Trade Costs of Visas and Work Permits

A Trade Facilitation Perspective on Movement of Persons

Kommerskollegium 2015:5

National Board of Trade, March 2015 – First Edition. ISBN: 978-91-86575-96-0

www.kommers.se

The National Board of Trade is a Swedish government agency responsible for issues relating to foreign trade, the EU Internal Market and to trade policy. Our mission is to promote open and free trade with transparent rules. The basis for this task, given to us by the Government, is that a smoothly function-ing international trade and a further liberalised trade policy are in the interest of Sweden. To this end we strive for an efficient Internal Market, a liberalised common trade policy in the EU and an open and strong multilateral trading system, especially within the World Trade Organization (WTO).

As the expert agency in trade and trade policy, the Board pro-vides the Government with analyses and background material, related to ongoing international trade negotiations as well as more structural or long-term analyses of trade related issues. As part of our mission, we also publish material intended to increase

awareness of the role of international trade in a well functioning economy and for economic development. Publications issued by the National Board of Trade only reflects the views of the Board.

The National Board of Trade also provides service to compa-nies, for instance through our SOLVIT Centre which assists companies as well as people encountering trade barriers on the Internal Market. The Board also hosts The Swedish Trade Procedures Council, SWEPRO.

In addition, as an expert agency in trade policy issues, the Na-tional Board of Trade provides assistance to developing coun-tries, through trade-related development cooperation. The Board also hosts Open Trade Gate Sweden, a one-stop information centre assisting exporters from developing countries with infor-mation on rules and requirements in Sweden and the EU.

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The concept of trade facilitation has been useful in the examination and reduction of trade costs of goods. However, in the modern trading economy, information, knowledge and persons are equally important inputs for production as goods and services are. The key role of movement of persons across borders for competitive production and trade has been shown in several previous reports from the National Board of Trade.

In this report, we look more closely at border procedures that regulate movement of persons, and how these procedures create transaction costs and reduce trade. Essentially, therefore, this report outlines the case for “flow facilitation” for persons as a complement to trade facilitation for goods.

The report was written by Emilie Anér. We gratefully acknowledge the input provided by company representatives on the topic.

Stockholm, March 2015

Anna StellingerDirector GeneralNational Board of Trade

Foreword

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Movement of persons across borders is integral to the new trading landscape of specialised and internationalised production. High costs or lengthy procedures for such movement can therefore restrict trade. The importance of procedures has been well recognised when it comes to trade in goods, where the trade facilitation agenda reduces border bottlenecks through harmonisation, simplification and transparency.

This report applies a trade facilitation perspective to entry procedures for persons, specifically visas and work permits. With trade taking place in global value chains, fusing goods and servic-es, the report argues that trade facilitation for goods needs to be complemented with “flow facilitation” – efforts to reduce the trade costs of cross-border movement of persons.

Based on company interviews and empirical studies, the report finds that entry procedures for persons may have substantial effects on companies in the form of increased costs, delayed projects or deliveries, inefficient operations, and sometimes lost contracts or opportunities. For example, it is estimated that a “typical” application for a work permit in Sweden amounts to around 1,000 euros. For a visa, costs may range from 50 to 2,000 euros or more. Processing times can vary from just a few days up to several months. For the applicant, travel to interviews and preparation of documents add to their waiting time. Applications may also be refused, which adds to the uncertainty and exacerbates other costs.

It is therefore not surprising that empirical studies of the EU (Schengen) and the USA indicate that bilateral trade responds significantly to changes in visa regimes. This report furthermore argues that some types of trade are more sensitive to costly or unpredictable entry procedures for persons than others, namely:

• Trade in global value chains, since it relies on expertise from many countries. • Trade with non-traditional markets, since entry procedures often are more complex

between non-traditional trading partners. • Production depending on scarce or highly specialised skills, since such skills more often

need to cross borders. • Trade in services, whether by service or manufacturing companies, since services are

often delivered by persons. • Trade by small companies and new market entrants, since they have relatively less

capacity to handle complex procedures than large or incumbent firms.

Summary

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Dagens handel bygger på specialiserad och internationaliserad produktion. Den kräver att inte bara varor, tjänster och kapital kan röra sig över gränser, utan även personer. Kostnader och krångel för personrörlighet kan därmed bli handelshindrande.

Denna rapport är inspirerad av det arbete som görs nationellt och internationellt för att förenkla handelsprocedurer för varor. Rapporten menar att de grundläggande principerna i detta arbete – harmonisering, förenkling och transparens – kan användas för att förenkla gränsbyråkrati även för personer, och att detta skulle stärka företagens möjligheter att handla i en värld av globala värdekedjor där varor och tjänster integreras allt mer.

Rapporten visar att procedurerna för att få visum och arbetstillstånd kan leda till effektivitets-förluster i handlande företag, att deras projekt och leveranser försenas och ibland även att de förlorar kunder eller kontrakt. Kostnaderna för en ”typisk” arbetstillståndsansökan i Sverige uppskattas till omkring 10,000 kronor medan kostnaderna för ett Schengenvisum kan variera från 500 kronor till över 20,000 kronor. Handläggningstiderna kan variera mellan ett par dagar upp till flera månader. Till detta ska läggas tid för att anskaffa nödvändiga dokument och eventuella ansökningsintervjuer. Från den sökandes sida upplevs processen ofta som oförutsägbar.

Det är därför inte överraskande att empiriska studier av EU (Schengen) och USA visar att handel påverkas av förändringar i visumregler. Denna rapport visar dessutom att vissa typer av handel är mer känsliga än andra för dyra eller oförutsägbara gränsprocedurer för personer, nämligen

• Handel i globala värdekedjor, eftersom den förlitar sig på kompetens från många länder.• Handel med andra länder än de traditionella (EES och USA i Sveriges fall), eftersom

gränsbyråkratin ofta är mer omfattande mellan icke-traditionella handelspartners.• Tillverkning som är beroende av specialiserade eller ovanliga kunskaper, eftersom

personer som besitter sådana kunskaper oftare behöver korsa gränser. • Handel med tjänster, i såväl tjänste- som tillverkningsföretag, eftersom tjänster ofta

levereras av personer. • Handel i företag som är små eller nya på marknaden, eftersom dessa ofta har mindre

kapacitet, relativt sett, att hantera komplicerade procedurer än stora eller redan etablerade företag.

