GATS Negotiations Must Focus on Services Liberalization: The Case of SADC. By Kennedy K. Mbekeani*1 2 3 >>
Aug 4, 2003
The countries that comprise the Southern Africa Development Community (SADC) countries have recognized the economic benefits to be derived from autonomous reforms in sectors such as financial services, telecommunications and transport, which may be viewed as infrastructural backbones of any economy. These sectors have a significant impact on growth and efficiency across a wide range of user industries and overall economic performance. Availability of infrastructure services may lead to export capacity building in other sectors, including the attraction of private investment. For example, improved transport services will contribute to the efficient distribution of goods within the SADC region, and has a significant impact on the region’s ability to participate in global trade. Improvements in social services, such as education and health, are necessary in building human capital, which is key to long run economic growth.
In the absence of services liberalization, the implementation of the SADC Trade Protocol, which aims at creating a SADC free trade area, could result in negative effective protection for goods. The SADC countries include Angola, Botswana, Democratic Republic of Congo, Lesotho, Malawi, Mauritius, Mozambique, Namibia, Seychelles, South Africa, Swaziland, Tanzania, Zambia and Zimbabwe. These member states, in 2001, started implementing a free trade agreement and are about to start negotiations on services liberalization. For trade liberalization in the SADC region to have any meaning it is important that services liberalization keep pace with trade liberalization.
The low number of proposals in GATS negotiations by SADC countries reflects the difficulty the countries face to clearly identify negotiating objectives on services—a problem that has to be addressed. On the other hand, the main concern of SADC countries in most sectors is capacity-building and technology transfer rather than access to markets. This article attempts to identify key issues of interest to SADC countries in the GATS negotiations and how the countries can ensure a favorable outcome.
Key issues for SADC countries
The challenge for SADC countries is how to establish their specific needs in the framework of GATS Article IV, leading to transfer of technology and capacity building. Experience shows that in some areas, like construction services, developing country suppliers maximize their capacity building when engaging in joint ventures and partnerships with foreign firms in the delivery of service. This measure—the requirement to establish joint ventures—is considered a limitation on trade liberalization.
Implementation of Article IV provisions at the horizontal level appears to be difficult. Developing countries seem to be better positioned to make progress in negotiations on increasing participation in the trade of services when they focus on how to implement GATS Article IV in the sectors of their interest, and in articulating the associated sector-specific issues and measures of their immediate concern.
Areas of interest to SADC countries include movement of natural persons, construction, tourism and energy services.
Movement of Persons. A number of SADC countries are interested in a further liberalization of movement of persons (mode 4) on a sectoral basis, and in addressing issues that are impeding market access—including issuance of visas, administrative procedures, lack of transparency and economic needs tests. A new approach is necessary to make progress in the negotiations on mode 4. This approach should be handled at a level of detail, so that the negotiations would not be overtaken by non-trade concerns. Some of the issues include setting minimum sufficient international rules that would limit negative trade impact on the movement of natural persons, and would be compatible with the overall development objectives of developing countries, and sectors or categories of professions where liberalization of the movement of persons is critical for the export of services from developing countries.
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