JOSEPHINE J. FRANCISCOPhilippines

GENERAL AGREEMENT ON TRADE IN SERVICES

(GATS)

GENERAL AGREEMENT ON TRADE IN SERVICES

(GATS)

Provides a framework for temporary stay of people in other countries for the purpose of providing services

CHALLENGE FOR THE PHILIPPINES CHALLENGE FOR THE PHILIPPINES

• Take advantage of the opportunities• Take advantage of the opportunities

• Untangle from existing institutional barriers to liberalization of movements of temporary migrants

• Untangle from existing institutional barriers to liberalization of movements of temporary migrants

I. Trends in overseas employment, its economic contribution and composition of Filipino service providers

I. Trends in overseas employment, its economic contribution and composition of Filipino service providers

II. Barriers to free movement of migrants, particularly Filipinos

II. Barriers to free movement of migrants, particularly Filipinos

I. TRENDS IN OVERSEAS TEMPORARY MIGRATION EMPLOYMENT

I. TRENDS IN OVERSEAS TEMPORARY MIGRATION EMPLOYMENT

Labor migration is not a new phenomenon among Filipinos

OVERSEAS EMPLOYMENT PROGRAM (1974)

OVERSEAS EMPLOYMENT PROGRAM (1974)

• Serves as a temporary measure to ease the tight domestic labor market• Serves as a temporary measure to ease the tight domestic labor market

• Serves as an alternative employment strategy for Filipinos• Serves as an alternative employment strategy for Filipinos

• Stabilizes the country’s balance-of-payment position• Stabilizes the country’s balance-of-payment position

OVERSEAS DEPLOYMENT IN GENERALOVERSEAS DEPLOYMENT IN GENERAL

36,035

733,995

660,122

841,438

389,200

662,294

740,154

791,989755,350

667,669372,784

654,022

747,696

831,643

837,020

0

200,000

400,000

600,000

800,000

1,000,000

1,200,000

1,400,000

1,600,000

1,800,000

1975 1985 1995 n.a 1997 1998 1999 2000

Workers Processed Workers Deployed

Processed and Deployed OFW’sProcessed and Deployed OFW’s

559,227

320,497

643,304640,331

638,343

484,653372,784

0

100,000

200,000

300,000

400,000

500,000

600,000

700,000

1985 1995 1996 1997 1998 1999 2000

Deployed Landbased OFWs

1995 - 20005.32% annually

1997 - 199811 to 14%

1999 - 2000less than 1%

52,290

198,134

196,689193,300188,469

175,469165,401

0

50,000

100,000

150,000

200,000

250,000

1985 1995 1996 1997 1998 1999 2000

Seabased

Deployed Seabased OFWs

1995-200025%

1995-200025%

0

50,000

100,000

150,000

200,000

250,000

300,000

Deployed Land-based OFWs by Major Group (1985-2000)

1995 – 200048%1995 – 2000

(44%)

OVERSEAS EMPLOYMENT OVERSEAS EMPLOYMENT

• Provides temporary employment to Filipinos

• Major generator of foreign exchange

893.4

4,055.00

4,651.44

5,123.77

926.68

5,948.34

5,484.22

4,667.00

597.89208.84 846.21

274.55

257.61251.24287.6789.31

82.01210.51

0

1000

2000

3000

4000

5000

6000

7000

1978 1985 1990 1995 1996 1997 1998 1999 2000

Land-based

Sea-based

OFW Foreign Exchange Remittances (in million US$)(1985-2000)

$290.85 M

$6.8 B

OFWs' REMITTANCESOFWs' REMITTANCES

• Offset foreign exchange outflows

• Country's saving grace during periods of negative GDP growth

14.43

16.9718.01

19.6

21.81

27.96

20.66

22.76

16.7

19.39

15.66

2.67 3.29 3.264.08 4.13

6.374.92

6.69 7.168.42

7.5

0

5

10

15

20

25

30

1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000

Remittances (%) of Exports Remittances (%) of GNP

Contribution of Overseas Employment to GNP (1990-2000)(In %)

Contribution of Overseas Employment (1990-2000)

1.272.4

4.213.6

0.1

5.2

6.95.55.26

2.62

0.34

3.67

3.93.23

- 0.54

5.43

5.484.764.39

2.12

1.57

- 1.02

-5

0

5

10

15

20

25

30

1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000

Remittances (%) of Exports Remittances (%) of GNP GNP Growth Rate GDP Growth Rate

DEPLOYMENT AS SERVICE PROVIDERS

DEPLOYMENT AS SERVICE PROVIDERS

Who are the International Service Providers (ISP)?

