International Trade Negotiations and the Trans-Border Movement of People: A Review of the Literature
Migration linked to international trade agreements
In this section, we review available literature on direct linkages between trade negotiations and agreements on trans-border labour movement. However, it is difficult to fully review such links because migrant access (particularly of temporary workers) may be part of confidential trade negotiations, or may constitute a side agreement, and the links may not be explicitly acknowledged in publicly available documents.
It is important to emphasise at the outset that the international movement of labour has generally been treated quite differently from goods and investment flows (Chia, 2006). International trade liberalisation has taken place through a range of regional and multilateral agreements and foreign direct investment liberalisation has often accompanied these agreements (though not at the WTO level), while labour movements continue to be tightly regulated, particularly in the case of unskilled/semiskilled workers (Chia, 2006).
Hatton (2007) summarises a range of studies that compare the potential gains from reducing barriers to migration with those from reducing further barriers to trade. He finds that the gains from moving to free migration are typically huge compared to moving to free trade. Despite these large potential gains, liberalisation of migration has not shared the high-profile of trade liberalisation and the movement of people across borders has not been a central focus of most international trade agreements. Facchini (2004) reviews the literature on the political economy of international trade and factor mobility and concludes that there is empirical support that trade policy is determined by what he calls 'influence driven contribution', in which outcomes are determined by the relative negotiating strengths of lobby groups, such as business and unions. One would expect that a similar perspective can be used to explain restrictions to international migration flows, but Facchini (2004) argues that the formal theoretical and empirical literature in that area is still less developed.
Where they do cover labour mobility, multilateral and regional trade agreements treat it in a wide variety of ways, from (relatively) full mobility of labour through to little or no movement of labour being allowed (Nielson, 2003). Many alternative arrangements are possible, including with respect to the length of stay, the skill level and the type of contracts covered. Agreements covering countries with geographic proximity and similar levels of development tend to demonstrate a relatively liberal approach to labour mobility (Mattoo, 2001). However, Winters (2003b) notes that 'the very heart of international trade...lies in exploiting differences. The larger the differences, the larger are the potential gains'. He extends this argument to the temporary movement of natural persons, implying that the greatest gains are to be had from allowing increased labour mobility between very different countries. However, in that case the social concerns may be much larger than in the case of migration between very similar countries. This paradox will be revisited later in the report.
In this section, we begin by examining the implications of the WTO agreements for labour mobility. We then examine two of the best known regional free trade areas, the European Union (EU) and the North American Free Trade Agreement, (NAFTA) to gain insights into the implications for the movement of people. We then move to a discussion of the range of regional and bilateral agreements in which New Zealand has a direct involvement, both current and anticipated.
2.1 The WTO agreements
The WTO is the most extensive multilateral trade organisation, covering over 150 countries. These countries are diverse in their economies, geography and level of development, not to mention language and culture. The WTO was established in 1995 and includes rules based on the General Agreement on Tariffs and Trade (GATT), which originated in 1948. Following the Uruguay Round of negotiations, the WTO also implemented the General Agreement on Trade in Services (GATS), which is of particular relevance to the movement of people across international borders.
A key guiding principle of the WTO is non-discrimination between member countries. This principle is motivated by the maximum gains from trade that are achieved when non-discrimination allows access to the lowest cost suppliers. However, labour markets are generally not able to fully adjust, due to various non-competitive components and forms of public intervention such as minimum wages and social insurance. Hence, the benefits from non-discrimination may be weaker for the movement of people than for trade in goods (World Bank, 2006). In addition, because of the cyclical nature of unemployment, governments are typically reluctant to undertake quantitative and permanent commitments (Chia, 2006). The impact of a particular shipment of trade is only short-run: once consumed, the impact is gone. With respect to migrants, their arrival may impact on the economy and society for a long time (Carbaugh, 2007). A further hindrance to multilateral agreements is that countries generally prefer to import foreign workers from particular countries and communities, rather than being bound by the WTO principle of Most Favoured Nation (MFN) treatment, whereby discrimination between countries is not allowed (Chia, 2006). We note that even if the anticipated economic benefits are large, the expected social costs may deter the complete opening of borders.
