The Financial Times, 10th March 03

Sir, In the current Doha round of global trade talks, the services sector has until now been less controversial than agriculture and trade-related intellectual property rights (“Restricted services”, February 11). But the recent offers by the European Union on services liberalisation have changed that. The EU is willing to open markets further only in areas such as banking and telecommunications, and shies away from new commitments in public services such as health and education, as well as in audio-visual services.

Denying access to European markets in health and education clearly reflects double standards. This has jolted many developing countries that were hoping to gain access to the EU health and education sectors through mode 4 of service supply (movement of “natural persons”). The supply of services in banking and telecommunications takes place under mode 3 (investment), where developing countries are at a clear disadvantage.

Already, mode 4 commitments are limited in sectoral coverage. Sectors such as health, legal and accountancy services, where cross-border mobility is important, have not been scheduled by many countries.

Greater mobility of labour would not only benefit developing countries, but also provide substantial gains to many developed countries, which are short of manpower in the health and education sectors. A recent study carried out on behalf of the Home Office found that immigrants contributed about 10 per cent more to public finances than they took out. Further, the rising numbers of elderly people as a proportion of total population is increasing the burden on those of working age. The Organisation for Economic Co-operation and Development estimates that by 2050 this trend could take 18 per cent off living standards in the EU, 23 per cent in Japan and 10 per cent in the US.

Under the rubric of movement of “natural persons”, we would like to see more export of workers in other sectors such as construction, agriculture and service industries. Another OECD study has pointed out that there are more than 1,000 occupations in the west that need skilled manpower. To take just one, a British Housing Corporation report has identified a shortage of skilled bricklayers in UK, which has pushed up wage costs. In areas such as construction, public transport, hotels and retailing the case for lifting immigration controls is compelling.

According to research into the mobility of labour carried out for the EU-India Network on Trade and Development by the Consumer Unity and Trust Society in partnership with the University of Sussex, UK, movement of health workers from India and the Philippines to Europe is taking place despite the lack of commitments under the General Agreement on Trade in Services. Commitments under Gats would benefit sending countries by providing a more transparent framework based on non-discrimination.

There is also a debate about whether rich countries’ gain is necessarily developing countries’ loss. Any “brain drain” is nullified by the money sent back home by such migrants, and by returnees bringing investment and technology. Globally, remittances are estimated at $60bn-$70bn a year, larger than development aid flows.