The Philippines, as a service export country, should welcome the continuing multilateral

negotiations to expand global trade in services, including overseas employment, in order to

maximize the benefits from a liberalized trading environment. The significant contributions
of overseas employment in 2 terms of mitigating the unemployment problem and stabilizing
the balance of payments position of the country, through their significant remittances, have
been recognized.
The service sector is the most important sector for most developing economies. It is the
largest contributor to gross domestic product, production and employment. Since it is such an
important sector, developing economies need to identify their comparative advantage in
services and potential export markets. Developing economies have a comparative advantage
in labour services. They have an abundance of low and semi-skilled labour that is a major
input into tourism, construction and transport services. New potential export opportunities are
also emerging in communications and computer services. However, the export of many of
these services is limited by many restrictions on the temporary movement of labour imposed
by their trading partners through domestic regulation. Developing economies can improve
their export revenues by specifically identifying these restrictions and, where a movement of
labour is required, promote the benefits to potential export markets of services trade
liberalizati
The potential benefits of services trade liberalisation Trade in services can help create
opportunities for countries to expand their outputs of services in sectors where they have a
comparative advantage, thus creating jobs, contributing more to GDP and generating foreign
exchange. This can be especially important for those countries which are relatively isolated
from world goods‟ markets, e.g. due to poor transport infrastructure, or being landlocked,
such as many subSaharan African countries. Services exports can be an important part of a
developing country‟s growth strategy. For example, India has been capitalising on a boom in
exports of IT enabled services as firms have increasingly outsourced certain administrative
functions to lower cost countries. And (labour-intensive) tourism is now a significant part in
the economy of many low-income countries. In addition, imports of services can significantly
improve performance by bringing greater competition, international best practice, better skills
and technologies, and investment capital.
Trade in services via Mode 4 is an increasingly important component of services exports for
developing countries. This type of trade can benefit countries through remittances, return
migration and by filling specific skill gaps, although concerns about brain drain remain.
Several regulatory barriers still restrict much of trade via Mode 4. In order to reap full
benefits from mode 4 trade, developing countries could: enhance their lobbying efforts to
reduce these barriers in other countries; reduce their own barriers in areas where skills are
scarce; and implement complementary policies, such as expanding the skill base and creating
incentives for return. Trade in services via the temporary movement of natural persons (or via
Mode 4) may help developing countries exploit their comparative advantage in semi-skilled
and unskilled labour and for some developing countries specialised skilled labour as well.
This is an increasingly important component of services exports for many developing
countries, which send abroad a number of different service providers, such as nurses,
teachers, domestic workers, as well as more skilled ones, such as medical doctors, architects,
engineers. This allows countries to receive remittances, which are the largest source of
external capital in many developing countries, and to benefit from enhanced skills and
resources of return migrants (in case migration is truly temporary). On the other hand data
show that skilled individuals are more likely to emigrate, thus raising concerns about „brain
drain‟ for exporting countries. These flows are mainly South-North, although South-South
Mode 4 trade is increasingly important. The latter constitutes an effective way for developing
countries to fill some of the gaps in specific skills via the temporary import of service
providers. For example the number of foreign nurses in Botswana is roughly equal to that of
Batswana nurses abroad, suggesting that imports of nurses in Botswana are helping mitigate
the potential negative effects of migration on domestic capacity.

4.6. Real or Apparent Benefit of Liberalization One approach taken by some sectors in
rationalizing the need to liberalize trade in services is to stress our legal obligations when the
Philippines acceded to the GATS. Aside from this legalistic perspective, the need to liberalize
trade in services and specifically commit our professional services to the rules, disciplines
and obligations of GATS can be reasoned out by emphasizing the benefits derived from a
liberalized environment. In a study by Tullao (1998), the positive contributions of
liberalization of services on various sectors of the economy have been discussed. In the field
of professional service, some of the key benefits of liberalization cited through the
establishment of Mutual Recognition Agreements include the following: “1) free movement
of professionals across borders; 2) increase in the comparative advantage of professional
services; 3) use of imported skills for the improvement of profession; 4) allows various
regulatory bodies involved in granting rights to practice to save time and resources by
working together and engaging in more effective division of labor; and 5) enhances mutual
learning and the transmission of regulatory experience thus raising professional standards and
the level of access to professional services” (Yew, 1997).