The GATS was negotiated during the Uruguay Round in response to the huge growth in services in the global economy (DRCMGP, 2005), with services now the dominant sector of economic activity in most developed countries. All WTO members are signatories to the GATS, with the first round of negotiations on services trade having started in January 2000 (WTO, 2006). The GATS does not cover permanent migration, or workers in sectors other than services. It comprises four main elements, identified as modes one through to four. Mode 1 deals with cross-border supply; mode 2 focuses on consumption of services abroad; mode 3 deals with the commercial presence of foreign firms; while mode 4 is concerned with the presence of natural persons (WTO, 2006). Examples of the different modes of supply covered, from the perspective of the importing country (Country A), are provided in Table 1.
Table 1. Examples of the four modes covered by GATS
Mode 1: Cross-border
A user in country A receives services from another country through its telecommunications or postal infrastructure. Such supplies may include consultancy or market research reports, the services of calling centres for assistance and information, accounting services, medical advice, distance training, or architectural drawings.
Mode 2: Consumption abroad
Nationals of country A have moved abroad as tourists, students, or patients to consume the services in another country.
Mode 3: Commercial presence
The service is provided within country A by a locally-established affiliate, subsidiary, or representative office of a foreign-owned and controlled company (e.g. bank, hotel group, construction firm).
Mode 4: Movement of natural persons
A foreign national provides a service within country A as an independent supplier (e.g., consultant, health worker) or employee of a service supplier. (e.g. consultancy firm, hospital, construction services company).
Source: WTO, 2006
While negotiations on mode 4 first took place during the Uruguay Round from 1986 until 1994, these initial negotiations were primarily focused on facilitating business visits of an exploratory nature and also the movement of high-level personnel of multinational corporations. Mattoo (2003) notes that developing countries were disappointed with the lack of commitment given to any movement of workers unrelated to foreign direct investment. In addition, multinational firms wanted further facilitation of the movement of personnel across borders (Mattoo, 2003). While there may be plenty of scope for expanding the coverage of mode 4, explicit concessions have not been very forthcoming. There are also various other barriers that constrain the movement of people, including visa quotas, red-tape, discriminatory standards and lack of recognition of foreign professional qualifications (Mattoo, 2003).
GATS mode 4 appears primarily targeted at intra-corporate transferees and business visitors (Chaudhuri et al., 2004; Walmsley and Winters, 2005). However, more broadly, GATS encompasses the movement of natural persons for which it is hard to find substitutes, such as medical and construction services. In some services sectors modern communication technology can substitute for person movement. This may be the case in education, accounting and lawyer services (ACCI, 2002; WTO, 2006).
There appears to be broad agreement in the literature that GATS, especially mode 4, is rather vague and unclear. Mode 4 was set up to make it easier for service workers to move between countries as temporary migrants. However, its impact is limited, with adherence to the agreement voluntary and flexible and even the term temporary not clearly defined (Chaudhuri et al., 2004). The definition of temporary can vary from a few months to a number of years, depending on the country and type of work and the types of movement covered. For example, Japan allows foreign business travellers to stay for up to 90 days, however, some categories of intra-corporate transferees may remain in Japan for up to five years (Mattoo, 2003). Teachers of English and university lecturers may also take up contracts with Japanese institutions that extend over several years. This rather vague notion of temporary movement may blur the distinction between mode 4 and more permanent migration. In addition, details of the coverage of GATS are sometimes unclear or under dispute (DRCMGP, 2005). Mattoo (2001) indicates that, for example, an Egyptian accountant selling services abroad, either independently or as an employee of an Egyptian firm, would likely be covered by GATS. However, if the accountant was employed by a host country firm, this would seem to fall outside of GATS. This kind of partial coverage may lead to distortions in international trade in services that diminish the potential economic gains.
Mattoo (2003) refers to GATS mode 4 as 'ambitious in scope but unclear in definition'. While mode 4 is potentially ambitious, relatively few commitments to open markets have been made. This is evidenced by the very few changes in the movement of people that have been made compared to what was already covered under existing immigration policies.[3] Indeed, countries' actual temporary migration policies tend to be more liberal than commitments made under GATS (World Bank, 2006), with existing national regimes often 'more open and less narrowly defined than the GATS' (Mattoo, 2003). This is also the case in New Zealand.
