UK: Trade And Migration - Inseparable Twins?

Last Updated: 15 February 2017
Article by Bernardine Adkins

Migration has been front page news both in the US and UK in recent months and should remain prominent in forthcoming elections in other EU Member States.

Yet trade and migration have gone hand in hand ever since merchants began travelling the Silk Road over two millennia ago to trade luxuries between China and Europe. This is certain to continue in earnest as international trade in goods begins to be eclipsed in importance by international services.

Here, we explore the place of migration in modern free trade agreements. If the UK is truly to be a global champion for free trade post-Brexit, then the current international trade rules and Realpolitik dictate that it will also need to support and encourage trade-related migration.

We also explore what the status of migration is likely to be as a matter of EU law in the forthcoming Brexit negotiations; this is significant as it will dictate the parameters of such negotiations.


The legal framework for international trade under the World Trade Organisation (WTO) - which appears to be under review by the current US administration - includes a General Agreement on Trade in Services (GATS).

GATS categorises cross-border trade in services according to four 'modes' of supply:

  1. cross-border services - provided remotely (e.g. by post or telecommunication);
  2. consumption abroad - where the customer moves to the supplier's country to buy services (e.g. students travelling abroad);
  3. commercial presence - of the supplier in the customer's country, e.g. by using a local agent;
  4. presence of natural persons - for example by seconding employees or by independent professionals visiting the customer's country to provide services.

With the exception of mode 1, trade in services therefore implies - at least in the majority of cases - the movement of individuals across national frontiers.

WTO members offer commitments (in a series of schedules) dictating the level of free trade they are willing to permit all other WTO members - both in goods and services.

Currently, the UK uses the EU's WTO trade schedules. However, as Prime Minister May indicated recently, Britain will be leaving those parts of the common customs union which prevent the UK from negotiating its own WTO schedules. It is therefore likely that UK trade policy - including migration - will become a subject of internal debate and external negotiation in the near future.

The UK's new WTO schedules (including under GATS) will form the bedrock of its future world trading position.

Most favoured nation principle

It is a key principle of WTO membership that commitments offered under its schedules are available to all members (about 140 countries) on a non-discriminatory basis - the so-called "most favoured nation" (MFN) principle. If a member does not adhere to its commitments as listed in its schedules, the WTO treaties contain dispute resolution procedures through a system of 'panels' (essentially international arbitrators), to make decisions permitting others to impose trade sanctions on the defaulting member.

Trade-related migration is, though, likely to apply only to individuals staying in the UK for a short period of time. An annex to GATS explains that it does not apply to national legislation regulating citizenship, residence or employment on a permanent basis.

Nor does it affect national rules (for example visa requirements) restricting entry or temporary stay in the member's territory. However:

such measures are not [to be] applied in such a manner as to nullify or impair the benefits accruing to any Member under the terms of a specific commitment.1


A permitted exception to the MFN rule applies where member countries conclude bi-lateral or regional free trade area (FTA) agreements among themselves to give a greater degree of market access than otherwise.

An important caveat to this exception is only permitted where the free trade agreement removes tariffs on 'substantially all' trade within the free trade area. So, for example, the EU treaties and NAFTA are both within the WTO 'free trade area' exception.

It is this principle that will make it particularly difficult for the UK government to adopt a selective sectoral approach in any negotiations with the EU.


As a 'state of the art' free trade agreement, the EU-Canada CETA is useful in demonstrating how migration for the purpose of supplying services fits with the current free trade regime.

Chapter 10 of CETA determines some detailed joint commitments on migration. CETA specifically deals with services provided under modes 3 and 4 of GATS and also for personnel being seconded between members of a group of companies.

With the exception of employees being seconded to a specific post within the same group (where a longer three year period was agreed in CETA), the free movement of people only applies for stays of up to 12 months - less for 'short term' business visitors travelling for meetings etc. Significantly, these CETA commitments only apply to certain types of individuals - usually those having a university level education - and not to those wishing to enter to seek employment.


The 2015 commitment to reduce annual migration to the UK to fewer than 100,000 individuals has not been changed by the current government. This commitment therefore questions the definition of 'migration'.

We have seen from CETA, 'last generation' free trade agreements generally only apply to migration for up to 12 months and do not affect long-term migration. The UK Office for National Statistics (ONS) also collects one set for short term migration of up to a year and another for long-term migration. This separation follows UN definitions of short and long-term migration.