Sammanfattning på svenska

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Index

Foreword............................................................................................................................................................. . 1

Summary............................................................................................................................................................. . 2

Sammanfattning.på.svenska............................................................................................................................. . 3

1.. Introduction.................................................................................................................................................. . 61.1 Purpose, outline and method.......................................................................................................................................... 61.2 About work permits and visas ......................................................................................................................................... 7

2.. Costs.of.entry.procedures........................................................................................................................... . 82.1 Costs of a work permit ....................................................................................................................................................... 82.2 Costs of a visa ........................................................................................................................................................................ 92.3 Uncertainty when .................................................................................................................................................................. 112.4 Uncertainty if ......................................................................................................................................................................... 12

3.. The.effects.on.companies........................................................................................................................... . 133.1 Delayed projects or delivery ............................................................................................................................................ 133.2 Inefficient business operations ....................................................................................................................................... 133.3 Contracts lost ......................................................................................................................................................................... 14

4.. The.impact.on.trade..................................................................................................................................... . 154.1 General impact – visas restrict trade ............................................................................................................................ 154.2 Disadvantaging trade in high-value products .......................................................................................................... 154.3 Disadvantaging production in global value chains ................................................................................................ 164.4 Favouring incumbents ....................................................................................................................................................... 17

5.. Concluding.discussion................................................................................................................................. . 18

6.. Annex............................................................................................................................................................. . 196.1 Interviews ............................................................................................................................................................................... 196.2 Explanatory notes ................................................................................................................................................................ 19

7.. Literature...................................................................................................................................................... . 20

Notes.................................................................................................................................................................. . 22

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1. Introduction

Procedures• Work permits• Visas

Costs• Money• Time• Uncertainty

Effects• Delays• Inefficiency• Lost contracts

Impact• Reduced trade...• ...especially for

high-value trade and for non- incumbents

Figure 1. How entry procedures create costs, affect companies and impact trade

Movement of persons across borders is an integral part of many modern business models. In previous studies, the National Board of Trade has found that such movement is often crucial for companies’ ability to trade, invest, access needed skills and take part in global value chains.1

Trade in the 21st century can be characterised as a multitude of “tasks” that combine into long value chains. The chains may include inputs of goods and services from all over the world and just-in-time delivery is often a key feature.2 Final products cross borders many times before reaching the consumer. This implies that trade facilitation – reducing border transaction costs – is of great importance. This has been recognised both academically3 and politically4.

Trade facilitation means harmonising regula-tions, simplifying procedures, standardising requirements, and improving transparency. Cutting “red tape” in this way may generate larger gains than new market access (liberalisation) since com-plex procedures generate dead weight costs that benefit no one.

However, almost all trade facilitation efforts have focused on transaction costs affecting goods. This report adopts a trade facilitation perspective on the procedures that govern entry into a country of persons (hereafter “entry procedures”). Complex and lengthy entry procedures for persons could be trade-restricting for companies that need to move persons across borders.

1.1 Purpose, outline and methodThis report examines to what extent entry proce-dures relating to visas and work permits generate trade costs. It further describes how the costs affect companies and trade.

We use entry procedures to Sweden as our case and focus on how they create red tape, not on whether they constitute market access restrictions.

Figure 1 illustrates this purpose as well as the outline of the report.5

Figure 1 shows that when companies follow the procedures to apply for work permits and visas, costs are generated. These costs can be expressed in money, time and uncertainty, and are described in chapter 2 of the report. For procedures affecting goods, the OECD calculates that these “direct” transaction costs can amount to 2-15% of the value of a traded product.6

The costs have a number of effects on companies – delayed projects, inefficiencies and lost contracts. We describe these effects in chapter 3.7

Finally, we discuss, in chapter 4, the longer-term impact of entry procedures on trade – including how it varies depending on the type of trade at stake.

The report builds on a literature review and interviews with a number of large and small com-panies based in Sweden (see chapter 6.1). They rep-resent both manufacturing and services industries. The cost analysis for work permits builds on infor-

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mation provided by companies. For the visa cost analysis we rely mainly on data collected by the European Commission in a recent evaluation of the Schengen visa regulations. In both cases, we focus on first-time applications.

The cost estimate is inspired by the widely applied Standard Cost Model. This entails a) break-ing down a regulation into manageable compo-nents and b) measuring the amount of time and money spent by those regulated on complying with each component.8

Table 1. Visas vs work permits in Sweden

Visas Work permits

Function Regulate entry to (and exit from) the territory

Regulate entry to national labour market

Required for Foreigners from all non-EU countries, except those enjoying visa free travel to the Schengen area

Foreigners from all non-EU countries who are going to work in Sweden for reasons of employment here or in another country (with some exceptions10)

Main regulation

1. EU Visa Code11 for Schengen visas (0-3 months in any 6 month period)

2. Swedish Aliens Act

Swedish Aliens Act12

Policy objective

1. Ensure security and control of inflows

2. Instrument for the EU common foreign policy

Allow foreigners to fill labour market demands under working conditions similar to already resident workers

Main handling agency

Consulates Migration Board

Table 2. Who needs which permit and for what?

For whom Examples of purpose

Both Person from a visa-requirement country who will work for less than three months in Sweden

- certain short-term intra-corporate transfer13

- provision of a service e.g. consultancy

Only work permit

Person who will work for longer than three months (whether they come from a visa-requirement country or not)

- long-term intra-corporate transfer

- labour migration

Only visa Person from a visa-requirement country who will not perform work

- participation in a conference

Neither Person from a visa-free country who will not perform work

- participation in a training programme

1.2 About work permits and visas Work permits and visas are measures used to regu-late inflows of persons from abroad into a country.9 Table 1 provides an overview of how the measures are used in Sweden.

Both types of permit are relevant as entry proce-dures in Sweden for trade-related purposes. Some arriving persons only need one permit, some need both and some neither – see table 2. All depends on the person’s country of origin and purpose of stay.

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2. Costs of entry procedures

2.1 Costs of a work permitThe Swedish work permit system is demand-driven.14 Employers apply for the permits and may recruit employees of any nationality as long as they nominally advertise the job beforehand and guarantee similar wage and conditions as in pre-vailing collective contracts.15

The Migration Board may certify employers. The certified companies undertake to submit com-plete online applications, and the Migration Board undertakes to process them within certain time-frames. This fast-track system is attractive since ordinary waiting times have at times been long (see chapter 2.3). Companies may also be certified to

lodge applications on behalf of other employers. Most companies that were interviewed for this report use the services of such certified companies, and the practice is growing.16

Table 3 shows a “typical” case of costs for a first-time work permit application in Sweden, where the applicant firm uses services of a certified external company.

Based on our interviews, a typical work permit application in Sweden thus amounts to around 1000 euros. The application process is generally considered to be fairly straight-forward and inex-pensive and this has also been expressed in other studies of the system.21 Some documents required for the application, such as written contracts and adequate insurance, might have been produced anyway and should perhaps, to some extent, not be counted as entry procedure costs at all.