The formation of the ASEAN Economic Community (AEC) envisions the ASEAN to no
longer be a group of ten individual and fragmented markets but a single market and
production hub with a market of more than 600 million people. For businesses, this means
opportunities to scale up. For consumers, this means facing a wider variety of products at
better prices. For the region as a whole, this means a more dynamic, competitive market place
with a larger pool of resources such as raw materials and other inputs, services, capital, and
human resources to draw from. To reap all these benefits, the ten member countries have to
be as seamlessly connected as possible. But how will goods, services and investments flow
freely across ten countries that are geographically separated, culturally and institutionally
diverse, and economically different in terms of their levels of development? The answer lies
in the Master Plan of ASEAN Connectivity (MPAC). With the goal of narrowing the
development gaps between the member-countries and ensuring the ASEAN’s place at the
center of growth and development in Asia-Pacific, the MPAC is envisioned to reduce the
costs of investment and international trade in goods and services to deepen and widen the
production and distribution networks in the region.
An important element of the liberalisation of accountancy services is the ability of qualified
accountancy professionals from one jurisdiction (home country) to practice in another
jurisdiction (host country). The ability to practice in different jurisdictions may be achieved
through several means. These may include the unilateral recognition of qualifications and
experience, the harmonisation of qualifications and the mutual recognition of qualifications
and experience.

Migration can help strengthen trade relationships, by fostering faster economic growth
and also through the personal connections migrants bring with them  In conventional
economic theory, migration and trade are treated as substitutes. Put simply, developed
countries face a choice between importing products that embody labour inputs and instead
importing the labour directly through migration. In other words, increased trade was thought
of as reducing pressures for migration; conversely, increased migration would reduce the
need for trade.  Recent research has challenged this concepti

Greater labour market access for migrants from developing countries has the potential
to deliver substantial development gains, in excess of the benefits from further trade
liberalization
 Increased migration has the potential to deliver ‘win-win-win’ benefits to: migrant workers
themselves; (developing) countries of origin; and host country economies. World Bank
estimates of the welfare gains from greater labour mobility show that a 3 per cent increase in
global migration could deliver benefits of over $350 billion.  Large and persistent income
gaps between countries, globally and within the Asia-Pacific, provide substantial incentives
to cross-border movement and suggest that the benefits from migration to individual workers
are high. One set of estimates is that the ratio of GDP per capita (PPP) between the top and
bottom countries grew from 10 to 1 in 1870 to around 50 to 1 by the end of the last century.
But any benefits to the migrant from higher wages need to be netted off against the costs of
moving, including money paid to middle-men, which is often substantial. Migrants are also
vulnerable to abuse if personal and employment rights are not protected.  Sending countries
generally also benefit from outward migration. Migration can increase wage rates for those
left behind as labour becomes scarcer; remittance inflows support consumption and
investment; and the prospect of migration increases the incentives for 8 would-be migrants to
develop skills and knowledge. These positives generally outweigh the costs of the so-called
‘brain drain’ although in certain sectors this can be damaging, especially in small countries. 
Receiving countries also benefit from migration when it meets labour market needs. Despite
common public concerns, there is little evidence that migration substantially impacts wages
for local workers. Migrants are often entrepreneurial and can foster economic dynamism and
business creation.
Greater labour mobility for workers in developing countries could have a larger positive
impact on development than any other policy intervention. Host countries would also broadly
benefit if workers were allowed to fill specific labour shortages. To achieve this, more
bilateral co-operation on labour mobility is needed. This can be achieved through
freestanding bilateral labour agreements or as part of wider trade deals.  Because trade
agreements offer a wider field for negotiation, developing countries have potentially more
leverage than in agreements solely dealing with labour mobility. Successful deals could
exchange labour market access in the developed or recipient country for goods and services
access in the developing market.  Effective agreements will also incorporate mechanisms for
sending and receiving countries to work together so that: temporary migrants do not overstay;
migrants are properly protected and accorded labour rights; information on available job
opportunities is shared; applicants are effectively screened before departure; and incentives
are in place for migrants to develop skills that will benefit their countries of origin upon their
return.  Greater temporary labour market access may be more achievable than expanded
permanent access. While this has drawbacks, it would still deliver major gains: for sending
countries temporary access still provides benefits in terms of skill development and earning
opportunities, while for host country populations it offers reassurance that immigration will
not be uncontrolled or damaging to social cohesion.  Regional co-operation can also play an
important role. Subregional organizations like ASEAN have further to go in integrating
labour markets. And regional consultative processes can build towards more tangible
outcomes in terms of developing model agreements and offering capacity building on
successful working practices.  ESCAP as the United Nations Regional Economic
Commission for Asia and the Pacific can help by acting as a platform for regional co-
operation. More specifically, ESCAP can provide specific advice and capacity building for
countries negotiating preferential trade agreements or economic partnerships so that they
secure, as far as possible, the full developmental benefits of labour mobility.