Hufbauer and Stephenson (2007) argue that while the GATS was regarded as path breaking when it was negotiated in the mid-1990s, the world has changed quickly and overtaken it. For GATS to maintain relevance, they suggest it needs to move forward in four main areas: electronic delivery of services, liberalising temporary labour movement, dispute settlement, and future services trade liberalisation. However, Hatton (2007) argues that the problem is not simply institutional, with the real issue being that the basis for multilateral agreement on migration is not clear. The missing element is the reciprocity that is central to multilateral agreements. Since migration driven by absolute rather than comparative advantage, it is 'more of a one-way street than is trade' (Hatton, 2007).
The NAFTA and EU agreements
Following the review of GATS, we will now consider regional agreements with relevance to New Zealand. The best-known regional free trade agreements are the European Union (EU) and the North American Free Trade Agreement (NAFTA). Although these agreements cover countries geographically distant from New Zealand, they are important international benchmarks. We examine the implications of these agreements for the movement of persons to generate insights into both the opportunities and challenges of international labour movement.
The EU represents a unique agreement, which covers many different economies, cultures and languages.[4] It seeks to preserve diversity, while also working to promote unity. The Treaty of Amsterdam on the EU came into force in May 1999 with the key ambition of maintaining and developing a multi-country area of freedom, security and justice; a region which promotes and assures the free movement of persons; and introduces appropriate methods to control borders, the entry of asylum seekers, and immigration (European Commission, 2006). The EU has resulted in relatively unrestricted movement of capital, goods and services. However, despite progress with respect to people movement, there remains a long way to go before this can be regarded as completely free among all EU member states. It was originally planned that only skilled workers would be able to move freely within the EU. However, due to political and social pressures, this has been extended to all categories of citizens (European Commission, 2006). Furthermore, it could be argued that a scheme that restricts on the basis of skills would be too cumbersome and costly to administer.
Since 2007, the EU comprises 27 member countries, but Western European members have indicated concern that the new Central and Eastern European Countries (CEEC) members will adversely impact their economies. This is particularly true of the labour market, where it is believed that large flows of labour could potentially move from east to west (Layard et al., 1992). There is a significant difference in wage levels between the old member states and the CEEC, necessitating the negotiation of transitional arrangements for the movement of people (Breuss, 2001). Jileva (2002) argues that the EU has adopted a relatively restrictive policy on the movement of labour from the CEEC. In this sense, the EU treats them 'as members as far as the obligations of EU membership are concerned and as third countries as to its benefits' (Jileva, 2002). Expansion of the EU into more diverse economic regions has tested the issue of borders and migration, with the EU displaying a very cautious approach to the new eastern borders (Kengerlinsky, 2004). When the EU expanded from 15 to 25 countries in May 2004, only Britain, Ireland and Sweden waived the opportunity to impose immigration restrictions lasting up to seven years. With the recent joining of Bulgaria and Romania in January 2007, even these countries now impose restrictions on migration. Britain defends the restrictions on the grounds that immigrant flows since 2004 from Eastern European countries had been grossly underestimated and the only two sectors in Britain open to unskilled workers from Bulgaria and Romania are food processing and agriculture.[5]
The NAFTA has been in force since 1994 and, covering only Canada, the United States and Mexico, it is much smaller than the EU in terms of membership. NAFTA is also much less ambitious than the EU in terms of cross-border people movement, however, it does include provisions for the temporary movement of business persons across each of the borders. NAFTA defines temporary entry as entry without wanting to establish permanent residence and the period of stay should have a 'reasonable finite end' (DFAIT, 2006). This absence of a set time period appears to give some discretion to the administering officials.
