemptions, 32 are of a preferential nature.  In the remaining cases, the treatment
covered is purely reciprocal or, in two cases, it is at the same time preferential and reciprocal.
Preferences granted are not frequently mirrored by similar exemptions on the part of beneficiary
countries.  Among other factors, this could reflect asymmetrical treatment under relevant agreements
or failure by a government to seek an exemption in time.  (In turn, such failure could also result inasymmetries should the government, in view of the legal situation, have decided to extend the benefits
erga omnes .)  Due to imprecise drafting, however, such possibilities cannot be further explored.
Moreover, while 11 exemptions are clearly related to bilateral agreements and seven to unilateral
measures, 12 provide no clarification of  the legal basis of the measure – unilateral application;
bilateral, regional or plurilateral agreement.  Other exemptions provide cover for variouscombinations of unilateral measures and bilateral, regional and plurilateral agreements.
48. Most of the exemptions are of unspecified sect oral coverage.  Only three exemptions apply to
clearly designated sectors - interpretation, distribution and maritime transport - and one exemption to
sectors covered by a bilateral treaty (Annex Table 13.B).  In another case, the Member involved has
indicated the sectors "principally concerned" (hotel, catering, construction).  The scope of two otherexemptions is confined to unskilled or semi-skilled labour, and a further exemption covers only
seasonal workers.  Finally, three exemptions apply to what seem to be peripheral aspects from the
perspective of Mode 4 trade, namely the amount of consulate duties collected (one case) and a social
security agreement.
                                                     
33Such measures seem to raise problems under Article II and may need to be covered by an MFN
exemption .  Only one Member has acted correspondingly.S/C/W/75
Page 17
49. The countries covered are not always clearly identified.  For example, two exemptions simply
refer to "traditional sources" of supply and one exemption to countries contained in national
legislation.  In two cases, reference is made to geographical zones whose borders are not clearly
defined, while one exemption covers an unspecified range of countries selected on the basis of
language.  In eight instances, reference is made to members of a regional organization which are not
further specified, possibly implying that any future members would also be covered.  Similarly,
several exemptions mention as beneficiaries all countries with whom the Member concerned
maintains, or may conclude in future, agreements of a certain type.  (It is difficult to provide count of
such cases as the terms used are not always sufficiently clear.)  In two cases, there is an apparent
contradiction between the description of the measure – "bilateral agreement" – and its envisaged
application to "all countries".  (Presumably, the Members concerned intended to include all present
and future signatories to bilateral agreements of a certain type.)
50. In many cases, the underlying measures are not, or not precisely, defined.  Visa procedures
are explicitly mentioned twice, notwithstanding th e relevant provisions of the Annex on Movement of
Natural Persons to the GATS (see below).  However, such procedures may also be used to provide for
"most favourable entry conditions" "preferential treatment", "measures affecting the movement of
natural persons" or "facilitation of access procedures".  Most of the measures, which have beenspecified in more detail, relate to the granting of work or residency permits, the waiving of economic
needs tests or nationality requirements, or improved access to certain – not normally defined  –
activities.  One exemption waives limits on the duration of stay, the proportion of foreign employees
and their payroll share.
51. The vast majority of exemptions, 30 in total, are destined for an indefinite period.  Of these,
however, two provide for period review by the nation al authorities.  Three additional exemptions are
linked to the duration of the agreement covered, two are limited to ten years, and two apply until the
completion of an integration process.  In one case, the timeframe has not been specified.
52. In conclusion, it appears fair to say that the information contained in many MFN exemption
lists is limited.  In order to obtain a clearer picture of the measures covered, preferences conferred andintended beneficiaries, it would often be necessary to consult the underlying agreements or legislation.S/C/W/75
Page 18
ANNEX
1. Terms and Definitions
53. Mode 4 is defined in Article I:2(d) of the GATS as entailing "the supply of a service … by a
service supplier of one Member, through presence of natural persons of a Member in the territory of
any other Member".  Article XXVIII(k) specifies that this definition applies to nationals as well as, in
certain circumstances, permanent residents of WTO Members seeking to supply services abroad.
