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The regulations related to the free movement of skilled labor AEC

FOREIGN TRADE UNIVERSITY
FACULTY OF ECONOMICS AND INTERNATIONAL BUSINESS

---------***---------

GRADUATION THESIS
Major: International Business Economics
THE REGULATIONS RELATED TO
THE FREE MOVEMENT OF SKILLED LABOR
WITHIN THE ASEAN ECONOMIC COMMUNITY
AND SOME RECOMMENDATIONS FOR VIETNAM

Student name : Pham Thi Van Trang
Student ID

: 1217150144

Class

: A24 – High Quality Program


Intake

: 51

Supervisor

: PhD. Tran Thi Ngoc Quyen

Hanoi, May 2016


TABLE OF CONTENTS
LIST OF ABBREVIATIONS ................................................................................. i
LIST OF TABLES .................................................................................................. ii
LIST OF FIGURES ............................................................................................... iii
ACKNOWLEGEMENT ........................................................................................ iv
INTRODUCTION ....................................................................................................1
CHAPTER 1: OVERVIEW OF THE REGULATIONS RELATED TO THE
FREE MOVEMENT OF SKILLED LABOR AND THE ASEAN ECONOMIC
COMMUNITY .........................................................................................................4
1.1. Overview of the free movement of skilled labor.........................................4
1.1.1. The concept of the free movement of skilled labor...................................4
1.1.2. The regulations and international agreements related to labor mobility
in the world ........................................................................................................5
1.2. Overview of ASEAN Economic Community ............................................12
1.2.1. Historical Overview ...............................................................................12
1.2.2. Commitments related to the free movement of skilled labor within the
ASEAN Economic Community .........................................................................15
1.2.3. ASEAN Economic Community Blueprint 2025 ......................................17
CHAPTER 2: THE REALITY OF IMPLEMENTING THE REGULATIONS
RELATED TO THE FREE MOVEMENT OF SKILLED LABOR IN SOME
COUNTRIES IN THE ASEAN ECONOMIC COMMUNITY .........................21
2.1. Overview of ASEAN Labor Market and Labor Movement within the
ASEAN Economic Community .........................................................................21
2.1.1. Overview of ASEAN Labor Market ........................................................21
2.1.2. The movement of unskilled labors within the ASEAN Economic
Community .......................................................................................................25
2.1.3. The free movement of skilled labors within the ASEAN Economic
Community .......................................................................................................26
2.2. Regulations and agreements related to the free movement of skilled


labor within the ASEAN Economic Community ............................................30
2.2.1. The national regulations ........................................................................30
2.2.2. The international agreements ................................................................38


2.3. The reality of implementing regulations related to the free flow of
skilled labor within the ASEAN Economic Community ................................46
2.3.1. ASEAN 6 .................................................................................................46
2.3.2. CLMV .....................................................................................................49
2.4. Assessments of implementing the regulation related to the free
movement of skilled labor within the ASEAN Economic Community .........53
2.4.1. The achievements ...................................................................................53
2.4.2. The limitations........................................................................................56
CHAPTER 3: PROSPECTS OF SKILLED LABOR RESOURCES
DEVELOPEMENT AND SOME RECOMMENDATIONS FOR VIETNAM
RELATING TO THE FREE MOVEMENT OF SKILLED LABOR WITHIN
THE ASEAN ECONOMIC COMMUNITY .......................................................58
3.1. Current trends in international labor migration .....................................58
3.1.1. Trends in the number of international migrants worldwide ..................58
3.1.2. Trends in labor force components .........................................................62
3.2. Prospects of skilled labor resources development in ASEAN to 2030 ...64
3.2.1. Overview of skilled labor resources development prospects in ASEAN to
2030 ..................................................................................................................64
3.2.2. Strategy on skilled labor resources development within the ASEAN
Economic Community ......................................................................................69
3.3. Recommendations for Vietnam relating to the free movement of skilled
labor within the ASEAN Economic Community ............................................74
3.3.1. Improve Labor quality and Education and training system ..................75
3.3.2. Actively participate in the regional and international integration
process .............................................................................................................77
3.3.3. Ensure the financial resources for human capital development ............80
CONCLUSION.......................................................................................................82
REFERENCES .......................................................................................................83
APPENDIX ...............................................................................................................v