There are four categories of business persons in the NAFTA agreement: business visitors, professionals, intra-company transferees, and traders/investors. Business visitors may perform work in all aspects of production: research and design, manufacturing, marketing, sales, after-sales service, and distribution (DFAIT, 2006). The 'professionals' category covers 63 professions, including accountants, engineers and lawyers. These professionals can enter the member country for temporary employment in their occupation. They can also enter to perform training functions or conduct seminars in their respective profession (DFAIT, 2006). An intra-company transferee is a person who is employed by an enterprise to perform management, executive or specialised functions in an enterprise, parent branch, subsidiary, or affiliated branch in another member state (DFAIT, 2006). The traders and investors category is particularly interesting. It allows traders to enter a member state if they conduct over 50 percent of their trade in goods or services between the member countries, while investors must own at least 50 percent in a company, or maintain a controlling interest. Business persons in this category may also enter if they wish to establish, develop, administer, or provide consulting or technical services to manage an investment to which foreign capital has been, or is going to be committed to a project. Included in this category are the employees of the traders and investors, who may act in a supervisory or executive capacity, or have skills that are essential to the operation of the company (DFAIT, 2006).
The NAFTA agreement differs of course from the EU situation in that permanent migration between the members States is still relatively restricted. However, notwithstanding the restrictions on labour mobility between the three countries, there were in 2001 about 250,000 US born and 50,000 Mexico born persons living in Canada and some 800,000 Canada born and 9 million Mexico born living in the US.
New Zealand's current trade agreements
Table 2 summarises New Zealand's current key trade agreements. It indicates some of the main aims, provisions and functions of the agreements, along with an indication of how labour mobility is integrated into these agreements. The table includes the information with respect to WTO and GATS that was already covered earlier. Detailed subsections further explain the other agreements and their implications.
Asia-Pacific Economic Cooperation
Asia-Pacific Economic Cooperation (APEC) is a multilateral economic and trade forum, formed in 1989 and now with 21 member economies, including New Zealand. APEC is committed to increasing trade by reducing barriers, as outlined under the Bogor Goals of 'free and open trade and investment'. The APEC region has had some success in lowering tariffs on average from 16.9 percent to 5.5 percent between 1989 and 2004. Many of the APEC members have had high rates of economic growth and the population living in poverty in APEC economies has approximately halved since 1989 (APEC, 2006; MFAT, 2007), though APEC itself is of course only one factor contributing to this outcome.
APEC does not contain specific market access arrangements for labour mobility. However, it does include 'arrangements aimed at facilitating labour mobility by information exchange; dialogue with business; development and implementation of immigration standards; and capacity building to help streamline temporary entry, stay and departure processing for business people' (Nielson, 2003). The APEC Business Travel Card Scheme simplifies the entry of cardholders into participating countries and reduces time and costs of entry visas and permits (Chia, 2006). The card allows accredited business people easier access to participating economies. The card has a validity of three years and card holders have special privileges such as APEC immigration lanes at airports and automatic multiple entry visas for stays of up to 90 days (Business Mobility Group, 2006; APEC, 2006). Other agreed measures aimed at facilitating the mobility of business people include: standards for processing applications; extending temporary residence permits for certain categories of skilled workers transferring within companies; and also Advanced Passenger Information (API) systems which enable passengers to be processed in advance of arrival in the destination country (Chia, 2006).
Australia New Zealand Closer Economic Relations Agreement
In 1965, New Zealand's first free trade agreement was arranged with Australia, named the New Zealand-Australia Free Trade Agreement (i.e., the original 'NAFTA'). The agreement was not actually a free trade agreement as such; it was rather an unclear agreement on removing trade barriers between the two countries. In January 1983, the Australia-New Zealand Closer Economic Relations Trade Agreement (ANZCERTA, commonly referred to as CER) came into force, replacing the less comprehensive NAFTA (Nana and Poot, 1996). Through CER there has been free trade in most goods and services since 1990. The WTO has commended the agreement as being 'the world's most comprehensive, effective and mutually compatible free trade agreement' (MFAT, 2007).
Alongside CER is the Trans-Tasman Travel Arrangement (TTTA), which has been effectively operating since 1923 and formally since 1973 (Carmichael, 1993), whereby both New Zealand and Australian citizens can freely enter, live and work in each country. The TTTA is not a binding bilateral treaty but rather a string of procedures in the immigration policies of both countries. In 2001 Australia modified the arrangement by redefining eligibility for trans-Tasman social security, as noted earlier. Since then, New Zealanders who are not permanent residents in Australia are not able to receive labour market-related social security benefits, notably the unemployment benefit. New Zealanders who are semi-skilled or unskilled are most disadvantaged as they may not meet the Australian permanent residency criteria. There is some evidence of greater return migration and lesser attachment to Australia since the introduction of the new policy (Poot and Sanderson, 2007). The asymmetric treatment with respect to social security is arguably a step backwards on the path towards the single Australasian market. While New Zealanders working in Australia will be required to pay Australian taxes, when they become unemployed they may not receive the same benefits as Australians (Venter, 2001; Bushnell and Choy, 2001; MFAT, 2007).