However, some employers, especially smaller companies, do not find the system quite so easy to navigate as the larger ones. Also, even though the certified company deals with some of the administration, such as filling out online forms, the employer must produce all documents and keep in contact with the external company and any rele-vant trade union. Several of the interviewed com-panies devoted considerable in-house resources to managing their work permit applications. Simply keeping track of and understanding all applicable regulations is time-consuming.

It is not uncommon that regulation and proce-dures fuel the use of bought-in business services in companies. On the one hand, the certification service comes with a cost that must be borne by employers taking advantage of the fast-track system. On the other hand, the tasks performed by the certi-fied company would otherwise have had to be per-formed in-house, with resulting internal costs. The creation of this new business services market might make the work permit system more effective by improving the quality and efficiency of applications.

When it comes to trade in goods, it is common to outsource handling of border procedures to logistics companies. This can create more efficient markets. In fact, the World Bank observes that a key feature of “logistics friendly” countries is that com-panies are able to outsource their logistics. The main gain is that this allows them to focus on their core business while also managing very complex supply chains.23 The same logic might apply to a certification system for persons.

Table 3. ”Typical” costs for a first-time work permit

Requirements in the application process

Cost for employer

Comment

Total time required for administering the application, including

6 hours

- Advertising the position Not necessary for intra-corporate transferees who are employed abroad

- Specifying the offer of employment (for the purpose of the application)

Can take time to find solutions for e.g. insurance that are acceptable to all parties

- Obtaining statement of opinion from relevant trade union on the terms of the employment

Not obligatory, but if not included the application is not considered to be complete and will take longer to process

- Filling out application and attaching all documents17

More stringent requirements apply in certain industries18

Fee of certified company € 400 Not obligatory but if not used internal costs and waiting time rise instead. Fees seem to vary between €200 and 1300, with around €400 euro being quoted as typical19

Work permit fee € 200

Obtain residence permit card – visit Migration Board to take picture and biometrics

4 hours Only needed for stays above 3 months.Visit not necessary if biometrics were taken during visa application.

Notify tax agency20 0.5 hours

Total cost 10.5 hours at € 38/hour = € 399Fees: € 600Total: € 999

See chapter 6.2 for explanations of the salary figure.

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2.2 Costs of a visaThe “Schengen Area” has a common visa policy for visits shorter than three months in any 180-day period. The area covers 22 EU member states, in-cluding Sweden, and four non-EU states.24 Citizens of about 130 countries – covering most of Asia, Africa and Latin America – need a visa before arrival, while citizens of OECD countries and some other countries do not.25

The European Court of Justice has declared that Schengen visas can be viewed as a trade restriction due to the “additional and recurrent administrative and financial burdens involved in obtaining such a permit which is valid for a limited time”.26 It is quite difficult to estimate how costly this financial bur-den is.27 Table 4 provides estimates for three scena-rios which are based on figures from the European Commission, and one real-life case study.28

Except in the minimum scenario, fees represent a small share of total costs. There is considerable variation between scenarios; application costs may range, at least, from 50 to more than 1,400 euros per person. Travelling costs is one reason. Some applicants can visit the consulate in the city where

Table 4. Variation in costs for obtaining a first-time Schengen visa

Minimum scenario

“Average” scenario

Expensive scenario

Case study: a Liberian visitor to Sweden

Fee 35 43 60 60

Travelling costs 0 100 750 1,213

Documents 5 12 24 200

Other costs 10 38 55 11

Salary costs (not included)

(not included)

(not included)

(20h x €30=600)

Sum (€) 50 193 889 1,484

(2,084 when salary costs

are included)

See chapter 6.2 for explanations of the figures.

Benefits and costs of the certification system for work permitsThe certification system was originally open only to employers with at least 50 work permit applications per year, both new applications and extension applications. This was later changed to 25 applications per year. Both thresholds were too high for small companies. When it became possible for certain certified companies to submit applications on behalf of other employers, a new segment of business-to-business services opened up in Sweden. More than 500 employers, including small ones, used the services of certified companies in 2013.

Among the certified companies are the major auditing firms (Deloitte, PwC, Ernst & Young and KPMG), a few law firms, a few chambers of commerce, and several relocation companies such as Alfa Relocation, Fragomen and Human Entrance.

The certified companies’ services can be bought separately or as part of a package deal. Relocation companies tend to have lower fees and solicitors’ offices higher fees. Higher fees may mean more quality and legal scrutiny of the application. The main benefit is the fast-track, but it might also be valuable to the employer to outsource communications with the authorities. These services represent a small share of total business for the certified companies, but the volume grows quickly, as mobility is becoming more important for many employers, and they cannot accept to wait for weeks or months for permits.

In fact, several certified companies use these services to find new clients. Having supported the clients in obtaining a work permit quickly, it is easy to convince clients to outsource handling of tax, insurance, pensions and other difficulties involved with moving persons across borders to the same service provider.22

Special study

they live; others have to travel to their capital, or even to another country to lodge their application.

The three scenarios do not include salary costs for administering the application. However, trade-related visa seekers will probably handle their application during working hours.29

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The case in the right column of Table 4 is one example of total application costs in real life and this case measures salary costs. The example stems from a recent experience at the Swedish National Board of Trade. Eight Liberian colleagues were invited in the course of a joint trade policy project to the NBT in Sweden for a week in 2014. Schengen visas could only be applied for at the Swedish embassy in Nigeria, 2,000 km away. Hence, each applicant had to spend one week “on the road”, in order to have one working week in Sweden. Salary costs represent the time spent by the Swedish team on arranging the appointment at the embassy, arranging travel to and from Nigeria, producing supporting documents, filling out the application form and communicating with the consulate. Working time by the Liberian officials that was lost or spent on administration is not included. All in all, costs amounted to more than 2,000 euro per person. The costs emanate from the normal proce-dure – none of the requirements imposed were due to the Ebola outbreak.

In some ways it is more difficult to apply from Liberia than from most other countries, but the need to travel to apply is not unique for the case.30 As shown in Table 4, “Other costs” are on the other hand comparatively low, e.g. because the list of documents could be kept to a minimum and appli-cations could be lodged directly with the consulate, instead of with an external service provider.