However, the statistical methods used to estimate long and short-term migration to and from the UK are different. For long term migration, the ONS can produce estimates of net migration into the UK from the international passenger survey interviews it regularly conducts.

For short-term migration, the position is more complex in terms of keeping track of movements across the UK border. In particular, it isn't possible to tell if the same individual has entered the UK several times during the year. The ONS therefore produces two estimates for short-term migration:

  • the number of short term migrants in the UK ("stock"); and
  • the flow of short term migrants crossing the UK border.

For the 'flow' figures - likely to be those used by politicians and the press as part of a measure of 'immigration', the ONS notes:

Flow estimates refer to the number of migrations commenced (migrant moves) as opposed to the number of people who commence migrations (migrants). This distinction is important when estimating [short term migration] annually because a person could migrate more than once in the same period. For example, a single person migrating twice in a year for 3 months on each occasion would appear in the short-term flow estimates as 2 (migrant moves), not as 1 (migrant).


It is not possible to calculate net migration for short-term migrants, as the definition of a migrant is different for the inflow (who must be a foreign resident moving to England and Wales) and the outflow (who must be a resident of England and Wales moving overseas).2

It would appear from this that government immigration targets which include short term migration will necessarily overstate the "immigration" figures: the short-term figures are not 'net' and may include an element of double counting.

UK immigration legislation permits controls on all people wishing to enter the UK, except those arriving from the Channel Islands or the Republic of Ireland. The conditions which may be attached to their entry to the UK vary - with nationals of EU Member States being treated on a non-discriminatory basis with UK nationals and so not subject to entry conditions. Conditions may be attached to the entry of other nationals, including the length of their stay and whether or not they need a visa in advance of arrival.


All EU Member States must allow near unconditional entry to their territories for citizens of other members. Most, except the UK and Republic of Ireland, are also signatories of the Schengen treaty which allows free movement across national frontiers within the Schengen area free of controls - unless there is a serious risk to national security or order. Seen from the village of Schengen in Luxembourg - where the treaty was originally signed - this seems a rather obvious thing to do. Luxembourg is the Continent's smallest EU Member State and sits in a bend of the Mosel River. Cross one bridge and you are in Germany, another and you are in France.

As with trade, so with immigration: a single 'free movement' area requires a common visa and entry control policy. Since the Treaty of Lisbon (2009), EU institutions have exclusive competence to make external trade treaties - on behalf of all EU member States (including the UK) - across all of the services covered by GATS, including trade-related migration.

But if the reason for the entry of an individual into the EU is not related to a GATS transaction, the EU's exclusive trade competence does not apply. This distinction was considered by (British) Advocate General Sharpston in her recent Opinion on the EU-Singapore Free Trade Agreement (EUSFTA).

EUSFTA contains commitments- dealing with trade in services and other issues requiring migration of individuals. The Court of Justice of the EU (CJEU) has been asked for a decision by the European Commission on whether the EU's sole competence over international trade matters (to and from the EU) gives it the ability to implement EUSFTA without the need for separate ratification by each Member State.

Advocate General Sharpston considered two main arguments put forward by some Member States to assert that they also had competence over the relevant part and therefore needed to agree to it. The first was that some forms of movement of individuals, which might be for the purpose of a GATS-related mode of international service supply, could also be for the purpose of overseeing or arranging a foreign direct investment (FDI). This meant, so they argued, that the EU's exclusive competence was removed in those cases.

The second argument was that, in some areas of service provision (notably financial and professional services), the EU has not yet fully adopted relevant EU implementing legislation - which means that Member States remain free to make their own (domestic) legislation. Since the EU's powers to regulate trade with third countries mirror its powers to regulate inter-State trade within the Single Market, it could not have sole competence to conclude the EUSFTA to the extent it had not legislated on services for 'internal' EU purposes.

Mrs Sharpston rejected this second argument. Provided that the EUSFTA rules are within the remit of the EU's internal powers, the fact that the detail of how the type of service is to be regulated in the EU has not been the subject of secondary EU legislation does not relieve the EU of its external competence to conclude trade agreements in that area, such as EUSFTA.