In 1998, the Trans-Tasman Mutual Recognition Arrangement (TTMRA) entered into force, and as part of this arrangement, people are able to register an occupation and practise in the other country if they are registered in this occupation in the home country. This has lowered the barriers to people moving for employment reasons between the two countries (MFAT, 2007).
Pacific Island agreements
New Zealand and Australia have close ties to the Pacific Islands. One agreement that came into force for most Forum Island Countries (FIC) in January 1981 was the South Pacific Regional Trade and Economic Co-operation Agreement (SPARTECA).[6]
|
Agreement and documents consulted |
Established |
Members |
Main Aims and Provisions |
Integration of Labour Mobility |
|---|---|---|---|---|
|
WTO (WTO, 2006). |
January 1995 |
151 countries |
Multilateral trade liberalisation: administration, forum for negotiations and handling disputes. |
Does not focus specifically on labour mobility, however all WTO members are signatories to the GATS. |
|
GATS (WTO, 2006). |
January 1995 |
All WTO members. |
Increased transparency and predictability of rules and regulations. Promotion of services liberalisation. |
Mode 4 of the GATS covers temporary movement of natural persons in the services sectors. |
|
APEC (Business Mobility Group, 2006; APEC, 2006). |
1989 |
21 economies |
Increase trade by reducing barriers under the 'Three Pillars' 1) Trade and investment liberalisation, 2) Business facilitation , 3) Economic and technical cooperation |
APEC Business Travel Card (17 members) allows easier access by business people. |
|
ANZCERTA (or CER), (TTTA & TTMRA) (Carmichael, 1993; Nana and Poot, 1996; MFAT, 2007). |
January 1983 |
Australia and New Zealand |
Free trade in goods and services. Also freedom of people movement. However, market access issues in some sectors are still to be resolved. The ultimate goal is a single economic market. |
Mutual recognition of occupations (with their qualifications). Citizens of both countries may freely, enter, live and work in each country. |
|
SPARTECA (Forum Secretariat, 1998). |
January 1981 |
Forum Island Countries (FIC) with Australia and New Zealand. |
Integration of trade between FICs and Australia and New Zealand. New Zealand offers duty free and unrestricted or concessional access for almost all products originating from FICs. |
None evident. |
|
PACER (MFAT, 2007; Qalo, 2006; Voigt-Graf, 2006). |
October 2002 |
Pacific Island countries, Australia and New Zealand |
Vision of free trade with a current aim of increased trade facilitation. No significant provisions for trade liberalisation, but rather a guide of how this should be undertaken. |
Currently no provisions, but agreement has potential for, e.g., the setting up of work programmes. |
|
ANZSCEP (Nielson, 2003; MFAT, 2007). |
January 2001 |
New Zealand and Singapore |
To advance the trade in goods and services and increase investment. |
Easier for business visitors and intra-corporate transferees. Uses the GATS model with some additional elements. Professionals and their qualifications are mutually recognised. |
|
NZTCEP (MFAT, 2007). |
July 2005 |
New Zealand and Thailand |
Eliminating tariffs and quotas. Liberalising trade and investment, encouraging cooperation in areas of mutual interest, improving efficiency and competitiveness. |
Business visitors and intra-corporate transferees can enter each country more easily. New Zealand agreed to temporary entry of Thai Chefs and possibly Thai massage therapists. |
|
TPSEP (Nielson, 2003; MFAT, 2007). |
May - August 2006 |
Brunei Darussalam, Chile, New Zealand and Singapore |
Elimination of tariffs and quotas. There will be or has been an immediate elimination of tariffs in 90 percent of exports. All tariffs are to be eliminated by the year 2017. |
Improved travel conditions for business people. GATS commitments are honoured as well as APEC business card commitments. Also, increased recognition of qualifications. |
SPARTECA is 'a non-reciprocal trade agreement under which the two developed nations of the South Pacific Forum, Australia and New Zealand, offer duty free and unrestricted or concessional access for virtually all products originating from the developing island member countries of the FIC' (Forum Secretariat, 1998).
