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Globalization Transforms Trade-Migration Equation
By Charles B. Keely
Georgetown University
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December 2002
The flowering of economic globalization has seen the development of
unprecedented interconnection between immigration on the one hand, and
increased trade capacity, competitiveness, and employment policy on the other.
Corporations and governments alike are being forced to adjust to this new
reality, particularly as it relates to labor flows.
For their part, government policy makers face urgent questions about how to
maximize the benefits of migration, while minimizing potential drawbacks. At
the same time, international personnel movement — a strategic concern of top
executives - is spurring firms toward innovation in business organization
and practice.
But despite ample reasons for increased linkage, a gap remains between
migration policy and trade policy. This manifests itself in various ways, from
the absence of international migration regimes, to immigration controls that
effectively function as non-tariff trade barriers. The lack of coordinated
policies also has an impact on firms as they adapt to globalization by applying
new migration-linked human resources techniques. Examining these phenomena
illustrates just how closely migration and trade are related in this era. It
also demonstrates how neglecting to coordinate trade and migration policies can
create obstacles for both countries and firms.
A Missing Framework
Maximizing the rewards of labor migration depends, to some extent, on a
functioning international framework. However, no international regime exists
for migration comparable to the World Trade Organization (WTO), whose complex
machinery and rules regulate international trade agreements, dispute resolution
mechanisms, ongoing rounds of trade talks, and global trade regimes. The
purported goal of this set of international agreements, behaviors, and
institutions is to bring about "free" trade. But in light of the complicated
rules, it is misleading to describe it as "free" rather than as "regulated."
In comparison with global trade, international migration is in a sense both
less regulated and less free. Examples do exist of bilateral and multilateral
agreements on "free" or highly facilitated movement between countries, such as
those between Ireland and the United Kingdom or New Zealand and
Australia. Moreover, there are regional agreements, most notably that of the
European Union, which allow citizens of member states to live and work in other
member states. In addition, there are elements of a global refugee regime that
suggest how refugees should be treated, but in the end lays down no
requirements for states to permit the entry or settlement of refugee status
claimants. States freely enter into such agreements in limited contexts.
In general, however, individual countries reserve the sovereign right to set
their individual immigration policies. Control of borders is viewed, even by
many advocates of "free" trade, as an inherent part of sovereignty. There is
very little questioning of this orthodox view, even when national immigration
controls limit flows of one factor of production — people — in much the same
way that tariffs limit flows of goods.
Borders as Barriers
Immigration controls and trade barriers are similar in that they restrict supply
of a factor of production, increase prices, and subsidize and protect the labor
sector of the country that imposes such restrictions. That virtually every
country restricts entry in some way does not change the economic impact of
restricting labor flows. It merely means that nearly every country imposes
non-tariff-like barriers when they restrict immigration.
These barriers set up a potential economic clash in cases where international
trade regimes regulate the movement of people. One example of such regimes came
out of the negotiations in the Uruguay Round of the General Agreement on Trade
and Services (GATS), which introduced an innovation that makes clear the
aptness of the analogy between trade barriers and immigration controls.
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"Negotiations on the movement of service providers have been slow and
contentious, and illustrate how the integration of immigration policy decisions
into trade negotiations is still in its infancy" |
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To carry out trade in services, the agreement recognizes four modes of
delivering them. First, a person can go to a country and receive the
exported service (e.g., a medical operation) and return home. Second, a firm
can sell a service without the buyer or seller leaving their respective countries
(e.g., certain types of insurance policies or financial transactions). Third,
a service-providing firm can set up a facility in another country (e.g., banks or consulting firms). Fourth, the person in the role of
the service provider may move from his or her own country to perform the
service in another country, and then return home. In GATS jargon this is
referred to as the movement of a "natural person" (as opposed to a "juridical
person" like a firm or subsidiary).
Under the rules of this agreement, therefore, countries whose immigration laws
restrict the movement of service providers have erected a non-tariff barrier to
trade in services. Immigration and trade policy thus collide head on.
Negotiations on the movement of service providers have been slow and
contentious, and illustrate how the integration of immigration policy decisions
into trade negotiations is still in its infancy.
Employee Movement and Competitiveness
As an increasing number of firms become more global in their operations, the
relationship between migration and trade has become a fundamental issue of
competitiveness. For companies that manufacture goods and those that primarily
deliver services, and all shades in between, operating globally requires
movement of international personnel. This includes taking on non-citizen new
hires and moving current employees internationally for both short and long-term
assignments.
By definition, global firms operate in an international context. They make
decisions on manufacturing, research and development configuration,
distribution, and management development for global operations based on the
assumption that their employees will be citizens of many countries and will of
necessity occasionally need access to countries other than their own to perform
their assigned duties for the firm.