• Sent by his/her employer to a foreign country to undertake a specific assignment for a restricted period of time 

• Engaged in work that requires professional, commercial, technical or other highly specialized skills for a restricted period of time

• Upon the request of his/her employer in the country of employment, engaged in work that is transitory or brief for a restricted and definite period of time (Garnier, 1996)

ISPISP NOT ISPNOT ISPEngage in :

• Consulting Service

• Training activities

• Supervisory functions

• Overseas Construction Contracting

- skilled engineers- managers or supervisors- consultants

• Seasonal and contract workers

• Engage in manufacturing activities

D. Diplomatic and international personnelD. Diplomatic and international personnel

C. Short term or business visitorsC. Short term or business visitors

A. Intra-company transfereesA. Intra-company transferees

B. Individual service providers and specialists on specific assignments

B. Individual service providers and specialists on specific assignments

MAIN TYPES OF SERVICE PROVIDERS  MAIN TYPES OF SERVICE PROVIDERS  

DEPLOYMENT LEVEL DEPLOYMENT LEVEL

Number of newly hired workers as classifiedby the

Philippines Overseas Employment Administration (POEA)

Deployment of Land-based Newly Hired OFWs (1995-2000)

1. Professional and Technical Workers

2. Managerial Workers3. Clerical Workers

4. Sales Workers5. Service Workers

6. Agriculture Workers

7. Production Workers

8. Other Skills

Total (all skills)

Total (skills 1, 2, 3, 4, 5 & 8)

43,629 36,055 51,381 55,456 78,685 97,448

346 305 572 385 284 385

3,435 3,169 3,632 2,897 2,367 3,356

1,986 1,938 2,637 2,514 2,083 3,18881,043 84,745 76,644 80,675 91,206 92,351

981 822 546 388 526 550

82,537 75,683 85,829 75,078 57,807 56,740

200 3,074 0 1,822 20,072 4,186

214,157 205,791 221,241 219,215 253,030 258,204

127,204 126,117 131,234 140,852 192,330 197,558

Skills Category 1995 1996 1997 1998 1999 20012000

62,500

333

2,552

2,24484,138

452

79,662

5,379

237,260

154,594

Selected Top Skills Deployed (1995-2000)

Skill Destination NumberDomestic HelpersAnd RelatedHousehold Workers

Hong Kong 136,339KSA 54,522UAE 27,692

Taiwan 23,618Kuwait 20,454

Malaysia 15,331Singapore 7,919

Canada 6,133

Brunei6,0934,781

Italy

Choreagraphers and Dancers

Japan145Hong Kong

153,181

Taiwan 16

Japan 53,989Composers, Musicians andSingers Malaysia 257

Singapore 256

KSA 14,630ElectriciansHong Kong 1,085

Qatar 1,002

Source: Philippine Overseas Employment Administration

UAE 7,368Waiters, Bartenders and related workers KSA 6,111

Bahrain 1,179Kuwait 1,079

Selected Professional Deployed (1995-2000)

Profession Destination NumberNurses KSA 19,885

UK 4,118Libya 1,488

Singapore 1,241

IT(Computer Programmers and related workers, Systems analysts)

USA 2,730KSA 1,358

Singapore 125Australia 102

57UAE

Accountants KSA 988Northern Marianas Island 211

USA 180Papua New Guinea 129

UAE 129

Engineers KSA 7,945Source: Philippine Overseas Employment Administration

LENGTH OF STAY IN HOST COUNTRIES

LENGTH OF STAY IN HOST COUNTRIES

Middle East Workers : 2 yearsJapan Entertainers : not more than 6 monthsTaiwan Workers : 1 year