Just like in the case of work permits, Schengen governments increasingly outsource some tasks in the handling of visa applications to companies, for example admission of applications. The companies are called external service providers, ESPs. They might provide for better service than consulates, such as longer opening hours, which might reduce applicants’ costs, and applicants seem generally positive. At the same time, the ESP charges a fee for its services.31 Unlike consulates, ESPs may not waive any procedural requirements, which could be one reason why even applicants of “known reliability and integrity” are rarely offered procedural facilita-tion (see below).32

“A visa easily costs me two working days per employee”Dzemil Ugarak, director and owner of Ugarak Produkt in Bosnia and Herzegovina explains33: “My company produces PVC and aluminium windows and facades. We import raw materials and export our products to the EU. On aver-age, we need 12 to 15 visas every year: for our drivers, but also for the technicians who have to show our European clients how to install our products.

To get a visa is not cheap. First, there are some direct financial costs (…) But what costs me more is the time that my workers spend on getting a visa. They need to go to the embassy in Sarajevo twice – once to hand in the appli-cation, and once to pick up their visa. Each time, they need to drive from Visoko to Sara-jevo (28km) and back again, which takes an hour by bus each way. If they go by car, we have to pay parking fees, which are consider-able, up to 15 EUR. They need to wait at the embassies, which can take many hours. In the end, a visa easily costs me two working days per employee.”

Example

“Delays are part and parcel of the process”GE Healthcare is a global firm with 300,000 employees in more than a hundred countries. GE Healthcare in Uppsala, Sweden, special-ises in life sciences. There is a steady stream of people coming and going to Uppsala from other parts of global GE, often requiring work permits. The main difficulty is considered to be the uncertainty the permits impose on timing. The Uppsala office has never in recent times been denied in an application. Thus, they are not uncertain about if a person can come, but it is uncertain when.

“Delays are part and parcel of the process”, says GE. “We can never set a firm date for when a foreigner shall begin his or her job with us. We are used to this, and must adjust operations and expectations accordingly. We would never count on a person coming from abroad to manage a key process or client, due to the uncertainty. Instead, most of our international rotations happen for reasons of career or firm development, rather than filling specific positions.”

Example

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2.3 Uncertainty whenUncertainty is generally negative both for growth34 and trade35, especially when it concerns just-in-time production. Entry regulations create uncer-tainty – both as regards if entry will be granted and, if so, when. Entry permits are usually discretionary measures: it is not certain that the permission will be given, until it has been given.

The Swedish work permit system has for some time held considerable uncertainty as to when because of the processing times.36 The average processing time in 2013 was 108 days (3.6 months).

In exceptional cases, however, processing times may be more than 20 months.37 The fast-track system with certified external companies has con-siderably reduced processing time for applications considered eligible. These applications took on average 6 days to process in 2013.38

For Schengen visas, the length and uncertainty of the entire application procedure is the main issue, rather than just the processing times.39 Figure 2 has the standard application process in its centre. The boxes around the process chart show common variations according to evidence gathered by the European Commission.

Figure 2. Visa application process with common variations in boxes40

Gather information about requirements

Total waiting time between first contact with consulate or ESP and collecting their passport was >10

days for 42 % of respondents, and >1 month for 20 %

Apply for an appointment

Gather necessary documentation

Submit application

Wait for processing

Pick up passport

Max 2 weeks wait is allowed but 30% of

respondents waited longer

Less than half of consulates had

online booking of appointments

70% of consulate’s websites have “average or poor” information, e.g.

about documents

In a majority of cases, decision is taken within

7 days. Deadline may be extended from 15 days

to 60 in exceptional cases.

91 % of frequent travellers claim never to have been offered

facilitation

No of required docs can vary from 9 to 16 for the same purpose of travel

Applicant must usually submit in person. Not uncommon to travel to

other countries – there are about 900 “blank spots” over

the world, where the sole/main destination Schengen

country does not accept applications in the appli-

cants’ country of residency

Pick up in person or with ESP

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As shown in figure 2, while processing times are often shorter than seven days, a number of factors may extend the entire process for the applicant. These factors reflect, for example, that the applica-tion of the Schengen visa policy is not yet fully harmonised between member states, as well as the discretionary and case-specific nature of visas. The length of time varies between cases, consulates, source country, host country, purpose of stay, and other factors, adding to the unpredictability for the applicant.

2.4 Uncertainty if The refusal rate is one measure of uncertainty as to if a permit will be issued. The refusal rate may also reflect the number of incomplete or inadequate applications.

For Swedish work permits, between one quarter and one fifth of first-time applications have been refused in the last years.41 One of the purposes of the fast-track system is to reduce the number of incomplete applications which slows the system down. This rather high refusal rate does not seem,

however, to much affect multinationals or IT com-panies who need for mobility for trade purposes. The refusal rate for them has been less than 1 % in the last years.42

For Schengen visas, the refusal rate is lower: 7-9 % of applications in the last years.43 There are however large fluctuations within this average. Even if the refusal rate is low, an individual applica-tion is always uncertain because of the element of discretion in the processing.

Uncertainty is fuelled if the reasons for refusal are not made clear. Reason for refusal of a visa is notified to the applicant but the use of a standard form means that it might not be very informative if no qualitative guidance is also provided.44

To conclude this chapter about uncertainty and costs, it is clear that difficulties in one area exacer-bate the others. Manufacturing company SKF puts it like this:

”The worst problem is the waiting time in com-bination with the unpredictability. We can only hope to get a certain person to a certain position in 6 or 12 months, but we cannot know. We don’t have that kind of grace period in the private sector.”

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3. The effects on companies

It has now been shown that entry procedures create costs for companies and that there can be a lot of uncertainty during an application process. In this chapter, we examine how this affects the operation of companies.

3.1 Delayed projects or deliveryThe most common effect, based on interviews with companies, seems to be that delays to entry for a person in turn delay projects or deliveries to clients. Even a relatively short waiting time can be problematic for firms operating in a highly com-petitive international environment.45 One example is Tieto, an IT firm, who say: ”We need someone in a week’s time”. Or King, a digital game developer: “We need them yesterday”.

Delayed movement of persons from certain countries restrains companies wishing to start doing business with that country.46 Several compa-nies mentioned that especially in industries with tough competition or where speed is essential, procedural delays and hassle can be negative for trade and future prospects.

Delays may also occur when a temporary stay needs to be prolonged. A Schengen visa is not renewable and its period of validity is generally limited to the event or period foreseen at the time of application.47 If plans or circumstances change, the visitor must leave the country and apply for a new visa from home. “It may take two months before our expert is back to finish the job”, says one IT company.48 Similarly, US companies describe how when they send a work team into the EU to install a piece of machinery, completion could be delayed due to unforeseeable environmental or work conditions. If the permit expires before a pro-ject is completed, the company has to fly the team out of country and then back, or fly in other tech-nicians to take over, adding to business costs.49

Small wood producer missed out on one year’s exportsThe small company Orsa Lamellträ, located in a small town in the middle of Sweden, produces glued laminated timber. The financial crisis and hardening international competition drove many Swedish wood producers out of the market, and Orsa Lamellträ needed to find new markets.

