Services & Investment EU-SADC EPA Group Cape Town, September 2010
Key service sectors for development Infrastructure: financial services, telecommunicatios, transport, energy & the environment, business services, construction Foreign currency earners: tourism and potentially all sectors Social services: health, education
How to trade services? Multilateral framework: GATS Unilateral liberalisation Regional integration and EPAs
In the «mode» for love? Mode 1: cross-border supply (only the service crosses the border telecentres) Mode 2: consumption abroad (consumer travels abroad tourism) Mode 3: commercial presence (establishment of a subsidiary or branch investment abroad) Mode 4: temporary presence of natural persons supplying a service (business travel consultant attending a meeting abroad)
Services Services are the fastest growing sector not only in the developed world, but also in the developing one, where it represents often more than 50% of GDP Services are the backbone of any economy: telecommunications, transport, banking and distribution are essential to economic development Trade in goods cannot be separated from trade in services see transport and logistics
Openness in Services Closed services markets = lack of competition = high costs = lack of competitiveness In Africa, extremely high transport costs, and high costs of accessing finance Objective of services provisions in EPAs: facilitate and strengthen trade in services, by granting service providers legal certainty re. market access and conditions under which they operate
Services & Investment Foreign direct investment (FDI) services and non-services sectors helps to improve infrastructure attract capital enhanceemployment contribute to transfer of technology and know-how encourage economic growth in general
Services & Investment in the EPA EPA to help attract investment by fostering legal certainty (minimum standards obligations and commitments) EPA to limit discrimination (i.e. restrictions for foreign nationals only) Reduce prices and increase consumer choice through competition
EU Proposal on Services and Investment in the EPA Reciprocity and asymmetry Gradual market opening Compliance with WTO rules (GATS Article V) Building on GATS concepts Scope: Trade in services E-commerce Establishment also in non-services sectors Regulatory framework Regional integration Development cooperation
The EPA and Regional Integration No prior regional harmonisation necessary Every country can choose sectors, level of commitments and transitional periods Further regional harmonisation is possible Regional liberalisation will open up the market for regional operators, but the level of liberalisation vis-à-vis the EU remains EPA commitments do not undermine regional integration - neither in SADC nor Europe Examples: EU GATS commitments, Cariforum EPA
Example from CARIFORUM schedule SECTOR OR SUB-SECTOR f) Integrated engineering services (CPC 8673) DMA, DOM, VCT, BRB (Except CPC 86732), GRD (CPC 86731, 86732, 86739), KNA (CPC 86733), SUR (Except CPC 86732 and 86739) Different scope of coverage LIMITATIONS ON MARKET ACCESS BRB, GRD: 1), 2), 3) None DMA, KNA, SUR, VCT: 1), 2) None DMA: 3) Unbound. None from January 1, 2022 DOM: 1) None; 2) Unbound; 3) None SUR: 3) None from January 1, 2013 VCT, KNA: 3) Joint venture required BRB, DMA, GRD, KNA, VCT, SUR: 4) Unbound except as indicated in the horizontal commitments DOM: 4) Prior permit required. A foreign professional who meets the relevant qualifications may join CODIA as long as Dominican nationals are not prohibited from practicing in the jurisdiction in which the foreign professional is licensed. Chemical engineers must work in association with a national chemical engineer. Different commitments LIMITATIONS ON NATIONAL TREATMENT BRB, GRD, VCT, SUR: 1), 2), 3) None DMA: 1), 2) None JV requirements DMA: 3) Unbound. None from January 1, 2022 DOM, KNA: 1) None; 2), 3) Unbound Transitional periods BRB, DMA, DOM, GRD, KNA, VCT, SUR: 4) Unbound except as indicated in the horizontal commitments Requirements for quality of service
EPA Commitments and Regulation When taking commitments on trade in services and investment in EPAs, both ACP countries and the EU retain their right to regulate non-discriminatory issues (security, safety, consumer protection)