DEPLOYMENT OF SEAFARERSDEPLOYMENT OF SEAFARERS

Philippines as “Ship Manning Capital”representing 25% of

world’s seaman population

Philippines as “Ship Manning Capital”representing 25% of

world’s seaman population

Rank Country Officer Ratings TOTAL 1 Philippines 50,000 180,000 230,000 2 Indonesia 15,500 68,000 83,500 3 China (PRC) 34,197 47,820 82,017 4 Turkey 14,303 48,144 62,447 5 Russia 21,680 34,000 55,680 6 India 11,700 43,000 54,700 7 Ukraine 14,000 23,000 37,000 8 Greece 17,000 15,500 32,500 9 Japan 18,813 12,200 31,013 10 U.S.A.-Lakes 13,204 17,667 30,871 Source: ISF

Rank Country Officer Ratings TOTAL 1 Philippines 50,000 180,000 230,000 2 Indonesia 15,500 68,000 83,500 3 China (PRC) 34,197 47,820 82,017 4 Turkey 14,303 48,144 62,447 5 Russia 21,680 34,000 55,680 6 India 11,700 43,000 54,700 7 Ukraine 14,000 23,000 37,000 8 Greece 17,000 15,500 32,500 9 Japan 18,813 12,200 31,013 10 U.S.A.-Lakes 13,204 17,667 30,871 Source: ISF

Top Ten Seafarer-Supplying CountriesTop Ten Seafarer-Supplying Countries(as of 2000)(as of 2000)

DEPLOYMENT OF SEAFARERSDEPLOYMENT OF SEAFARERS

Inclusion in the International Maritime Organization (IMO) White list

Filipino seafarers onboard ocean-going vessels constitute a large pool of skilled temporary service providers on a per year contract

DEPLOYMENT AS TO TYPE OF MOVEMENT

DEPLOYMENT AS TO TYPE OF MOVEMENT

Total Number of Deployment * :

Short-term Filipino service providers : 60,000

Intra-company transferees : 40,000

Long-term skilled migrants : 100,000*Garnier / 1996

Bulk of deployment in the Philippines are temporary migrant workers under seasonal and contractual arrangements and not much on intra-company transferees, individual service providers and specialists

II. BARRIERS TO MOBILITY OF FILIPINOS UNDER MODE 4 (PRESENCE OF NATURAL PERSONS)

II. BARRIERS TO MOBILITY OF FILIPINOS UNDER MODE 4 (PRESENCE OF NATURAL PERSONS)

MODE 1 : CROSS-BORDER SUPPLY Non-resident service suppliers to supply services cross- border into the Member’s territory

MODE 2 : CONSUMPTION ABROAD Freedom for the Member’s residents to purchase services in the territory of another Member

MODE 3 : COMMERCIAL PRESENCE Opportunities for foreign service supplier to establish, operate or expand a commercial presence in the Member’s territory

MODE 4 : PRESENCE OF NATURAL PERSONS Entry and temporary stay of foreign nationals as service provider in their territory

MODE 3 : COMMERCIAL PRESENCE Opportunities for foreign service supplier to establish, operate or expand a commercial presence in the Member’s territory

MODE 4 : PRESENCE OF NATURAL PERSONS Entry and temporary stay of foreign nationals as service provider in their territory

Mode 4 is strongly linked to Mode 3Mode 4 is strongly linked to Mode 3

• All countries have restrictions that impedes or delay the movement of individuals

• GATS agreement is aimed at dismantling the barriers

BARRIERS OF THE PHILIPPINES UNDER MODE 4:BARRIERS OF THE PHILIPPINES UNDER MODE 4:

1. Those which are limited by the number and coverage of GATS commitments

2. Horizontal and sector-specific limitations on marketaccess

3. Limitations imposed through requirements and procedures

LIMITED GATS COVERAGELIMITED GATS COVERAGE

Philippines, like other developing countries, seeks to liberalize commitments in GATS under Mode 4

