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SADC reaches an agreement on Trade in Services

At the Conference

At the Conference, © GIZ

26.03.2018 - Article

CESARE supports negotiations on regional market access for services

Trade facilitation has been identified as one of the main drivers of economic integration in the SADC region. Naturally, when one speaks of trade, what first comes to mind is trade of goods. However, the reality is that trade barriers affect tradeable services as well as goods, even if the barriers may be different.  Whereas goods are mainly controlled at the border, services are mainly controlled through the way a sector is regulated domestically.  For example, every SADC Member State has a Banking Act.  Under the Act, Central Banks regulate their financial markets, to ensure the stability of the financial sector and to guarantee proper authorisation and supervision of banks as well as protection of customers.  Such regulations, if stretched, may limit foreign access to the domestic market.  Overregulation creates unnecessary compliance costs, which are often transferred to the consumer of the service.

Trade in Services is an important element to regional economic integration. SADC Member States have been negotiating regional market access for trade in services since 2012 within the ambit of the SADC Protocol on Trade in Services.  The Protocol on Trade in Services has been ratified by seven Member States so far, with at least three more Member States planning to ratify before the next SADC Summit, at which time the Protocol will enter into force.

The SADC Trade Ministers at their meeting in August 2017 accepted the results of several years of negotiations in four service sectors and sent it for legal scrubbing. A German Development Cooperation technical assistance programme - Cooperation for the Enhancement of SADC Regional Economic Integration (CESARE) provided technical advisory services for the SADC Secretariat during the negotiations. as the programme also provided capacity building support in selected Member States to enable them to draft their offers for the negotiations. The agreement guarantees the rights of access to each other’s markets for the supply of services and equal treatment with local service suppliers in the areas of communication, finance, tourism and transport. Negotiations of the country offers in two more sectors are currently being finalised. The first round of negotiations for Trade in Services in the SADC region has thus been completed.

The agreement has three main benefits: First, it relaxes the terms and conditions for establishing businesses within the SADC region; Second, the agreement and the resulting cross border trade and investment will avail wider choice of services for consumers; third, the agreement will serve as a benchmark for subsequent rounds of negotiations and will likely lead to further liberalisation in these sectors. It is expected that SADC Ministers of Trade will soon launch a second round of negotiations, covering additional sectors. Given the focus of the SADC region on Industrialization, it is expected that such sectors will be chosen which are important for Industrialization, such as business services.

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