(Permanent residents are covered provided the Member concerned (1) does not have nationals; or,
subject to additional qualifications, (2) accords substantially the same treatment to permanent
residents as to nationals.)
54. The Annex on Movement of Natural Persons Supplying Services under the Agreement
clarifies that the GATS does not apply to measures affecting individuals seeking access to the
employment market of a Member nor to measures regarding citizenship, residence or employment on
a permanent basis.  Moreover, regardless of their obligations under the Agreement, Members are free
to regulate the entry and stay of individuals in their territory provided that the measures concerned"are not applied in such a manner as to nullify or impair the benefits accruing to any Member under
the terms of a specific commitment".  The operation of visa requirements only for natural persons of
certain Members, but not for others, is not per se  regarded as nullifying or impairing such benefits.  (It
is somewhat surprising that the relevant footnote to  the Annex refers to nullification or impairment of
benefits under a specific commitment, i.e. Articles XVI, XVII and XVIII, and not to violation ofMembers' obligations under Article II.)
55. Two categories of measures are covered by the Annex;  those affecting natural persons who
are:
(i) "service suppliers of a Member" – i.e. self-employed (or independent) suppliers who
obtain their remuneration directly from customers - as well as
(ii) "natural persons of a Member who are employed by a service supplier of a Member in
respect of the supply of a service".
56. There appears to be room for interpretation whether the foreign natural persons "employed by
a service supplier of a Member" also include foreigners employed by host-country companies.  While
the wording of the Annex does not rule out this possibility, Article I:2(d) of the Agreement seems tocover only foreigners employed by foreign-owned companies (as noted above, the Article applies to
services provided "by suppliers of one Member, through presence of natural persons of a
 Member in
the territory of any other Member").  Thus, while foreigners would fall under the GATS if they work
on a contractual basis as independent suppliers for a locally-owned firm, they would seem not to be
covered if they were employees of that firm.S/C/W/75
Page 19TABLE 1
Top ten payers of workers' remittances, 1990-96
(US$ million)
1990 1991 1992 1993 1994 1995 1996
Saudi Arabia 11236 13746 13397 15717 18102 16616 15513
United States 8390 9050 9440 10190 10930 11850 12860
Germany 4380 3860 4380 4130 4630 5310 4920
France 2787 2754 3108 2761 2704 3146 3067
J a p a n ------ 2790
Switzerland 2116 2195 2276 2135 2311 2679 2480
Oman 856 910 1220 1423 1365 1537 1709
Kuwait 770 426 829 1229 1331 1354 1376
Côte d'Ivoire 458 429 457 420 395 522 580
Spain 148 195 372 382 387 481 552
Total top ten 31141 33565 35479 38387 42155 43495 45847
%  o f  t o t a l  w o r l d 8 78 98 88 88 89 29 4
Source: Butkeviciene, J. "Market Access for the Movement of Natural Persons as Service Suppliers", UNCTAD (1998).S/C/W/75
Page 20
TABLE 2
Top ten recipients of workers' remittances, 1990-96
(US$ million)
1990 1991 1992 1993 1994 1995 1996
India 2352 3275 2891 3495 5782 6139 7603
Mexico 2492 2414 3070 3332 3475 3673 4224
Portugal 4263 4517 4650  4179 3669 3793 3715
Turkey 3246 2819 3008  2919 2627 3327 3542
