The Hindu Business Line : `Movement of labour, key facet of trade in services'

AS developed countries are increasingly becoming labour deficit due to demographic structure with documented global migratory labour alone accounting for about 170 million people contributing to $94 billion in annual remittances, the free flow of human labour across borders could result in substantial welfare gains particularly for developing countries.

This is one of the key conclusions by participants at a one-day brainstorming session hosted here by the UN Conference on Trade and Development (UNCTAD) and the London School of Economics (LSE) on the `New Global Trade Paradigm'.

Participants stated that the free flow of human labour across borders (Mode 4 Services) is a key dimension of trade in services and is of enormous importance to labour-rich developing countries, even as political and cultural sensitivities persist on the issue that needs to be addressed at the appropriate level.

While taking on board the concerns of poverty and development, it was felt that growth continued to remain a fundamental strategy towards poverty alleviation and that trade was increasingly becoming a crucial driver of growth.

It was acknowledged that the need for higher productivity and technological efficiency produced challenges for assuring adequate human employment. This is a dilemma that confronts even developed countries like the US. Developing countries could address this issue in terms of both accelerated growth and strategic sector positioning to ensure that efforts were directed towards labour-intensive sectors like services.

Domestic supply side capacity restraints were viewed as one of the critical factors that prevented developing countries from capitalising on the potential that the markets of North and other developing countries offered.

While fair regulatory and legal frameworks existed in countries like India, the efficiency of these processes often acted as a disincentive for movement of capital towards these countries, including lack of transparency and tedious administrative procedures in the developing countries.

Participants noted that while the 1990s saw a rationalisation of the tariff regime in India, it is clear that further improvements would only advance the cause of development. There was a need to make tariffs more moderate and widen the tax net while giving more emphasis to the serious issue of enforcement. Hope was expressed that political consensus would be generated towards adopting a broad-based value-added tax.

On Cancun and likely future position of the WTO, it was acknowledged that there was a stasis in multilateral trade negotiations at the WTO. It was felt that progress at Cancun was limited to a large extent on account of the excessive defensiveness of certain developed countries on agriculture and over-ambition in the case of Singapore issues.

Participants noted that above all it was political will on the part of the US, the EU and other OECD countries and four major developing countries Brazil, China, India and South Africa that would be key to the effective re-propping of the WTO. The spurt in bilateralism and regionalism in trade arrangements was noted as also that such trends would tend to escalate if effective multilateralism was not put back on track.

The Planning Commission Member, Mr N.K. Singh, and noted economist, Lord Meghnad Desai, were key speakers at the event and Sir Howard Davies, Director of the LSE, also attended the session held here on March 22, an official release said.