i

LIST OF ABBREVIATIONS
ADB

ASEAN Development Bank

AEC

ASEAN Economic Community

AFAS

ASEAN Framework Agreement on Services

APEC

Asia-Pacific Economic Cooperation

ARQF

ASEAN qualification reference framework

ASEAN

Association of Southeast Asian Nations

AUN

ASEAN University Network

CARICOM

The Caribbean Community

CLMV

Cambodia, Lao PDR, Myanmar and Vietnam

EAC

The East African Community Common Market

ECOWAS

Economic Community of West African States

EU

European Union

FDI

Foreign Direct Investment

FDI

Foreign Direct Investment

FTA

Free Trade Area

GATS

General Agreement on Trade in Services

GDP

Gross Domestic Product

ILO

International Labour Organization

MNP

Movement of Natural Persons

MQF

The Malaysian Qualifications Framework

MRA

Mutual Recognition Arrangement

NAFTA

North American Free Trade Agreement

NOSS

National Occupational Skill Standards

OEC

Overseas Employment Certificate

OECD

Organisation for Economic Co-operation and Development

TVET

Technical Vocational Education and Training

UN

United Nations

UNDESA

United Nations Department of Economic and Social Affairs

WTO

World Trade Organization


ii

LIST OF TABLES
Table 1.1: Four key pillars and elements of the AEC ..............................................14
Table 1.2: Characteristics and elements of ASEAN Economic Community
Blueprint 2025..........................................................................................................20
Table 2.1. ASEAN migration stocks, 2013 ..............................................................22
Table 2.2: ASEAN: Growth rates of working-age population, 2000-30 .................23
Table 2.3: ASEAN: GDP per capita, 1995-2014 .....................................................24
Table 2.2. The AQRF level descriptors’ domain .....................................................45
Table 3.1. ASEAN Population Growth, by countries, 1970–2030 ..........................66
Table 3.2. Selected Social Indicators in ASEAN, 2013...........................................67


iii

LIST OF FIGURES
Figure 2.1. Referencing Process under the AQRF ................................................. 43
Figure 3.1. Number of international migrants by major area of destination, 2000 to
2015 ........................................................................................................................ 58
Figure 3.2. Number of international migrants by major area of origin, 2000 and
2015 ....................................................................................................................... 59
Figure 3.3. Actual and projected change in total population during five year time
periods by major area, from 2000 to 2050, with and without international migration
starting in 2015....................................................................................................... 61
Figure 3.4. Percentage female among international migrants by major area, 2000
and 2015 ................................................................................................................ 62
Figure 3.5. Number of international migrants by sex and major area of destination,
2000 to 2015 .......................................................................................................... 62
Figure 3.6. Median age among international migrants by major area,
2000 and 2015 ....................................................................................................... 63
Figure 3.7. ASEAN Population Growth, 1970–2030 ........................................... 65
Figure 3.8. Population Dependency Ratios in ASEAN, 1970–2030 ..................... 68


iv

ACKNOWLEGEMENT
This graduation thesis is the effort of the author during thirteen weeks of
researching and writing from February to May, 2016. I undertook this task with
high motivation and hard work. During the writing process, I also faced challenges
of collecting data related to the free movement of skilled labor in some ASEAN
countries. Although it was not a long period, I gained new insights in the filed of
economic research. My special appreciation and grateful thanks is for my
supervisor Phd. Tran Thi Ngoc Quyen who always passionately supported me to
complete the thesis.


1

INTRODUCTION
1. Research Rationale
ASEAN is the region defined as the middle class in economic growth and also
obtains the approachable methods for further economic restructuring and
transformation. As the result, the regional economic integration has become a top
priority for the Association of Southeast Asian Nations (ASEAN) from the early
1990s. A series of treaties and agreements had been made to put boost the regional
integration process. These agreements included the ASEAN Free Trade Area
(AFTA), the ASEAN Framework Agreement on Services (AFAS), the ASEAN
Agreement for Promotion and Protection of Investment (IGA), and the Framework
Agreement on the ASEAN Investment Agreement (AIA), all signed in the 1990s.
In 2015, the ASEAN Community was officially established with three main
pillars of ASEAN Economic Community (AEC), ASEAN Political -Security
Community (APSC), and ASEAN Socio – Cultural Community (ASCC). ASEAN
agreed on an ambitious goal to fast-track the development of ASEAN as a stability,
prosperity and high competiveness regional economic in which goods, services,
capital and especially labor resources can flow more freely, economy develop more
uniformly and poverty and economic diversification - society is minimized.
Of the three pillars, ASEAN Economic Community is considered the most
important pillar, which essentially is established to mutate ASEAN into a single
market and production on base characterized by, among other things, a free flow of
skilled labor. This flow envisioned by ASEAN leaders is different, however, from
the notion of free labor flows as understood from the literature or the common
practice in Europe, the Caribbean Community (CARICOM), and other regions.
Rather than aiming for the unrestricted or “free” flow of skilled labor, the
AEC seeks to offer ways to facilitate a “freer” flow, mainly by implementing
Mutual Recognition Agreements (MRAs) based on national and ASEAN
Qualification Frameworks, as well as the facilitation of temporary visa issuance.
The MRA is completed by occupation, so far covering eight professions that
involve less than 1.5 per cent of the ASEAN labor force (ADB-ILO, 2014).