Developed countries are more cautious in their approach towards Mode 4 while seeking to dismantle the barriers in the other 3 modes

LIMITED GATS COVERAGELIMITED GATS COVERAGE

Too much concentration on highly skilled labour and expertise than less skilled labour

Both developing and developed countries expect significant gains from GATS

However, the hold-off stance of developed countries toward less skilled labour may inhibit success of GATS

LIMITED GATS COVERAGELIMITED GATS COVERAGE

Local businesses in developing countries are hindered by lack of capital and investment to establish commercial presence through branch or subsidiary

Under GATS, bulk of Commitment entries in developing countries consist of intra-corporate transferees (Mode 3)

LIMITED GATS COVERAGELIMITED GATS COVERAGE

17% of all horizontal entries may cover low-skilled persons in categories as vague as “business sellers”, “non-specified”, and “others”

Construction and engineering services (labour-intensive export potential) are confined largely to intra-corporate transferees in highly skilled or managerial capacities

Progress in Mode 4 commitments is reactive to developments

Emphasis on high training and expertise on mobility of persons may be related to the expansion of world trade and growing role of intra-firm linkages

Reflect the proliference of internal labour market within multinational firms as well as limited institutional frameworks for facilitating exchange of skills

LIMITED GATS COVERAGELIMITED GATS COVERAGE

LIMITED GATS COVERAGELIMITED GATS COVERAGE

Growth of specialized service providers or professionals is a result of changing demographic patterns in certain developing countries

The current Commitments under Mode 4 are only an extension of Commitments in Mode 3

QUOTA, PRE-EMPLOYMENT AND WAGE

REQUIREMENTS

QUOTA, PRE-EMPLOYMENT AND WAGE

REQUIREMENTS

Horizontal and Sectoral Commitments on Market Access

• Domestic minimum wage legislation coupled with restriction on work condition, working hours and social security benefits

• Domestic minimum wage legislation coupled with restriction on work condition, working hours and social security benefits

• Numerical limit to what is allowed • Numerical limit to what is allowed (low number of quotas relating to “ordinary staff” and senior staff)

• Intra-corporate type of movement tied to the pre-employment requirements• Intra-corporate type of movement tied to the pre-employment requirements

(at least 1 year residency with the firm)

RECOGNITION REQUIREMENTS AND PROCEDURES

RECOGNITION REQUIREMENTS AND PROCEDURES

Licensing and qualifications such as sufficient education, experience and training before being allowed entry

• Variation in testing, certification and licensing requirements

• Variation in testing, certification and licensing requirements

Because of these variations, service providers are given lower position, salary or benefits even if actual qualifications or skills are comparable

• Variation in the educational system of member-countries• Variation in the educational system of member-countries

Impediments:Impediments:

ADMINISTRATIVE BARRIERSADMINISTRATIVE BARRIERS

Vague terminologies and definitions used in the Schedule of Commitments resulting to various interpretations

• Need for predictability of actual entry condition particularly the economic needs or labor market test

• No agreed definition of what constitutes “temporary” and “standard” categories

(90 days for business visitors or intra-corporate transferees / 2 to 5 years for other groups such as executives, managers and specialists)

III. TOWARDS GREATER MOBILITYIII. TOWARDS GREATER MOBILITY

• Mode 4 Commitments should move its focus from highly trained and skilled service providers and

must be de-linked to commercial presence

• Mutual recognition schemes should be pursued even outside of GATS

• Address closely the bottlenecks in market access Commitments

• Give attention to the limitations on wages and regulations curtailing benefits under mandatory social insurance systems

• Overcome administrative barriers

• Overseas deployment is an important contributor to the Philippine economy

CONCLUSION

• The key element in expanding trade through Mode 4 is negotiations to reduce barriers and facilitate greater and freer cross-border flows of service providers

• Only when a proactive and developmental approach to negotiations is adopted will the GATS agreement achieved its goal of distributing opportunities to all