New export possibilities were identified in the Balkans, but to be able to sell directly to customers, rather than to middlemen, it was necessary to first recruit a person from the export market with fluency in its language and business culture, and who could be trained to know all about Orsa Lamellträ’s offerings. This person needed a work permit in Sweden.

The application cost a lot of time to manage and also took six months to be processed. By then other exporters had arrived to the Balkan market and captured market shares. Orsa Lamellträ’s introduction into the market was delayed by one year, resulting in lower revenues than had been anticipated.

Example

Delayed projects – a costly business for ABBA delay can have enormous consequences, often in proportion to the costs at stake in the project. ABB is a global enterprise group, specialising in, for example, high voltage direct current (HVDC) transmission. With electricity grid building sites all over the world and a highly specialised workforce to deploy on a global scale, ABB relies on getting the exact right expertise to the right place at the right time.

The larger HVDC projects run over 3-4 years and may be worth several hundred million euros. These projects often have built-in milestones triggering payment. In the worst-case scenario, bureaucratic barriers to getting the right exper-tise on the ground causes ABB to miss their deadline vis-à-vis the client, meaning that they can be charged fines of around 50,000 euros per day.

Example

3.2 Inefficient business operations There are many ways in which entry procedures could create inefficiencies in the way companies operate. Rather than waiting for the right person and risking delays, companies may opt for quicker but less efficient ways of getting the job done. Instead of the most suitable person, they deploy someone less qualified who has the right passport or is already in the country. IT company Tieto says:

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”When we put together a team for a new client or a new project, we sometimes have to do it in suboptimal ways, for example starting the project in China with only Chinese personnel even though a combination of Swedes and Chinese would be bet-ter. We work something out. Waiting times do not necessarily cost us contracts or clients, but they certainly reduce efficiency for the cross-border teams, and consequently income.”

To stay competitive, international companies increasingly organise themselves as one global entity. In the past, it was more common to have parallel entities in each (major) country with similar internal structure and duplicated functions. Nowa-days, specialised hubs are instead expected to serve the entire company on all its markets from one location. New projects often have to draw on com-petence from several such hubs. This means that mobility of specialised persons is built into the corporate set-up. Costs and uncertainty for mobil-ity limit the efficiency of this set-up which may be negative for the company’s competitiveness.

For example, a Swedish work permit can be renewed. While applying for the extension, the per-son can stay on the job but is recommended not to leave the country. A manufacturer of appliances, Electrolux, explains that staying put like this delays business, since these persons often take up a glob-ally important function and need to travel in the course of their job. Where competence is special-ised, a function cannot easily be filled by someone else. Instead, time is lost while the person needs to stay put in Sweden.50

A general barrier to efficient business stressed by many is that lengthy application procedures reduce opportunities to respond quickly to market changes, for example by delaying meetings. “We have to plan so far ahead and still we are not sure of getting the right people here on time”, is a common reflection.

3.3 Contracts lostIn some cases, companies are not able to work around delays and uncertainty in the processes and lose the contract or the client to which the person moving was key. Companies often want to keep such failures to themselves and not much was shared during interviews.51 A survey conducted by a German business association sheds some light on this issue. Companies were asked about the visa requirements between Germany and Russia and their impact on business. 39 out of 200 respondents – a cross-section of German business – stated that visa problems had already resulted in contracts being lost to competitors. One of the reasons was that the requirements made it impossible to keep deadlines, or to attend meetings on short notice. More than half of the companies said that they would invest more in the EU and Russia if the visa requirement were lifted. One German company with Russian customers said:

“It cannot continue like this. We are driving our customers away through the long waiting times for German visas (…) Otherwise our competitors everywhere will be delighted.”52

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4. The impact on trade

We have now established that entry procedures entail costs which may affect how companies do business. However, doing business always entails costs and any regulation may affect efficiency. In this chapter, we therefore investigate whether there is any longer term impact of costs and uncertainty imposed by entry procedures – first if there is a general impact on trade, and then how any impact differs between types of trade. We expect to find impacts, because trade facilitation literature has shown that transaction costs at borders affect the pattern of bilateral trade and investment, as well as the geographical distribution of production.53

4.1 General impact – visas restrict tradeStudies show that trade between two countries increases when there are migrants from one of the countries present in the other.54 Three quantitative studies furthermore indicate that lack of visa requirements, specifically, increases bilateral trade.55

The first study shows that the US Visa Waiver Program encourages business travel and com-merce. When the USA and another country remove visa requirements between them, US merchandise exports to that country increases in the range of 10-20 %. To get the same effect, tariffs would have to be lowered by 2-4 %.56

The second study finds that when Schengen countries introduced new visa requirements on Ecuador and Bolivia, bilateral trade dropped con-siderably between Schengen Europe and these two countries compared with countries without (new) visa requirements.57

The third study finds that Russian companies less often export to destinations where their per-sonnel face visa requirements, compared to similar destinations without such requirements. Visa requirements are deemed to play a significant and negative role in terms of market access for these firms.58

While this literature is new and has some meth-odological difficulties, it indicates that imposing a visa per se has a negative impact on trade. There are, to our knowledge, no studies investigating the effects of facilitation of visa procedures (or work per-mits) on trade. However, the European Commis-sion estimates that out of several million potential travellers to EU “lost” in one year due to cumber-

some visa procedures, up to 80 % would be “recov-ered” under various scenarios, such as increased use of multiple-entry visas and longer validity of visas.59 This indicates that, at least in the visa case, facilitating procedures might be almost as effective as removing visa requirements. To put it differently, trade facilitation of entry procedures might be almost as effective as full market access for persons.

4.2 Disadvantaging trade in high-value products In addition to these general tendencies, it is clear that costs arising from entry procedures are more strongly felt in “high-value” trade than other trade. By high-value we mean that it depends on special skills and/or is highly servicified. Both make mobil-ity of persons more important.

Firstly, high-value products depend on scarce and highly specific skills. ICT is a prominent exam-ple, where there are tight labour markets for many critical competencies and technology and skills evolves fast. As explained by World Economic Forum, this is why “all skills are not available in all markets at all times, and consequently, must be sourced globally within a company and made avail-able on a temporary basis.”60 “Our programmers often work at the client’s site”, says IT company Nansen. “We must send someone there who knows both the technology and how we work. Slow entry procedures slow the business down; we lose speed in developing new products and services. We could grow faster if procedures were faster.”