Egypt 4284 4054 6104  5664 3672 3226 3107
Greece 1775 2115 2366 2360 2576 2982 2894
Spain 1886 1792 2173 1926 2167 2603 2747
Morocco 2006 1990 2170 1959 1827 1904 2010
France 807 968 1300 1231 1413 1782 1730
China 124 207 228 108 395 350 1672
Total top ten 23235 24151 27960  27173 27603 29779 33241
% of total world 50 61 66 64 62 61 74
Source: Butkeviciene, J. "Market Access for the Movement of Natural Persons as Service Suppliers", UNCTAD (1998).S/C/W/75
Page 21TABLE 3
Annual average growth rates of workers' remittances, 1980-1996
(Per cent)
1980-
19961980-
19901980-
19851985-
19901990-
19951987-
19881988-
19891989-
19901990-
19911991-
19921993-
19931993-
19941994-
19951995-
1996
PAID
World 6.2 4.4 1.0 9.8 6.5 10.5 8.8 16.8 5.9 6.6 8.2 9.4 -0.7 3.0
DCs 6.4 5.8 1.5 9.7 5.4 6.1 2.3 14.5 2.0 9.4 2.4 7.1 5.3 12.6
LDCs 5.9 2.6 0.5 9.9 7.7 17.7 18.6 19.7 10.7 3.5 15.3 11.6 -6.8 -8.0
CEECs - - - - - - - - - - - - 13.3 -2.9
RECEIVED
World 3.3 2.0 -12.9 18.8 -8.3 4.1 7.2 62.0 0.3 19.8 8.0 30.0 -76.6 1.5
DCs 1.6 -0.7 -10.0 5.6 1.2 -2.1 -7.1 25.1 -1.2 12.9 -11.2 -2.1 16.3 -2.5
LDCs 3.7 3.7 -1.4 10.1 1.9 1.5 9.2  21.4 -14.9 8.1 -0.2 5.7 8.2 -8.0
CEECs 4.3 3.8 -6.3 11.9 0.3 8.2 -1.0 19.3 1.5 5.3 -5.3 -0.4 2.8 1.7
AbbreviationsDCs – Developed countries
LDCs – Developing countriesCEECs – Central and Eastern European countries
Source: Butkeviciene, J. "Market Access for the Movement of Natural Persons as Service Suppliers", UNCTAD (1998).S/C/W/75
Page 22
TABLE 4
Top ten payers of labour income, 1990-96
(US$ million)
1990 1991 1992 1993 1994 1995 1996
Switzerland 5752 6147 6241 5776 6078 7054 6764
Germany 3170  3741 3757 3935 4016 5186 5229
USA 2367  2742 3077 3310 3711 3851 3891
Belgium-Luxembourg 1155 1274 1510 1531 1712 2507 2492
Italy  3640 2484 2296 2143 1922 1447 1647
France 3986 4137 4871 4524 4769 5362 1250
Israel - - 20 132 269 650 1103
Netherlands 620 627 943 823 760  1083 1005
Norway 81 78 81 89 93 556  559
R u s s i a ---- 2 2 1 4 6 9 5 0 8
Total top ten 20771 21230 22796  22263 23551 28165 24448
% of total world 67  68 67 64 64 66 65
Source: IMF, "Balance of Payment Statistics"S/C/W/75
Page 23TABLE 5
Top ten recipients of labour income, 1990-96
(US$ million)
1990 1991 1992 1993 1994 1995 1996
Belgium-Luxembourg 2821 3127 3541 3442 3524 4513 4421
Germany 5102 5028 4725 4199 3968 4020 3853
France  3032 3461 3660 3539 3695 4460 2603
Italy  3764 2712 2232 2022 1901 1934 2189
Thailand 973 1019 445 1112 1281 1695 1806
Switzerland 787 848 902 914 1060 1232 1164
Mexico 606 616 630 647 647 695 725
Netherlands 465 440 497 480 511  666 694
Australia 348 337 354 340 387  431 507
Austria - 82 815 769 845 973 497
Total top ten 17898  17670 17801 17464 17819 20619 18459
%  o f  t o t a l  w o r l d7 97 67 17 16 86 65 6
Source: IMF, "Balance of Payment Statistics".S/C/W/75
Page 24
TABLE 6
Direction of labour-related transfers and income flows, 1980-1990
(US$ million)
1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990
Net workers' remittances
LDCs 20110 19325 19239 19444 20461 19387 21650 24195 24251 27958 33737
Credit 25336 24698 24682 24787 24882 23444 25420 27898 27990 31884 38599
Debit 5225 5374 5443 5343 4422 4057 3771 3703 3740 3926 4862
DCs -10607 -11057 -11026 -10631 -10366 -10107 -10840 -11955 -13682 -14900 -18230
Credit 3760 3210 3140 2923 2846 2941 3455 3877 4274 4626 5213
Debit 14367 14268 14166 13554 13211 13047 14295 15832 17956 19526 23442