2
Progress toward freer skilled mobility has been slow and uneven, for several
reasons. It has been difficult to adapt domestic policies and regulations to meet the
provisions of the MRAs; the challenge is broader than just technical obstacles,
reflecting a lack of political and public support despite the difficult nature of the
problem. Moreover, the mutual recognition of qualifications and experience, while
important, is not enough to facilitate skill mobility. Other equally key components
determine who migrates and under what circumstances. Foremost among these are
basic labor market demand and supply gaps, admissions and visa policies, and the
recruitment process, which is primarily controlled by the private sector.
Without jointly and comprehensively addressing these interrelated issues, the
question as to whether the free flow of skilled labor will remain aspiration has
become a center of many debates. Therefore, this paper “The regulations related
to the free movement of skilled labor under the commitments of ASEAN
Economic Community and recommendations for Vietnam” is dedicated to
analyze the theoretical basis of free flow of skilled labor in the ASEAN Economic
Community, the reality of implementing the regulations and commitments related to
free movement of skilled labor in some ASEAN member countries and suggest
some recommendation to develop skilled labor resources in Vietnam to adapt with
the requirements of the regional labor market after the official establishment of the
ASEAN Economic Community in late 2015.
2. Research Objectives
The research aims at analyzing the theoretical basis of free flow of skilled
labor in the ASEAN Economic Community according to related regulations and
agreements and also point out the reality of implementing the regulations to the free
flow of skilled labor within the ASEAN Economic Community in some member
states. By considering the current situation of some ASEAN countries as well as the
strategies on human resource development in ASEAN, this thesis tries to deliver
some suggestion and recommendation for Vietnam to improve the human capital
quality in order to take full advantages of the establishment of the ASEAN
Economic Community.


3
3. Research object and research scope
The object of this research are the regulations, commitments related to the free
movement of skilled labor in some countries in the ASEAN Economic Community,
strategies to develop human resource in ASEAN.
Scope of the study: This thesis focuses on analyze the regulations related to
the movement of skilled labor in some ASEAN member countries where
information is available and updated. This study also gives an overview of the
reality of implementing the regulations connected with the free flow of skilled labor
in some member nations in recent years. In addition, this research covers the
prospects of skilled labor resources development to 2030.
4. Research Methodology
Qualitative method: After collecting secondary data, the author analyzed,
aggregated theories and assessed the reality of implementing the regulations related
to labor mobility in the AEC. Through theoretical and practical analysis, the author
delivered some recommendations toward the development of human resources in
Vietnam in the period of international economic integration
Secondary data source: The researches, the studies related to high-quality
human resources in Vietnam and foreign countries; The reports, statistics, business
survey data of prestigious organizations such as ADB, ILO, World Bank, United
Nations...
5. Research Structure
Apart from lists of abbreviations, tables and figures, acknowledgement,
introduction, conclusion, references, appendix and table of contents, the thesis is
structured as follows:
Chapter 1: Overview of the regulations related to the free movement of
skilled labor and the ASEAN Economic Community
Chapter 2: The reality of implementing the regulations related to the free
movement of skilled labor in some countries within the ASEAN Economic
Community
Chapter 3: Prospects of skilled labor resources development in ASEAN
and some recommendations for Vietnam relating to the free movement of
skilled labor within the ASEAN Economic Community


4

CHAPTER 1: OVERVIEW OF THE REGULATIONS
RELATED TO THE FREE MOVEMENT OF SKILLED
LABOR AND THE ASEAN ECONOMIC COMMUNITY
1.1. Overview of the free movement of skilled labor
1.1.1. The concept of the free movement of skilled labor
According to International Organization of Migration (IMO), the freedom of
movement is defined as the right to leave any country and the right to return to his
or her own country1. Freedom of movement is also referred to in the context of
freedom of movement arrangements between States at the regional level such as
European Union. (IMO, 2011)
In general, labor migration is generally defined as a cross-border movement
for purposes of employment in a foreign country or labor migration is a transnational process and neither sending nor receiving countries are in a position to
resolve all the issues alone. Inter-State cooperation in managing labor migration is
essential and involves three levels: bilateral, regional, and multilateral. The term
“economic migrant” is sometimes used as an equivalent to the term labor migrant or
migrant worker. However, the two concepts may cover different categories. The
term “labor migrant” can be used restrictively to only cover movement for the
purpose of employment, while “economic migrant” can be use either in a narrow
meaning, which includes only movement for the purpose of work, or in a broader
meaning that includes person entering the other countries to perform other types of
economic activities as investors or business travellers. (Appendix 1.1)
In fact, there is no universally accepted definition of labor migration. As the
result, there is still a lot of misunderstanding about what this will mean for
migration flows in the region and at the country level. People sometimes refer to a
free movement of labor, as in Europe, but that prospect remains distant. As this new
economic community emerges, there will be opportunity for the greater mobility of
workers, who move across national boundaries to fill skills shortages, increase their
1Art.