Also, as explained above, global companies often draw on expertise from many hubs when they develop new projects. Research and development is particularly cross-border by nature. “Ultimately”, says ABB, “we are concerned about the future possibilities of conducting cutting-edge research in countries where we cannot swiftly assemble the needed expertise”. Competence is increasingly specialised in other sections of business as well and requires quick and reliable entry procedures to be effectively deployed. Sometimes, only one person is qualified for a specific task.

Secondly, the “servicification” of production means that goods-producing companies increas-ingly rely on services both as inputs and for adding value to their products.61 Products which are servic-ified are often considered heterogeneous by the

16

client because services such as support, education and maintenance are included in the package and/or because products are tailor-made for the cust-omer. They may therefore sell at a higher price. The products require personal contacts and pres-ence of experts at the customers’ site to be sold and delivered and to function properly over the years. When traded across borders, such products are therefore more sensitive to costs and uncertainty in entry procedures than products that depend less on services.

It is therefore not surprising that two of the quantitative visa studies cited above find that pres-ence of visa requirements affects heterogeneous goods more than homogenous goods. In the Russian study, the effect on exports was twice as great.62

4.3 Disadvantaging production in global value chainsSensitivity to costs and delays is higher where the product’s value chain is global rather than local in nature. The more borders that need to be crossed, the higher the costs for entry procedures will be.

For example, in ABB, the divisions “Power sys-tems” and “Corporate research” depend on mobility and are sensitive to delays and costs. Both divisions draw on expertise from all over the world and the output is developed in many locations. The low voltage product segment, on the other hand, is mainly produced and sold within the EU and is therefore less sensitive.

Global value chains are held together by a steady stream of people who coordinate, educate, perform tasks for, and become acquainted with each other – especially going back and forth to the headquart-ers.64 “If companies are going to want to have their headquarters here in Sweden, we must facilitate people coming here to be trained in the company’s culture and products”, says Envac, a company which produces automated waste collection sys-tems. “It is very time-consuming that everyone

Holding excess “inventory” of visas Nolek is a small company that exports solutions for leak testing, leak detection and proof testing from Sweden. To ensure the continued function of their product, they guarantee repair services if the equipment malfunctions. Nolek’s business model therefore relies on being able to dispatch technical staff on short notice to these cross-border clients. They ensure that certain staff always possesses valid visas to export coun-tries, if the need to travel should arise. This “sur-plus inventory” of visas is both an administrative burden and a substantial cost, since the com-pany exports to many markets, but it is prefe-rable to making the customer wait days or weeks while the visa is processed.63

Example

17

should wait for visas for several weeks, and are sometimes not able to get them in time”.

A specific difficulty for companies outsourcing parts of its production through global value chains is that visas are often not granted without an invita-tion letter from the partner organisation. This is the case in, for example, the Schengen area and China. This means that surprise visits to the contract manufacturer are not possible, and hence it may become difficult to monitor and evaluate their performance.

Moreover, the impact of entry procedures is more strongly felt in production that is global in the sense that it involves “non-traditional” coun-tries. For Swedish companies, non-traditional means for example the emerging economies in Asia, Africa and Latin America.65 Mobility is gener-ally more difficult to and from these countries than between EU/OECD countries. Visas are usually required in both directions, and because of income differences between the countries it is proportion-ally more costly to bring a person from these countries to work in Sweden – to a Swedish salary – than, say, from other EU countries.66 At the same time, this is the part of the world where markets grow and where established companies might expand. In order to trade and invest in these markets, mobility of persons (in both directions) is crucial.

Companies stress in interviews that they do not move personnel to cut costs – costs are typically four to seven times higher for transferring person-nel to hiring locally67 – but because it is necessary for the business. Still, costs (which include salaries) are important when determining whether to arrange an international assignment.

4.4 Favouring incumbentsThere is a risk that entry procedures favour “incumbents” – established and/or large companies – over new market entrants, such as small and medium-sized enterprises or new start-ups.

Firstly, any regulation that imposes fixed costs is proportionately more costly for small entities.68 None of the large companies interviewed for this report mentioned outlays for fees, travels or HR personnel to manage applications as a big obstacle, but for small companies the same costs can be con-sidered as prohibitive. At times, the only HR person

in the company may have to devote all his/her time to managing the mobility of a key person. It is per-haps unlikely that a small or recently started com-pany could absorb costs of above 2,000 euros for a visa application when there is no guarantee that the application will be approved.

Secondly, the sheer complexity of international mobility – the interplay between regulations for entry, taxes, insurance, and pensions, the multi-level character of regulation (local, national, regional, international), the lack of international harmonisation, the need to deal with multitudes of country-pairs, and the political sensitivity often surrounding migration – may inadvertently favour incumbents because they have experience in how to navigate and manage systems.

Thirdly, rules may explicitly favour existing firms over start-ups. One example can be fast-track systems for “trusted traders” or “approved econo-mic operators”. These systems are meant to direct government control efforts where they are most needed, by certifying “incumbents” that follow the rules and focusing inspection on others. The Swed-ish fast-track system for work permits, for example, was first designed so that few Swedish companies had enough applications per year to qualify, espe-cially in new and dynamic segments of the eco-nomy such as game development or digital stream-ing of music. At the same time, these start-ups expanded rapidly, needed to draw on skills from all over the world, and had little patience with delayed applications.69 The system was then changed so that small and new companies could also use the fast-track through the services of another certified company (see chapter 2.1). Still, the fees charged by the certified companies might be more difficult to absorb for small companies.

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5. Concluding discussion

Trade facilitation for goods allows companies to trade more efficiently and generates considerable welfare gains. By placing the trade facilitation lens over entry procedures for persons, this report has demonstrated that streamlining the flow of people across borders would facilitate trade for companies in similar ways.

We have estimated that in a “worst case” scen-ario, for a person coming to Sweden who needs both a work permit and a visa and where both are delayed to the maximum degree, entry may cost in the range of 3,000 euros or more and take up to two years. A more likely scenario might be costs of around 200-1000 euros and a couple of weeks of waiting. While costs are unwanted, it is mainly the uncertainty as to when the permit will be granted and the length and sometimes unpredictability of the application procedures that are perceived by companies as creating delays, inefficiencies and lost opportunities in their operations. In the long run, trade is affected negatively, even by limited costs and delays.

Furthermore, negative impact of entry proce-dures is disproportionately high in production and trade that relies on production through global value chains, involving scarce skills, and embodying both goods and services. Where entry procedures de facto favour incumbent companies over small and new businesses, this may also result in negative impact on competition in the home market.

