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Sheila Page
Overseas Development Institute
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Scoping Study
Special and Differential Treatment in post-Cotonou Services
Negotiations
Dirk Willem te Velde, Ian Gillson and Sheila Page
Overseas Development Institute 111 Westminster Bridge Road
London , SE1 7JD
Final report: 23 February 2004 for
The Dutch Ministry of Foreign Affairs
Overseas Development Institute
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Executive summary
This scoping report highlights the issue of post-Cotonou negotiations on services. The Cotonou Partnership Agreement (CPA), signed in 2000 and ratified in 2003 by a sufficient number of states, allows Economic Partnership Agreements (EPAs) between the European Union (EU) and African, Caribbean and Pacific (ACP) countries to be extended to services. The agreement provides for applying special and differential treatment (S&D) in services negotiations in order to benefit the ACP and this report discusses how that might be done.
The three objectives (terms of reference) of this report are to: 1. identify the provisions on services in existing agreements and assessment of the
pros and cons of these provisions; 2. provide an overview of possible benefits to ACP countries (if possible with
differentiation between regions) of EU liberalisation sectors, regulations and modes of supply;
3. conduct a stocktaking of the possibilities for S&D for the ACP countries in the framework of the General Agreement of Trade in Services (GATS) and assess options for incorporating S&D in services in Cotonou over and above the level in the GATS.
To examine these objectives this report combines S&D in GATS, Provisions in Regional Services Agreements, and Services Provisions in the Cotonou Partnership Agreement, with an analysis of ACP services export capacity and current EU GATS commitments.
GATS and Special and Differential Treatment
Chapter 2 introduces GATS and the concept of S&D as applied to services negotiations. This is relevant as it can provide a template for the structure (including S&D options) of possible regional services negotiations and also a background against which regional negotiations take place (at least for ACP countries that are also WTO members). There are several S&D provisions in the GATS: • Provisions aimed at increasing participation of developing country members in
world trade, with specific attention to least-developed countries. • Provisions under which WTO members should safeguard the interests of
developing country members through the Council of Trade in Services by carrying out assessment studies and establishing negotiating guidelines.
• Provisions that allow flexibility of commitments by developing countries, flexibility of action with regard to establishment of enquiry points and use of policy instruments, and flexibility to developing countries with respect to services commitments in economic integration arrangements.
• Provisions specifying the use of technical assistance in developing countries.
S&D in GATS is difficult to measure, not yet fully operational and often not mandatory. Negotiations on emergency safeguard measures are also ongoing. The ACP group will be interested in the development of S&D in GATS, as it will inform their negotiations with the EU on a possible services agreement under Cotonou. However, this does not preclude thinking on how S&D can be applied in Cotonou, before S&D negotiations in GATS have finally finished.
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Services Provisions in Regional Trade Agreements (RTAs)
Chapter 3 examines in more detail services provisions in RTAs such as NAFTA, CARICOM, MERCOSUR, ANDEAN, ASEAN, COMESA and SADC. It highlights a number of aspects relevant to post-Cotonou negotiations on services. The main conclusion is that RTAs differ with respect to coverage, liberalising principles and depth of commitments, and this also applies to recent EU RTAs with developing countries (South Africa, Chile, Mexico etc.). In particular, we highlighted • Depth of commitments, • General provisions related to cross-border supply of services and consumption
abroad (modes 1 and 2), • Treatment of investment (mode 3), • Treatment of movement of natural persons (mode 4), • Government procurement of services.
Importantly, therefore, the elements of post-Cotonou negotiations on services and its strategy are, in principle, negotiable. The differing approaches to services provisions in regional trade agreements reflect a range of factors, including cultural and historical ties, the degree of geographical proximity of the parties, similarities in their levels of development and interests with countries or sectors to push items on the agenda. There is one further unresolved complication in that all EU agreements (with exception of ongoing EU-MERCOSUR negotiations) are based on agreements between the EU and a single developing country, unlike expected EPAs.
Services Provisions and post-Cotonou Negotiations
Chapter 4 reviews the provisions in the Cotonou Partnership Agreement relevant for planned EPA negotiations on services. In principle the ACP is not obliged to start negotiations, but the EU and the ACP agree to extend their partnership to encompass the liberalisation of services in accordance with the provisions of GATS. There are separate provisions for maritime services, information and communication technologies, and information society, and tourism. The CPA incorporates a reaffirmation of GATS commitments and underlines the need for S&D for ACP suppliers of services, such as through consideration to the ACP states’ priorities in the EC schedule and through strengthening the ACP supply capacity, especially in labour, business, distribution, finance, tourism, culture and construction and related engineering services.
Phase 1 negotiations started in September 2002, and the outcome of phase 1 ACP EU negotiations was made public in October 2003. Phase 2 negotiations have now been launched in several African EPA regions (ECOWAS, CEMAC, ESA) and are expected elsewhere. Phase 1 negotiations concluded that services liberalisation in an EPA should be progressive, based on a positive list, adapted to the level of ACP countries and their sectors and specific constraints, and underpinned by principles of S&D, asymmetry and positive regional discrimination. The EC agreed to discuss liberalisation in mode 4 (temporary movement of natural persons) in the context of EPA negotiations. This issue is sensitive for the EU but crucial to the ACP. The EU and the ACP also agreed that support for the development of services sectors should be provided to ACP countries within the context of EPAs, but there is disagreement
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over the need for additional funds which can be used flexibly and rapidly (ACP) as opposed to no additional (EU) beyond existing EDF commitments. Finally, while the EU argues for a WTO-plus agreement, the ACP group is unlikely to want to go (significantly) beyond commitments in the WTO.
WTO Compatibility of S&D in EPAs on Services
Chapter 5 discusses which GATS provisions allow services negotiations in RTAs and shows the flexibility that is available for the ACP in WTO compatible services EPAs. It concludes that there are provisions that relate to developing-developed country arrangements, including EPAs between the EU and ACP regions, which would allow flexibility (or S&D) for developing countries in EPAs in terms of coverage and removal of discrimination, while the EU would liberalise more/substantially all sectors and modes to ACP regions (while not doing the same to other WTO members).
ACP exports of Services to the EU: Performance and Barriers
Chapter 6 provides an overview of the performance of ACP exports and the barriers they face in the EU at present. An analysis of the data on services (which unfortunately are not of high quality) finds that • The average share of services in GDP is 50 percent for the ACP but varies widely
across countries; the share of services in total exports ranges from over 75 percent for a number of Caribbean countries (typically high because of tourism) to under 5 percent for several African countries.
• Despite strong growth in the value of ACP exports of services (US$8 billion in 1980 to US$20.8 billion in 2000), the world share of the ACP dropped from 2.4 percent in 1980 to 1.5 percent in 2000.
• In 2000, the largest eight exporters of services in the ACP group accounted for more than half of total ACP services exports. These include the Dominican Republic, Bahamas, Jamaica, Mauritius and Barbados (owing to exports of tourism services) as well as Kenya, Zimbabwe (owing to exports of transport) and Nigeria (owing to exports of business services).
• For the ACP group of countries the largest export sector is travel, which accounts for more than half of all ACP services exports, followed by transport, business services and government services.
• Almost three-quarters of recorded African ACP exports of services have gone to the EU. Seven percent of extra-EU trade in services is with the ACP. Exports of services account for one-third of all ACP exports of goods and services to the EU.
Benefits of EC liberalisation by mode of delivery, sector and regulation
The chapter then discusses in general terms possible benefits of removing EC barriers to ACP exports in a two stage procedure: • Identify EU barriers to ACP exports in services (sectors, modes, and specific
regulations) to be liberalised, using consolidated EU GATS schedules • Identify the supply response of the ACP to EU liberalisation (by mode, sector,
country and region), in other words, whether ACP counties are sufficiently competitive and have the domestic capacity to supply services to the EU.
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The present study is a scoping study, and thus provides only preliminary answers. Strengths of services exports in many ACP countries are through modes 1, 2 and 4. Mode 4 is by definition labour intensive, and, vis-à-vis the EU, the ACP has a comparative advantage in labour due to relative labour abundance (though not necessarily in highly skilled services). However, mode 4 delivery is seriously hampered by the current EU trade regime in the form of economic-needs tests and diploma and nationality requirements, as well as outright restrictions on movement of less-skilled workers or short-term workers for ACP companies. Linking mode 4 delivery to commercial presence (mode 3), or cross-border delivery (mode 1) delivery to mode 3, constitutes another barrier to the ACP, because the ACP has a comparative disadvantage in setting up a commercial presence.
Mode 1 delivery has become more important over time owing to technical improvements in telecommunications and information networks. Bound commitments in mode 1 by the EC would safeguard cross-border ACP exports of services, but there are several unbound mode 1 commitments. Most back office service sectors have been fully committed by the EC (e.g. computer-related services CPC 84), but not all, e.g. collection, telephone answering and duplicating services. Mode 2 is the main mode of ACP supply of services (tourism) and features few barriers. An exception may apply to coverage of national health insurance for EU nationals outside the EU.
It is also possible to review benefits of EU liberalisation to the ACP by sector and type of regulation. We would need to consider EU-wide (where services have been liberalised internally) and country-specific regulations. In business services, many individual member states include requirements for a university degree, professional qualifications and several years’ professional experience, for accountants, lawyers, etc. In the case of medical and dental services, access can be restricted to natural persons and often includes economic-needs testing and a residence requirement. Removing these restrictions would benefit countries with a relevant supply capacity. The inclusion of postal, courier and audiovisual services (many of which are uncommitted) could also benefit ACP exporters with relevant export capacity (ranging from high to low: Jamaica, Dominican Republic, Guyana, Côte d’Ivoire, Barbados, Tanzania, Kenya, Ethiopia, Mauritius). For construction and related engineering services, there are EC member state nationality requirements in market access under mode 3 and qualification requirements in mode 4 (e.g. degree and professional experience in the Netherlands), while mode 1 is largely unbound (though France has an economic-needs test). Removing these restrictions would benefit those ACP countries with a relevant export capacity (ranging from Tanzania, Madagascar, Cameroon, Ethiopia, Mauritius, Côte d’Ivoire, Barbados). Removing residence requirements in distribution services (e.g. wholesale trade) could benefit ACP countries. Removing nationality conditions in France, Denmark and Ireland could help ACP exports of education services (e.g. Caribbean and African universities).
Removal of a nationality or residence requirement in mode 4 of financial services in Austria, Denmark, Spain and Italy could lead to benefits for ACP countries, but these are not expected to be big. Countries with reported export values in insurance service, ranking from high to low, are: Barbados, Mauritius, Trinidad and Tobago, Côte d’Ivoire, Antigua and Barbuda, Cameroon, Tanzania, Bahamas, Jamaica and Botswana. But there is a question whether ACP insurance firms can compete on the EU market. ACP banks and financial institutions may not be able to withstand
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competition in EU markets, but there may be exceptions, e.g. Trinidad and Tobago. Obstacles more difficult to overcome (for reasons of prudence) relate to depository assets and transparency requirements for offshore banking (resulting in blacklisting of certain ACP countries). On the other hand, labour-intensive financial services such as data processing and call centres could be done more cheaply in the labour abundant countries. For this, safeguards regarding mode 1 in the EU would be effective (although many such services would fall under business services).
The potential for ACP exports of health services is significant. Removing restrictions in health services in modes 3 and 4 (economic-needs tests) or including it as committed sectors (as many EU health sectors are unbound, or uncommitted) should help such exports significantly. There are also EU-wide and member state-specific regulations relating to health tourism and cutting waiting lists that would fall under government procurement and hence not under business services negotiations. But it is clear that ACP health operations can be more competitive than EU operations.
The main source of exports of tourism and travel related services is in mode 2. This is already relatively free of restrictions. Removing restrictions (esp. in Southern European countries) on tourist guides (mode 4) could give marginal benefits to ACP countries. Anecdotes suggest that removing mode 4 restrictions in recreational, cultural and sporting services, including economic-needs tests (Italy), main profession (Austria), employment contract with authorised enterprise (France), and others would facilitate ACP exports of services, including entertainment groups.
Many transport service sub-sectors have been excluded from commitments. New commitments e.g. in maritime shipping could benefit ACP countries (e.g. Kenya). There are also various unbound transport sub-sectors. Only road-transport services include commitments, subject to limitations such as economic-needs tests (mode 3 and 4). However, the removal of mode 3 restrictions does not seem of major interest to the ACP due to capital requirement.
Finally, it would be of interest to examine more closely which regions are expected to gain from EU liberalisation and which countries within regions. For instance, CEMAC and ECOWAS did not report high increases in exports of services since the 1980s, while EAC, SADC and COMESA did. It is also clear that specific countries within regions are expected to gain, depending on sectoral composition and other issues, such as cultural and linguistic links with the export market.
Special and Differential Treatment in post-Cotonou Negotiations
Chapter 7 “scopes in” 10 possible options for the inclusion of S&D in post-Cotonou negotiations on services (detailed case studies should assess relative importance): 1. Financial support for services export capacity building; 2. Facilitation of the recognition of professional credentials between the EU and the
ACP by setting up one-stop shops in ACP countries (e.g. establish an ACPPASS initiative similar to a recently announced EUROPASS initiative);
3. Information centres for ACP exporters of services; 4. Increase in technology transfer to the ACP services sectors using “home country
measures” (e.g. PROINVEST, EIB Investment Facility); 5. Full credit for autonomous ACP liberalisation of services
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6. Fewer or no services commitments by ACP/LDC countries (affirming GATS commitments);
7. EU commitments over and above GATS. This should cover more liberal mode 4 conditions (e.g. an ACP business travel card), safeguarding mode 1 supplies, and removal of restrictions in mode 3 and mode 4 in specific sectors such as business services, construction and related services, health and education services, recreational, cultural and sporting services, and tourism services. Lifting of some restrictions can be achieved more easily at ACP level than in the GATS, but EPAs should be formed under GATS article V (on Economic Integration).
8. Inclusion of (parts of) EU government procurement (e.g. health and IT); 9. Operationalise Emergency Safeguards Measures for the ACP; 10. Flexible implementation time period (this could apply to mutual recognition of
qualifications and inventories of restrictions).
After resolving general issues, such as agreeing on who will negotiate EPAs (see chapter 4 on ACP groupings), we suggest at least four ways forward: 1. No services agreement or new resources. 2. No services agreement, with some S&D options such as additional resources. 3. A limited services agreement. No ACP commitments beyond GATS, but
(significant) new EU commitments and inclusion of several S&D options. 4. Advanced services agreement, with both the ACP and EU committing more than
under GATS. There would need to be regional coordination of services commitments within ACP regions before engaging with the EU, and further discussion of liberalising principles and rules, as we argued before that these are in principle negotiable, and inclusion of S&D.
Conclusions and areas for further work
Chapter 8 concludes with areas for further research required to assess the importance of services negotiations within the CPA at a more detailed level. The need for more detailed research will depend on which negotiating option will be chosen. We highlight a few options below and suggest to begin with ESA and CARICOM regions as both have expressed an interest in thinking further about services negotiations: • For each EPA region, identify the country and sector specific effects of financial
resources on ACP services productivity and export capacity; • For each EPA region, identify at the country/sector level, the effectiveness of the
above 10 S&D options; • Initiate public-private dialogue to examine which trade barriers should be lifted by
the EU to trigger a supply response in the ACP;. • Initiate a mode 4 study to examine feasibility and effects of a possible ACP
business travel card.
It should be noted that in order to obtain at least modest gains from a services agreement, the ACP would need to table specific S&D options: requests for the lifting of certain barriers in the EU, for EDF resources in specific areas, etc. Now is the time to consider which specific options are likely to be most effective, as this process may be lengthy. It is not possible to wait until current GATS 2000 negotiations have been finalised, as different requests (for the lifting of barriers, or other S&D options) can be made under Cotonou whereas GATS 2000 negotiations may not have finished by 2005, with Cotonou services negotiations possibly starting in 2006.