13(2), Universal Declaration of Human Rights, 1948: "Everyone has the right to
leave any country, including his own, and to return to his country”


5
incomes and gain new experiences. However, discussions have primarily focused
on labor mobility for skilled workers, through Mutual Recognition Arrangements
(MRAs) that provide freedom of movement and rights to work across the region for
professionals in eight fields: accountancy, engineering, surveying, architecture,
nursing, medical services, dental services and tourism. (Sally Barber and Max
Tunon, 2013)
The main aspect of cooperation within the ASEAN Economic Community
implies in the development of human resources, performance-enhancement in
communications connectivity, integrations to promote free movement of goods,
services, capital investment, skilled labor, etc. The term ‘free flow of skilled labor’
can be understood that people who have outstanding background on their career in
every country in ASEAN easily move to another place for working. This means that
ASEAN Economic Community need to take current actions to promote abovementioned process, for example, the visa, the services when it comes to job
searching, the university connection, etc. However, it is incomplete to cover the
counterparts ‘flow of unskilled or semi-skilled labor’ in AEC. These human
resources are considered as the majority of components in this region and it’s
definitely the most serve challenges which is need to be figured out in not-toodistant future so as to maintain the stable development. (Wolfgang form. et al,
2014).
In conclusion, the term “free movement of skilled labor” can be defined as the
right of labor with high working capacity, outstanding academic background in
eight specific sectors to move among the member countries in the ASEAN
Economic Community for working or doing business.
1.1.2. The regulations and international agreements related to labor mobility
in the world
1.1.2.1. The regulations related to labor mobility in the world
ILO Conventions
The ILO has since 1919 aimed to protect “those working in countries other
than their own”. The ILO has long recognized that migrant workers are more
vulnerable to exploitation and abuse than national workers. Under the ILO’s


6
fundamental Conventions, migrant workers are entitled to the same rights as
national workers, and are covered by most other Conventions unless specifically
excluded. The ILO’s Migration for Employment Convention (No. 97), first adopted
in 1926 and revised after the Second World War in 1949, is based on equal
treatment, viz. migrant workers are entitled to “treatment no less favourable than
that which they (States) apply to their own nationals” in respect of remuneration,
hours of work, holidays, apprenticeship and training, membership in trade unions,
accommodation, most branches of social security, employment taxes, and in legal
proceedings.
The ILO adopted the Migrant Workers (Supplementary Provisions)
Convention (No. 143) in 1975. Convention No. 143 had two purposes. First, it
requires Member States to suppress clandestine movements and illegal employment
of migrant workers. On the other hand, it also requires member States to guarantee
equal treatment, including free choice of employment (subject to the condition of
having worked lawfully for a fixed period) and to facilitate the unification of
families of settled migrant workers. A number of other ILO Conventions protect the
rights of migrant workers, especially the Plantations Convention, 1958 (No.110);
Safety and Health in Construction Convention, 1988 (No.167); Safety and Health in
Mines Convention, 1995 (No. 176); Safety and Health in Agriculture Convention,
2001 (No. 184); and the Domestic Workers Convention, 2011 (No. 189).
The European Union Regulations on Free Movement of Labor
Free movement of workers is one of the four main economic freedoms of the
European Union (EU). The right to move freely is linked to both market integration
and to the rights represented by the status of EU citizenship. The first appearance of
the right to free movement dates back to 1957 and the Treaty of Rome, which
considered this right only from the economic point of view. Therefore, at that time,
free movement right was intended to be granted only to workers who could
contribute to creating common market. However, since the Treaty of Maastricht,
free movement became an essential element of European citizenship and is
extended to every citizen of the Union, independent of the fact whether they are
economically active or not. Moreover, as noted by Catherine Barnard “from the


7
legal development of free movement of workers it is possible to detect the embryo
of what later became EU citizenship”.
Freedom of movement for workers guarantees the right for EU nationals to
move to another Member States to take up employment and to establish themselves
in the host country with their family members on the same terms as nationals. The
legal framework protects EU workers from direct or indirect discrimination against
them on the basis of their nationality. EU migrant workers and their families are
also entitled to equal treatment not only in work-related matters, but also in regard
to, tax advantages and social benefits. (European Commission 2006c).
Directive 2004/38/EC introduces EU citizenship as the basic status for
nationals of the Member States when they exercise their right to move and reside
freely on EU territory. For the first three months, every EU citizen has the right to
reside on the territory of another EU country without any conditions or formalities.
For longer periods, the host Member State may require a citizen to register his or
her presence within a reasonable and non-discriminatory period of time. Directive
2004/38/EC also amended Regulation 1612/68/EEC with regard to family
reunification and extended the definition of ‘family member’ (formerly limited to
spouse, descendants aged under 21 or dependent children, and dependent
ascendants) to include registered partners if the host Member State’s legislation
considers a registered partnership to be the equivalent of a marriage. Irrespective of
their nationality, these family members have the right to reside in the same country
as the worker.
The East African Community Common Market Regulations on Free
Movement of Workers.
The Protocol on the Establishment of the East African Community (EAC)
Common Market entered into force on 1 July 2010, following ratification by all the
five Partner States: Burundi, Kenya, Rwanda, Tanzania and Uganda. The Protocol
was signed by the Heads of States on 20 November 2009, coinciding with the 10th
Anniversary celebrations of the revived Community.
The establishment of the East African Community Common Market is in line
with the provisions of the EAC Treaty. It provides for “Four Freedoms”. They are


