Conclusion

While flows of goods, services and investment have made some significant headway in the WTO and regional agreements, the same can not be said for the movement of labour, particularly of unskilled workers (Chia, 2006). This bias against people movement seems to be reflected in public opinion and in discrimination against migrant groups. For example, Mayda (2007) used survey data and found that opinions across a range of countries are generally more pro-trade than pro-immigration. Greenway and Nelson (2006) explain this by noting that trade is predominantly about short-run material consumption whereas migration generates a range of externalities over a long period of time. Despite the large potential gains from labour market liberalisation, there are often concerns about adverse labour market impacts for certain groups of native workers, concerns that immigrants may impose net burdens on public finances, as well as possible social and political aversion to increasing immigration (Mayda, 2007). Hatton (2007) suggests, however, that while public opinion may be less receptive to liberalisation of migration than trade, the key impediment to liberalisation of migration is the lack of a basis for reciprocity in negotiations.

Nonetheless, given the greater flexibility of temporary migration schemes and the advantage of work to residency schemes, this review suggests that there may be an advantage in expanding the scope and use of GATS mode 4 policies in trade negotiations. However, given the current international environment, such negotiations are likely to be on a bilateral basis rather than as an outcome of the Doha round. Whatever evolves, it must be recognised that mode 4 will always be too restrictive to replace immigration policy. In any case, the concerns and interests of various government departments in this area do not always intersect. Consequently, progress will probably require strong leadership, including at the ministerial level. It should be kept in mind that concessions under temporary entry may be bi-directional. In the New Zealand context, a trading partner may seek greater access to the market for unskilled labour (say, in seasonal employment), whereas professional New Zealand workers might seek access to the market for professional services in the partner's economy. This simply reflects typical labour movements between developing and higher income countries. The export of educational services in particular is likely to remain a promising area, with growth in developing country incomes and a strong appetite for international education.

While labour-exporting countries may be keen to lower the barriers to the movement of their workers, such countries typically have asymmetrical policies. Inward labour movements in these countries typically face a much tighter regulatory environment than do international flows of goods and investments. Developing countries that may encourage the emigration of their citizens are not always themselves open to immigrants from elsewhere. Furthermore, movements of lower-skilled workers are generally viewed as particularly sensitive, even though significant gains are possible (Chia, 2006). Keely (2003) notes that immigration policy should be viewed more along the lines of trade policy, with a movement from a protectionist approach to a more open approach. He argues that trade, competitiveness and employment policies are 'inextricably tied into migration to a degree beyond what existed before the expansion of globalization' (Keely, 2003). However, the counter argument is that multilateral trade negotiations have a more than 50 year history, while migration has typically been a national policy issue and the movement of people raises a host of additional challenges, including social and cultural integration that trade agreements may not be well positioned to address (World Bank, 2006).

The largest gains may be from allowing labour mobility between very diverse countries (Winters, 2003b). Hatton (2007) argues that international migration is driven by absolute rather than comparative advantage. Hatton therefore suggests and there is 'no basis for WTO-style negotiations over migration and therefore no grounds for reforming the international architecture in the hope of fostering liberalization' (Hatton, 2007). Therefore, although large potential gains from liberalising migration could be realised through improved cooperation along the lines of what the WTO has done for trade, this is not likely to happen in the view of Hatton, unless a specific way forward can be forged. Hatton suggests that explicit linking of immigration policy to other policy issues and agreements may be useful. Crump (2007) also emphasises the importance of this issue-linkage in negotiations.

Bilateral or regional approaches could serve to build trust, certainty and improved management schemes that could later act as stepping stones to multilateral deals (World Bank, 2006). Again this emphasises the complex and interacting dynamic linkages that negotiators will need to be able to deal with effectively. Countries will typically prefer the flexibility to choose the conditions and countries from which labour may flow and they may be reluctant to agree to the WTO principle of MFN treatment (Chia, 2006). Therefore regional agreements seem particularly important and they are of course increasing in relevance even for trade negotiations, particularly given the current setbacks for the WTO negotiations. Nonetheless, regional arrangements will bring their own set of problems which are well-documented in the international trade literature.

Increasing pressures may open countries to more serious discussions on migration agreements. For example, as the Japanese economy finds itself increasingly short of unskilled workers (given its rapidly ageing population) it may consider options that were previously unpalatable. Interestingly, the movement of natural persons is included as a 'major element' in draft agreements between Japan and the Philippines and Thailand (Yamagata, 2006). Juxtaposing people movements with other elements of a regional trade agreement seems much more attractive to the Japanese who can see clear benefits accruing from liberalisation in other areas and this policy change 'is truly remarkable in the sense that previously Japan had not shown any interest in the introduction of foreign semiskilled workers' (Yamagata, 2006). This seems to be a good example of issue-linkage and finding a way forward through complex, interacting and sometimes one-way streets.

The current state of the economic environment in both origin and destination countries tends to determine the key areas of opportunity and concern. For instance, in emerging economies unskilled workers may seek opportunities abroad, while in rich countries there may be strong demand for skilled labour. There will be strong international competition for attracting 'talent'. Comparative advantage arises with differences between economies - leading to important gains from trade and possibly also the movement of people. New Zealand's ability to attract foreign talent is more likely to be linked to the desire of skilled migrants to improve their lifestyles rather than to increase their incomes. However, comparative advantage is dynamic and the implications of this for the movement of people will change over time for any given economy.

The Productivity Commission (2006) provided in the Australian context an extensive discussion of the many ways in which immigration affects the economy. Any quantification of the impact requires then the use of a large scale model of the economy that bring the myriad influences together. This was the approach adopted by the Productivity Commission and is also the approach adopted in the current New Zealand research programme on the economic impacts of immigration, co-ordinated by the Department of Labour.^[21] Consequently, in cases where access to the domestic labour market is negotiated as part of bilateral foreign policy initiatives, it should be kept in mind that a quantitative assessment of the impact requires the use of such a large scale model, such as the Monash model of Australia, or the GTAP model of the world. This would facilitate an assessment of the impact in a way that can take account of the many and intricate ways in which both temporary and permanent migrants can affect the economy.

Finally, we must emphasise that from the policy perspective these issues cannot be fully addressed within a purely economic framework. In this report we highlighted the paradox of diversity. Economic theory suggests that the economic benefits of opening up borders to trade or immigration are at their largest, the more different the countries are. In addition, greater labour mobility helps to facilitate trade and increases the cross-border demand for domestic output. It is argued by some, as noted earlier, that from the perspective of trade, economic integration is not as desirable as the nurturing of cultural diversity. From the social perspective, however, it has become clear that social cohesion and the accumulation of social capital are not natural outcomes in increasingly diverse societies, but require resources to be allocated to the promotion of desirable social outcomes. Thus, the social evaluation of greater cross-border mobility resulting from greater international economic integration must go hand in hand with the economic assessment.