Another Pacific Island agreement is the Pacific Agreement for Closer Economic Relations (PACER). This also includes Australia and New Zealand. The agreement entered into force in October 2002, but does not contain significant provisions for the liberalisation of trade. Instead, PACER provides guidelines for setting up an agreement for goods trade between the Pacific Island countries, as occurred in 2003 with the Pacific Island Countries Trade Agreement (PICTA) (MFAT, 2007). Currently however, there are no provisions in the SPARTECA or PACER agreements that deal with the movement of people. It is clear that from the perspectives of both the Pacific nations and New Zealand there are benefits in giving this more prominence. Such benefits are outlined elsewhere in this report, but we note here that the temporary movement of people, as well as more permanent migration, may be important sources of foreign exchange supply through remittances for many of the FIC (Qalo, 2006; Voigt-Graf, 2006; MFAT, 2007, World Bank, 2006). Permanent migration from the Pacific Islands to New Zealand has of course already been extensive, with the number of New Zealand residents from selected Pacific birthplaces being in 2006: 51,000 from Samoa, 38,000 from Fiji and 21,000 from Tonga.
Forau (2006) argues that the FIC currently do not provide employment for all of the economically active populations. Their small and peripheral economies may have been detrimentally affected by globalisation forces (Poot, 2004). The resulting unemployment or underemployment may become a source of disruption and pose threats to the security and viability of those countries. Therefore, the Pacific communities have two main options. They must either invest in job creation, or negotiate better people movement provisions with New Zealand and Australia. Section 6.1 discusses some new initiatives in temporary movement in more detail.
Agreement between New Zealand and Singapore on a Closer Economic Partnership
The New Zealand and Singapore Closer Economic Partnership Agreement (ANZSCEP) entered into force in January, 2001. At the time, it was the most comprehensive trade agreement negotiated by New Zealand, with the exception of the CER. The agreement strives to advance trade in goods and services and increase investment in the two economies.
Labour mobility is included in Part 11 of the General Provisions, using the GATS model, with some additional elements (Nielson, 2003). Under the ANZSCEP, service exporters from New Zealand will have better access into Singapore, especially in such areas as architecture, engineering, telecommunications, finance, education and environmental services. Regulatory agencies and educational institutions have been set up so that services can flow more freely between the economies. This has been done so that professionals and their qualifications are mutually recognised in each economy (MFAT, 2007).
The ANZSCEP also makes it easier to buy Singaporean services in New Zealand. The areas that received particular attention were engineering services, computer and related services, transport, dental services, environmental services and some business sectors, including market research and management consulting (MFAT, 2007). The agreement makes it easier for both business visitors and intra-corporate transferees to enter Singapore and New Zealand. Temporary business visitors are able to enter Singapore to negotiate or service a contract and stay for a month, which can be extended for a further two months. Intra-corporate transferees must have worked for the firm for at least a year, after which time they can work for the company in Singapore for up to three years (MFAT, 2007).
New Zealand and Thailand Closer Economic Partnership
In July 2005, the New Zealand and Thailand Closer Economic Partnership (NZTCEP) entered into force. The main commitment under the agreement is to establish a free trade area. When the NZTCEP entered into force, about 50 percent of the tariffs were eliminated, with a goal of eliminating the last tariffs and quotas in 2025. Trade between the two countries amounted to NZ$1 billion in 2004, with New Zealand exports accounting for $365 million of this. New Zealand exporters faced 9 percent tariffs on average, with some tariffs as high as 40 to 60 percent, therefore, the NZTCEP opens up many opportunities (MFAT, 2007).