There is a broad consensus that international labour mobility can contribute positively to
development and poverty reduction under certain conditions. The ability to earn higher
salaries abroad is generally good for migrants and their families, and for communities
remaining behind in the sending countries. Further, contrary to the commonly encountered
belief that inward migration is socially and economically harmful, receiving countries can
also benefit from the skills and economic dynamism brought by new arrivals. But there are
also costs associated with migration, including: high transaction costs for migrants
themselves, low levels of protection for workers’ rights, and high human and social costs
associated with distance from places of origin. Migration, when not wellmanaged, can also
raise social tensions and may increase demand for public services in countries of destination.

Free flow of services

20. Free flow of trade in services is one of the important elements in realising ASEAN
Economic
Community, where there will be substantially no restriction to ASEAN services suppliers in
providing
services and in establishing companies across national borders within the region, subject to
domestic regulations. In liberalising services, there should be no back-loading of
commitments, and pre-agreed flexibility shall be accorded to all ASEAN Member Countries.
In facilitating the free flow of services by 2015, ASEAN is also working towards recognition
of professional qualifications with a view to facilitate their movement within the region.
Actions:
i. Remove substantially all restrictions on trade in services for 4 priority services sectors,
air transport, e-ASEAN, healthcare and tourism, by 2010 and the fifth priority services
sector, logistics services, by 2013;
ii. Remove substantially all restrictions on trade in services for all other services sectors by
2015;
iii. Undertake liberalisation through consecutive rounds of every two years until 2015, i.e.
2008, 2010, 2012, 2014 and 2015;
iv. Target to schedule minimum numbers of new sub-sectors for each round: 10 sub-sectors
in 2008, 15 in 2010, 20 in 2012, 20 in 2014 and 7 in 2015, based on GATS W/120
universe of classification;
v. Schedule packages of commitments for every round according to the following
parameters:
• No restrictions for Modes 1 and 2, with exceptions due to bona fide regulatory
reasons
11
(such as public safety) which are subject to agreement by all Member Countries on a
case-by-case basis;
• Allow for foreign (ASEAN) equity participation of not less than 51% by 2008, and
70% by 2010 for the 4 priority services sectors; not less than 49% by 2008, 51% by
2010, and 70% by 2013 for logistics services; and not less than 49% by 2008, 51%
by 2010, and 70% by 2015 for other services sectors; and
• Progressively remove other Mode 3 market access limitations by 2015;
vi. Set the parameters of liberalisation for national treatment limitations, Mode 4 and
limitations in the horizontal commitments for each round by 2009;
vii. Schedule commitments according to agreed parameters for national treatment
limitations, Mode 4 and limitations in the horizontal commitments set in 2009;
viii. Complete the compilation of an inventory of barriers to services by August 2008;
ix. Allow for overall flexibilities2
, which cover the sub-sectors totally excluded from
liberalisation and the sub-sectors in which not all the agreed parameters of liberalisation
of the modes of supply are met, in scheduling liberalisation commitments. The scheduling
of liberalisation commitments in each round shall be accorded with the following
flexibilities:
• Possibility of catching up in the next round if a Member Country is not able to meet
the parameters of commitments set for the previous round;
• Allowing for substituting sub-sectors that have been agreed to be liberalised in a
round but for which a Member Country is not able to make commitments with subsectors
outside the agreed sub-sectors; and
• Liberalisation through the ASEAN Minus X formula.
x. Complete mutual recognition arrangements (MRAs) currently under negotiation, i.e.
architectural services, accountancy services, surveying qualifications, medical practitioners
by 2008, and dental practitioners by 2009;
xi. Implement the MRAs expeditiously according to the provisions of each respective MRA;
xii. Identify and develop MRAs for other professional services by 2012, to be completed by
2015; and
xiii. Strengthen human resource development and capacity building in the area of services.

For the professional, it is a good career move to be able to work within ASEAN regions
freely. It will enhance personal skills as well as diverse interaction with other countries.
Hence, his/her background will grow. It is also good for the companies who prefer to have
people outside their country to hire easily based on AEC’s MRA.
I can see a problem outside the ASEAN territories to emerge with this kind of “freedom”.
Some may think that the ASEAN are conniving with each other, making others an “outcast”
in the improvement of one’s nation. Also, a professional might abuse his/her leeway from one
country and company to another. This will boil down to internal assessment and agreement
that the ASEAN should look into.
In addition to this, the low-skilled to unskilled labour workers will not benefit from the
AEC’s aim. The criteria required of them are a bit too high to achieve considering economic
factors are not consistent at all classes. I think the companies will gain most in this effort and
low-skilled workers will not benefit from this.