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List of abbreviations
ACP African, Caribbean and Pacific countries ANDEAN Andean Community APEC Asia-Pacific Economic Cooperation ASEAN Association of South East Asian Nations CARICOM Caribbean Community and Common Market CARIFORUM Caribbean Forum CEMAC Communauté Économique et Monétaire de l'Afrique Centrale CGE Computable General Equilibrium CPA Cotonou Partnership Agreement CRTA Committee on Regional Trade Agreements CTD Committee on Trade and Development CTS Council for Trade in Services DFID UK Department for International Development EAC East African Community EC European Community ECDPM European Centre for Development Policy Management ECOWAS Economic Community of West African States EDF European Development Funds EDI electronic data interchange EPA Economic Partnership Agreements EU European Union EU-CEECs Europe Agreements Central and Eastern European Countries FDI Foreign Direct Investment FTA Free Trade Agreement GATS General Agreement of Trade in Services GATT General Agreement on Tariffs and Trade GDP Gross Domestic Product IMF International Monetary Fund LDC Least-Developed country MA Market Access MFN most-favoured-nation MERCOSUR Mercado Común del Sur (South American Common Market) MNE Multinational Enterprises MS Member State NAFTA North American Free Trade Agreement NT National Treatment OAS Organization of American States OECD Organisation for Economic Co-operation and Development R&D research and development RTA Regional Trade Agreement RoO Rules of Origin S&D special and differential treatment SACU Southern African Customs Union SADC Southern African Development Community SMEs small and medium-sized enterprises TDCA Trade, Development and Cooperation Agreement UEMOA Union Économique et Monétaire Ouest-africaine UNCTAD United Nations Conference on Trade and Development WDI World Development Index WTO World Trade Organization
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Table of Contents
Executive summary......................................................................................................1Table of Contents .........................................................................................................8List of Appendices........................................................................................................9Chapter 1 Introduction and Overview..................................................................10Chapter 2 GATS and Special and Differential Treatment..................................12
2.1 GATS ..........................................................................................................12 2.2 GATS commitments ....................................................................................12 2.3 GATS 2000 requests and offers ...................................................................13 2.4 Special and differential treatment in GATS.................................................14
Chapter 3 Services Provisions in Regional Trade Agreements ..........................193.1 Developing country Regional Trade Agreements and services ...................19 3.2 Services provisions in Regional Trade Agreement with the EU .................25 3.3 Conclusions and relevance for post-Cotonou negotiations.........................28
Chapter 4 Services Provisions and post-Cotonou Negotiations..........................304.1 Services provisions in the Cotonou Partnership Agreement........................30 4.2 Post-Cotonou Services negotiations so far ..................................................31 4.3 Post-Cotonou Services negotiations: undecided issues ...............................31
Chapter 5 WTO Compatibility of S&D in EPAs on Services .............................33Chapter 6 ACP Exports of Services to the EU: Performance and Barriers......35
6.1 Performance of ACP trade in services .........................................................35 6.1.1 Share of services in GDP .............................................................................35 6.1.2 Share of services in total trade .....................................................................36 6.1.3 Growth in services trade ..............................................................................36 6.1.4 The composition of ACP services exports...................................................38 6.1.5 ACP regional exports...................................................................................40 6.1.6 The composition of services exports from ACP regional groups ................41 6.1.7 ACP trade in services with the EU ..............................................................41 6.1.8 ACP exports and imports of services by mode of supply............................43 6.1.9 ACP services companies exporting to the EU .............................................44 6.1.10 Conclusions..................................................................................................45 6.2 EU barriers to ACP exports .........................................................................47 6.2.1 General barriers to trade in services.............................................................47 6.2.2 Trade barriers to ACP-EU trade in services: anecdotes...............................48 6.2.3 EU GATS schedules ....................................................................................48 6.3 Possible benefits to ACP of removing EU barriers to ACP exports............54
Chapter 7 Special and Differential Treatment in post-Cotonou Negotiations ..587.1 Negotiations so far .......................................................................................58 7.2 Options.........................................................................................................59 7.3 Political and negotiating issues....................................................................61
Chapter 8 Conclusions and areas for further work.............................................63References .................................................................................................................65
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List of Appendices
Appendix A: Services Sectoral Classification List.................................................67Appendix B: GATS commitments...........................................................................74Appendix C: EC requests in GATS 2000................................................................77Appendix D: Types of natural persons supplying services (horizontal
commitments) .....................................................................................78Appendix E: Cotonou Partnership Agreement: services related articles. ..........79Appendix F: EU trade with ACP, list of ACP countries.......................................82
Table F1: EU trade with ACP ..............................................................................82 Table F2: List of ACP countries with WTO and LDC status ..............................83
Appendix G: Regional Trade Agreements Notified (and in Force) to the WTO 85Appendix H: S&D in GATS.....................................................................................86Appendix I: Background data................................................................................93
Table I.1: Services as a Percentage of GDP for ACP Countries 2000 .................93 Table I.2: ACP Services Exports as Percentage of Total Exports........................94 Table I.3: ACP Services Exports ($ Millions)......................................................95 Table I.4: ACP Services Exports by Sector 2000 ($ millions).............................96 Table I.5: ACP Services Exports by Region, 1980 -2000, $ mn..........................98 Table I.6: EU Trade in Services ...........................................................................99 Table I.7: EU Member state trade in services ....................................................100 Table I.8: EU Services Trade with ACP as a Proportion of Total EU Services
Trade ..................................................................................................103 Table I.9: EU Exports and Imports of Services 2001 ($ millions).....................104 Table I.10: Composition of exports for selected ACP countries..........................106
Appendix J: Business Process Outsourcing to Developing countries. ..............107Table J.1: Business Process Outsourcing in the UK financial services industry108
Appendix K: Consolidated EU GATS schedule...................................................110
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Chapter 1 Introduction and Overview1
The Cotonou Partnership Agreement (CPA) was signed in June 2000 and entered into force on 1 April 2003. The agreement allows for negotiations between the EU and the ACP on reciprocal trade and investment relationships in goods and services. Among others, the CPA includes two new approaches compared to previous EU-ACP arrangements. First, it will mark the eventual abolition of unilateral tariff preferences in goods trade, which has long been granted by the EU to ACP countries. Secondly, beyond the goods trade, it is expected that negotiations will cover investment and trade in services. Negotiations are expected to proceed in the form of regional economic partnership agreements (EPAs) between the EU and ACP regions.
The purpose of this scoping paper is to inform ACP negotiations on the issue of trade in services and on how to incorporate special and differential treatment (S&D), as advocated in the CPA. While the Cotonou mandate allows for S&D, both the EU and the ACP have tabled few concrete proposals in this area, even though for some ACP regions substantive phase 2 negotiations began in October 2003.
Special and differential treatment has long been practised in the EU-ACP context. However, it has dealt with trade negotiations in goods, which are now about retaining, not securing, further special market access. So it is only in services that the ACP can make demands for more access. There has been no real progress on thinking about how S&D can be applied to post-Cotonou service negotiations.2 Some would argue that the (likely) nature of service agreements at WTO and EU-ACP level, i.e., a positive list approach, is inherently consistent with S&D, as each country has sufficient flexibility in terms of committing sectors and restrictions. However, S&D in services can be about more than flexibility in offering services sectors. S&D could include: increased access to partner markets, in particular through mode 4; increased technology transfer, especially in mode 3; allowances for emergency safeguards for committed sectors and credits for autonomous liberalisation; and others.
The three objectives (terms of reference) of this study are to:
1. identify the provisions on services in existing agreements and assessment of the pros and cons of these provisions;
2. provide an overview of possible benefits to ACP countries (if possible with differentiation between regions) of EU liberalisation sectors, regulations and modes of supply;
3. conduct a stocktaking of the possibilities for S&D for the ACP countries in the framework of the General Agreement of Trade in Services (GATS) and assess options for incorporating S&D in services in Cotonou over and above the level in the GATS.
1 We are grateful to Marjolein Geusebroek and her colleagues at the Dutch Ministry of Foreign Affairs for their comments. 2 A discussion with Bridget Chilala indicated that the Commonwealth Secretariat has conducted a study on services in Cotonou (Arkell and Johnson, 2003). In line with the Terms of Reference, our study focuses on S&D in services in Cotonou, thereby paying more attention to services provisions in regional trade agreements, data issues and options to include special and differential treatment.
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The structure of the rest of this report is as follows: Chapter 2 introduces GATS and the concept of S&D as applied to services negotiations. This is relevant as it can provide a template for the structure of possible regional services negotiations and also a background against which regional negotiations take place (that is for those countries that are members of the WTO). Chapter 3 examines services provisions in Regional Trade Agreements in more detail. These provisions, in particular those negotiated in EU FTAs, may provide a useful starting point for services negotiations in EPAs. Chapter 4 reviews the provisions in the Cotonou Partnership Agreement relevant for (possible) future EPA negotiations on services. Chapter 5 discusses which GATS provisions allow WTO compatible services negotiations in RTAs and shows possible flexibility in services EPAs available to ACP countries. Chapter 6 provides an overview of the performance of ACP exports, the barriers they face in the EU at present and possible benefits the ACP derive from lifting these barriers. Chapter 7 sets out possible options for the inclusion of S&D in post-Cotonou negotiations on services. Chapter 8 concludes with a list of areas for further research required to assess the importance of services negotiations at a more detailed level.
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Chapter 2 GATS and Special and Differential Treatment
2.1 GATS At the multilateral level, the General Agreement on Trade in Services (GATS) governs liberalisation in trade in services. The GATS consists of three core elements. The first consists of general rules and principles governing trade in services. Among others, these rules provide for disciplines on transparency (Art. III) and most-favoured-nation (MFN) treatment (Art. II), although derogations are possible (under Art. II –exemptions and Art. IX:3 – waivers). The framework is still incomplete, and modalities on certain issues, such as emergency safeguard measures (Art. X), subsidies (Art. XV), domestic regulation (Art. VI) and government procurement (Art. XIII) continue to be developed. Secondly, the GATS includes a series of specific annexes pertaining to regulatory principles agreed in specific service sectors (air transport, financial services, maritime transport, and telecommunications) and decisions on specific issues (movement of natural persons). The third element of the GATS consists of schedules of commitments which outline the liberalisation of each Member. Sectoral schedule commitments concern market access (Art. XVI) and national treatment (Art. XVII) within designated sectors. Such commitments identify the services by mode of supply (cross-border trade, consumption abroad, commercial presence and movement of natural persons) for which the Member guarantees market access and national treatment and any limitations that may be attached. Members can also make market access and national treatment commitments across sectors (again for each mode of supply) in what are known as horizontal schedules of commitment. Members are free to tailor as they see fit the sector coverage and substantive content of sectoral and horizontal schedules.
GATS Art. XIX allowed the start of a new round in 2000, due to finish by the end of the Doha Round in 2005. The article says that this process of liberalisation should take place with due respect for national policy objectives and the level of development of individual Members, both overall and in individual sectors; that there will be appropriate flexibility for individual developing country Members to open fewer sectors, liberalise fewer types of transactions, progressively extend market access in line with their development situation and, when making access to their markets available to foreign service suppliers, attach to such access conditions aimed at achieving the objectives referred to in Art. IV.
2.2 GATS commitments WTO members made GATS commitments in 1995 or, afterwards, on entry into the WTO. There are various ways to examine schedules of commitments made in GATS. One is a description of commitments by mode of supply (World Bank, 2002; WTO, 1998 and 1999). Countries can make unbound or partial and full commitments. There are four modes covering cross-border supply and returns to cross-border movement of factors.
• Mode 1. Cross-border supply: when a service crosses a national border. An example is the purchase of insurance or software by a consumer from a producer abroad.
• Mode 2. Consumption abroad: when a consumer travels abroad to consume from the service supplier, such as in tourism, education, or health services.
• Mode 3. Commercial presence: when a foreign owned company sells services (e.g. foreign branches of banks).
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• Mode 4. Temporary movement of natural persons: when independent service providers or employees of a multinational firm temporarily move to another country.
Countries have also had to decide which sectors to include (unbound, or bound with or without market access and NT/MFN exemptions). The basic list (more detailed in appendix A) of GATS sectors is
• Business services • Communication services • Construction and related engineering services • Distribution services,• Educational services, • Environmental services, • Financial services, • Health-related and social services, • Tourism and travel-related services, • Recreational, cultural and sporting services, • Transport services, • Other services.
Appendix B contains a very brief summary of commitments in these twelve sectors. Sectors least committed are social sectors, such as educational and health-related services. Sectors most committed include communication services, financial services and tourism.
WTO member states have made significant (full) commitments for mode 1 and especially mode 2 (few countries prevent tourism), but far fewer (and partial) commitments in mode 3 and especially mode 4. Mode 3, commercial presence, is a contested area since it relates to the impact of foreign direct investment. Entries vary by sector, and partial bindings are commonplace for this mode, which is more restrictive in financial services, infrastructure services and consumer-oriented businesses. Mode 4, in which there are no full horizontal commitments, is also a contentious area.
WTO (1998) shows that most of the mode 4 entries scheduled (240 out of 328) concern executives, managers and specialists. Of these, 135 entries explicitly relate to intra-corporate transferees and are thus related to commercial presence or Mode 3 commitments (see Appendix D). The focus on employed persons is further reflected by use of employment links such as a market access criterion; among all relevant restrictions ‘pre-employment’ ranks top, by a wide margin. Others include numerical quotas and economic-needs tests. The schedules are biased in favour of qualified labour. Only 17 percent of all horizontal entries cover low-skilled persons as well (‘business sellers’, ‘non specified’ and ‘other’).
2.3 GATS 2000 requests and offers GATS 2000 is currently at a request-and-offer negotiating stage. The Doha ministerial instructed that GATS 2000 should be part of a single undertaking, due to finish by 2005. After failing to progress substantially at the Cancún ministerial, it has become more likely that the 2005 deadline will be pushed backwards (probably also despite a letter by the US trade negotiator aimed at speeding up the current round).
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Nevertheless, progress in GATS should be carefully watched, as this provides a background for services negotiations in Cotonou due to finish by 2008.
Request and offers under GATS are usually not public. But the requests of the EU to 109 countries, including ACP countries, were leaked. (The requests to the EU have also been made public, but not by country.) Appendix C contains a summary table. The tables in Appendix C are simplifications, and they do not reveal whether a sector is completely liberalised or only partly (e.g. in one mode, based on one principle, etc.). They also do not tell us whether the commitments (and requests) describe the status quo, or whether requests to developing countries will actually result in offers from developing countries. More detailed analyses would be needed to answer such questions (see e.g. Gillson and Ojowu, 2003, for Nigeria). The requests by the ACP to the EU are not publicly available. A summary is available: by 2002, three ACP countries (Kenya, Mali and Mauritius) had requested changes to the EC schedule.
2.4 Special and differential treatment in GATS The WTO has included special provisions for developing countries in many of its agreements, including:
• longer time periods for implementing agreements and commitments, • measures to increase trading opportunities for these countries • provisions requiring all WTO members to safeguard the trade interests of
developing countries • support for capacity building in developing countries so that they can
negotiate in the WTO work, handle disputes, and implement technical standards, and
• additional provisions related to least-developed country (LDC) Members.
The WTO (www.wto.org) describes nine special and differential treatment provisions in the GATS, broken down as follows:
• Provisions aimed at increasing trade opportunities: Article IV:1 and Article IV:2
• Provisions under which WTO Members should safeguard the interests of developing country Members: Article XIX:3
• Flexibility of commitments, of action. and use of policy instruments: Article III: 4 (enquiry points), Article V:3 (MFN exemptions and RTAs), Article XV:1 (use of subsidies), and Article XIX:2 (coverage)
• Technical Assistance: Article XXV:2 and Paragraph 6 of the Annex on Telecommunication.
