What is Movement of Natural Persons? What is its importance for India?

Movement of Natural Persons under WTO refers to the presence of persons of one WTO member in the territory of another for the purpose of providing a service. Simply, it means citizen of a country temporarily going to another country to do services.

Movement of Natural Persons is one of the four modes in which services are traded among the member countries. The WTO’s GATS (General Agreement of Trade in Services) which is the service trade rules for WTO members, describes service trade in the following four modes.

Mode 1: Services which themselves cross-frontiers from one country to another e.g. Telecommunications. (BPO services)

Mode 2: Services, which are made available within a country for foreign consumers’, e.g.: tourism.

Mode 3: Services supplied by an entity of one country, which is commercially pressed in another e.g.: banking.

 Mode 4: Movements of natural persons from one country to another.

Popularly, Movement of Natural Persons is known as Mode 4 service trade. Movement of Natural Persons does not concern persons seeking access to the employment market in the host member, nor does it affect measures regarding citizenship, residence or employment on a permanent basis.

Practically most countries restrict the entry of foreign persons to do services. They often impose visa and several other restrictions on the entry of foreign personals. According to the WTO estimates, trade through movement of natural persons is relatively low compared to other three modes.

As per the Uruguay Round of GATT negotiations, commitments scheduled under Mode 4 were largely limited to two categories: intra-company transferees regarded as “essential personnel”, such as managers and technical staff linked with a commercial presence in the host country; and business visitors, i.e. short-term visitors not in general gainfully employed in the host country.

Besides, the GATS also allows for foreign qualified professionals and practitioners for temporary stay to work in a country to perform temporary assignments.

India’s interest in Mode 4

For India, the Mode 4 provides the greatest opportunity as the country has a rich pool of skilled persons. India hence is arguing for greater liberalization for the movement of natural persons.

Importance of Mode 4 for the country is visible from the fact that India is the largest remittance receiving country in the world. Remittance flow is the most comforting factor that produces a surplus in the invisible account of the BoP.

Similarly, large number of Indian companies are operating in advanced countries. Movement of Natural Persons provision allows them to employ Indian professionals in foreign countries.

Out of the WTO, India is engaging in bilateral visa liberalization talks for facilitating the movement of natural persons from India to other countries. But the developed countries including the US and UK are imposing more restrictions on the entry of Indian service professionals into their countries.