Mode 4? What does it mean?

By Linda Kaucher

The fight against the proposed European Union/India Free Trade Agreement and the widespread social dumping it would create is gathering pace and the issue will now be debated at this year's TUC Congress.

One union, RMT, is now campaigning against the most secretive aspect of this deal - the labour liberalisation concept, called Mode 4, which allows corporations to drive down wages.

At its annual general meeting, RMT delegates were warned that EU Mode 4 commitments would hand transnational corporations the power to bring in cheap labour from outside the EU to work on extremely low rates of pay.

"The UK is the main and very willing target for these corporations and it will undermine UK labour conditions and displace workers.

"These workers will not be classed as immigrants and the company will be holding their visas," RMT delegate Gary Abbott warned.

The union is now seeking to publicise how British workers are being sold out in EU international trade deals and to challenge the British government's complicity in this.

Public debate on economic recovery always acknowledges the central importance of employment and of workers earning and spending.

But if transnational corporations displace earning and spending workers with a reserve army of cheaper, temporary migrant workers, recovery will be undermined. Yet this is not so readily recognised, and neither are the government measures that allow this to happen.

In particular, trade concessions that encourage such social dumping are being deliberately hidden. Workers who are earning and spending - in the process allowing others to earn and spend - is what Keynes called the multiplier effect.

While temporary cheap migrant labour may benefit individual companies and their shareholders, it cuts across the earn and spend cycle and the multiplier effect.

This means that wages leave the country, tax and national insurance income drops, the welfare bill increases as resident workers are displaced and become unemployed, young workers are denied work opportunities and there is an ominous and irretrievable loss of skills.

And then transnational corporations cream off profits from moving cheap labour across borders.

There is a continuum of measures allowing big business to capitalise on transnational wage differences. Free movement of workers inside the EU, but particularly free movement of services allows EU firms to bring in their own cheaper labour from wherever they choose.

Two categories in the British points-based system allow trans-national firms to bring in workers with no numerical limits.

The EU's Mode 4 offers - included in all EU trade agreements - allow transnational firms to bring in temporary workers.

The British points-based system categories of "intracorporate transferees" (ICTs) in tier 2 and "international agreements" in tier 5 have been set up for the international trade agreement commitments, though the British government does not draw attention to this.

Government regulations actually encourage the use of tier 2 ICTs. Transnational corporations bringing in skilled workers for less than a year can pay them just the minimum wage, made up to a low industry level wage with tax-free expenses and no national insurance. So British regulations ensure that ICTs are overall a cheap labour source, and because these workers are brought in temporarily and rely on the corporation for their visa, they will not become organised.

The EU's Mode 4 trade concessions are the most sinister measure because of the secrecy, the implications for workers and particularly for their permanence.

They allow corporations to bring in workers for their own established operations but also to supply workers into other firms, relieving those firms of all employer responsibilities.

Under Mode 4 the corporate right to displace workers with cheaper temporary migrant labour becomes irreversible and fixed in international trade law.

India is the main country asking for Mode 4 access so that Indian corporations such as Tata can supply cheap labour into the EU, though Britain is actually the main target.

In the EU/India Free Trade Agreement - expected to be completed in December this year - Mode 4 labour access is the single demand that India is making.
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Eugene


Thus this trade agreement hinges on British workers' jobs being sacrificed in exchange for investment opportunities for transnational financial services firms.

Yet while the EU/India trade agreement is being heavily contested in India because of the effects there, British workers have not been told about it.

There has been deliberate secrecy throughout the four years of negotiations.

Tory, Lib Dem, Labour, Green and UKIP politicians - as well as high profile journalists - have all known about Mode 4 commitments but have failed to tell British workers.

The BIS House of Commons select committee, overseeing the Department of Business, Innovation and Skills which connects with EU trade policy, has similarly failed in its role.

Despite the committee's extensive and expensive enquiries on trade, the labour aspect has not emerged in its reports.

This supposed watchdog committee has chosen to ignore it, despite the effects on workers and on the national economy, both now and in the future.

Workers in many sectors and at all skill levels will be affected by the Mode 4 commitments, especially in combination with existing internal EU labour liberalisation measures.

Transnational corporations will cash in on importing cheap workers as long as the government measures allow and facilitate it while disregarding the negative effects.

Clearly workers have to act for themselves to bring this to public debate. RMT has recognised the urgency of the threat of Mode 4 labour commodification, especially in the EU/India Free Trade Agreement, and is campaigning to bring it to public attention and to hold the government accountable.

Why Mode 4?

The World Trade Organisation categorises the modes in which cross-border services can be delivered

Mode 1: eg by internet

Mode 2: client crosses border eg tourism, foreign student market

Mode 3: company established cross border

Mode 4: workers are moved as "service suppliers"