Under the NZTCEP, Thailand was unable to consider any major services negotiations. However, it was agreed that talks on such liberalisation would commence within three years. With the NZTCEP, New Zealand and Thailand have agreed on several aspects of temporary entry of people, mainly through the exchange of letters. Business visitors from New Zealand are able to apply for one-year multiple entry non-immigrant business visas, which allow business people to enter Thailand for 90 days each visit. It was also negotiated that intra-corporate transferees who are managers, executives or specialists can have one year work permits that can be renewed up to a maximum of five years. In addition to this, the intra-corporate transferees do not have to notify Thai authorities to attend business meetings, seminars, or 'conduct business contacts'. Another aspect of people movement that was agreed to by Thailand was that New Zealand investors with at least two million Baht (about NZ$87,000) of capital will be able to access Thailand's One Stop Service Centre for visa and work permit applications (MFAT, 2007).
New Zealand also made concessions to Thailand, including agreeing to the temporary movement of Thai chefs into New Zealand. Under the agreement a Thai national must have gained a Thai cooking certificate at levels 1, 2 or 3 with practical experience of 5, 4 or 3 years respectively and they need to have secured a job offer. If Thai chefs meet the requirements, they may enter New Zealand for a period of three years, which can be extended for an extra one year (MFAT, 2007). New Zealand is also examining the possibility of recognising traditional Thai massage therapist qualifications, which would allow them to enter New Zealand for temporary employment.
Trans-Pacific Strategic Economic Partnership
The Trans-Pacific Strategic Economic Partnership (TPSEP) has four founding member countries: Brunei Darussalam, Chile, New Zealand and Singapore. This is the first regional agreement that New Zealand has made which incorporates a Latin American country. The agreement entered into force (officially) between New Zealand and Singapore on 28 May 2006. The ANZSCEP from 2001 will continue to be in force; both countries are able to take advantage of provisions from either agreement. The TPSEP entered into force on 12 July 2006 between New Zealand and Brunei and the Chilean senate approved the deal on August 9, 2006. An important part of the agreement is the elimination of tariffs. There are also no quotas allowed, and very little allowance for the use of transitional safeguards. In each market there has been, or will be, an immediate elimination of tariffs in 90 percent of exports, with all tariffs to be eliminated by 2017 (MFAT, 2007).
The TPSEP improves travel conditions for New Zealand business people by facilitating the temporary entry of business persons through streamlined and transparent immigration clearance procedures. In addition, the members have re-established their GATS commitments in regard to the temporary entry for business people and they have confirmed their APEC business travel card commitments. Furthermore, provisions have been made to increase the recognition of New Zealand qualifications and professional registration organisations. Those professions and qualifications which will be given priority are: architects, accountants, engineers, geologists, geophysicists and planners (MFAT, 2007). The agreement also has a 'MFN Treatment' clause, whereby the service suppliers in New Zealand will get the benefit of commitments made by the TPSEP member countries in later FTAs which are more liberal than those in the TPSEP (MFAT, 2007).
New Zealand's anticipated trade agreements
There are also a number of trade agreements currently under negotiation or anticipated by New Zealand that we briefly introduce here. In particular, there are negotiations with China, ASEAN, Malaysia, Hong Kong and possibly the United States. There is, however, very limited publicly available information on how the movement of people will be dealt with in these agreements.
The New Zealand and China Free Trade Agreement, expected to be finalised in 2008, marks the first bilateral trade negotiation that China has entered into with a developed country. China is New Zealand's fourth largest trading partner and, with its rapidly growing economy, China is of increasing importance as a trading partner to New Zealand. The trade agreement offers significant potential benefits to New Zealand, particularly for securing markets in goods and services that include milk powder, wool and education (MFAT, 2007). In October 2006, negotiators from both New Zealand and China met in Wellington to further discuss the agreement. This was the ninth and longest round of negotiations, covering elements such as rules of origin, customs, trade remedies, investment, legal issues, and also services and the temporary entry of people (MFAT, 2007). Both countries hope to conclude the agreement by April 2008. We also note that China continues to be the major source country of foreign students in New Zealand. During the year ending June 2006, 26,661 entry permits were issued to Chinese students. However, the number has declined from a peak of 40,748 in June year 02/03 (Bedford and Ho, 2006; MFAT, 2007).
In 2004, the Association of Southeast Asian Nations (ASEAN) with its 10 member countries agreed to start free trade negotiations with both Australia and New Zealand. The combined population of this area encompasses 500 million people, with over US$700 billion in GDP. The agreement should help foster greater economic growth in the area and it has been suggested that an additional US$48 billion in GDP will be gained between 2000 and 2020, with New Zealand's share being US$3.4 billion (MFAT, 2007). If the EU area is counted as a whole, ASEAN becomes the fifth largest export market and also source of imports for New Zealand. Negotiations between ASEAN and Australia and New Zealand are continuing.