• Provisions relating to least-developed country Members: Article IV:3.
In addition, the preamble of the GATS recognises the particular need, among others, for developing countries to exercise the right to regulate, or introduce new regulations on the supply of services within territory in order to meet development objectives.
The table in Appendix H lists the relevant WTO-GATS articles including relevant comments made in WTO official documents after the conclusion of GATS. It also includes a column for the proposal by the African group made to the CTD (Committee on Trade and Development) of the WTO regarding S&D. Very often, S&D needs further operationalisation before it will really increase developing-country opportunities in exports of services. For instance, a draft report of the CTD
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(TN/CTD/W/25/Rev.1) states that ‘the General Council agrees that the information to be provided by Members shall indicate how the requirement that special priority be given to least-developed country Members in the implementation of paragraphs 1 and 2 of Article IV is being met, and that contact points, in this context, shall provide information of particular interest to services suppliers from least-developed country Members.’ To this end the African group proposes (TN/CTD/W/28) that the CTD set periodic benchmarks on financial and technical cooperation and other mutual arrangements under which developed country Members accord to developing-country Members special and differential treatment and undertake commitments in negotiations, as and when held, designed to ensure:
(a) the strengthening of the capacity, efficiency and competitiveness of domestic-service industries of developing-country Members and to effect technology transfer to developing-country Members;
(b) access by domestic service industries of developing-country Members to distribution channels and information networks of developed-country markets;
(c) liberalisation of market access in sectors and modes of supply of export interest to developing-country Members.
Indeed, with this debate ongoing it is clear that the implementations of S&D is slow to occur or not at all. Three areas can be highlighted. First, the need to implement S&D relating to liberalisation of modes of export interest of developing countries is exemplified by the fact that developing countries frequently argue that commitments on mode 4 are important to them. However, data have indicated that there were 100 horizontal limitations with respect to mode 4, compared to 20 for mode 2. Secondly, some S&D options have yet to be used, e.g. Art. V:3. Thirdly, there has been limited progress on other S&D options, including technical assistance.
Regarding technical assistance, a draft report of the CTD (TN/CTD/W/25/Rev.1) states that ‘the General Council instructs the WTO Secretariat to pursue with a view to concluding arrangements with relevant international institutions that have the technical assistance capacity to assist developing and least-developed country Members in addressing their supply-side and infrastructural constraints and their development needs in the services sector. This shall be without prejudice to the prerogative of the Council for Trade in Services to decide upon technical assistance to developing countries which shall be provided at the multilateral level by the Secretariat, in accordance with Article XXV.2.’ Data from the Trade-Related Technical Assistance and Capacity Building Database at the WTO (http://tcbdb.wto.org/) show 149 entries for services-related technical assistance, spread over 2001 (34), 2002 (82) and early 2003 (33). More than 100 of these were done by the WTO for the benefit of developing countries. The total amounted to US$5 million in 2002 and US$18 million in 2003. The UK Department for International Development is supporting an UNCTAD/World Bank programme for the benefit of developing country negotiations in GATS.
Recently, some progress has been made in the area of finalising S&D modalities in services. First, the LDC group tabled various proposals (TN/S/W/13, 2003) on how to operationalise S&D for LDCs:
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• Considering the serious difficulty for LDCs, Members shall present requests which are limited in terms of numbers of sectors and modes of supply and scope of commitments. Members shall not seek the removal of conditions imposed by LDCs.
• No LDCs shall be required to offer national treatment. • Members shall grant full market access and national treatment to LDCs in the
sectors and modes of supply of export interest to them. • Developed-country Members shall promote and strengthen their investment
and export/import promotion programmes for LDCs. • Members shall assist least-developed countries in obtaining training and
transfer of technology, and making appropriate financial resources available for such specific measures.
• Members shall facilitate and ensure the improvement of access to services and service suppliers of LDC Members to distribution channels and information networks, especially in tourism, transport, audiovisual, and construction services, inter alia through promotion of intergovernmental cooperation programmes.
• Members shall undertake commitments to provide access to all categories of natural persons from LDCs, particularly unskilled and semi-skilled persons, for supplying services under the GATS without the application of economic-needs test.
• LDCs shall be granted maximum credit for their autonomous trade liberalisation without scheduling them as binding commitments.
• Technical assistance shall be provided to LDCs to carry out national assessments of trade in services.
The ACP declaration on the fifth ministerial conference of the WTO, on 1 August 2003, discusses services in the context of GATS, including S&D. The main conclusions were:
• That the principle of progressive liberalisation should be respected, in particular (i) the flexibility offered to ACP states and other developing countries in opening up fewer sectors; and (ii) liberalisation by developed countries of sectors and modes of export interest to the ACP, particularly mode 4.
• That, due to capacity constraints, the ACP had not taken part in the current request and offer negotiations.
• That the WTO should finalise modalities for LDCs. • That the importance of GATS Article IV should be highlighted. • That assistance should be given to ‘carry out an assessment of the effects of
previous services liberalisation and the potential effects of future liberalisation in ACP States individually and as a Group, so that our negotiating position may be more informed’.
In its contribution to the CTD, the EC (TN/CTD/W/26, 2002) said it thought decisions would be possible on ‘the proposals of the LDCs to take account in a more systematic manner of the priority sectors or interests of LDCs in the GATS negotiations, including possibly a special session of the Council for Trade in Services (CTS) on this subject’.
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A special session of the CTS took place on 3 September 2003 and agreed on modalities for the special treatment for LDCs. The contents of modalities followed largely the proposal by the LDC group, but has been toned down in some areas (e.g. on mode 4, or autonomous credit):
• Members shall exercise restraint in seeking commitments from LDCs (e.g. in terms of national treatment),
• There shall be flexibility for LDCs in offering fewer sectors and modes, • Members shall provide effective market access in sectors and modes of
supply of export interest in LDCs, • Members shall develop mechanisms to implement Article IV:3, • Members shall take measures such as promoting investment in LDCs,
reinforcing export/import promotion programmes, improve LDCs’ access to distribution channels and information networks,
• Members shall assist least-developed countries through training and transfer of technology, enterprise schemes, intergovernmental cooperation programmes and financial resources,
• Members shall to the extent possible consider undertaking commitments to provide access in mode 4,
• LDCs shall be granted appropriate credit for their autonomous trade liberalisation without scheduling them as binding commitments,
• Further work on GATS rules shall include the interests of LDCs, • Technical assistance shall continue to be provided to LDCs to carry out
national assessments of trade in services and build national capacities.
There has however been no call for this to be implemented, e.g. at Cancun, so the effectiveness of this can be doubted.
It would be important to see which new concrete examples could be most effective in achieving GATS Article IV. Hoekman et al. (2003) discuss new options that could be considered in the WTO in providing special and differential treatment to small and low-income countries. While suggesting a number of steps to make S&D more effective and the Doha Round more supportive of development, they advocate just two new measures in relation to services:
• A binding commitment by developed countries on services, to expand temporary access for service providers by a specific amount, e.g., equal to three percent of the workforce. Winters (2002) finds that an opening of developed countries to allow temporary entry by foreign workers, equal to three percent of the current workforce, would generate welfare (real-income) gains that exceed those from full merchandise trade liberalisation.
• A commitment not to restrict cross-border trade (e.g., via telecom channels). Many developing countries are using the internet and telecommunication networks to provide services through cross-border trade. Currently such trade is free of restrictions, but this is not locked in through the GATS.
The first point has also been emphasised in the proposal by the African group (TN/CTD/W/28, 2003): ‘Developed country Members shall reserve quotas for supply of services by developing country suppliers as may be appropriate in sectors that developing country suppliers have interests, and that developed country Members shall not adopt horizontal limitations with respect to movement of natural persons and
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shall over a period of two years phase out the limitations they maintain at the adoption of this decision.’
Overall, while S&D proposals have been tabled in GATS, they have not been (fully) operationalised and are in a number of cases not mandatory or are difficult to measure. Negotiations on emergency safeguard measures are also ongoing. The ACP groups will be interested in S&D in GATS, as it will inform their negotiations with the EU on a possible services agreement under Cotonou. However, as we will also explain later, this does not preclude thinking on how S&D can be applied in Cotonou, before S&D negotiations in GATS have finally come to an end.
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Chapter 3 Services Provisions in Regional Trade Agreements
This chapter describes services provisions in Regional Trade Agreements (RTAs) because this can provide insight into how negotiators have in the past approached services liberalisation at a regional level, or how they could approach it in the future including at the EU-ACP level. The description of services provisions in RTAs will be performed at two levels. We will compare services provisions in the main developing country RTAs (3.1) and we will also compare a selection of RTAs concluded between the EU and developing countries (3.2). Section 3.3 concludes.
3.1 Developing country Regional Trade Agreements and services Over the past decade and a half, developing countries have begun to design provisions in RTAs addressing trade in services, in parallel with GATS negotiations. GATS Article V required a higher degree of liberalisation in RTAs than in GATS (until both are fully liberalised). RTAs should have substantial sectoral coverage and provide for the ‘absence or elimination of substantially all discrimination’ through elimination of existing discriminatory measures and/or the prohibition of new or more discriminatory measures, either at the entry into force of the agreement or on the basis of a reasonable time-frame. The substantial sectoral coverage in services refers to the number of sectors, volume of trade affected and modes of supply. No mode of supply should be excluded a priori. We discuss this issue in more depth in Chapter 5.
Stephenson and Prieto (2002) define the components often found in regional (Western Hemispheric) service agreements on the basis of three elements: coverage, liberalising principles and depth of commitments (similar to GATS provisions).
• Coverage describes the four modes of supply (as in GATS: cross-border delivery, consumption abroad, commercial presence, and movement of natural persons), and whether the agreements take a negative-list approach where all services sectors are included, subject to exceptions (called non-conforming measures), or a positive-list approach specifying the type of access offered to service suppliers in scheduled sectors.
• Liberalising principles include: the fundamental principles of National Treatment (NT – no discrimination between foreign and domestic suppliers); Most Favoured Nation (MFN – no discriminations amongst source of foreign suppliers); local presence requirement (whether a local presence is required to supply the service); quantitative non-discriminatory restrictions (e.g. on number of TV frequencies).
• Depth of commitments includes transparency (informing members of existing restrictions on services trade), ceiling binding, a freeze or standstill on non-conforming measures (no return to less liberalisation), ratcheting, list or loose (non-conforming measures can be maintained only when they are listed in appendices) and future liberalisation.
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Table 3.1 compares RTAs in the area of services recently concluded by Asian and Western Hemispheric countries. The following points emerge:
• Western Hemispheric RTAs are based on a negative-list approach, excluding MERCOSUR. ASEAN is based on a positive-list approach.
• RTAs offer MFN, with the notable exception of CARICOM; RTAs based on a negative-list approach offer NT.
• ANDEAN, NAFTA and CARICOM require transparency, whereas ASEAN and MERCOSUR do not have such provisions. Transparency is required when changing measures relate to trade in services. Most agreements include a standstill clause, i.e., no new restrictions are allowed.
• Some (NAFTA) of the above agreements have separate rules governing investment in services (mode 3 of services), though MERCOSUR regards investment in services as mode 3 of services supplies.
• ASEAN does not have a special chapter on monopoly practices, while ANDEAN, NAFTA and MERCOSUR do. CARICOM has a separate agreement on competition.
• MERCOSUR and NAFTA (and CARICOM) require member states to encourage recognition of titles of other member states, while in ASEAN tiles may be recognised.
• NAFTA includes provisions on government procurement of services. MERCOSUR has ongoing negotiations on this. Other regions do not appear to include this.
• Treatment of mode 4 (temporary movement of natural persons) varies considerably. In MERCOSUR it depends on the scheduled commitments, and in NAFTA there are limited provisions related to business-services providers only. CARICOM is in an advanced stage, allowing movement of natural persons based on foreign establishments, and (when the protocol is ratified) allowing free movement for ‘skilled nationals’ and access to labour markets. Some RTAs may not grant right of entry but have established a scheme to facilitate the entry of business visitors. Regarding APEC (OECD 2002a):
The APEC Business Travel Card is valid for three years and provides multiple short-term business entries, with stays of two or three months on each arrival. Cardholders are required to present their passports, but receive expedited airport processing and are not required to submit separate applications for business visitor visas. Participating economies commit to implement the scheme on a best endeavours basis and are free to maintain existing visa requirements for business visitors. All economies retain the right to refuse an individual without providing reasons or to refuse entry to APEC Business Travel Card-holders at the border.
• ASEAN and MERCOSUR do not have rules regarding non-conforming measures, while ANDEAN, CARICOM and NAFTA are not allowed to schedule any new non-conforming measures.
• Most RTAs need to be and are ambitious, aiming to reduce all restrictions on trade in services within the coming two decades.
It would be of interest to examine the effects of each individual trade measure. This would contribute to an understanding of which provisions and commitments are important, in which mode, in which sector, etc. Much will depend on specific
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circumstances, and we will examine the context of ACP countries in mode detail in Chapter 6.3
Table 3.1 Services components in selected RTAs
ASEAN ANDEAN MERCOSUR NAFTA CARICOM Sectoral coverage
Universal, according to schedules
Universal According to schedules, all sectors by 2010
Universal Not determined
Negotiating modality
Gradual, positive list Negative list Gradual, positive list Negative list Negative list
Most favoured nation
Subject to sectoral exemptions
Unconditional Subject to sectoral exemptions
Unconditional Not specified
National Treatment
scheduled sectors subject to bound commitments
General obligation scheduled sectors subject to bound commitments
General obligation Yes
Transparency Not included Each Party will promptly publish all measures of general application
Each Party shall publish all measures
Procedures to be established to notify restrictions
No, but when ratified the protocol requires notification of existing restrictions and provisions on services providers
Treatment of investment
Commercial presence covered by specific sectoral commitments; also separate investment disciplines
Right of establishment guaranteed for service providers (commercial presence); separate investment disciplines.
Commercial presence covered by specific sectoral commitments; separate investment disciplines
Investment rules in separate chapter, no local presence required,
While no national treatment is provided, it does establish that members shall not introduce in their territories any new restrictions relating to the right of establishment of nationals of other members states.
Safeguards Provisions exist for Emergency Safeguard Measures and Restrictions to Safeguard the Balance of Payments
Provisions exist for Restrictions to Safeguard the Balance of Payments
Provisions exist for Emergency Safeguard Measures and Restrictions to Safeguard the Balance of Payments
No provision for safeguard action in services, but provisions in case of balance of payment difficulties (different for tare in financial services)
Provisions to safeguard the Balance of Payments
Monopoly practices
No Disciplines to be developed for monopoly practices and exclusive service suppliers
Disciplines to be developed for monopoly practices and exclusive service suppliers
Yes, for monopolies and state enterprises
Monopolies not specified, but Agreement on competition
Recognition of titles
Each Member State may recognise the education or experience obtained, requirements met, or licenses or certifications granted in another Member State.
Each Party shall recognise the licenses, certifications, titles of professions, and diplomas, accorded by other Member Country, in which activity of services requires of such instruments, according to the established criteria in a Decision dealing with the matter.