Net migrants' transfers
LDCs -147 -176 -189 -197 -145 -94 -46 38 208 130 43
Credit 230 247 182 151  155 131 205 254 437 346 212
Debit 377 424 371 348 300 225 251 216 228 216 168
DCs 1092 1385 1195  1156 936 804 1264 1779 2507 3400 3326
Credit 1946 2281 2098 1957 1908 1807 2323 3261 4088 5197 5225
Debit 854  897 903 800 972 1003 1059 1482 1581 1797 1899
Net labour income
LDCs 1161 1693 2016  2360 2130 1756 2001 2222 2502 2910 2923
Credit 3713 4019 4283 4688 4332 4056 4562 5237  5654 6161 7144
Debit  2551 2326 2267 2328 2202 2300 2561 3015 3152 3251 4220
DCs -1874 -2330 -2307 -2512 -2715 -2686 -3506 -4899 -5944 -7117 -10243
Credit 7366 6632 6999 6733 6403 6642 8909 10872 12317 12670 14748
Debit 9240 8963 9306 9245 9115 9328 12415 15770 18261 19787 24992
Net total labour-related flows
LDCs 21125 20841 21066 21607 22445 21049  23604 26454 26961 30998 36704
DCs -11389 -12003 12138 -11986 -12141 11988 -13082 -15074 -17119 -18618 -25147
Source: UNCTAD, The World Bank, "Liberalizing International Trade in Services.  A Handbook", 1994.S/C/W/75
Page 25
TABLE 7
Labour earnings and merchandise exports for selected countries, 1996a
(US$ million and per cent)
Labour earningsMerchandise
exportsLabour earnings as %
of merchandise exports
INDUSTRIALISED COUNTRIES
Japan 514.73 400279 0.13
Austria 1068 72995 1.46
Belgium-Luxembourg 4927 154407 3.19
France 4526 274062 1.65
Greece 3079 5890 52.28
Italy 2584 250843 1.03
Portugal 3868 25271 15.31
Spain 3530 102041 3.46
Sweden 301 84690 0.36
Switzerland 1334 95513 1.40
AFRICA
Namibia 14 1349 1.04
Seychelles 6 92 6.52
Sudan 221 620 35.65
ASIA
Cambodia 12 644 1.86
Sri Lanka 851.4 4095 20.79
Samoa 45 10 450.00
EUROPE
Albania 551 244 225.82
Armenia 86 290 29.66
Hungary 49 14184 0.35
Lithuania 3 3413 0.09
Macedonia, FYR 67 1147  5.84
Malta 21 1840 1.14
Poland 774 27557 2.81
Romania 18 8085 0.22
Slovak Republic 21 8824  0.24
Slovenia 214.1 8366 2.56
WESTERN HEMISPHERE
Aruba 12.5 1736 0.72
Colombia 166 10651 1.56
Dominican Republic 943.2 3963 23.80
Mexico 4949 96000 5.16
Panama 94 5889 1.60
aLabour services earnings include receipts of labour income, migrants' transfers and workers'remittances.  Countries were selected on the basis of data availability for 1996;  the allocation
to country groups follows IMF conventions.
Source: Computations from IMF "Balance of Payment Statistics Yearbook", 1997.S/C/W/75
Page 26
TABLE 8
Inflows of skilled workers as a percentage of total temporary workers in selected OECD
countries, 1992-1996
(Thousands and per cent)
1992 1993 1994 1995 1996
Australia
Skilled temporary workers 14.6 14.9 14.2 14.3 15.4
% of total temporary workers 17.1 20.3 18.0 18.4 20.5
Canada
Skilled temporary workers 81.8 68.1 60.6 59.9 -
% of total temporary workers 35.5 37.0 35.0 43.7 -
France
Skilled temporary workers 1.8 1.9 2.0 2.2 2.0
% of total temporary workers 5.0 5.6 6.5 7.3 6.7
Germany
Skilled temporary workers 115.1 63.3 48.4 56.2 47.3
% of total temporary workers - 25.2 23.1 22.1 17.3
Netherlands
Skilled temporary workers 1.9 1.8 2.0 1.5 -
% of total temporary workers 26.4 25.7 29.4 27.8 -
United Kingdom
Skilled temporary workers 12.7 12.5 13.4 15.5 16.9
% of total temporary workers 42.2 42.7 44.6 43.7 44.8
United States
Skilled temporary workers 123.2 112.5 130.7  147.5 178.6
% of total temporary workers 70.1 61.7 62.0 66.8 70.2
Note: The categories of temporary workers and of skilled workers differ from country to country.