8
the free movement of goods; labour; services; and capital, which will significantly
boost trade and investments and make the region more productive and prosperous.
In the Protocol, the right to free movement of persons entails the abolition of
any discrimination based on nationality. The right to free movement of persons
include: the right to enter the territory of a Partner State without a visa; the right to
move freely within the territory of a Partner State; the right to stay in the territory of
a Partner State; the right to exit without restrictions; and the right to full protection
by the laws of a Partner State. The Partner States shall also, (but only) in
accordance with their national laws, guarantee the protection of the citizens of the
other Partner States while in their territories. Hence, the free movement of persons
shall not exempt from prosecution or extradition, a national of a Partner State who
commits a crime in another Partner State.
The Economic Community of West African States Regulations on Free
Movement of Persons
The Economic Community of West African States (ECOWAS) was formed on
1975 to among other things encourage, foster and accelerate the economic and
social development of the Member States in order to improve the living standards of
their peoples. The Member States include Benin, Burkina Faso, Cape Verde, Cote
d’Ivoire, The Gambia, Ghana, Guinea and Guinea Bissau. Others are Liberia, Mali,
Mauritania2, Niger, Nigeria, Senegal, Sierra Leone and Togolese. The recognition
of the need for economic integration including free flow of persons, goods and
services stimulated the enactment of Protocol on free movement of persons, and the
right of residence and establishment in 1979. The first phase of the Protocol
guaranteed free entry of citizens from Member states without visa for ninety days
and it was ratified by all member states in 1980. The second phase of the protocol,
right of residence became effective in July 1986 and all member states ratified it.
However, right of establishment is yet to come into force.
With the coming into force of this protocol, the member states abolished visa
and other entry requirements for citizens traveling to a sister country. This means
that citizens of ECOWAS have the right to enter, reside and establish in the territory
of Member States. The right of entry, residence and establishment shall be


9
progressively established in the course of a transitional period shall be
accomplished in three phases (Phase I - Right of Entry and Abolition of Visa; Phase
II - Right of Residence; Phase II - Right of Establishment) and with a maximum
transitional period of fifteen (15) years from the definitive entry into force of this
Protocol by abolishing all other obstacles to free movement of persons and the right
of residence and establishment.
The formation of ECOWAS and enactment of protocol on free movement of
persons have helped to re-create borderless West Africa which existed before the
advent of colonial rule. Although the flow of population has increased considerably
within the past two and half decades the protocol has been in existence, there are
problems and challenges to realisation of free movement of persons within the subregion. These include strict border checks, unstable economies of many member
states, delay in implementation of policies toward integration, and lack of focus due
to multiple memberships in international organisations.
1.1.2.2. The international agreements related to labor mobility in the world
Until now, there are at least 20 major multilateral free trade agreements and an
even a bigger quantity of bilateral free trade agreements.2 The main purpose of
these agreements is to create a free environment for trading goods and flows of
investment between participating countries. However, some agreements also
include provisions bounded for expediting the entry of investors, services providers
and also workers employed for wages in an agreement’s partner country. A majority
of free trade agreements aim at contiguous or neighbouring countries. This section
below mentions just a few.
Caribbean Community (CARICOM)
The Caribbean Community, or CARICOM, is a group of 15 nations and
dependencies created by the 1973 Treaty of Chaguaramas under the intention to
promote economic integration, including freedom of movement, between member
States. The population of CARICOM was about 6.5 million in 2000, but three

2For

a listing of the operating and proposed multilateral free trade agreements, go to
http://en.wikipedia.org/wiki/List_of_free_trade_agreements [accessed May, 2016] and for a listing of bilateral free trade
agreements, go to http://en.wikipedia.org/wiki/List_of_bilateral_free_trade_agreements [accessed May, 2016].


10
countries represented almost three-fourths of CARICOM’s residents – Jamaica, at
40 per cent, Trinidad and Tobago, at 20 per cent, and Guyana, at 12 per cent.
The CARICOM Single Market and Economy treaty went into effect on 1st
January 2006. The single market component includes the free movement of goods,
services, capital, business enterprises and skilled labor. CARICOM started the
freedom-of-movement process at the beginning of 1996 with five types of workers:
graduates of approved universities, media workers, musicians, artists and sports
persons certified by national professional bodies, with free mobility to be extended
later to three more occupations – teachers, nurses and domestic workers (Girvan,
2007). The mobility for domestic workers became effective on 1 January 2010;
however, Antigua and Barbuda, and Belize were allowed to delay it for up to five
years to allow time to study its socio-economic impacts.
The treaty states that people wanting to move between CARICOM Member
States to work must first obtain a Certificate of Recognition of CARICOM Skills
Qualification, usually from their home country’s labor ministry, and present it to
immigration authorities upon arrival in another CARICOM Member State. Skills
certificates issued in one CARICOM Member State are to be recognized
automatically in others (mutual recognition), and dependants of migrants with skills
certificates have the right to move with the certificate holder and work without
having to obtain a work permit. It means that migrant service providers have the
right to have their family members accompany them.
North American Free Trade Agreement (NAFTA)
NAFTA was established in 1994, the North American Free Trade Agreement
aims to liberalize trade and investment between the United States and its two main
trading partners – Canada and Mexico. Canada and the United States already had a
free trade agreement, as of 1989. Canada and Mexico are the top-two trading
partners of the United States, and several industries, particularly automobiles, have
developed closely integrated production systems spread over the three countries. It
facilitates labor mobility through temporary entry for business visitors, traders,
investors,