Each state shall be encouraged its competent authorities to develop together with those of the other Parties mutually acceptable standards or criteria regarding the exercise of professional activities related to trade in services
Annex on professional services which requires members to encourage the relevant bodies in their respective territories to develop mutually acceptable standards and criteria for the licensing and certification of professional service providers, to provide recommendations on mutual recognition to the parties and to develop procedures for the temporary licensing of professional service providers of another party
Provision to establish common standards and measures for accreditation or, when necessary, for the mutual recognition of diplomas, certificates and other evidence of qualifications of nationals of CARICOM members
3 There is more information on benefits from multilateral service liberalisation than from regional service liberalisation. It may be useful to restate some key results of multilateral services liberalisation studies. Results of global CGE models suggest global gains in economic welfare of around US$250 billion per annum for a 50 percent cut in (all) services trade barriers, occurring over a five to ten year period, and equally distributed across all countries in proportion to their GDP (George and Kirkpatrick, 2003; OECD, 2002b). Importantly, most gains are obtained through liberalising a country’s own services sector (not through negotiations), rather than obtaining further access to foreign markets. Most models surveyed (eight) do not explicitly model different modes of services supply. But some models do include FDI in services sectors (mode 3), suggesting a global gain of US$60 billion per annum for this mode alone (but benefits skewed to Asians). Regarding mode 4, if rich countries permitted movement of labour up to three percent of the total labour force, world incomes would rise by US$156 billion (Winters, 2002). Developing countries would be the main gainers and the net welfare for the home region for Africa would be US$14 billion.
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RoO Benefits are denied to a service supplier who is a natural person of a non-Member State
Benefits of the protocol can be denied to a service provider from another member party, given notification and consultation, when this party demonstrates that the services provided by a person or country not part of Mercosur.
Benefits of the protocol can be denied to a service provider from another member party
Subject to prior notification a Party may deny the benefits to a service provider of another Party
It seems possible to deny benefits of the protocol to a service provider from member an non-member parties.
Government procurement
No Government Procurement disciplines to be applied to services, once developed
To be developed, but to be applied to services
Includes government procurement of services in separate chapter on government procurement
Not mentioned
Movement of natural persons
No Freedom of Temporary movement guaranteed.
No, depends on scheduled commitments
Commitment regarding temporary movement of business services providers
Temporary movement of persons as services providers in connection with foreign establishment, including (family of) management, supervisions and technical staff; CARICOM skilled nationals act to be ratified before 2005 by all members.
Dispute settlement
A specific dispute settlement mechanism may be established
Provisions provide for procedures in the case of rules of origin dispute, including consultation
Disputes are to be settled according to the dispute mechanisms of MERCOSUR
Access to investor-state dispute mechanisms under chapter 11 on investment, see e.g. financial services chapter
No mentioning of this in the chapter on services
Exceptions No Yes Yes Yes Yes Restricting Non-conforming measures
No No party will increase the number of existing non-conforming measures
No Parties need to make reference to law when scheduling commitments.
Members will not introduce any new restrictions on the provision of services in the Community (standstill)
Special provisions
Financial services, basic telecommunication, maritime transport, movement of natural persons, and audio-visual
Financial services, basic telecommunications, and professional services will be elaborated in a near future
Financial services, basic telecommunications, maritime transport, movement of natural persons, and audio-visual
Financial services, air services, land transport, telecommunications, professional services, Temporary Entry for Business Persons
Professional services, air transport
Future liberalisation of trade in services
Gradual liberalisation through exchange of lists commitments.
Progressive liberalisation of a list of commitments through negotiations within a period of 5 years (by 2005).
Progressive liberalisation of a list of commitments through negotiations within a period of 10 years (by 2007).
To remove restrictions but allow for exceptions and reservations.
To achieve a complete elimination of the identified restrictions to the movement of natural persons and capital throughout the region by 2005
Sources: OAS website and RTA chapters/protocol related to services. Notes: see Te Velde and Fahnbulleh (2003) for investment provisions in regions
There are far fewer services provisions and agreements in African ACP regions. Below we discuss the coverage of services in ECOWAS, CEMAC, EAC, SADC, COMESA, SACU.
Under the ECOWAS protocol on the free movement of natural persons and property, individual countries have abolished the need for visas for Member country nationals. For instance, ECOWAS nationals are free to visit and work in Nigeria for a period of 90 days, after which an extension must be sought from the Nigeria Immigration Service. Similar efforts have been ongoing in CEMAC and EAC. A December 2001 summit announced that CEMAC aimed to introduce a CEMAC passport, whose modalities are still to be announced. There were also discussions on a common air transport policy and on insurance announcing the creation of an office in each
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member country for the delivery of international vehicle-insurance cards. The card, which would be issued with a common insurance policy, aimed to provide an effective solution to problems arising from cross-border accidents.
There are at least three SADC protocols on: energy; tourism; and on transport, communications and meteorology (signed 1996). These govern cooperation on trade in services in areas such as harmonisation of regulations. SADC has also formulated and is discussing a Draft Annex on Trade in Services, with provisions on definition, market access, MFN, NT, trade liberalisation, right to regulate, mutual recognition, provision of information, effective and transparent regulation, promotion of trade and investment in services, competition policy, transfers, denial of benefits, general exceptions, waiver of obligations, labour-market integration agreements and consultation and dispute settlement. The horizontal approach is not consistent with the so far sectoral approach.
Chapter 15 of the 2001 EAC Treaty is on cooperation in infrastructure and services. It has articles on
• Common transport and communications policies • Roads and road transport • Railways and rail transport • Civil aviation and civil air transport • Maritime transport and ports • Inland waterways transport • Multimodal transport • Freight booking centres • Postal services • Telecommunications• Meteorological services • Energy
Chapter 11 of the 1993 COMESA Treaty is on cooperation in the development of transport and communications. It includes articles on common transport and communication policies; roads and road transport; railways and rail transport; air transport; maritime transports and ports; inland waterway transport; pipeline transport; multimodal transport; freight booking centres; freight forwarders; customs clearing agents and shipping agents; meteorological services; postal services; postal services; telecommunications; radio and television; common provisions. Most articles deal with cooperation and harmonisation.
For instance, in May 1999 COMESA introduced the COMESA Regulations for the implementation of liberalisation of air transport services. This entailed two phases. The first phase has been implemented by 12 member states and provides for: free movement of intra-COMESA cargo and non-scheduled passenger services; free movement of intra-COMESA scheduled passenger services with a frequency limit of up to two daily between any city pairs; adoption of multiple designation; and elimination of capacity restrictions. Phase 2 provides for free movement of intra-COMESA air transport.
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Chapter 28, Article 164 of the COMESA Treaty, on free movement of persons, labour, services, right of establishment and residence, stipulates that
• Member States agree to conclude a Protocol on the Free Movement of Persons, Labour, Services, Right of Establishment and Right of Residence.
• Member States agree that the Protocol on the Gradual Relaxation and Eventual Elimination of Visa Requirements within the RTA adopted under the PTA Treaty shall remain in force until such time that a Protocol on the Free Movement of Persons, Labour, Service, Right of Establishment and Residence enters into force.
Whalley and Leith (2003) report that SACU has not covered services, and that services are relatively regulated in SACU countries. Licensing of banks in each SACU member is done by each individual member, despite the fact that four out of five members share a common currency.
RTAs clearly differ with respect to services provisions, for various reasons. It appears that Latin American RTAs (including CARICOM) are most liberalised, followed by ASEAN in Asia while African RTAs (COMESA) have only just started to consider services (though there are several sectoral agreements). Nikomboriak and Stephenson (2001) discuss differences among RTAs. In particular, they highlight the different approaches taken in Asian agreements (ASEAN) and those in the Western Hemisphere. The latter are based (mostly) on a negative list approach with commitments being ‘GATS-plus’. ASEAN on the other hand is based on a positive-list approach and has been less ambitious, with similar commitments to those in GATS. The following factors were noted to explain these differences:
• Unilateral trade liberalisation was being carried out more rapidly in Latin America.
• Privatisation (in telecommunications, transport, financial and energy sectors) was more widespread in Latin America.
• The ASEAN Framework Agreement on Services was seen as originating from a political desire to speed up integration rather than as being backed by private sector service providers.
• There was a more informal mode of functioning in ASEAN. NAFTA on the other hand, provided an important example of services agreements throughout the Western Hemisphere (including by Mexico).
The Latin American RTAs may have achieved a higher degree of liberalisation than GATS, by including more transparency and stability for services providers through a negative-list approach and a list of non-conforming measures (liberalising framework), and has also included more liberal schedules (commitments). However, this seems more questionable in the case of other developing regions. There is no evidence to suggest how developing country RTAs have (or have not) boosted trade in services, relating to what type of RTAs provisions are most effective. For instance, OECD (2003) argues that it would be of great practical value to know whether the biggest gains from liberalisation arise from removing market access limitations, or removing restrictions on national treatment, i.e., whether the entry of additional domestic suppliers is important for the impact of liberalisation. Finally, RTAs have, with few exceptions, and with the exception of government procurement, made little
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progress in tackling the key ‘unfinished’ rule-making items on the GATS agenda (OECD, 2002a) – such as emergency safeguard mechanism and Subsidies.
Most RTAs have gone further than GATS in some respect, partly because Article V of GATS requires this and partly because it might be easier to arrive at a consensus. However, it should be noted that when parties have arrived at such a consensus, they often need to modify domestic regulations, laws and procedures. Once that has been done, it can usually be achieved (and often more cheaply) on an MFN basis world wide. An important question is thus whether, and if so when, it would be desirable for a country to schedule services provisions and commitments at regional rather than at GATS level.
To understand the economic rationale behind this question, Stephenson (2000) defines four different categories of services
1. Infrastructure-type services: financial, telecom, energy and transport; 2. Business-type services: distribution, professional services, other business
services, tourism, construction and engineering services, and environmental services;
3. Social services: educational and health services; 4. Other services: recreational, cultural.
It is argued that in order to attract the most efficient service providers in the capital-intensive category 1, it would make sense to liberalise beyond the region (though RTAs could bind GATS and current commitments). For less capital-intensive category 2, tourism is already a liberalised sector; construction and engineering services and professional services on the other hand depend on qualifications and national standards, so RTAs may play a useful role in facilitating recognition across borders (within the region first). The third type of sectors is sensitive to national concerns and it could be easier to liberalise these sectors amongst countries with similar levels of development, language, culture, etc. RTAs could act as a catalyst. The fourth category is mixed. Hence, for some sectors RTAs might be a politically and culturally appropriate starting level. The situation would probably be different for mixed regions, such as in the case of the proposed EPAs amongst developed and developing countries.
3.2 Services provisions in Regional Trade Agreement with the EU The EU has signed several free trade agreements which have included provisions on trade in services. We compare EU association agreements: with the Central and East European countries (CEECs) also called Europe Agreements,4 with the Mediterranean countries also called EU-Med agreements,5 South Africa,6 Mexico7 (Decision 2/2000
4 Europe Agreements are pre-accession agreements, with Bulgaria (into force 1995), Czech Republic (1995), Estonia (1998), Hungary (1994), Latvia (1998), Lithuania (1998), Poland (1994), Romania (1995), Slovakia (1995), Slovenia (1999). 5 Euro-Mediterranean association agreements with Algeria (signed 2002), Tunisia (1998), Israel (1995), Jordan (1997), Lebanon (2003), Morocco (1996) and Palestinian Authority. 6 Trade Development Co-operation Agreement signed in 1999. 7 Economic Partnership, Political Co-ordination, and Co-operation agreement or Global Agreement, signed 2000 and 2001.
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and 2/2001) and Chile8. The EU agreements vary substantially with respect to several important services provisions (see Table 3.2 for a more complete overview):
• Depth of commitments: from not including services liberalisation above GATS (EU-South Africa is confirmation of GATS) to making substantially deeper commitments and more liberalised principles (EU-Chile).
• General provisions related to cross-border supply of services and consumption abroad (modes 1 and 2): MFN is a general provision in EU-CEECs, some EU-Meds and EU-Mexico, and not the others; NT is a general provision in EU-Chile and EU-Mexico, but not in the others.
• Treatment of investment (mode 3): commercial presence is included in the definition of services (e.g. in EU-Mexico and EU-Chile) but is also included in a separate chapter on establishment. EU-South Africa includes only a desire to ensure free movement of capital. Only the Europe agreements and EU-Chile include provisions for entry of investors (in addition to post establishment).
• Treatment of movement of natural persons (mode 4): deeper liberalisation under Europe Agreements (employment of key personnel; temporary movement of natural persons related to provision of service) than in EU-Mexico (managerial and set-up personnel in conjunction with investment, mode 3), or EU-South Africa (where no provisions on mode 4 are included and no commitments beyond GATS). The EU will eventually grant access to the labour market to the CEECs.
• Government procurement of services: only explicitly included in EU-Mexico and EU-Chile, and the latter includes procurement of government works and for the first time for EU bilateral agreements, a substantive list of sectors.
The Europe agreements and EU-Chile are the most liberal in terms of market access commitments and the liberalising framework. This is followed by EU-Mexico which has scheduled to liberalise all restrictions within ten years and where the liberalising principles (on services, public procurement and investment) guarantee predictability and access for EU exporters and investors equivalent to suppliers from NAFTA countries. Provisions on services in the EU-Med and EU-South Africa agreements are least liberal in terms of commitments (e.g. GATS commitments) and framework (sometimes a handful of articles), so can be expected to result in less growth in services trade. It is important to realise that services agreements concluded by the EU vary considerable with respect to key aspects.
8 EU-Chile Association Agreement.
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Table 3.2 Services provisions in Regional trade agreements involving the EU
EU- Med association agreements (Algeria, Jordan, etc.) -Title III
EU-CEECs Europe Agreements (e.g. EC-Poland, EC-Hungary)
EU-Chile EU-Mexico EU-South Africa
Sectoral coverage
Universal Universal Universal (except audio visual services, air services and maritime cabotage)
Universal (over two stages, and except audio visual services, air services and maritime cabotage.)
To be determined 5 years after entry
Negotiating modality
Agree to widen scope of commitments under GATS, assessed after five years (Morocco)
Progressive liberalisation based on negative list approach
Positive listing Negative-list approach If further liberalisation occurs, there will be elimination of all discrimination (Art. 30)
Most favoured nation
Yes, general provision in e.g. in Art. 30.2 in Algeria, but for Jordan for establishment
General provision Not included as general provision
General provision (Art. 5) Only for commitments under GATS
National Treatment
For Right of Establishment, only in Jordan (art 30), and subject to reservations in annex VI; For maritime transport (Art. 39)
scheduled sectors subject to bound commitments
General provision (Art. 98)
General provision (Art. 6) Only for commitments under GATS
Market access No scheduled sectors subject to bound commitments, no general provision
General provision (Art. 97) banning several reservations on market access
General provision (Art. 4) Not\mentioned
Transparency assessment of achievement after five years
Not mentioned Each party shall respond promptly to information requests by other parties; List of commitments required after 10 year transitional period (Art. 7)
List of commitments required after ten year transitional period (Art. 7)
Not\mentioned
Treatment of investment
Chapter II, Title IV on Establishment. Clauses on establishment for mode 1 and 2 in e.g. Art. 55 for Poland-EC
Separate chapter on establishment, but this does not cover services. Indirectly covered by provisions on market access of services providers
Covered as commercial presence and under a separate investment chapter
Art. 33: Members should ensure free movement of capital
Safeguards No No No No No Government procurement
No No Separate chapter on government procurement, including public works. Includes substantive list in annex XI and XII.
Title III, separate chapter on government procurement including for sectors listed in Annex VIII. Primer for EU agreements.
No. Art. 45, parties agree to co-operate for a fair, equitable and transparent system.
Movement of natural persons
Provisions vary. No general provisions for Algeria ; reaffirm GATS commitments for Morocco and Tunisia (Art. 69 provides for dialogue on movement of workers; and bilateral agreements with member states possibly more liberalised, Art. 68)
Under establishment, Art. 53 (Bulgaria and others), right to employ key personnel covering period of employment; Art. 56 permits temporary movement of natural persons related to provision of services (except for direct sales)
Art. 101: Two years after the entry into force, the Parties shall review the rules and conditions applicable to movement of natural persons (mode 4) with a view to achieving further liberalisation.