Data and percentages are therefore not fully comparable.  The figures for total temporary
workers refer to the total work or residence permits issued in Canada, the Netherlands, theUnited Kingdom and the United States, to the sum of temporary programmes in Australia
(excluding students), to the total provisional work permits issued plus seasonal workers in
France and to guest workers, contract workers and seasonal workers in Germany.
Source: OECD; "Trends in International Migration", Annual Report 1997, 1998 Edition.S/C/W/75
Page 27
TABLE 9
Types of natural persons supplying services (horizontal commitments)
No. of
entriesNo. of aggregate
entries% of total
entries% of aggregate
entries
Executives 45 13.7%
Managers 44 13.4%
Specialists 45 13.7%Intra-company
transferees
Others 1135
0.3%41.1%
Executives 22 6.7%
Managers 40 12.2%
Specialists 42104
12.8%31.7%
Commercial Presence 30 9.1%Business
visitors Sale Negotiations 4070
12.2%21.3%
Independent Contract Suppliers 3 3 0.9% 0.9%
Other 3 3 0.9% 0.9%
Not Specified 13 13 4.0% 4.0%
Totala328 328 100.0% 100.0%
aTotal number of entries by those 100 WTO Members that have included commitments on Mode 4 in the
horizontal section of their schedules.S/C/W/75
Page 28
TABLE 10
Duration of stay by type of natural personsa
Intra-corporate transferee Business visitor
EMS OEMSCP SNICS Other NS Total
0-3 months 1 1 1 1 11 20 1 36
6 months 11 1 3
12 months 1 1 2
(2)b(2) (3) (2) (1) (2) (1) (13)
24 months 1 1 1 1 1 1 1 7
(1) (1) (1) (1) (1) (5)
36 months 6 6 5 1 1 1 1 1 22
(1) (1) (1) (1) (1) (5)
48 months 5 4 4 1 14
60 months 4 5 5 1 1 2 18
72 months 11
Unspecified 25 24 24 16 33 32 16 18 1 3 12 204
aUnless otherwise indicated, the following periods are maximum periods which may be reached after an extension of the initial st ay.
bEntries in parenthesis indicate the possibility of an extension where the Schedules concerned have not specified a timeframe.
Legend:
E = Executives
M = Managers
S = SpecialistsO=  O t h e r sCP = Commercial presenceSN = Sale negotiationsICS = Independent contract suppliers
NS = Not specifiedS/C/W/75
Page 29TABLE 11
Entry conditions/restrictions by type of natural personsa
Intra-corporate transferees Business visitors
EM S OEM SCP SNICS Other NS Total
ENT no criteria 1 4 5 1 2 14 17 1 6 51
ENT with criteria 1 1 1 3
Approval 1 1 1 3 8 5 1 1 2 23
Residency 3 1 1 3 4 3 15
Work permit 1 1 4 4 4 1 1 1 2 19
Pre-employmentb34 32 35 3 2 106
Link to Mode 3 7 12 12 31
Qualification 2 1 3
Recognition 1 1 1 3
Numerical Limits
Total staff 10 % 11 1 2 3 4 1 1 3 1 7
≤20% 11 2 2 2 1 9
>20% 11 2 2 2 8
Abs. figur e 23 3 8
Senior staff 15 % 11 2
20% 11 1 3
50% 21 1 4
Abs. figur e 22 4
Ordinary staff 10 % 11 1 3
Payroll 15 % 11 2 1 5
20% 11 2 1 5
30% 11
Workforcec50% 11
Unspecified 2 2 2 1 1 8
Minimum wage 15 15 15 1 1 47
Disputesd45 4 2 2 2 2 1 2 2
Technology transfer 1 1 1 7 8 12 2 32
aSee Table 10 for the legend.