In the Master Plan on ASEAN Connectivity, people-to-people connectivity was recognized as

the glue that supports and anchors the efforts for physical connectivity and the regulatory and
institutional reforms in the region. These constitute the region’s efforts to realize a people-
oriented ASEAN community, keeping in mind that the ASEAN people will be both agents
and recipients of the economic benefits that the integration is expected to bring about. They
are agents because their cultural diversity, shaped by different customs and beliefs, and
enriched by investments in education, life-long learning and other initiatives for human
resource development can provide the much needed impetus for new, creative and innovative
business ideas that will only sprout if there will be greater interaction among them. They are
also recipients because the collective effort to accelerate economic growth, enhance social
progress and intensify cultural development can only lead to an improvement of their living
standards. The vision is to ultimately make a connected ASEAN that will be a single
community abounding with opportunities meant to enhance the well-being and livelihood of
the ASEAN people. With this in mind, efforts for people-to-people connectivity focus on two
main strategies: to promote deeper intra-ASEAN social and cultural interaction and
understanding, and greater intra-ASEAN people mobility through progressive relaxation of
visa requirements and development of mutual recognition arrangements (MRAs). Creating an
integrated ASEAN labor market out of an integrated ASEAN market is easier said than done.
Labor issues have always been sensitive for many countries for several reasons. Prompted by
nationalism or sometimes even by guild mentality, local labor authorities consider it their job
to ensure that local employment opportunities are reserved for its own citizens. Some
employers who have already encountered economic needs tests required by labor authorities
may attest to this – they may have had to prove that local workers are not available in order to
justify their need to hire a foreigner. The other side of the coin is the fear of local employers
of losing precious talent who are looking for greener pastures abroad. The issue of a possible
brain drain still looms in the mind of some. Mobility issues also transcend economic issues –
security problems in light of transnational crime, cross-border terrorism and illegal migration,
as well as socio-cultural issues such as health and assimilation. But despite the threats, it is
not a question of whether labor mobility should be permitted or not – the pros outweigh the
cons but ASEAN will have to take a more gradual approach in tackling the mobility of
human resources in the region by first earning the support of the national governments and
business sectors, and then preparing the educational systems in the member-countries.

Transforming ASEAN into a single market and production hub will be difficult unless it is
oiled by the mobility of the people who will manage the free flow of goods, services and
investments. To carry this out, the AEC blueprint includes, among its many elements, the free
movement of skilled labor. Bringing down the barriers to labor market integration in ASEAN
will not only benefit businesses in terms of a better and larger talent pool, but participating
countries and the workers themselves stand to benefit as well. For host economies, labor
migration helps boost growth and address labor shortages. The growth of countries sending
workers abroad will also be spurred by financial remittances and possible knowledge
transfers. The workers, on the other hand, will also gain higher wages and opportunities to
acquire skills and experience. The case for labor mobility in the AEC is strengthened by the
participation of the ASEAN countries in complex international supply chains. The World
Bank (WB), World Trade Organization (WTO) and Organisation for Economic Co-operation
and Development (OECD) have pointed out that the formation of cross-border supply chains
has been tantamount to a “trade-investment-services-know-how nexus”. Goods, services,
investments and knowledge are now fully intertwined and inseparable in production. This
means that for the efficiency of supply chains, not only should the barriers to goods trade be
addressed, but also the barriers to the other components of the nexus, especially services. As
cited in the IMF publication Finance and Development, for manufacturing firms in
developing economies, simply providing services that connect their industries to global value
chains is not enough. They also have to develop competitiveness in more skill-intensive
activities along the value chain1. The concept of the “smile curve” of value creation comes to
mind, which categorizes manufacturing and standardized services such as transportation and
communication as low value-added activities, while more sophisticated services such as
research, development, design, marketing, advertising, brand management and other after-
sales services are in the higher ends of the value chain. Initially, developing economies join
the chain by starting with the low value-added tasks, and then eventually upgrading to the
higher value-adding activities. Note that the services element in the higher value components
(marketing, advertising, after sales services, etc.) have very strong ‘professional services’
flavor. The upshot on international trade in services is that ‘movement in natural persons’
will become an important policy issue
Developing countries need to create incentives for migrants‟ return in order to fully benefit
from their skills. Policies such as the active institutional management of migration and
systems that allow a returning skilled migrant to rejoin her industry at a level appropriate for
her experience may help create these positive incentives. A relatively successful example of
this is the Philippine Overseas Employment Administration, which was created in 1995 to
promote the return and reintegration of migrants. This institution grants several privileges to
returnees, including tax-free shopping for one year, loans for business capital at preferential
rates and eligibility for subsidized scholarships. Effective co-operation between exporting
and importing country is also crucial to increase the number of migrants returning. Co-
operation may involve bonding schemes, where part of the wage of the temporary migrant
could be paid upon return, or in an account based in the home country