Art. 3ci only managers and set up personnel in conjunction with investment; no access to labour market; key personnel and managers in financial services can be of any nationality, subject to exception (Art. 16 and 17)
Not included
Dispute settlement
Dispute settlement for financial services
Yes, separate title on dispute settlement.
Article 104 on dispute settlement
Restricting Non-conforming measures
Standstill to all modes of supply
Standstill on covering commercial presence
Standstill
Special provisions
Selected: Maritime transport (Art. 56 1) in Hungry-EC and Poland-EC, Romania-Ec (Art. 57 1) etc., granting unrestricted market access, and traffic on commercial basis
Separate section on Maritime transport, Telecommunications Services, Separate Chapter on Financial Services,
Maritime transport, Financial Services
Maritime transport (Art. 31), unrestricted access and fair competition
Future liberalisation of trade in services
Progressive liberalisation within 10 years.
View to further liberalisation (Art. 30)
Source: Original agreements and OECD (2002a) Note: See ECDPM (2003) on investment provisions in recent EC trade agreements.
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3.3 Conclusions and relevance for post-Cotonou negotiations This chapter on services provisions in RTAs has highlighted a number of aspects that can be of relevance for post-Cotonou negotiations on services. The main conclusion is that RTAs differ with respect to coverage, liberalising principles and depth of commitments, and this also applies to RTAs concluded by the EU with developing countries. In particular, we highlighted
• Depth of commitments, • General provisions related to cross-border supply of services and consumption
abroad (modes 1 and 2), • Treatment of investment (mode 3), • Treatment of movement of natural persons (mode 4), • Government procurement of services.
Importantly, therefore, the elements of post-Cotonou negotiations on services and its strategy are, in principle, negotiable. The differing approaches to services provisions in regional trade agreements reflect a range of factors, including cultural and historical ties, the degree of geographical proximity of the parties, similarities in their levels of development and interests with countries or sectors to push items on the agenda.
While it is thus clear that there are regions specific provisions regarding services, it would need to be discussed whether doing this is effective and efficient. There is a case to be made (e.g. politically or culturally) that some services could be more successfully liberalised within a region (first). Indeed, liberalising principles andcoverage are more liberal in RTAs than in GATS. However, so far sector commitments in RTAs seem to be little more liberal than under GATS, although intentions of course are much more substantial. While it would obviously be of interest to examine what negotiating strategy is most optimal, little is known about the optimal strategy or the effects of individual strategies, in particular for EPAs.
There is one further complication with respect to regions specific services in EPAs. The above review of EU agreements were all based on agreements between the EU and a single developing country. Clearly, there are ‘market asymmetries’ involved, as the level of development in the EU and its partner country differs. But post-Cotonou negotiations will also be based on regional economic partnerships between regions,and this will involve ‘regulatory asymmetries’ at regional level. Stephenson and Contreras (2002) provide one example of this concerning ongoing EU-MERCOSUR negotiations in the area of services, where there are strong regulatory asymmetries. In the EU the establishment of the Single Market has had an impact on national regulations of many services sectors, and has led to harmonisation of regulation across countries. MERCOSUR, on the other hand, is in an earlier stage of integration of services markets, characterised by ongoing reforms of national regulations in specific services sectors and, to a lesser extent, regulatory harmonisation across countries. Because of these asymmetries, the authors identify a three-phase negotiating strategy departing from GATS:
• Phase I: Identification of (potential) ‘sensitive’ sectors and liberalisation of ‘non-sensitive’ sectors (where asymmetries do not play a major role).
• Phase II: Regulatory reform/review and political consensus around ‘sensitive’ sectors.
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• Phase III: Progressive liberalisation after completion of removing regulatory asymmetries through regulatory reform.
Berlinski (2003) further mentions the complications that asymmetries would entail: it would be difficult to make WTO-consistent MFN exemptions different for MERCOSUR members and the EU. However, it is expected that any post-Cotonou negotiation in the area of services will differ from this approach, not least because of the emphasis on S&D in CPA Chapter 4. There are no obvious examples of S&D amongst members of RTAs. We will return to S&D options in the context of the CPA in Chapter 7 of this report.
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Chapter 4 Services Provisions and post-Cotonou Negotiations
4.1 Services provisions in the Cotonou Partnership Agreement The Cotonou Agreement is based on three issues (see Te Velde and Bilal, 2003): (i) the political dimension (with the inclusion of policy dialogue, the promotion of peace and the prevention of conflicts, and the reinforcement of the principles of human rights, democracy, the rule of law and good governance); (ii) regional economic partnerships (the negotiation of new ACP-EU trading arrangements including rules on trade in goods and services and on investment, the strengthening of regional integration initiatives, etc.), which may include reciprocal trade preferences (for both the EU and the ACP), and (iii) aid financed by the European Development Funds – EDF. The ultimate objective of the Cotonou Partnership Agreement is to achieve sustainable development and alleviate poverty in the ACP countries.
Within the Cotonou Partnership Agreement, CPA Arts 41-43 deal with planned negotiations in trade in services (see Appendix E), although in principle the ACP is not obliged to start negotiations and in practice only wants to start negotiations in the light of Art. 41.4. In Art. 41.4 the Parties agree under the economic partnership agreements, and after they have acquired some experience in applying the Most Favoured Nation (MFN) treatment under GATS, to extend their partnership to encompass the liberalisation of services in accordance with the provisions of GATS, and particularly those relating to the participation of developing countries in liberalisation agreements. Arts 42 and 43 and 24 describe specific service sectors: maritime services; information and communication technologies, and information society; and tourism.
CPA Arts 41.2 and 41.3 provide for an affirmation of GATS commitments9 and underline the need for special and differential treatment for ACP suppliers of services, and the need to give sympathetic consideration to the ACP states’ priorities for improvement in the EC schedule. The need for an ACP position is pressing. The first phase of negotiations started in September 2002 and phase 2 negotiations started in October 2003 and can include substantive issues at sub-regional levels while maintaining the ACP group as a whole. Impact assessments will guide this process. Presumably, ACP players will need to think first about possible outcomes of the GATS negotiations running until the beginning of 2005, and how S&D will be incorporated; and secondly (or simultaneously, being realistic about current GATS negotiations) about post-Cotonou service negotiations and how S&D can be incorporated there.
CPA Art. 41.5 states that the EC shall support the ACP States’ efforts to strengthen their capacity in the supply of services. Particular attention shall be paid to services related to labour, business, distribution, finance, tourism, culture and construction and related engineering services with a view to enhancing their competitiveness and thereby increasing the value and the volume of their trade in goods and services.
9 It should be noted that reaffirming GATS commitments is not possible for the 20+ ACP countries that are not a member of the WTO.
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4.2 Post-Cotonou Services negotiations so far Phase 1 negotiations formally started in September 2002. In October 2003 ‘the outcome of phase 1 ACP EU negotiations’ was made public. Six areas of negotiations were conducted during the first phase:
• Market access • Agriculture and fisheries • Development issues • Trade in services • Trade related areas • Legal issues
Regarding trade in services, the EU agreed that the ACP is not obliged to liberalise services. The Draft Joint Report of the all-ACP-EC phase of EPA negotiations states that
• The parties agreed to extend their partnership to encompass liberalisation of services as provided for in CPA Art. 41(4);
• Services liberalisation in an EPA should be progressive, based on a positive list, and adapted to the level of ACP countries and their sectors and specific constraints;
• Services liberalisation in an EPA should be underpinned by principles of S&D, asymmetry and positive regional discrimination;
• Emphasis should be put on a sound regulatory framework, the right to regulate as well as the right to introduce new regulations in order to meet national policy objectives;
• With respect to the ACP’s request for improvement in the access of ACP service suppliers to the EC market under mode 4 (movement of natural persons), the EC agreed to discuss this issue of mutual interest in the context of the EPA negotiations (point 21 of joint report);
• Both the EU and the ACP also agreed that support for the development of services sectors (CPA article 41.5) should be provided to ACP countries within the context of EPAs (point 22 of joint report);
• There was also mention of adequate sequencing between support for services development and services liberalisation (point 23 of joint report).
There is, however, also some disagreement over certain areas. While the ACP sees the need for additional funds which can be used flexibly and rapidly, the EU argues that no more funds are needed beyond existing EDF commitments to support services-sector capacity. Regarding movement of natural persons, the ACP sees this as essential to an agreement on services, while for the EU this is more sensitive, given its connotations of permanent migration. Finally, while the EU argues for a WTO-plus agreement, the ACP group is unlikely to want to go beyond commitments in the WTO.
4.3 Post-Cotonou Services negotiations: undecided issues EPA phase 2 negotiations were officially launched in 2003 for selected regions. Other regions may follow. There are some undecided services-related issues that need clarification:
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• The first issue to be decided upon is which regional groupings are ready to negotiate EPAs with the EU. The following African ACP groupings (comprising 38 countries) have emerged so far
• ECOWAS = UEMOA (Benin, Burkina Faso, Côte d’Ivoire, Guinea Bissau, Mali, Niger, Senegal, and Togo) and Cape Verde, Gambia, Ghana, Guinea, Liberia, Nigeria, and Sierra Leone, and Mauritania linked; phase 2 negotiations officially launched on 6 October 2003
• CEMAC = Cameroon, Central African Republic, Chad, Republic of Congo, Gabon, and Guinea Equatorial, and linked São Tomé and Principe; phase 2 negotiations launched on 4 October 2003
• ESA = Burundi, Comoros, DR Congo, Djibouti, Eritrea, Ethiopia, Kenya, Madagascar, Malawi, Mauritius, Rwanda, Seychelles, Sudan, Uganda, Zambia and Zimbabwe; official launch scheduled for 5-7 February 2004.
• This leaves the rest in Africa as SADC (minus): Angola, Mozambique, Botswana, Lesotho, Swaziland, Namibia and Tanzania (but BLNS and South Africa have their own arrangement with the EU) still to decide on how to negotiate EPAs.
• The Pacific Forum for ACP Countries in the Pacific. • In the Caribbean, CARICOM (or CARIFORUM) is expected to play a key
role. CARICOM = (Antigua & Barbuda, Bahamas, Barbados, Belize, Dominica, Granada, Guyana, Haiti (entered July 2002), Jamaica, Montserrat, St. Kitts & St Nevis, St Lucia, St Vincent & the Grenadines, Surinam, Trinidad & Tobago) and Dominican Republic may also be part of CARICOM-plus negotiations.
LDCs may decide not to join EPAs. We counted 39 LDC-ACP countries (more than half of all ACP members) – see Appendix Table F.2
• Next a region will need to decide whether to negotiate a services agreement as part of an EPA. This is not obligatory, but would be consistent with the partnership character of Art. 41 (5) and it could result in benefits to the ACP, particularly if S&D is treated seriously. A decision is expected not later than 2006.
• If it is decided to negotiate a services agreement, there is a need to discuss the liberalising principles, and requests, offers and commitments, based on detailed studies. It needs to be decided whether the ACP will go further than commitments already undertaken in GATS 1995 and likely to be undertaken in GATS 2000.
• Bearing in mind that not all ACP countries are WTO members, and that GATS may well take longer than one year to conclude, services negotiations by ACP countries will need to operate in parallel with GATS. In particular, ACP countries would need to decide whether, and if so what, offers they are more likely to make in Cotonou than in GATS, and make requests in those sectors which the EU are willing to liberalise in Cotonou rather than in GATS.
• Determine how the EU can provide S&D in Cotonou over and above what will be obtained in GATS (e.g. LDCs).
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Chapter 5 WTO Compatibility of S&D in EPAs on Services
EPAs have been advanced to maintain trade relationships compatible with WTO rules between the EU and the ACP. For instance, under successive Lomé conventions, the EU granted the ACP special trade preferences. A waiver of existing trade preferences has been obtained during the Doha ministerial, which will run out by the end of 2008. Offering trade preferences to the non-LDC-ACPs, but not to other developing countries, would violate the MFN principle in the WTO. Thus, EPAs have to be reciprocal and count as normal regions (RTA). This can involve large adjustments in small economies, particularly in non-LDC ACPs (who may decide not to join EPAs).
There have been various discussions whether EPAs are WTO compatible. Most discussions so far have dealt with EPAs in trade in goods. For goods trade, RTAs amongst developed countries can be concluded and grant trade preferences to each other, provided that they are notified under GATT Art. XXIV, which includes a requirement that RTAs include liberalisation of ‘substantially’ all trade. RTAs among developing countries can be notified under the enabling clause which includes more flexible provisions in order to grant to parties of the RTA special and differential trade preferences. This does not depend on liberalisation of ‘substantially’ all trade. Crucially, RTAs on goods amongst developed and developing countries (such as EPAs) would fall under Art. XXIV (e.g. NAFTA), and not the enabling clause, which would imply the absence of significant flexibility in violating the non-reciprocity principles, at least as far as non-LDC developing countries are concerned. Some argue that this article needs reviewing for the purposed of EPAs, see e.g. Onguglo and Ito (2003).
While there are similar issues at stake in trade in services, there appears to be added flexibility in the possibility of granting trade preferences in RTAs, such as the proposed EPAs between the EU and ACP regions. Trade preferences in the GATS context refers to an exemption of the general obligation to adhere to MFN (GATS Art. II). The GATS allows for exceptions to the MFN principle by virtue of two provisions:
• Exemptions granted, subject to revision, in conformity with the annex on exemptions of the general obligations of Article II of GATS. An example of an EU MFN exemption offer is that Commonwealth citizens do not need a work permit in services sectors in the UK. When GATS came into force in 1995, members were allowed a once-only opportunity to take an exemption from the MFN principle of non-discrimination between a member’s trading partners. In principle, exemptions should not last for more than ten years (although in practice the EU is already asking in GATS 2000 for extensions of the MFN exemptions).
• Preferential treatment among WTO Members can be notified under Article V on economic integration (i.e. an RTA with provisions on services). This should be compatible with the provisions of Article V, and communicated to the Council for Trade in Services (V: 7 and 8), which refers them to the Committee on Regional Trade Agreements (CRTA). The Council, based on the examination of the agreement, may, if appropriate, make recommendations
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to the parties. In order to be compatible with GATS Art. V, an agreement must fulfil two basic conditions:
• it must have ‘substantial’ sectoral coverage, in terms of sectors, volume of trade, and modes of delivery, V:(1a), and
• it has to provide for national treatment for services providers of the parties eliminating ‘substantially’ all discrimination, V(1b).
These conditions should be met when the agreement comes into force, or on the basis of a ‘reasonable’ time frame. Both of these conditions are subject to interpretation, and less clear than the goods case (GATT Art. XXIV, where ‘reasonable’ is ten years).
Importantly, GATS Article V:3 provides for flexibility with respect to these two requirements (substantial coverage and eliminating all discrimination) in two cases:
o GATS Article V:3(a) provides that where developing countries are parties to an agreement, flexibility shall be provided regarding conditions set out in GATS Art. V:1a and V:1b.
o GATS Article V:3(b) stipulates that more favourable treatment is to be accorded to legal persons of developing countries in the GATS of RTAs that involve only developing countries.
The first of these provisions would seem to relate to North-South arrangements, such as EPAs between the EU and ACP regions. It would allow flexibility for developing countries in EPAs in terms of coverage and removal of discrimination, while the EU could liberalise more sectors and modes to ACP regions (while not doing the same to other WTO members). This flexibility could go beyond the current flexibilities and hence be termed S&D. Such flexibilities do not arise in the goods case. Table 5.1 summarises the important points (for further details, see Onguglo and Ito, 2003).