bThe person seeking access must have already worked for the current employer;  the minimum period specified in Schedules is gene rally one year.
cTotal workforce of the country concerned.
dAbsence of labour-management disputes.S/C/W/75
Page 30
TABLE 12
Other discriminatory treatment affecting work and living conditions
Real
estateSubsidyForeign
exchangeBorrowing TaxationMobility
restrictions
Executives 7 22 1 2
Managers 7 22 2 2
Specialists 8 22 2 2Intra-company
transferees
Others
Executives 3 3 1 3
Managers 4 4 1 4
Specialists 2 4 1 5
Commercial
Presence31 7 1 2Business
visitorsSales
Negotiations72 2 1 2
Independent
Contract Suppliers11
Other 1
Not Specified 3 1 1 1
Totala46 118 3 1 20 10
aTotal number of entries by those 100 WTO Members that have included Mode 4 in the horizontal section of
their schedules.S/C/W/75
Page 31TABLE 13
Overview of MFN exemptions affecting movements of natural persons
A. EXEMPTIONS WITH COMPREHENSIVE SECTORAL COVERAGE
WTO MEMBERS BENEFICIARIES TREATMENT COVERED DURATIONOTHER
REMARKS
1. Austria Switzerland Waiving of visa requirement and other measures Indefinite
2. Brunei Traditional sources Preferences for entry and stay Indefinite with
periodic national
review
3. Cyprus EU Member States Permission for limited numbers of EU nationals to be employed or to exercise
professions in specific occupations in accordance with criteria to be established
unilaterally or in future agreements with EUUntil the time of
full EU
membership
4. Portugal Angola, Brazil, Cape Verde,
Guinea Bissau,
Mozambique, Sao Tome and
PrincipeWaiving of the nationality requirement for the exercise of certain  activities and
professionsIndefinite
5. France Francophone African
countries, Algeria,
Switzerland and RomaniaFacilitation of access procedures for the exerci se of certain services activities 10 years
6. United 
KingdomMembers of the British
CommonwealthWaiving of the requirement of a work permit for citizens having a grandparent
born in the UKIndefinite
7. EC and/or 
Member StatesSwitzerland Measures with the objective of providing for the movement of all categories of
natural persons supplying servicesIndefinite Reference to a
progressiveprocess
8. EC and certain 
Member StatesSan Marino, Monaco,
Andorra, Vatican State cityRight of establishment for natural (and legal) persons, waiving the requirement of
work permitsIndefinite
9. EC Member 
StatesStates in Central, Eastern
and South-Eastern Europe
including Russia, Ukraine,Belarus and Georgia, and inthe Mediterranean basinGuarantee of work permits in limited number for temporary contract work Indefinite or, for
certain countries,
until an economicintegrationagreement is
concluded or
completedAll sectors
(principally
construction, hoteland catering).Reference to a
broader initiative
10. Italy States in Central Eastern and
South Eastern Europe and in
the Mediterranean BasinGuarantee of work permits for seasonal workers IndefiniteS/C/W/75
Page 32
WTO MEMBERS BENEFICIARIES TREATMENT COVERED DURATIONOTHER
REMARKS
11. Egypt Greece, Iraq, Jordan, Libya,
Qatar, Sudan, United ArabEmirates, Yemen andpossibly other countriesFull national treatment As long as the
agreementsremain in force
12. Indonesia Malaysia, Singapore, Brunei
Darussalam, Papua NewGuinea, AustraliaMeasures concerning movement of personnel (semi–skilled workers).  Limited
access to low level occupationsIndefinite
13. Jamaica Caricom Members:  Antigua
and Barbuda, Barbados,Belize, Dominica, Grenada,
Guyana, Montserrat, St Kitts
and Nevis, St Lucia, StVincent and the Grenadines,Trinidad and TobagoWaiving of work permits Indefinite
14. Liechtenstein Switzerland Mutual granting of temporary stay and permanent residency Indefinite
15. Liechtenstein EC and EFTA countries Preferential treatment of  persons from traditional recruiting areas with regard to
permits for entry, stay and work (applies to persons other than the essential
persons appearing in the schedule of commitments).Indefinite
16. Liechtenstein All countries Reciprocity concerning the "right of presence of natural persons" Indefinite
17. Malaysia All countries Differential treatment for measures affecting the movement of semi-skilled and
