Services waiver

AFTER returning from negotiation in Geneva, the commerce minister and his team expressed confidence about access to services market in developed countries by Bangladesh as an LDC. It is clearly vital for the country as the value of service export is $3.7 billion, or more than 10% of total exports as of 2013, and it experienced 92% growth in the last five years. 

The government's points of discussion in Geneva were broadly supported by a technical committee on waiver and Unctad's country study on services policy review. However, the solution to any problem in WTO has been quite difficult and complicated as far as LDCs are concerned. This matter is, therefore, not expected to get exempted from the tradition in such a multilateral forum that is claimed to overly serve the purpose of dominating members, mostly from global North.

The eighth WTO ministerial meeting in December 2011 was a landmark for evolving LDC services waiver as one of the key deliverables. It was indeed a significant achievement due to a last-minute compromise after years of negotiations, in which the WTO members have been allowed to grant preferences to services and service providers of all LDCs. The most crucial part of services for Bangladesh is waiver in movement of natural persons, including professional services, which is popularly known as "GATS Mode 4."

Originally, a range of LDC modalities were established in 2003 to guide members in accessing developed country markets. These direct members to make specific commitments, attach special priority to providing "effective market access" in sectors and modes of supply of export interest to LDCs through development of "appropriate mechanisms" by them towards achieving full implementation of GATS Article IV:3. Furthermore, the set of LDC modalities requires members to make commitments providing access in Mode 4, keeping in mind all categories of natural persons identified by LDCs in their requests.

The 8th Ministerial Conference adopted waiver allowing the WTO members to deviate from most favoured nation (MFN) obligation of non-discrimination in order to grant preferential treatment to service suppliers under Mode 4. Subsequently in Bangladesh, the Ministry of Expatriates' Welfare and Overseas Employment formed a national committee comprising members from this ministry, Ministry of Commerce, BMET and scholars from research organisations to prepare ways and means for negotiating the movement of skilled and semi-skilled persons mainly to the developed countries by preparing a 'catalogue.' The US, the most influential WTO member and the most lucrative market in Mode-4 for LDCs, was quite diplomatic and kept silent during the services negotiations in early-February 2015. 

Even though this scheme sounds lucrative and is a truly special treatment for LDCs, there are many practical predicaments. It expires after 15 years of notification under which Members may provide temporary preferential treatment to LDC services and service suppliers on annual basis. However, the countries granting waiver 'must' notify the Council for Trade in Services, which will conduct an annual review and assess whether the exceptional circumstances that justify the waiver still exist or not. 

To understand the matter, let us suppose that Bangladesh applies to the US for an LDC waiver for its manpower exports in order to secure preferential treatment in which the other competitors are India or Sri Lanka for the same category. In that case, the US is compelled to notify the Council for Trade in Services, which will review annually to see whether Bangladesh is supposed to be provided the waiver. As the US has already shown its 'golden face' by remaining silent in the negotiation meeting, it is unlikely to notify this Council as it may cause more burden and obligation to grant a similar waiver to other LDCs, which would increase its workload. The same can happen for other developed countries like UK, Germany, Italy, France and Canada, where the LDC governments are quite eager to facilitate movement of natural persons. Therefore, fruitful implementation of the waiver is unlikely.

Nevertheless, Bangladesh needs to conceive the opportunities under Mode-4 as skill-driven, which currently includes the manpower in semi- and less-skilled categories also. It would give the country a better dividend to access the developed country market in the medium and long terms. The manpower in the latter categories would find it extremely difficult to get temporary jobs in the developed country market as the education and training are far below standard and do not meet the requirement. Therefore, it would be wise to take those workers out of the list of request in the catalogue. 

In the professional category, architects and engineers and nurses and midwives would not find short-term job through only physical presence like the semi-skilled manpower. This is mainly because the curricula and training do not necessarily meet the requirement of the host countries and lack global accreditation. 

Conversely, Chartered and Cost and Management Accountants would easily be able to export services or even travel worldwide for short-term physical presence due to their accreditation. Besides ICAB and ICMAB, some leading global accountants and auditing institutions, ACCA and CIMA, are now operating in Bangladesh, which has opened up opportunity for Bangladeshi professionals to export quality accounting and auditing services in Mode-4 due to global recognition as professional manpower. 

Despite lack of international accreditation, the architecture and engineering services could be exported through attracting international investment in Bangladesh. If international firms are allowed to open offices in Bangladesh and recruit manpower from the country, they can export services by staying in the country and paying short visits abroad once or twice a year, based on demand of the international clients. In that case, easing the financial rules of Bangladesh is imperative so that they are not exposed to difficulties in financial transactions, both inward and outward. It will be beneficial for Bangladesh in the long run. 

The writer is Senior Research Fellow, Bangladesh Institute of International and Strategic Studies (BIISS). E-mail: mahfuzkabir@yahoo.com