Training managers for future leadership, for example, requires international
experience and foreign assignments. Research and development teams and
marketing teams for multi-country introductions often require international
groups to work together on projects for extended periods. Joint ventures often
demand relocation. Many firms seek to hire scientific specialists with advanced
degrees from top universities who often are not nationals of the base country
of the hiring company. Training in facilities management for specialized
manufacturing facilities or training in financial controls used throughout a
multinational firm may require extended training of foreign personnel at a
regional or headquarters site in a country other than their own. Indeed,
international experience is now a prerequisite to climb the corporate ladder in
many firms.
In the long term, without closer coordination of trade and migration policies
by governments and international bodies, firms will be harder and harder
pressed to meet their increasing need for more permeable borders that allow the
flexible and fleet movement of high-skilled employees like the ones mentioned
above.
"Just in Time" Labor Flows
In pursuit of competitiveness, many firms have already reduced costs, increased
quality, and shortened the time to market for new or modified products. One
area of international business that does not yet mirror this rationalization of
global operations, however, is human resources. This sector has yet to become
an area of routine strategic analysis and decision-making by top corporate leadership.
In this context, international mobility is still typically seen as part and
parcel of a staff operation in human resources. Human resources professionals
and lawyers are left to navigate immigration law and facilitate movement of
personnel. However, this eliminates the opportunity for firms to apply a
relatively recent business innovation: the "just in time" method.
Storing inventory in a warehouse is expensive, so "just in time"
manufacturing techniques were developed to minimize the gap between production
and delivery to the customer. However, despite their success in improving
product delivery and reducing costs, such concepts have not been applied to the
"just in time" delivery of necessary skills. Money, time, and competitive edge
are squandered when skills, experience, and knowledge (some of it firm-specific
and otherwise unavailable outside the company) are not efficiently and
rationally utilized.
The question remains, however, whether "just in time" methods can be used with
maximum efficiency as long as contradictions exist between trade and migration
policies at national and international levels.
Managing Intellectual Property
That employees are a company's most valuable asset has a basis beyond corporate
sloganeering.
Thinking of the international mobility of managers and highly skilled people
in research and development, marketing, and other areas critical to corporate
management and growth would be yet another globalization-spurred innovation
along the lines of "just in time" production techniques. In fact, international
competitiveness will demand attention to human resource management and mobility
as part of intellectual property management as a profit sector in the very near
future. The development of both a mindset and the organizational technology to
successfully exploit the human resources profit center potential requires
developing ways to measure the true success of the deployment and use of
employee skill sets.
The ability to make evaluations on the basis of measured results is typically
necessary to sufficiently raise an issue's strategic importance in order to
garner high-level executive attention. However, there is still no case study or
successful set of guidelines in the area of global personnel mobility. Many
firms suspect this and are paying more attention to personnel movement.
At this point, firms focus mostly on operational and cost issues, narrowly
conceived. These include the cost of transfers for longer-term assignments vs.
using shorter-term business trips to accomplish the same objectives. The issue,
of course, is whether the methods used are able to accomplish the goals and
deliver the same value to the company and the employee.
While these are certainly areas of concern, the focus is too confining. A
broader vision is necessary and new organizational technology needs to be
developed to rationalize resource allocation, use, growth, and retention of
intellectual property assets embodied in valuable employees. Government
migration policy that recognizes and rewards this vision will be crucial to its
successful realization.
Tying Trade to Migration
Seen in the light of these various challenges and opportunities, migration for
employment purposes is part of a government's trade policy and economic policy
related to competitiveness and employment. Immigration was never simply a
matter of admitting people for family, occupational, or humanitarian reasons
with little or no economic, employment, or trade impacts at the national level.
It is also not an isolated matter of deciding whether, how many, and what
kinds of immigrants to admit and the myriad regulations affecting their
employment status. Nor is it simply a matter of private interests of firms
alone with no further national implications for the economic health of the
country.
This approach does not require extreme steps such as throwing opening doors or
eliminating all immigration regulation. It is more akin to changes in thinking
about moving trade policy from a protectionist approach to a more open
approach. Trade has not become deregulated or thrown open to any and all
practices. Likewise, immigration policy needs to be seen as a wider field
beyond social policy about population composition. It is also economic policy.
Increased trade capacity, competitiveness, and employment policy are
inextricably tied into migration to a degree beyond what existed before the
expansion of economic globalization. The great age of migration may still be in
the future.
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Copyright @
2009 Migration Policy Institute.
All rights reserved.
MPI · 1400 16th St. NW, Suite 300 · Washington, DC 20036
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