unskilled workers on a regional, religious and cultural basisIndefinite
18. Malta European Union Countries Preferential treatment in the gran ting of licences and permits to provide services Indefinite Ref erence to the
integrationprocess into theEU
19. New Zealand Kiribati Most favourable entry conditions possible for up to 20 nationals each year Indefinite
20. New Zealand Tuvalu Most favourable entry conditions possible for up to 80 nationals each year Indefinite
21. Panama Guatemala, El Salvador,
Nicaragua, Costa Rica, andHondurasPreferential treatment for suppliers of services of different kinds Indefinite
22. Panama United States Preferential treatment for suppliers of services under the Panama Canal Treaties Indefinite
23. Peru All countries Waiving the limitations of:  three years as maximum duration, 20% of the total
number of employees and 30% of the payrollIndefinite
24. Philippines "All countries" /countries
with whom a treaty on entryrights for traders and
investors has been
concludedWaiving labour market test and simplifying entry procedures Expiry or
termination dateof the bilateral
treatiesS/C/W/75
Page 33WTO MEMBERS BENEFICIARIES TREATMENT COVERED DURATIONOTHER
REMARKS
25. Sierra Leone Mano River Union and
ECOWAS countriesFull national treatment As long as
agreementsremain in force orare extended
26. Singapore "Traditional sources" Measures  regarding unskilled, semi-skilled, and skilled persons except specialists
and professionals. (Purpose:  prevent overpopulation and maintain social order)Indefinite
(periodic nationalreview)
27. Solomon 
IslandsMembers of the Melanesian
Spearhead Group: Vanuatu,Papua New GuineaWaivers for measures affecting the entry and temporary stay of natural persons Indefinite Reference to an
ongoing process
28. Sweden Switzerland Measures with the objective of providing for the movement of all categories of
natural persons supplying servicesIndefinite Reference to a
progressiveprocess
29. Switzerland Liechtenstein See 14. Indefinite
30. Switzerland EC and EFTA countries See 15. Indefinite
31. Tunisia "All countries" (probably
with whom Tunisia has orwill have agreements)Bilateral social security agreements: ex tension of social security and health
benefits to citizens of other countriesNot specified
32. Turkey Libya Restrictions on the transfer of premiums for long-term insurance schemes and on
employment of foreign-workers by foreign companies is waived (not appliedde facto).Indefinite
33. Turkey All countries Consulate duties:  if the amount of the consulate duties collected from Turkish
nationals by any country is higher than the amount written in the tariff list, theconsulate duties collected from the nationals of that country will be increased
reciprocally.Indefinite
34. USA All countries with whom the
United States has a
friendship, commerce and
navigation treaty, a bilateralinvestment treaty; or certaincountries described inSection 204 of the
Immigration Act of 1990Movement of persons for trade and investment:  issuance of "treaty trader or treaty
investor non immigrant visas" to nationals of the countries concerned engaged in
substantial trade in services or in developing an investment.IndefiniteS/C/W/75
Page 34B.  SECTOR-SPECIFIC EXEMPTIONS
WTO MEMBERSECTOR
CONCERNEDBENEFICIARIES TREATMENT COVERED DURATION
1. New Zealand Interpretation
servicesJapan and other
countries with whomsuch arrangements maybe desirableMost favourable entries conditions if employment for up to two years as
interpreters in tourism related industries.Indefinite
2. Switzerland Distribution services EFTA members Granting of work permits without certain limitations to employees of
companies (commerce in goods) from EFTA countriesIndefinite
3. Thailand Services mentioned
in the US –Thailand
Treaty of Amity andEconomic RelationsUSA National treatment to U.S. citizens to provide the services mentioned in the
Treaty10 years
4. USA Maritime transport Countries that prohibit
longshore work by crewmembers aboard U.S.vesselsRestrictions on performance of longshore work when making U.S. port calls
by crews of foreign vessels owned or flagged in countries that similarlyrestrict U.S. crews on U.S. flag vessels.Indefinite
__________