Another country with which New Zealand is conducting trade negotiations is Malaysia. Within ASEAN, it is New Zealand's largest trading partner and an agreement will further strengthen the ASEAN agreement. While some issues have been finalised, further negotiation is needed with respect to services and investment, areas that are of course particularly relevant with respect to implications for migration.
Negotiations between China's Special Administrative Region of Hong Kong and New Zealand commenced in 2001. However, these are currently suspended, awaiting the outcome of the New Zealand and China Free Trade Agreement. Hong Kong is New Zealand's seventh largest export destination. New Zealand negotiators would strive to create a positive environment for encouraging inward investment from Hong Kong into New Zealand (MFAT, 2007). Such investment may trigger some temporary and permanent migration.
New Zealand is currently actively seeking a way forward towards an agreement with the United States that has similarities with the 2005 Australia - United States Free Trade Agreement (AUSTFA). There are interesting issues regarding temporary movement in this context. While AUSTFA does not include a chapter on the movement of natural persons along the lines of mode 4 of GATS, the agreement did spark efforts in the US Congress and a special E-3 visa for Australian professionals was passed through legislation. The visa applies to those Australian nationals that have a university degree (or its equivalent in specialty occupations), and are looking for temporary residence to work in the US. The applicants also need a sponsoring US business. There is an annual quota of 10,500 applicants, which does not include their spouses and children, though the E-3 holder's spouse is entitled to work as well. An initial two year visa is issued, which can be extended every two years for an indefinite period of time (DFAT, 2005).
Summary of agreements
We have explored a range of multilateral, regional and bilateral trade agreements, particularly focusing on those directly affecting New Zealand. Most multilateral and regional trade agreements, with the exception of the EU and CER, appear to have had very limited impact on the temporary or permanent movement of less-skilled workers (World Bank, 2006). It should be noted that agreements on free labour movement are much more likely among countries that have similar levels of development. This was undoubtedly a major factor in the EU and CER agreements. With the expansion of the EU to countries with much lower income levels in recent years, (temporary) barriers have been introduced in the EU to limit migration flows from new member countries to existing high income members. This suggests that, while economic theory shows that countries can gain from both trade and labour migration, distributional issues (net gains coincide with a distribution of winners and losers from the liberalisation) are perceived to be less detrimental in trade than in migration liberalisation.
The absence of multilateral agreements for dealing with visa and work permit issues in the global economy has led to some trade agreements dealing with the movement of people explicitly, usually in separate chapters. Banda and Whalley (2005) note that the 'platform provided by a wide ranging trade and economic partnership agreement facilitates visa and work permits issues being included in the negotiations. But, the diversity of both outcome and approaches makes the emergence of later common disciplines from these agreements that much more difficult'.
The treatment of labour movement in trade agreements is currently very patchy, but will be supplemented to some extent by separate international labour agreements. While international trade agreements tend to be rather limited in permitting liberalisation of the movement of people, a number of bilateral and regional agreements exist that facilitate movement between selected countries, particularly between 'similar' developed countries such as Australia and New Zealand, Ireland and the United Kingdom, and the European Union, as noted above. It can be argued that typically 'trade agreements tend to be developed in response to trade that is already under way. Trade is rarely initiated by trade agreements' (OECD, 2004). Similarly, we may find that labour agreements will have a similar tendency to cover movement of labour that is already occurring to some extent.
[3] See, for example, Chanda (2003), Winters et al. (2003), Chaudhuri et al. (2004) and Ghosh (2005).
[4] For a recent report on the European Union, see The Economist (2007).
[5] Source: The Sofia Echo, 24 October 2006. Dustmann and Glitz (2006, Chapter 2) provide an overview of Europe’s experience of migration since the Second World War. The Economist (2008) provides a recent survey of migration issues.
[7] Another implication is of course that the rates of return to capital (and real interest rates) are higher in New Zealand than in Australia. Capital would therefore tend to flow from Australia to New Zealand.