transferees

of

multinational

companies,

and

highly-educated


11
professionals with a job offer in one of over 70 occupations.3 This latter group is
able to migrate using the bespoke Trade-NAFTA visa that is valid for up to three
years based on mutual recognition of skills and qualifications.
General Agreement on Trade in Services (GATS) , Mode 4: Presence of a
natural person
GATS includes negotiations at the global level to liberalize trade in services
under the auspices of the World Trade Organization (WTO) has four major modes,
or ways, to provide services across national borders: cross-border supply (Mode 1),
consumption abroad (Mode 2), foreign direct investment (FDI) or commercial
presence (Mode 3) and temporary movement of “natural persons” (Mode 4). Rules
for trade in services were negotiated under the General Agreement on Trade in
Services (GATS), potentially putting the movement of service provider workers
under the purview of the WTO.
Mode 4 - movements of service providers can be substitutes or complements
to the other types of trade in services. For example, accountancy services can be
provided online (Mode 1) rather than by sending an accountant abroad to audit
financial statements (Mode 4), or the client could travel to the country where the
service provider is located to receive services (Mode 2). Similarly, an IT service
provider could visit a client abroad (Mode 4) or provide services to foreign clients
via the Internet (Mode 1).
Migrant-sending countries want to liberalize Mode 4 movements by obtaining
commitments from migrant- receiving countries in four major areas. First,
developing countries want industrialized countries to eliminate the economic needs
tests that receiving countries often use to determine if foreign workers are needed,
usually by requiring their employers to search first for local workers. Second,
developing countries want industrialized countries to expedite the issuance of visas
and work permits, preferably via one-stop shops that include appeals procedures in
the event that a visa or permit is denied. Third, developing countries want

3

The list of professionals covered by NAFTA Appendix 1603.D.1 is at http://canada.usembassy.gov/business/doingbusiness-in- america/professions-covered-by-nafta.html [26 Sep. 2014].




12
industrialized countries to facilitate recognition of credentials earned abroad so that
service providers can obtain the needed licenses and certificates to work in
countries of destination. Fourth, developing countries want industrialized countries
to exempt their nationals from participating in work- related benefit programmes
and having migrants or their employers pay the taxes that finance them.
1.2. Overview of ASEAN Economic Community
1.2.1. Historical Overview
ASEAN – the Association of Southeast Asian Nations – was established on 8
August 1967 in Bangkok, Thailand, with the signing of the ASEAN Declaration (or
Bangkok Declaration) by the Founding Members of ASEAN, namely Indonesia,
Malaysia, Philippines, Singapore and Thailand. Afterwards Brunei Darussalam
joined on 8 January 1984, Viet Nam on 28 July 1995, Lao PDR and Myanmar on
23 July 1997, and Cambodia on 30 April 1999, making up what is today the ten
Member States of ASEAN.
For nearly two decades, the ASEAN was composed of only five countries, its
8 August 1967 founders: Indonesia, Malaysia, the Philippines, Singapore, and
Thailand. Other southeast Asian countries joined at different times: Brunei (1984),
Vietnam (1995), Laos and Myanmar (1997), and Cambodia (1999).
Beginning in 1997, heads of each member state adopted the ASEAN Vision
2020 during ASEAN's 30th anniversary meeting held in Kuala Lumpur. This vision,
as a means for the realization of a single ASEAN community, sees Southeast Asia
becoming a group of nations which are: "outward looking, living in peace, stability
and propsperity". (Julio Amador; Joycee A. Teodoro, 2014). Included in ASEAN
Vision 2020 were provisions on: peace and stability, being nuclear-free, closer
economic integration, human development, sustainable development, cultural
heritage, being drug-free, environment, among others. The Vision also aimed to:
"see an outward-looking ASEAN playing a pivotal role in the international fora, and
advancing ASEAN's common interests".4 Such vision was formalised and made
comprehensive through the Bali Concord II in 2003. Three major pillars of a single
4

"ASEANVision2020" 15 December 1997. Retrieved 10 December 2014.