Table 5.1 S&D in RTAs
Goods trade Services trade RTA notification GATT Article XXIV GATS Article V S&D in RTAs among developing countries
Enabling cause GATS Article V:3(a and b)
S&D in RTAs involving developed and developing countries
Not possible GATS Article V:3(a)
Ultimately the CTS / CRTA would decide on the compatibility of RTAs with GATS Article V. So far the CTS has not reached any conclusions on RTAs in particular relating to this article. The table in Appendix G on Regional Trade Agreements Notified (and in Force) to the WTO under GATS Article V reveals that, as of October 2003 not a single report of the CRTA on services agreements had been accepted (or rejected). For instance, consultations on NAFTA and EU (enlargement with Austria, Finland and Sweden) are still ongoing, and these agreements were notified almost a decade ago. The conclusion is that, legally and practically, the EU can offer certain types of S&D to the ACP in an EPA which would be WTO-compatible.
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Chapter 6 ACP Exports of Services to the EU: Performance and Barriers
This section focuses explicitly on the second objective in the Terms of Reference, to provide an overview of possible benefits to ACP countries of EU liberalisation sectors, regulations and modes of supply. The methodology to approach this is first to describe the export capacity in the ACP by region, country and sector (section 6.1). Then we describe EU barriers to ACP exports of services on the basis of existing GATS commitments (section 6.2). Finally, we attempt to link the ACP export capacity with the removal of EU trade barriers (section 6.3). It should be noted that in practice it will be difficult to predict an ACP supply response after the removal of EU trade barriers without more detailed discussion with key stakeholders including the ACP private sector.
6.1 Performance of ACP trade in services There are significant data limitations when it comes to the analysis of trade in services in developing countries. In particular, data on bilateral trade flows are scarce. This is one of the reasons why this section has devoted part of the analysis to total ACP exports. The data sources we can use include
• UNCTAD services trade statistics • IMF Balance of Payments • OECD database • World Development Indicators
However we should bear in mind that the quality of data on services in the ACP is not adequate.
6.1.1 Share of services in GDP
Chart 6.1: Services as a Percentage of GDP for ACP
Source: WDI (2003)
1960 1970 1980 1990 2000
%
38
40
42
44
46
48
50
52
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Between 1980 and 2000, low and middle-income countries increased their services production by almost 25 percent. Services accounted for about two-thirds of global GDP in 1995, but this proportion varies greatly between developed and developing countries. The share of services in economic activity currently ranges from around 38% in developing countries to 65% in developed countries. The higher share in industrial countries reflects the fact that demand for services tends to be income-elastic, i.e. that richer countries tend to spend proportionally more on services. In both developing and developed countries the share of services in total activity has been growing.
For the ACP group of countries eligible to form EPAs (we exclude Cuba and South Africa) the average share of services in GDP is about 50 percent (see Chart 6.1) although there are wide variations among individual countries ranging from five percent for Equatorial Guinea to 84 percent for Palau (see Appendix Table I.1).
6.1.2 Share of services in total trade A growing importance of the services sector in national output in many ACP countries has been accompanied by an expansion of the share of commercial services in world exports of goods and services. Since the early 1980s, international services transactions have increased more rapidly than trade in goods. That trade in services has comprised 20 percent of global trade (although this is more for the ACP). On the export side, North America (23.7 percent) and Western Europe (21.8 percent) continued to record above-average shares of services in their total exports, while Latin America (14.9 percent) and Asia (14.7 percent) remained below the global average. For Africa (20 percent) and the ACP group eligible to form EPAs (22 percent), the share of services in total exports of goods and services exceeds the world average. However, this is not necessarily indicative of a particularly dynamic services sector, but may be attributed as well to weak world markets. On the import side, Africa (22 percent), Asia (21 percent) and Western Europe (21.6 percent) record services shares in their total trade above the world average, while the Americas (14.9 percent) remain below.
Within the ACP group of countries there is a wide variation in the share of services in total exports ranging from over 75 percent for a number of Caribbean countries (typically high because of tourism) to under five percent for Niger, Burundi, Angola, Liberia, Mauritania, Guinea and Sudan (see Appendix Table I.2, based on UNCTAD data).
6.1.3 Growth in services trade Between 1990 and 2001, world trade in services increased at an annual rate of 6.2 percent, with the growth rate in the first half of the decade significantly higher than in the second half, due to developments in information and communications technologies. Deregulation and privatisation have contributed to this trend. Despite this increase, the share of services in world trade has been smaller than its share in world production. Developing countries saw their services exports boom in the first part of the 1990s attaining average growth rates of over 13 percent. In the second part of the decade, services growth fell to levels below that registered by developed countries. This reversal in growth is mainly attributable to the Asian financial crisis.
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Looking at individual geographic regions, a somewhat different picture emerges. Latin America showed strong export and import growth in the early 1990s, with imports growing faster than exports. During the second half of the decade the growth of both exports and imports decelerated, but exports were less affected than imports. Although Africa’s export growth in the second half of the 1990s declined, it was still above the world average. By contrast, its imports of services almost stagnated in the second half of the decade. Asia showed strong growth during 1990-95, but because of the financial crisis, growth rates of exports and imports of services fell steeply, to below one percent, in the second half of the 1990s. China and India, which were less affected by the crisis, sustained high growth rates. India, in particular, had an average growth rate of almost 20 percent for exports, reflecting its specialisation in computer and information services. Looking at the full period 1990-99 one sees that the Americas and Asia were growing at above-average rates, whereas Africa had below-average growth rates.
ACP imports of services grew, on average, 2.3 percent per year from US$18 billion in 1980 to US$26.4 billion in 2000. ACP exports of services have grown, on average, five percent per year from $8 billion in 1980 to $20.8 billion in 2000 (see Chart 6.2, based on the 67 ACP countries for which data are available). Despite strong growth in exports of services, the world share of ACP exports dropped from 2.4 percent in 1980 to 1.5 percent in 2000 (see Chart 6.3), but with most of the drop occurring in the 1980s.
Chart 6.2 ACP Imports and Exports of Services 1980-2000
Source: UNCTAD services trade statistics
1980 1985 1990 1995 2000
$ Millions
5000
10000
15000
20000
25000
30000
ImportsExports
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Chart 6.3
6.1.4 The composition of ACP services exports In 2000, the largest eight exporters of services in the ACP group accounted for more than half of total ACP services exports – see Appendix Table I.3. These include the Dominican Republic, Bahamas, Jamaica, Mauritius, and Barbados (owing to exports of tourism) as well as Kenya, Zimbabwe (owing to exports of transport) and Nigeria (owing to exports of business services) – see Appendix Table I.4.
More than half of total world trade in commercial services is made up of travel and transportation services. In recent years, however, other commercial services (insurance, banking, telecommunication and so on) have tended to expand faster than these two categories.
For the ACP group of countries the largest export sector is travel, accounting for more than half of all ACP services exports, followed by transport, business services and government services – see Chart 6.4. Breakdowns by country can be seen in Appendix Table I.10.
The largest ACP exporters of the main services sectors are illustrated in Table 6.1. The travel category covers all spending by travellers abroad, including purchases of goods. Transportation consists of passenger and freight sea, air and land transport. Other business services is a catch-all for all unreported sectors. Communication services groups together postal, courier and telecommunication services.
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Chart 6.4 Composition of ACP exports
Transport16%
Travel55%
Government services
8%
Other21%
Table 6.1: Main ACP Exporters of Services (2000) Sector Total ACP exports
(US$ Millions) Top 5 ACP exporters Country’s share in
total ACP exports in respective sectors
Travel/Tourism 11,110 Dominican Republic Bahamas Jamaica Barbados Mauritius
26% 16% 12% 7% 5%
Transport 3,250 Kenya Jamaica Mauritius Ethiopia Trinidad and Tobago
13% 10% 7% 7% 6%
Government Services 1,740 Kenya Senegal Djibouti Ethiopia Guinea
15% 9% 7% 7% 6%
Depending on reporting:
Countries reporting on Other Business Services
2,850 Nigeria Papua New Guinea Mauritius Côte d’Ivoire Mozambique
17% 9% 7% 5% 5%
Countries reporting on Communications
613 Jamaica Dominican Republic Guyana Côte d’Ivoire Barbados
34% 23% 10% 6% 5%
Countries reporting on Insurance
334 Barbados Mauritius Trinidad and Tobago Côte d’Ivoire Antigua and Barbuda
24% 13% 9% 7% 5%
Countries reporting on Financial Services
213 Barbados Mauritius Tanzania Côte d’Ivoire St. Vincent
35% 10% 10% 9% 7%
Source: UNCTAD
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It is important to note that a few ACP countries have a high share of total ACP services exports across a number of sectors: Jamaica (tourism, transport, communications); Barbados (tourism, communications, insurance, financial services); Mauritius (tourism, transport, other business services, insurance, financial services); Kenya (transport, government services); Trinidad and Tobago (transport, insurance); and Côte d’Ivoire (other business services, communications, insurance, financial services). Note, however, that in some cases a high share reflects the way countries report the composition of services.
6.1.5 ACP regional exports Appendix Table I.5 illustrates services exports from ACP countries eligible for EPAs summed across various regional groupings – these are not necessarily the same regions that will actually negotiate EPAs with the EU (EAC,10 ECOWAS,11 SADC,12
COMESA,13 UEMOA14 and CEMAC15). In value terms, COMESA is the largest services exporter of the five regions. However, between 1980 and 2000 SADC has experienced the highest growth in services exports (221 percent), followed by COMESA (147 percent) and EAC (120 percent). In 2000, services exports from ECOWAS and UEMOA have grown by 28 percent and 20 percent, respectively, over their values in 1980. In contrast, services exports from CEMAC in 2000 were only one percent higher than their value in 1980.
Table 6.2 illustrates the average annual growth between 1980 and 2000 in services exports from the five ACP regional groupings.
Table 6.2: Average annual Growth in Services Exports CEMAC COMESA EAC ECOWAS SADC UEMOA
1980-2000 0% 5% 4% 1% 6% 1% 1980-1985 -3% 1% -5% -11% -5% -3% 1986-1990 1% 9% 10% 13% 11% 5% 1991-1995 -8% 7% 11% -2% 10% 1%
1996-2000 4% 1% 0% 4% 3% -2% Source: UNCTAD
ACP regional groups have experienced differential average annual growth in services exports over the past two decades. Over the period 1980-2000 SADC exports of services grew at an annual rate of 6 percent with most of the growth in the period 1986-95. The financial crises in East Asia and elsewhere and the global downturn probably accounted for the slowdown in the late 1990s.
10 Kenya, Tanzania, Uganda. 11 Benin, Burkina Faso, Cape Verde, Côte d’Ivoire, The Gambia, Ghana, Guinea, Guinea-Bissau, Liberia, Mali, Mauritania, Niger, Nigeria, Senegal, Sierra Leone, Togo. 12 Excludes South Africa. Includes Angola, Botswana, Democratic Republic of Congo, Lesotho, Malawi, Mauritius, Mozambique, Namibia, Seychelles, Swaziland, Tanzania, Zambia, Zimbabwe. 13 Excludes Egypt, but includes Namibia and Swaziland in addition to Angola, Burundi, Comoros, Democratic Republic of Congo, Djibouti, Eritrea, Ethiopia, Kenya, Madagascar, Malawi, Mauritius, Rwanda, Seychelles, Sudan, Uganda, Zambia, Zimbabwe. 14 Benin, Burkina Faso, Côte d’Ivoire, Guinea-Bissau, Mali, Niger, Senegal, Togo. 15 Cameroon, Central African Republic , Chad, Congo, Equatorial Guinea, Gabon.
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6.1.6 The composition of services exports from ACP regional groups The composition of services exports from the various ACP regional groupings is illustrated in Chart 6.5. With the exception of ECOWAS, the largest export sectors are travel and transport which, combined, are responsible for between 45 percent (CEMAC) and 69 percent (SADC) of total services exports. The largest services export sector for UEMOA and ECOWAS is business services (because of its importance to the Côte d’Ivoire and Nigeria, respectively).
Chart 6.5 ACP Regional Exports by Sector 2000
Source: UNCTAD Note: sectoral shares are distorted as some countries do not report value for all sectors
6.1.7 ACP trade in services with the EU In recent years a high share of ACP services exports has been to the EU (e.g. about three-quarters of African exports in 2000). This compares with only 38 percent in the case of ACO exports of goods (table 6.4). Exports of services now account for a third of total ACP exports to the EU. In 2001 EU imports and exports of services from the rest of the world were US$604 billion and US$615 billion respectively – see Appendix 6. Germany is the largest importer of services in the EU accounting for nearly one-quarter of all imports. The UK is the largest exporter of services, accounting for 19 percent of all exports – see Appendix I.7. In 2001 the EU imports and exports of services from the ACP group of countries were US$14.3 billion and US$13.4 billion respectively. As such, EU trade in services with the ACP represents
0
1000
2000
3000
4000
5000
6000
7000
8000
CARICOM Pacific ECOWAS SADC EAC COMESA UEMOA CEMAC
$ Millions
Government services n.i.e
Personal, cultural and recreationalservicesOther business services
Royalties and license fees
Financial services
Insurance
Computer and information services
Construction
Communications
Travel
Transport
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about two percent of total EU trade in services and about seven percent of extra-EU trade in services.
Appendix I.9 shows that the main importer of services in the EU is Germany (one-fourth), followed by the UK (a fifth), France, Netherlands, Italy, Spain, Belgium and Luxemburg, Greece, Portugal, Sweden, Finland and Austria. Hence, the ACP group would need to examine markets in Germany and the UK (and France and the Netherlands) most closely, but the specific EU destinations may vary by ACP country.
In 2001, 28 percent of total EU imports of services from the rest of the world were in tourism-related services. In contrast, 35 percent of EU imports of services from ACP states were tourism-related (39 percent from African ACP, 28 percent from Caribbean ACP and 41 percent from Pacific ACP) – see Appendix 9.
Table 6.3 ACP exports of services to the EU, US$ billion, 2001 Total Transport Travel Government
services Other
AfricanACP
8.863 2.483 3.487 0.647 1.224
Caribbean 5.241 1.267 1.460 0.157 2.136 Pacific 0.201 0.074 0.082 0.003 0.047 Total ACP exports to EU
14.305 3.824 5.029 0.807 3.407
Data are best available proxies: African ACP = Africa-Maghreb-South Africa-Egypt, Caribbean includes some of Central America.
Table 6.4: EU Imports of Goods from ACP Countries 2002
EU country
Goods imports from
ACP(US$1000s)
Average annual growth in value 1998-2003
%
ACP goods exports to
world (US$1000s)
Share of ACP goods exports to
EU country (%)
Austria 486,235 14 76,868,773 1% Belgium-Luxembourg 1,011,833 76,868,773 1% Denmark 179,133 8 76,868,773 0% Finland 107,997 -9 76,868,773 0% France 5,034,994 2 76,868,773 7% Germany 2,162,667 76,868,773 3% Greece 63,298 76,868,773 0% Ireland 269,634 -1 76,868,773 0% Italy 3,637,567 -5 76,868,773 5% Netherlands 2,366,367 3 76,868,773 3% Portugal 1,022,914 7 76,868,773 1% Spain 3,935,983 8 76,868,773 5% Sweden 205,273 5 76,868,773 0% UK 8,489,822 14 76,868,773 11% Total EU 28,973,717 76,868,773 38% Source: COMTRADE database (2003).
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6.1.8 ACP exports and imports of services by mode of supply Table 6.5 shows ACP exports and imports of services by modes of supply namely mode 1, cross border supply; mode 2, consumption abroad; mode 3, commercial presence; and mode 4, presence of natural persons.