The trade facilitation principles can support an analysis of how to reduce trade costs in entry pro-cedures for persons. Harmonising regulations, sim-plifying procedures, standardising requirements, and improving transparency are as relevant for movement of persons as for movement of goods. The advantages of risk management-based imple-

mentation of policy (allowing quicker procedures for operators with a positive record70) have been shown in trade facilitation for goods and may hold valuable lessons for designing “approved economic operator” programmes or certification programmes for persons as well. As has been shown, it is also important to “Think Small First”71, so as not to discriminate against small and new companies.72

Mirroring the development in trade facilitation for goods, there is increased government “out-sourcing” of entry procedure administration to business services companies. If procedures con-tinue to be complex and lengthy, these types of ser-vices might make the handling of entry procedures more efficient for users, even though they also charge fees.

This report has examined entry to Sweden, and its implications are highly relevant to the Swedish trade profile. However, movement of persons is important to most companies that trade and visas and work permits are measures used by most coun-tries. Our cost estimates are indicative only, but it is not likely that they are unusually high. Some entry procedural practices which are not applied in Swe-den would for example increase costs and uncer-tainty far beyond the procedures studied here.73

All in all, it is clear that policy and design of procedures matter. Even if a country has adopted relatively simple and straightforward systems, busi-ness changes faster than rules and it is important to re-evaluate procedures continuously through the trade facilitation perspective. In a world of global value chains, just-in-time production, servicifica-tion and growing emerging economies, trade facili-tation for goods needs to be complemented with other types of “flow facilitation” – not least efforts to reduce trade costs of visas and work permits.

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6. Annex

6.1 Interviews

6.2 Explanatory notesExplanatory notes to Table 3 (”Typical” costs for a first-time work permit)

Costs per work hour: 43,600 SEK per month74 x 1.434275 / 165 hours per month76 = 379 SEK/hour ~ €38/hour

Explanatory notes to Table 4 (Variation in costs for obtaining a first-time Schengen visa)

“Other costs” = e.g. travel medical insurance, service fee at consulates, service fees of external service providers

Minimum scenario: own calculation based on reduced fee (applies where a Visa Facilitation Agreement is in force), no travelling needed, cheap insurance, and most documents already at hand.

Average scenario: the figures used as averages for computing purposes by the European Commis-

sion.77 The fee is the average fee actually levelled on applicants. Other figures are based on feedback from interviews with stakeholders.78

Expensive scenario: own calculation based on figures in Commission where travelling costs rep-resent travel from countryside Russia, documents represent the double of the average scenario (as documentary requirements vary a lot), other indi-rect costs are based on insurance at €25 + cost for appointment at €10 + cost of ESP at €2079.

Own experience: Costs per work hour: 35,000 SEK per month80

x 1.434281 / 165 hours per month82 = 304 SEK/hour ~ €30/hour

Time spent: for all six persons that needed a visa, the total in-house administration amounted to 80 hours. The “first” application took longer than the “second”. Had it been only one application, we esti-mate that it would have taken 20 hours to adminis-ter. The on-line visa application had to be completed by the NBT project administrator, since it could only be submitted in connection with payment of the fee. At the same time, most required personal informa-tion and documents had to be produced by the applicants, entailing a lot of coordination.

Salary costs thus 20 h x €30/h= €600. Travelling: SEK 4,083 (flights) + 5583 (hotels)

+ 2467 (allowance for expenses) = SEK 12,133 ~€1213. Only includes costs that were due to the visa process, not costs pertaining to the working week in Sweden.

Documents: DHL express delivery services at SEK 2,000 from Sweden of invitation letters and insurance certificates (originals were required).

Other costs: Travel medical insurance at €0.8 per person and day (provided by Kammarkollegiet) x 14 days= €11.2.

Interviews

Interviewed companies Industry

GE Healthcare Bio-Sciences AB

Life sciences

PwC Sweden Consulting and auditing services

AB Electrolux Appliances manufacturer

ABB Sweden Power and automation

Deloitte AB Consulting and auditing services

Orsa Lamellträ AB Processed wood

Envac AB Waste collection systems

Nansen IT and digital solutions

Nolek AB Environmental solutions

Information was also gathered in the interviews conducted for National Board of Trade (2013) and (2014)

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Notes

1 National Board of Trade (2013a), (2014a) and (2015)

2 See e.g. National Board of Trade (2012a), (2013b) and (2014b)

3 OECD (2009), World Economic Forum (2013a), Freund and Rocha (2010)

4 The WTO agreement on trade facilitation is a case in point, as well as governments’ keen interest in measuring and reducing own barriers through the World Bank’s Doing Business indicators and Logistics Performance indicators, the OECD’s Trade Facilitation indicators and the APEC Principles on trade facilitation.

5 We keep the links in the chain distinct for analytical purposes, but in practice they may naturally be difficult to separate.

6 OECD (2009)

7 Neither we, nor OECD (2009) attempt to quantify these effects. The OECD describes how ‘indirect transaction costs’ affecting goods result in loss of business opportuni-ties, suboptimal inventory holding and depreciation of value of time-sensitive goods.

8 See SCM Network (2014)

9 They are often separate measures but can also be combined (e.g. the US H1B visa).

10 Aliens Regulation (Utlänningsförordning 2006:97) Chapter 5, § 1-2

11 Regulation (EC) No 810/2009 of the European Parliament and of the Council of 13 July 2009 establishing a Community Code on Visas (Visa Code). For longer stays, member states may issue national entry visas. In Sweden, however, this is rarely done.

12 Aliens Act (Utlänningslag 2005:716)

13 No work permit is needed for specialists who work in Sweden for an international enterprise group for less than one year altogether or for employees who participate in practical experience, internal training or other skills development at a company in an international group for up to three months altogether over the period of 12 months. They do, however, need a residence permit after three months. Residence permits are not covered by this report.

14 Work permits fall under member state competence in the EU, but there are EU legal frameworks harmonising principles for long-term residents, family reunification, students, researchers, highly qualified workers (blue card), and latley intra-corporate transferees.

15 For a description and evaluation of the system, see OECD (2011)

16 Migration Board (2013a), p. 95

17 Add information about the company and the name, date of birth, citizenship, education and e-mail address for the employee. State the classification code for the relevant profession or occupation. Both employer and employee have to provide a power of attorney to the certified company.

18 Employers in the areas of Cleaning, Hotel and Restaurants, Construction, Trade, Agriculture and Forestry, Automobile Repair, Service and Staffing have to prove that they can guarantee a salary for the applicant.

19 According to company interviews, see list in chapter 6.1

20 Form SKV 1160 which requires names and identification numbers for company and employee, plus signatures

21 OECD (2011) and Bevelander et al (2014)

22 The box is based on our company interviews, Sundkvist (2013b) and Migration Board (2013a)

23 World Bank (2014)

24 Croatia, Cyprus, Ireland and the United Kingdom are non-Schengen EU states. Bulgaria and Romania are in the process of joining Schengen. Iceland, Norway, Switzerland and Liechtenstein are non-EU Schengen states.