13
ASEAN community were originally established: (1) ASEAN Security Community,
(2) ASEAN Economic Community and (3) ASEAN Socio-Cultural Community.5
The ASEAN Community, initially planned to commence by 2020, was accelerated
to begin by Dec 31 2015. This was decided upon by heads of member states during
the 12th ASEAN Summit in Cebu in 2007.
On 20 November 2007, the ASEAN Charter was signed in Singapore, forty
years after the founding of ASEAN. Also concurrently signed was the ASEAN
Economic Community (AEC) Blueprint. This was to establish stronger rules-based
norms and values shared among all member states. The charter was later ratified in
2008. (S. Pushpanathan, 2012). To full embody the three Bali Concord II pillars as
part of the 2015 integration, blueprints for ASEAN Political-Security Community
(APSC) and ASEAN Socio-Cultural Community (ASCC) were subsequently
adopted in 2009 in Cha-Am, Thailand.
Characteristics and elements of ASEAN Economic Community
The AEC project’s integrated ASEAN economic region was built on four
following pillars of integration:
(A) a single market and production base, characterized by a free flow of
goods, services, investment and skilled labor, as well as a freer flow of capital.
(B) a highly competitive economic region, characterized by sound competition
policy, consumer protection, intellectual property rights protection, infrastructure
development, sectoral competition in energy and mining, rationalized taxation and
e-commerce.
(C) a region of equitable economic development, characterized by small and
medium enterprise development and enhancement of initiatives geared to help the
least-developed ASEAN member states.
(D) a region fully integrated into the global economy, wit ASEAN centrality
and participation in global supply networks.
These pillars are also envisaged characteristics of the AEC which are interrelated and mutually reinforcing. Each characteristics incorporates its required
elements in one blueprint, aiming to ensure the consistency and coherence of these
5"Declaration

of ASEAN Concord II (Bali Concord II)". ASEAN


14
elements as well as their implemention and proper coordination among relevant
stakeholders.
On 20 November 2007, during the 13th ASEAN Summit, ASEAN Leaders
signed the AEC Blueprint which serves as the roadmap for the formation of AEC
along with the ASEC Scorecard to track the progress of the members in
implementing the plans for the AEC. As part of the AEC process, ASEAN
developed the ASEAN Charter, which was ratified by each ASEAN member state
and went in to effect in Dec 2008.
Table 1.1: Four key pillars and elements of the AEC
Key pillars
A. Single Market and Production Base

Key elements
A.1. Free flow of goods
A.2. Free flow of services
A.3. Free flow of investment
A.4. Free flow of capital
A.5. Free flow of skilled labor

B. Competitive Economic Region

B.1. Competition Policy
B.2. Consumer Protection
B.3. Intellectual Property Right (IPR)
B.4. Infrastructure Development
B.5. Taxation
B.6. E-Commerce

C. Equitable Economic Development

C.1. SME Development
C.2. Initiative for ASEAN Integration
(IAI)

D. Integration into the Global

D.1.

Coherent

Approach

Economy

External Economic Relations

towards

D.2. Enhanced participation in Global
supply networks
(Source: Author’s summary based on ASEAN Blueprint 2008)


15
1.2.2. Commitments related to the free movement of skilled labor within the
ASEAN Economic Community
The ASEAN Economic Community Blueprint, which laid down the strategy
for the run-up to 2015, envisioned “no substantial restrictions to ASEAN services
suppliers in providing services and in establishing companies across national
borders within the region” (ASEAN, 2008). ASEAN has also agreed to work
“towards recognition of professional qualifications with a view to facilitate their
movement within the region.” (ASEAN, 2008)
The blueprint identified the following commitments ASEAN Member States
agree to support in boosting the free movement of skilled labor:
• Complete the mutual recognition arrangements (MRAs) in eight sectors
• Implement the MRAs expeditiously, according to the provisions of each
respective agreement;
• Strengthen human resource development and capacity building in the area of
services;
• Facilitate the issuance of visas and employment passes for ASEAN
professionals and skilled labourers who are engaged in cross-border trade
and investment-related activities;
• Enhance cooperation among members of the ASEAN University Network
(AUN) to increase the mobility of both students and staffs within the region;
• Develop core competencies and qualifications for the job/occupational and
training skills required in priority and other service sectors; and
• Strengthen the research capabilities of each ASEAN Member Country to
promote skills and job placements, and develop labour market information
networks among ASEAN Member States
Since the blueprint’s adoption, there have been developments in two
committed areas: facilitating visa issuance and recognition of qualifications and
skills.
Facilitating Visa Issuance
In 2012, ASEAN Member States signed two agreements to streamline the
movement of select individuals within the region:


16
The ASEAN Agreement on the Movement of Natural Persons (MNP) provides
the legal framework to facilitate temporary cross-border movement of people
engaged in the conduct of trade in goods, services, and investment. More
specifically, the MNP aims to establish streamlined and transparent procedures for
business visitors, intra-corporate transferees, and contractual service suppliers to
apply for immigration formalities (ASEAN, 2012).
The ASEAN Comprehensive Investment Agreement (ACIA) grants entry,
temporary stay, and work authorization to investors, executives, managers, and
board members of corporations in the process of “committing a substantial amount
of capital or other resources.”(ASEAN, 2014)
Recognition of Qualifications and Skills
ASEAN Member States have taken various approaches to better recognizing
qualification and skills. Indeed, there is mounting evidence that migrants
in the region are o en unable to put their skills to productive use because their
qualifications, experience, and knowledge are not readily recognized in the
destination countries. The resulting waste of human capital represents a loss to
employers, host communities, and migrants themselves. At the macro level, this
would be reflected in lower levels of economic growth, worker productivity, and
country competitiveness. To address this challenge, ASEAN Member States are
undertaking two key initiatives:
Mutual Recognition Arrangements. Between 2005 and 2015, ASEAN Member
Governments signed MRAs in eight key occupations (engineering, nursing,
architecture, medicine, dentistry, surveying, accounting and tourism). Each MRA
aims to facilitate mobility within ASEAN, exchange information and enhance
cooperation on the mutual recognition of qualifications, promote the adoption of
best practices in standards and qualifications, and provide opportunities for capacity
building and training.
The MRAs include specific provisions to guide implementation. For instance,
except for the tourism sector, the MRAs require minimum years of experience.
Dental and medical practitioners are required to be in active practice for not less
than five continuous years in the country of origin before being eligible to apply;


17
nurse practitioners must be in active practice for at least three years. Engineers must
have seven years’ experience after graduation, of which two years involve
significant engineering work. Architects must have been in practice for at least 10
years, five of them after receipt of an architecture license (ASEAN, 2005). These
restrictions create additional barriers to entry.
The MRAs that cover engineering and architecture go a step further, with the
creation on of ASEAN-wide registries — the ASEAN Chartered Professional
Engineers Register (ACPER) and the ASEAN Architect Council (AAC) — to
streamline and centralize the recognition and certification process (ASEAN, 2005).
The MRAs also explicitly acknowledge each ASEAN Member State’s right to
regulate the sectors covered, including the actions of individual practitioners. This
further highlights the bottom-up nature of skill mobility in the region.
The ASEAN Qualification Framework (AQF). ASEAN Member States have
also taken concrete steps toward creating the ASEAN Qualification Framework
(AQF) to measure levels of educational or training achievement and create more
transparent career ladders between levels. The AQF aims to harmonize regulatory
arrangements between participating countries by developing mutually comparable
national qualifications frameworks (NQFs) based on a common reference
framework (CRF). Similar to the European Qualifications Framework (EQF)
established in 2008, the AQF will be a common regional reference point and a
translation grid that will make it easier to understand, compare, and recognize
qualifications across the different systems of ASEAN Member States, Australia,
and New Zealand. If properly and widely utilized it could promote the mobility of
workers and students within ASEAN more widely.
1.2.3. ASEAN Economic Community Blueprint 2025
The implementation of the ASEAN Economic Community (AEC) Blueprint
2015 has been substantively achieved in, among others, eliminating tariffs and
facilitating trade; advancing the services trade liberalization agenda; liberalizing
and facilitating investment; streamlining and harmonizing capital market regulatory
frameworks and platforms; facilitating skilled labor mobility; promoting the
development of regional frameworks in competition policy, consumer protection


18
and intellectual property rights; promoting connectivity; narrowing the development
gap; and strengthening ASEAN’s relationship with its external parties.
ASEAN recognizes that regional economic integration is a dynamic, ongoing
process as economies as well as domestic and external environments are constantly
evolving. In this context, ASEAN has initiated two studies for the AEC Blueprint
2025. The AEC Blueprint 2025 has been developed taking into account the
recommendations of the two studies, namely, by the Economic Research Institute
for ASEAN and East Asia (ERIA), and the S. Rajaratnam School of International
Studies (RSIS) and the Institute of Southeast Asian Studies (ISEAS), as well as
inputs from other stakeholders. The measures taken have to lead in creating a
networked, competitive, innovative, and highly integrated and contestable ASEAN.
The overall vision articulated in the AEC Blueprint 2015 remains relevant.
The AEC Blueprint 2025 will build on the AEC Blueprint 2015 consisting of five
interrelated and mutually reinforcing characteristics, namely: (i) A Highly
Integrated and Cohesive Economy; (ii) A Competitive, Innovative, and Dynamic
ASEAN; (iii) Enhanced Connectivity and Sectoral Cooperation; (iv) A Resilient,
Inclusive, People-Oriented, and People-Centred ASEAN; and (v) A Global
ASEAN. (Table 1.2)
The immediate priority is to complete the implementation of measures
unfinished under the AEC Blueprint 2015 by end-2016. The continuing
commitments of Cambodia, Lao People’s Democratic Republic, Myanmar and Viet
Nam (CLMV) under the AEC Blueprint 2015 up to 2018 are also incorporated
under the AEC Blueprint 2025. The AEC 2025 is envisioned to:
i.

Create a deeply integrated and highly cohesive ASEAN economy that would
support sustained high economic growth and resilience even in the face of
global economic shocks and volatilities;

ii.

Engender a more equitable and inclusive economic growth in ASEAN that
narrows the development gap, eliminates if not reduces poverty significantly,
sustains high growth rates of per capita income, and maintains a rising
middle class;


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