It should be noted that services data used to compute exports by mode are often based on proxies. For instance, mode 3 exports of services are sometimes proxied by FDI. A better indicator would be sales of services MNE affiliates abroad, but this is not always available. Similarly, mode 4 exports of services should reflect sales by natural persons temporarily abroad, but this is proxied by either remittances (which may understate the true value because sales my be higher than what is sent abroad; or overstate as remittances includes permanents migrants) or by compensation of employees in subsidiaries of services MNE, neither of which are correct.
Bearing this in mind, globally, trade in services is dominated by commercial presence and cross-border exports (Table 6.6). In contrast, for ACP countries, consumption abroad constitutes the largest source of services exports followed by cross border exports and temporary movement of natural persons. However, most services imports to ACP countries eligible for EPAs are cross-border imports, followed by commercial presence (Table 6.5 below). It would be of interest to see whether this would differ across ACP regions. The final column of Table 6.6 provides some data on exports of services from Africa to Germany by mode, confirming the patterns observed before. Such data will also be available for the UK and France, but not for elsewhere in the EU.
Table 6.5: ACP Services Imports and Exports by Mode of Supply US$ Millions
Year 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 Exports Mode 1 4345 4952 4807 5191 5102 5366 5419 5610 5406 5288 Mode 2 5617 6201 6130 6629 7375 8052 8788 9114 8868 9156 Mode 3 88 114 140 178 152 81 123 85 69 133 Mode 4 821 946 900 918 913 859 1044 992 991 924 Total 10871 12213 11977 12917 13541 14358 15374 15800 15334 15501Imports Mode 1 12221 14722 15021 15189 16253 15552 17397 16864 16083 16478Mode 2 2962 3239 3644 3031 2991 3618 3998 4336 4873 4731 Mode 3 2163 2767 2510 2712 3789 4295 4911 5453 5209 4756 Mode 4 187 249 292 275 247 258 335 356 445 470 Total 17533 20975 21467 21207 23280 23724 26641 27008 26610 26434Note: Mode 1= Cross Border Supply (BOP Services – Travel – Government Services); Mode 2= Consumption Abroad (Travel); Mode 3= Commercial Presence (Direct Investment); Mode 4 = Presence of Natural Persons (Compensation to Employees); the totals are a proxy only, since mode 3 and mode 4 are also proxies.
In growth terms, cross-border exports rose 22 percent between 1989 and 1998 while consumption abroad (foreigners in the ACP) grew 63 percent. In contrast, investment in the ACP countries eligible for EPAs has not been stable, falling in 1993, 1996 and 1997. Movement of natural persons abroad grew 13 percent between 1989 and 1998. In the case of services imports, the ACP countries have witnessed steady growth across all four modes of supply.
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Table 6.6 Sales by GATS modes of supply (world total and Africa-Germany)
Mode Proxy Rough estimate (Total – WTO)
Rough estimate (Africa- Germany, 2001)
Cross-bordersupply
BOP: services exports (note this excludes travel)
$ 1000 billion Euro 1620 million
Consumptionabroad
BOP: travel (possibly excludes health, education etc)
$ 500 billion Euro 2195 million
Commercial presence
FATS: turnover $ 2000 billion Euro 1100 million (this includes goods and services)
Movement of natural persons
BOP: compensation of employees (understatement)
$ 50 billion Euro 3 million
Sources: WTO and Bundesbank
6.1.9 ACP services companies exporting to the EU OECD (2003) provides an inventory of successful developing country services companies. While many examples relate to countries such as India (major IT consulting firms), there are also some examples of ACP services companies exporting to the EU. ACP services exporters encompass many sectors and all four modes.
• The Caribbean countries are major providers of back-office services (often through mode 1). Jamerican Associates is a Jamaican company specialising in data processing servicing customers in New York, Toronto and London.
• Performance Management Consulting from Senegal (Dakar) is a small consulting firm with offices in Dakar, Ouagadougou and Paris. Sales destinations include France (mode 3).
• A company in Africa exporting secure payments services in the EU (mode 1). • Non-EPA-eligible but ACP-member South Africa, offers surgery more
cheaply than the UK private sector. The company Surgeon and Safari has had hundreds of UK customers (The Guardian, 17/12/2002), mode 2.
• Non-UK health care providers, including Netcare of South Africa, were selected for fast-track centres offering surgery to NHS patients, a total of £2 billion (mode 3 exports with some commercial presence). The providers will also run mobile operating units. Netcare planned to bring over surgical teams from South Africa on rotation once every 11 weeks (mode 4), which would avoid poaching from the NHS or permanent jobs loss in South Africa. UK bids were rejected because they could not provide quality service at an acceptable price. (The Guardian, various dates).
• Call centres and other back-office jobs are not limited to India. Bowman International Sports, operating under a UK license, built a 200 job call centre in Mauritius in 1996 from which it supplies mode 1 exports of services (UNCTAD’s Investment Policy Review for Mauritius).
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• Health tourism (surgery in combination with cruise holidays, mode 2) is well documented in the case of the Caribbean (Gonzales, et al., 2001). Lyford Cay hospital in the Bahamas serves UK patients; around two percent of hospital visits in Queen Elizabeth Hospital in Barbados originated from the UK, etc.
But often ACP exporters are not the clearly visible larger exporter firms and include many small services suppliers using mode 4. All CARICOM countries are already exporting a wide range of ‘other’ services such as accountancy, architectural and engineering services, computer and database services, Internet-related services, data processing, legal services, consultancy, education, health, financial etc. (Riddle 2002).
Without detailed studies, it is not easy to answer which countries have a comparative advantage in which services sectors and modes. There are, however, some general observations. We first consider exports by mode. ACP exports are not concentrated in mode 3, partly because this requires access to capital, which is not relatively abundant in the ACP. By contrast, ACP countries have abundant labour, on lower wages, so their comparative advantage should be in mode 4. Thanks to technical change and lower transport costs, exports of services by the ACP in mode 1 (e.g. call centres) and 2 (health and education, travel) have become easier.
Examining comparative advantage by sector, the tourism sector is the best example of a comparative advantage for many ACP countries. It is the biggest services export in all regions. It is also labour intensive. Beyond tourism, there are specific ACP sectors in certain countries that are more efficient than the EU. The health services sector is also one example, as indicated by health tourism in the Caribbean or South African surgeons (temporarily) operating in the UK. Back-office operations in the financial services industry is another; we have mentioned call centres in the Caribbean and Mauritius. Appendix J discusses outsourcing of back-office services in UK financial services mainly to India, where a well qualified English-speaking labour force is available at a tenth the wage costs. Similar opportunities in call centres would seem possible in many parts in the ACP: the Commonwealth ACP (e.g. Ghana) for the UK, Francophone ACP (e.g. Senegal, Mauritius) for France, Lusophone ACP for Portugal, and Surinam for the Netherlands.
There are also some top services exporters in the ACP which have built some capacity and experience in exporting services. Jamaica (tourism, transport, communications); Barbados (tourism, communications, insurance, financial services); Mauritius (tourism, transport, other business services, insurance, financial services); Kenya (transport, government services); Trinidad and Tobago (transport, insurance); and, Côte d’Ivoire (other business services, communications, insurance, financial services).
6.1.10 Conclusions • For the ACP group (we exclude Cuba and South Africa) the average share of
services in GDP is about 50 percent but with wide variations ranging from five percent for Equatorial Guinea to 84 percent for Palau.
• Within the ACP group of countries there is also a wide variation in the share of services in total exports ranging from over 75 percent for a number of Caribbean countries (typically high because of tourism) to under 5 percent for Niger, Burundi, Angola, Liberia, Mauritania, Guinea and Sudan.
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• ACP imports of services have grown, on average, 2.3 percent per year from US$18 billion in 1980 to US$26.4 billion in 2000. ACP exports of services have grown, on average, 5 percent per year from US$8 billion in 1980 to US$20.8 billion in 2000. Despite strong growth in exports of services, the world share of ACP exports dropped from 2.4 percent in 1980 to 1.5 percent in 2000.
• In 2000, the largest eight exporters of services in the ACP group accounted for more than half of total ACP services exports. These include the Dominican Republic, Bahamas, Jamaica, Mauritius and Barbados (owing to exports of tourism services) as well as Kenya, Zimbabwe (owing to exports of transport) and Nigeria (owing to exports of business services).
• For the ACP group of countries the largest export sector is travel, which accounts for more than half of all ACP services exports, followed by transport, business services and government services.
• A few ACP countries have a high share of total ACP services exports across a number of sectors: Jamaica (tourism, transport, communications); Barbados (tourism, communications, insurance, financial services); Mauritius (tourism, transport, other business services, insurance, financial services); Kenya (transport, government services); Trinidad and Tobago (transport, insurance); and, Côte d’Ivoire (other business services, communications, insurance, financial services). These countries will have built up the best capacity to export, including to the EU.
• With the exception of UEMOA and ECOWAS, the largest export sectors are travel and transport which combined are responsible for between 45 percent (CEMAC) and 69 percent (SADC) of total services exports. The largest services export sector for UEMOA and ECOWAS is business services (because of its importance to Côte d’Ivoire and Nigeria respectively).
• In 2001 the EU imports and exports of services from the ACP group of countries were US$14.3 billion and US$13.4 billion, respectively. As such, EU trade in services with the ACP represents about two percent of total EU trade in services and about seven percent of extra-EU trade in services.
• In recent years almost three-quarters of recorded African ACP exports of services has gone to the EU. Exports of services now account for one-third of total ACP exports to the EU.
• Globally, trade in services is dominated by commercial presence and cross-border exports. In contrast, for ACP countries, consumption abroad constitutes the largest source of services exports followed by cross border exports and probably temporary movement of natural persons.
• ACP services exporters encompass many sectors and all four modes. More detailed studies can indicate more specifically what are sub-sectors of comparative advantage.
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6.2 EU barriers to ACP exports
6.2.1 General barriers to trade in services There are many barriers to the development and export of services. Some are general across all products, and some are specific to services. Some are trade related. Barriers often mentioned include:
• Limited size of the domestic market (especially in small and poorer countries) and so there is a need to raise market access to reap economies of scale.
• Limited access to (new) technology. • Lack of available financial resources. • Services products often being ‘experience’ goods, so that sales depend
on a track record of international credibility and profile. It can take time to build up international credibility. By contrast, raw materials are relatively homogenous.
• Some services, such as business or financial services, are skill intensive, but there are only limited human resources available.
• Various government departments being involved in developing services and promoting exports of services. There are various public policy concerns, including equity considerations, related to private sector participation in the supply of (social) services. Many (new) domestic regulations, often for good intentions of prudence or protection of consumers, can become significant trade barriers.
• Trade barriers, including (Hoekman and Braga, 1997): quotas (number of flights on a route), local content and prohibitions (some supplies for nationals only, some regulations become trade barriers); price-based instruments (visa fees and entry/exit taxes, or subsidies); standards (non-recognition of diplomas obtained in foreign countries), licensing and procurement (lack of transparency, outside GATS); discriminatory access to distribution networks (not being listed in computer reservation systems),
• The small size of services exporters in many ACP countries. They also face a lack of information on markets and regulations and may rely on mode 4 to export services, in which few countries are very open.
Obviously there are differences in key market-access barriers across sectors. Butkeviciene et al. (2002) summarise experience gained by UNCTAD at sectoral level.
• In construction services, key barriers to further market access include transfer of technology, recognition of qualification for architectural and engineering services, restrictions on mode 4 and subsidies in developed countries.
• In energy services, trade barriers relate to mode 3 due to monopolies and non-transparent transmission fees, mode 1, which can be subject to commercial presence and mode 4, including obtaining visa and work permits. For oil services, volatility of the market is a problem, because this requires diversification and hence the need for financial services to cover many countries.
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• In environmental services, mode 3 supplies may be required to invest in a capital intensive commercial presence. Mode 1 supplies can be subject to commercial presence, and are limited through certificates to local firms only. Legislation may require the need for various permits. It may also create liability, which is more difficult to cope with for small or inexperienced suppliers.
• Health services may depend on cultural and linguistic affinities. For mode 1 supplies (telemedicine), access to good quality and affordable telecommunications networks and to health networks is essential. For some countries, health insurance in developed countries may not cover developing countries which may discourage mode 2 supplies of health services. There are various mode 4 restrictions, including economic-needs tests, licensing, recognition of qualification, and nationality and residency requirements.
• Tourism services depend in part on good access to the world information network in order to facilitate mode 2 exports.
6.2.2 Trade barriers to ACP-EU trade in services: anecdotes There are several anecdotes in the EU that seem to highlight the barriers in the EU to further ACP exports of services. In the UK, two examples illustrate this:
(i) Based on local autonomy, one UK primary care trust rejected the UK’s scheme to contract out cataract surgery to the South African company Netcare amidst reports that it would ‘steal’ one- third of patients and lead to redundancies in the NHS while waiting lists were, supposedly, on track of being cut.
(ii) A World Bank funded play recommended to the Edinburgh Festival by the British army in Sierra Leone was cancelled because the UK Home Office refused to let the actors into the country. Visas for the cast of ten who were to perform in Edinburgh were refused on the grounds that they might claim political asylum once they arrived.
6.2.3 EU GATS schedules Trade barriers to trade in services with the EU-15 can be found in the GATS schedules. So far, there exists one schedule of commitments for the EC-12. The schedules of commitments for Austria, Finland and Sweden are separate because commitments were made before they joined the EU in 1995. The EC is currently in the process of consolidating these schedules into one for EC-15 and until this process has been completed there is no official single EU schedule.
The existing commitments for any Member of the WTO can be obtained from http://www.wto.org/english/tratop_e/serv_e/serv_commitments_e.htm. However, the document called ‘Conditional offer from the EC and its Member States’ contains the initial offer of the EC-15 and can be found on the web. This is a negotiation document and does not constitute the legal binding commitments of the EC-15 in the WTO. However, the document is based on a consolidated schedule which has been notified to the CTS. We have used this to describe the EU GATS schedule.
In order to read GATS schedules we need to explain a few basic elements. There are horizontal commitments by mode and these apply to all sectors; then there are specific
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sectoral commitments including limitations on market access (MA) and national treatment (NT); there are also unbound commitments where regulations have not been bound (but could be); there are also (sensitive) sectors with no commitments at all; finally there are MFN exemptions.
Making this distinction, the EU commitments are summarised in Appendix Table K. The table should be read as follows. When a sector has been fully committed in all modes with no restrictions on MA and NT the cells in the matrix should be empty. If sectors have not been (fully) committed this is indicated in a number of ways. Most simple is when the sector has not been committed at all in GATS schedules, then there will be a cross in the ‘No com’ column. If the EU or its MS include unbound sectors, this has been indicated by a letter in the final columns in mode 1 or mode 3, MA or NT. It would not make sense to include mode 4 (this is not unbound), or mode 2 (usually unbound). The letter indicates which country includes this sector as unbound, e.g. D for Germany, FIN for Finland, I for Italy, EU for EU-wide). Similarly, if a sector has been scheduled, but with limitations on market access or national treatment, this would appear in the first few columns marked mode 1 - mode 4.
There are two types of horizontal limitations across all sectors. First, a market access limitation on mode 3 states that in all EC Member States services considered as public utilities at a national or local level may be subject to public monopolies or to exclusive rights granted to private operators. There are also individual MS limitations on real estate purchase or a maximum number of voting rights or shares in a company (e.g. Finland).
The second type of horizontal limitations, and potentially more relevant for the ACP, lies in the treatment of temporary movement of natural persons (mode 4).