For the 'dual purpose' argument, AG Sharpston noted that the purpose of 'FDI' could also be seen as a provision of services. She noted:

Where foreign direct investment serves to establish a commercial presence for the purposes of supplying a service, it is covered by trade in services and therefore falls within the common commercial policy.3

She continued:

EU measures that are essentially intended to promote, facilitate or govern foreign direct investment and have direct and immediate effects on foreign direct investment and investors fall within the EU common commercial policy. [...]

...investment and trade are essential components of an effective and unified common commercial policy. In an increasingly globalised economy, it must be assumed that decisions on export and import markets and on where to produce depend both on trade and on investment policies and regulation.

If this view is followed by the CJEU (decision pending), this means that rules on migration relating to the provision both of GATS services (under all modes) and of FDI - e.g. the free movement of hedge fund managers to supervise the fund's investments in in EU-based companies - will be governed by the EU's common commercial policy.


This conclusion has important implications for the UK's Brexit negotiations with the EU. The finding that all GATS trade and FDI-related migration is under the EU's sole competence, and will not require the agreement of 27 Member States, could well make a UK-EU FTA easier to conclude. And the fact that related migration rules will need to be inserted into the future UKEUFTA will then mean that UK immigration rules post-Brexit will need to allow EU migrants meeting the FTA's migration criteria to enter the country for at least the period set out in UKEUFTA (likely to be up to 12 months).

GATS does not require WTO members to abandon frontier controls for trade-related migration - so EU businessmen will still have to show their passports at Heathrow as they do now. However, they would not be excluded simply because the right of free movement under EU law no longer applies to the UK after Brexit.

This will also mean that professional Britons travelling to Schengen to provide services - including FDI (so, hedge fund managers) - will have greater migration rights than other Britons.

Rights to travel to the EU for employment (other than intra-company secondments) or study - and possibly even leisure - will need to be negotiated separately after Brexit and such migration policy changes will require the agreement of all Member States. Given the firm stance taken by the UK government against 'uncontrolled' migration to the UK, it is very unlikely that the remaining EU members will be willing to continue with the current liberal arrangements as they stand.

But the inescapable link between migration and trade will unavoidably impact on the UK's future trade negotiations within the WTO. Since Britain is a large net exporter of international services, it will be in its interests to establish a broad openness to international services trade in order to prompt and possibly require other WTO members to do likewise.

So its future WTO schedules under GATS will need to permit wide access to the UK's services markets. Reciprocity is likely to be required here - it is wholly implausible that other WTO members will wish to open their markets to UK international service providers without reciprocal rights for their nationals to trade services in the UK.

This will mean that short term inward migration from non-EU countries will likely increase both generally and in particular for those countries with which the UK concludes FTAs. Quite what the impact of that increase on the government's immigration target will be is difficult to tell.

However, given the UK's need to trade on the world market going forward - and therefore to accept trade-related short term migration - coupled with the statistical difficulties in including short term migration figures in any 'immigration target' in any sensible and analytically robust way, we suspect that the Conservative manifesto commitment may have to be re-read so as to apply only to long-term net migration.

Again, it remains to be seen whether the government recognises this soon enough for potential negotiating difficulties to be avoided as serious trade talks with the EU and potentially with other trade partners start in earnest later this year.


[1] Annex on movement of natural persons supplying services under the Agreement

[2] Migration statistics first time user guide retrieved 26 January 2017

[3] Opinion, paragraphs 326-329

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Events from this Firm
19 Sep 2019, Seminar, Birmingham, UK

Providing GCs, Heads of Legal and senior in-house lawyers with timely, topical and practical legal advice on a variety of topics.

26 Sep 2019, Seminar, London, UK

Providing GCs, Heads of Legal and senior in-house lawyers with timely, topical and practical legal advice on a variety of topics.

8 Oct 2019, Seminar, Birmingham, UK

Supporting the development of paralegals, trainees and lawyers of up to five years' PQE by providing valuable knowledge and guidance together with practical tips.

Similar Articles
Relevancy Powered by MondaqAI
Akin Gump Strauss Hauer & Feld LLP
In association with
Related Topics
Similar Articles
Relevancy Powered by MondaqAI
Akin Gump Strauss Hauer & Feld LLP
Related Articles
Up-coming Events Search
Font Size:
Mondaq on Twitter
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions