Mode 4: Trade talks reopen migration debate

George Osborne on a visit to India in 2010 George Osborne has called for more progress on an EU deal with India

India is widely seen as an emerging economic superpower, an exciting growth market for exporting companies, including many in the UK.

George Osborne on a visit to Mumbai in July 2010 called for more progress in the negotiations, arguing a deal could ultimately unlock 4.5bn euros ($5.8bn; £3.6bn) worth of extra trade each year. Then the talks got bogged down.

EU Trade Commissioner Karel De Gucht has told the BBC he is now a little more hopeful that progress can be made.

"Those negotiations have known their ups and downs," he said. "Recently India has made openings with respect to wine and spirits and retail. I am more confident it may be possible to conclude a deal in the first half of next year."

But buried in the fine print of the draft paperwork is something called Mode 4, which would allow skilled Indian professionals to work for up to six months at a time in the EU.

Is that such a good thing?

'Race to the bottom'

Mode 4, according to a definition by the WTO, refers to the "temporary movement of natural persons: when independent service providers or employees of a multinational firm temporarily move to another country".

Indian officials called for 40,000 workers to come to Europe under this scheme but EU negotiators said it should be half that. Twelve thousand of those could come to the UK.

Start Quote

Karel De Gucht

The problem is that for whatever reason, there is now the conviction in Great Britain that this is about migration”

End Quote Karel De Gucht EU trade commissioner

Linda Kaucher, an academic studying trade deals, says this would not be good for British workers.

"I think it means an absolute race to the bottom now and in the future for jobs for UK workers," she says. "Numbers studying computing at university have slumped here because people don't want to be in competition with cheap labour. That means a real de-skilling for the country."

In a statement to the EU, she said that "insofar as Mode 4 allows corporations to bring cheaper labour into EU countries and capitalise on the wage differential, workers in the host countries have a great deal to lose".

The TUC has joined the debate, saying it does not want commitments that could lead to the exploitation of Indian workers or those already with access to the UK jobs market.

Owen Tudor, head of the TUC's EU and international relations department, tells the BBC that he is worried about "the under-cutting of the labour market in the UK, particularly for skilled graduates".

But others feel that the argument is being framed in the wrong way.

"It's a bizarre fallacy to return to the old story of 'coming over here, taking all our jobs'. We should see this as a benefit," said Mark Wallace, a spokesman for the Institute of Directors.

He pointed to the potential for trade and to build good relations with "one of the world's next superpowers".

Mr de Gucht, the EU trade commissioner, says that Mode 4 is about temporary work and movements between multinational companies.

The UK government insists that Mode 4 would affect employees working for big multinationals and not take away jobs from British workers.

"The problem is that for whatever reason, there is now the conviction in Great Britain that this is about migration," he says. "It's nothing to do [with] that. These are not jobs that would be done by the local workforce."

Further debates ahead

Whatever happens next with India, this issue is not going away.

The TUC says there is also a Mode 4 provision in an impending EU trade deal with Canada and it is seeking more information.

That deal with Canada is not far off completion and trade talks between the EU and the US are set to get going in earnest soon.

There is no shortage of trade talks right now: Singapore, Malaysia and Vietnam are also being pursued by the EU.

Robin Niblett, director of Chatham House, argues that academic studies suggest economic growth would be boosted by such deals, pointing to a study by the OECD from 2005 that suggests GDP per capita could increase by 3% in Europe if you can strike a deal to break down regulatory barriers.

"This could have a huge effect at a time of slow growth and difficult job creation in the US and EU," he says.

The debate over how they benefit economies, including the UK, looks set to continue.

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