25 Council Regulation (EC) No 539/2001

26 European Court of Justice (2006), para 55. See also European Commission (2009). The case concerned two Turkish lorry drivers who were refused the visa they needed to gain access with their vehicles to Germany. The Association Agreement between EU and Turkey has a standstill clause on new restrictions on the freedom of establishment and the freedom to provide services. The German visa requirement was introduced in 1980, after the entry into force of this agreement, and thus deemed incompatible with the standstill obligation by the Court.

27 Not least because of poor data – see European Commission (2014a) p. 10f.

28 Other estimates of costs of a Schengen visa is €200 from Russia to Germany (Committee on Eastern European Economic Relations, 2011, which includes fee, travel, personnel costs, costs for documents); €220 from Mali to France, and USD 789 from Senegal to Italy (European Commission 2013a, p 8).

29 60% of respondents to a European Commission public consultation spent at least five days in total on applying for their visa (European Commission 2014a p. 15). See also IKV (2010) p. 66

30 European Commission (2014a) p. 18f

31 European Commission (2014a).The fee may not be more than half the visa fee (i.e. maximum 30 euro), but the cost varies considerably even in the same location (e.g. €5-20 in India).

32 European Commission (2014a) p. 16

33 European Stability Initiative (2014)

34 E.g. because projects are delayed and employers refrain from hiring. See Bloom, Kose and Terrones (2013)

35 The trade facilitation literature has shown that uncertainty about transportation and travelling time reduces the gains of trade. Traders spend more time gathering information and must hold larger inventories while still facing the risk of not being able to deliver to the customer. OECD (2009), Christ and Ferrantino (2011).

23

36 OECD (2011), Migration Board (2012) and (2013a), Nygren (2014), Svenskt näringsliv (2013), Sundkvist (2013a), Larsson (2013). One reason has been the increase in the number of asylum applicants, causing the Migration Board to reassign staff resources (Migration Board 2013b).

37 Migration Board (2013a), figures 65 and 66

38 In 2012, corresponding figures were 101 days for all and 5 days for fast-track applications (Migration Board 2013a, p. 89f; Migration Board 2012, p. 70)

39 European Commission (2014a) p. 68; European Commission (2013b)

40 Sources European Commission (2014a) p13f; European Commission (2013b) p21ff, European Commission (2014b),Visa Code articles 21, 23 and 9

41 20% of first-time applications were refused in 2012 and 26% in 2013 (Migration Board 2013a, figure 64)

42 Most of the rejected applications came from small businesses, associations and individuals (OECD 2011).

43 European Commission (2015)

44 The Commission finds that “generally, the form is seen as offering insufficient motivation (explanation) of the refusal” (European Commission 2014b, p. 26). An example of a standard reason for refusal is “Your intention to leave the territory of the Member States before the expiry of the visa could not be ascertained”.

45 According e.g. to PwC, which is a certified company providing work permit services to other companies.

46 See National Board of Trade (2013a) and National Board of Trade (2015) which found that for companies with little or no experience as exporters of services there was a positive and statistically significant link between hiring from a country and the companies’ subsequent probability to export services to this country.

47 European Commission (2014b)

48 This company was interviewed for National Board of Trade (2013a)

49 United States International Trade Commission (2014)

50 See also Nygren (2014)

51 See however World Economic Forum (2013b) p.12, saying that “In one such case [in the EU] the granting of a work permit took so long that the project for which a highly-skilled ICT professional was needed was abandoned.”

52 Committee on Eastern European Economic Relations (2011). See also European Stability Initiative (2014)

53 Arvis et al (2013)

54 These links have also been shown on firm level, and for temporary migrants. See National Board of Trade (2015) for a review of the literature.

55 There are also studies showing that imposing visas on nationals from a certain country restricts the number of incoming visitors from that country, and their spending.

European commission (2013b), Neumayer (2010), Lawson and Roychoudhury (2013), The Economist (2013), World Tourism Organization and World Travel & Tourism Council (2012)

56 Yasar, Lisner and Rejesus (2012)

57 Umana Dajud (2014). Spain was concerned about the inflow of migrants from these countries and demanded introduction of the visa requirement. Umana Dajud argues that the visa requirement was an “exogenous shock” to the Schengen countries other than Spain, eliminating other possible explanations for the reduction in trade following the visa requirement. The analysis omits trade between Spain and the two countries.

58 Kapelko and Volchkova (2013)

59 European commission (2013b), section 5.4.1

60 World Economic Forum (2013b)

61 National Board of Trade (2010a), (2010b), (2012b), (2013c), (2014a) and (2014b) describes servicification

62 Kapelko and Volchkova (2013), Umana Dajud (2014)

63 See National Board of Trade (2014a) about the need for visas specifically for companies producing environmental goods.

64 See National Board of Trade (2013a)

65 70-80 % of Swedish trade is with EU and EFTA.

66 A requirement for a Swedish work permit is demonstrating that the salary is on par with that set by Swedish collective agreements or which is customary within the occupation or industry.

67 PwC Sweden (2013)

68 See e.g. OECD (2009)

69 See e.g. Svenska Dagbladet (2013)

70 Having such programs is a requirement in the new WTO Trade Facilitation Agreement. The European Commission (2014a) proposal to revise the Visa Code goes in this direction, by suggesting different rules depending on a person’s visa record.

71 This is an EU principle for new legislation

72 Both of these recommendations are also brought forward by Hoekman and Jackson (2013).

73 Quotas, economic needs tests, qualification requirements and requirements for previous employment are for example considered disruptive. See The Partnership for a New American Economy (2014), OECD (2011) and World Economic Forum (2013b).

74 Statistics Sweden 2013 – Average monthly salary for skilled workers in business economy, marketing and human resources in the private sector

75 Social benefits/payroll tax adds 0.3142 (see Skatteverket) and holiday pay adds 0.12 (see Verksamt.se)

76 According to Tillväxtverket’s SCM unit

77 European Commission (2013a), p 7ff

24

78 European Commission (2013a), p 8 and 66

79 European Commission (2013a). The ESP charge is between €5-20 in India (SWD(2014) 68 final p 56) and €15-27 in Turkey

80 Statistics Sweden 2013 – Average monthly salary for human resources personnel and career counsellors in the government sector

81 Social benefits/payroll tax adds 0.3142 (see Skatteverket) and holiday pay adds 0.12 (see Verksamt.se)

82 According to Tillväxtverket’s SCM unit

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