Commitments for market access (MA) are unbound except for • Intra-corporate transferees (hence based on commercial presence) where the
person involved has worked for the company for at least a year, and who is a • Person working in a senior position who primarily directs the
management of the establishment (managers), or • Person who possesses uncommon knowledge essential to the
establishment’s service (specialists).• Representatives of a service supplier to negotiate sales but not to be engaged
in making direct sales. • Senior person of a service responsible for setting up of a commercial presence
in the EU but not engaged in making direct sales. • Suppliers of a service on a temporary basis while not having a commercial
presence, when the service contract has been obtained within the past three months following tendering procedures, where the person has supplied the service for at least a year (two years in Greece), for a period of not more than three months in 12 months (24 months in Netherlands), and where the person must possess the necessary academic qualifications and professional experience.
An important limitation on national treatment (NT) in mode 4 relates to ‘EC directives on mutual recognition of diplomas do not apply to nationals of third countries’. And recognition of the diplomas which are required in order to practice
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regulated professional services remains within the competence of each MS. There are some further MS specific limitations on MA and NT.
EU and national working conditions, minimum wage requirements, and any collective wage agreements apply.
There are various commitments and limitations by sector:
Business services Commitments for most EU member states in mode 1 are unbound. Few member states have bound their commitments. One exception is Sweden which does include limitations on mode 1 in various sub-sectors. For instance, it states that ‘only auditors approved in Sweden may perform legal auditing services’. Germany ‘states that ‘application of the national rules on fees and emoluments for all services which are performed from abroad’ in the case of architectural services.
Most bound commitments, with limitations on MA and NT, are for mode 3 and 4. While there appear to be no EU-wide restrictions, many individual member states include requirements for a university degree, professional qualifications and several years’ professional experience, for accountants, lawyers, etc. In the case of medical and dental services, access is restricted to natural persons and often includes economic-needs testing and a residence requirement.
A few sub-sectors do not contain liberalising commitments e.g. ‘services incidental to manufacturing’.
Communication services Few sub-sectors have been scheduled. There are no commitments for postal, courier and audiovisual services, and some are unbound. Portugal requires residence for telecommunication services, MA in mode 1. There are some other MS MA limitations for mode 3 of telecommunication services.
Construction and related engineering services There are no EU-wide limitations, but there are nationality requirements (Greece) in market access under mode 3, or qualification requirements in mode 4. For example the Netherlands requires a university degree and three years’ professional experience in the sector. Mode 1 is largely unbound. France has an economic-needs test.
Distribution servicesIn mode 4, several MS include residence requirements (e.g. wholesale trade). For mode 3, there are several state monopolies (wholesale, tobacco).
Educational services Finland and Sweden have many unbound commitments in this sector (MA and NT) in modes 1-4. France (and Denmark and Ireland) includes a nationality condition, but subject to authorisation. Greece has mode 3 (MA) unbound for higher education.
Environmental services Commitments in mode 1 are not feasible. Most subsectors are unbound. There is a Swedish monopoly for controlling exhaust gases.
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Financial services Various EU directives and MS limitations to commitments affecting trade in financial services. These cover all modes. For instance, Austria, Denmark, Spain and Italy include a nationality or residence requirement in mode 4. Very detailed limitations on banking and finance companies. EU-wide, mode 3 (MA and NT), only firms having their registered office in the Communities can act as depositories of the assets of investment funds.
Health-related and social services Health services in mode 3 are often limited by economic-needs tests or national health services plans. There are also sub-sectors with no commitments at all, or where commitments are unbound (particularly mode 1).
Tourism and travel-related services Economic-needs tests for mode 3 commitments are included as limitations (e.g. tour operators in Italy). Mode 4 providers are often subject to nationality condition (tourist guide services in Greece, Spain, France Italy and Portugal) or need a professional certificate and three years’ experience (Italy and Sweden).
Recreational, cultural and sporting servicesSome subsectors have been excluded from commitments. Mode 4 commitments are limited by economic-needs tests (Italy), main profession (Austria), employment contract with authorised enterprise (France). There are residency requirements for publishers and owners of publishing or printing companies (mode 3). France allows a maximum of 20 percent capital/voting rights in new and press agency services.
Transport servicesMany subsectors have been excluded from commitments. There are also various unbound sectors (particularly mode 1). Only road transport services include commitments, subject to limitations such economic-needs tests (mode 3 and 4)
Other services Most sectors and modes are unbound.
There are ten MFN exemptions in audiovisual services, two in maritime transport, one in road transport services (freight), computerised reservation systems, rent/leasing services, publishing, news-agency services, financial services, press-agency services, real estate purchase (Italy), waiver of nationality requirement (Portugal versus. Portuguese speaking countries), facilitation of access (France to francophone African countries), extension of NT to investment (Sweden to three African countries), and work permit waiver (UK to Commonwealth).
The EU’s conditional (summary) offer can be found on the web: http://trade-info. cec.eu.int/doclib/cfm/doclib_section.cfm?sec=176&lev=2&order=date. A summary of this proposal is also available. It is useful to restate this here as it is possible that the EU offer will translate, albeit with changes, into GATS commitments, or at least that there will be a willingness on the side of the EU to liberalise in these areas and perhaps in the Cotonou context
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• The EU does not intend to make new offers in health-related, social-services sector or the education sector. There are no new commitments in audiovisual services. The EU wants to retain MFN exemptions; there are changes to the current EU limitations in favour of public utilities within the EU are introduced. There are no new rules on subsidies and they can thus be maintained.
• There are new offers in legal services and allowing for accountants and architects and engineers without discrimination.
• There is full market access to foreign service providers of computer and related services.
• In business services, specific limitations by Member States are removed on packaging services, and printing and publishing on a fee or contract basis. Furthermore, some nationality, residence and commercial presence conditions are also removed in some sub-sectors.
• On postal and courier services, the proposal confirms foreign operators access to markets which have already been opened to competition by the first postal directive of 1997 (EC 97/67) – notably parcels, express delivery, letters above 350 grams. The universal service provisions existing within the EC are fully safeguarded.
• In telecommunications services, the Commission proposes to guarantee to third countries’ operators full access to the EU’s internal market, while fully safeguarding the EU’s right, for example, to define its universal service objectives for those services. The Commission proposes to eliminate some national limitations to market access and national treatment in construction and engineering-related service. It removes obstacles for foreign companies to set up and develop their business in the EU.
• The proposal confers on non-EU nationals the same treatment as granted to EU nationals when applying for the opening of new department stores.Thus, the granting of licences for new department stores will be done on the merits of each application, including its compliance with non-discriminatory national regulations such as land-use planning laws etc., regardless of the nationality of the companies. In addition, it is proposed to allow commissioning agents to provide services cross border in some Member States and to liberalise franchising.
• The EU proposes market access and national treatment for providers of noise and vibration abatement services. The offer also foresees that advisory services for the protection of biodiversity and landscape could be offered by foreign companies to EU clients on a ‘cross-border’ basis, without the foreign company having to establish a presence in the EU. Foreign companies who have a contract to provide environmental services with a client in the EU will be able to send skilled personnel to the EU to provide these services for up to six months at a time (relevant in consulting and environmental impact assessments)
• On financial services, it is proposed to do away with a number of limitations pertaining for instance to the legal form of establishment or to the scope of business.
• The proposal would grant non-EU nationals wishing to establish travel agencies in the territory of the European Union the same treatment as EU
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nationals. The nationality of the companies or their managers will not be considered for the authorisation of new travel agencies.
• With respect to news agencies the proposal lifts some of the limitations (e.g. foreign-ownership limitations and nationality requirements) in some Member States. In entertainment services, it is proposed that one Member State broadens its commitments in line with the rest of the EU.
• The main changes in the offer for transport services are: • Maritime transport –reintroducing the 1996 EU offer withdrawn at the
end of the post Uruguay Round maritime negotiations. In addition, the proposal guarantees access to ‘‘feeder of international cargo’ and ‘movement of empty containers’ in accordance with existing EU and national legislation.
• Air transport: including ‘groundhandling’ and ‘ airport management’. • There is to be removal of some horizontal limitations relating to the
purchase and/or rental of real estate. The limitations essentially relate to authorisation procedures that foreign nationals have to pursue prior to acquiring and/or renting real estate, converting a scheduled limitation for foreigners in acquiring property into an authorisation procedure for the acquisition of property.
• Several changes to the EU’s commitments are proposed for mode 4: • A service company with a graduate-training programme will be able to
transfer its ‘managers of the future’ for up to one year to obtain work experience with an affiliated company in the EU.
• Overseas companies, who have a contract to provide certain services to a client in the EU, will be able to send skilled personnel to the EU to provide these services for up to six months at a time. The EU already has commitments in this area, but the proposal extends the number of sectors that are covered, as well as the permitted length of stay and length of the underlying contract.
• Self-employed skilled professionals working in certain sectors and based overseas will be able to enter the EU for up to six months at a time to provide services to EU clients.
• In all these cases, EU and national working conditions, minimum wage requirements, and any collective wage agreements will continue to apply (effectively undermining the comparative advantage of ACP labour in mode 4). EU Member States will continue to be able to refuse entry to persons that pose a security threat or are considered to be at risk of abusing the terms of their entry. Quotas with regard to entry of certain categories of workers will also need to be determined.
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6.3 Possible benefits to ACP of removing EU barriers to ACP exports
The possible benefits to the ACP of removing EU barriers to ACP exports depend on the identification and linking of two issues:
• the EU barriers to trade in services (sectors, modes, and specific regulations) that are to be liberalised, and
• the supply response of the ACP (by mode, sector, country and region), in other words, whether ACP counties are sufficiently competitive and have the domestic capacity to supply the EU.
The present study is a scoping study, so answers to these questions are preliminary and need further refinement. We discussed EU trade barriers to trade in Section 6.2 and discussed current capacity in exports of services by the ACP in Section 6.1. There is however a lack of precise data. Moreover, there is a very patchy picture on the competitive strengths of services exports in ACP regions, individual countries and individual sectors. For this we would need more detailed studies involving discussion with the ACP private sector.
By mode of delivery Strengths of services exports in many ACP countries are based on mode 1, mode 2 and mode 4 delivery. Mode 4 is by definition labour intensive, and, vis-à-vis the EU, the ACP has a comparative advantage in labour due to relative labour abundance (it should be noted that the EU would have a comparative advantage in highly skilled services operations). Mode 4 delivery however is seriously hampered by the current EU trade regime. Some of this is related to recognition of diplomas (particularly in business services: medical, architectural and engineering services), some of it is related to economic-needs test and nationality requirements, and all countries restrict less-skilled workers or those that have worked for an ACP company for only a short time if there is no commercial presence. Linking mode 4 delivery to commercial presence (mode 3), or mode 1 delivery to mode 3, constitutes another barrier to the ACP, particularly because the ACP would have a comparative disadvantage in capital necessary to set up a commercial presence.
Mode 1 delivery has become more important over time owing to technical improvements in telecommunications and information networks across countries. However, there are several unbound mode 1 commitments. One example of a commitment in mode 1 could undermine the comparative advantage in labour: in the case of architectural services in Germany ‘application of the national rules on fees and emoluments for all services which are performed from abroad’. It is understandable to apply minimum wage considerations in mode 3 delivery (as this would directly compete in the domestic labour market), but regulating pay of services originating in a foreign country e.g. through mode 1 or mode 4, is less so. More generally, bound commitments would safeguard mode 1 services, and this may for example be relevant for call centres or back-office operations. Mode 1 delivery would benefit those ACP countries that are culturally and linguistically linked to EU countries (e.g. UK and Commonwealth ACP, France to Francophone ACP and Portugal to Lusophone ACP, Netherlands to Surinam, Germany to e.g. Namibia, Italy to Somalia, etc.) and have the right supply capacity (the example of India being the ‘back office’ of the world, see Appendix J, also depends on there being sufficient IT skills, and this may apply to ACP countries such as Mauritius, Senegal, Ghana and Caribbean countries). Most
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back office sectors have been fully committed (e.g. computer-related services CPC 84), but not all, for example collection, telephone answering and duplicating services (see WTO members’ requests to the EC Consultation document).
Mode 2 is (probably) the main mode of delivery for the ACP, but there appear to be no major barriers in tourism, with the possible exception of computer reservation systems, and other provisions to safeguard health and safety of tourists. Similarly, consumption abroad of private health services is up to consumers (e.g. health tourism). On the other hand, coverage of national health insurance for EU nationals to non-EU countries may hamper mode 2 delivery of health services.
By sector and type of regulation
Business services Many individual member states include requirements (sometimes for reasons of prudence) for a university degree, professional qualifications and several years’ professional experience, for accountants, lawyers, etc. In the case of medical and dental services, access is restricted to natural persons and often includes economic-needs testing and a residence requirement. Removing these restrictions would benefit those countries that have a supply capacity of these business services (e.g. the category other business services exports in Nigeria is a substantial category, although it declined markedly from 1990-2000.) See also comments on mode 1 restrictions as that is particularly relevant for business services (e.g. telephone answering).
Communication services The inclusion of postal, courier and particularly audiovisual services would benefit ACP exporters. Portugal’s mode 1 limitation requiring residence in telecommunication services could also restrict ACP exporters. Appendix Table I.4 shows that various countries have built up a significant supply capacity (from high to low reported values: Jamaica, Dominican Republic, Guyana, Côte d’Ivoire, Barbados, Tanzania, Kenya, Ethiopia, Mauritius, etc.).
Construction and related engineering services There are nationality requirements (Greece) in market access under mode 3, or qualification requirements in mode 4. For example the Netherlands requires a university degree and three years’ professional experience in the sector. Mode 1 is largely unbound. France has an economic-needs test. Removing some of these restrictions would benefit ACP countries, possibly those that have built up some export capacity (from high to low reported values in Section 6.1: Tanzania, Madagascar, Cameroon, Ethiopia, Mauritius, Côte d’Ivoire, Barbados and Cape Verde).
Distribution servicesIn mode 4, several MS include residence requirements (e.g. wholesale trade). For mode 3, there are several state monopolies (wholesale, tobacco). Removing residence requirements could benefit ACP countries.
Educational services France (and Denmark and Ireland) includes a nationality condition, but this is subject to authorisation in mode 1. Removing this restriction could help countries that are
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exporting education services (e.g. universities in the Caribbean now and in African ACP countries in the past).
Environmental services There would be few restrictions with significant benefits to the ACP, partly because of capital requirements.
Financial services Removal of a nationality or residence requirement in mode 4 in Austria, Denmark, Spain and Italy could lead to benefits for ACP countries, but these are not expected to be big. Countries with reported export values in insurance service, ranking from high to low, are: Barbados, Mauritius, Trinidad and Tobago, Côte d’Ivoire, Antigua and Barbuda, Cameroon, Tanzania, Bahamas, Jamaica and Botswana. But there is a question as to whether ACP insurance firms can compete on the EU market with EU firms.
Regarding financial services (not insurance), ACP banks and financial institutions may not be able to compete in EU markets. Banks in Trinidad and Tobago may be able to withstand such competition. Obstacles more difficult to overcome (for reasons of prudence) relate to depository assets and transparency requirements for offshore banking (resulting in blacklisting of certain ACP countries). On the other hand, certain labour-intensive financial services such as data processing and call centres could be done more cheaply in the labour abundant countries. For this, safeguards regarding mode 1 would be effective (although many such services would fall under CPC 84, or business services).
Health-related and social services Removing restrictions in health services in mode 3 and 4 (economic-needs tests) or including it as committed sectors (there are many unbound, or uncommitted sectors) could help health-services exports. There are also EU-wide and MS-specific regulations that may be relevant, particularly relating to health tourism and cutting waiting lists. However, most of this would fall under government procurement (we have shown the case of Netcare) and hence not under normal services negotiations. Some ACP health operation can be more competitive (i.e., offering cheaper surgery) than EU operations.
Tourism and travel-related services The main source of ACP exports to the EU is through EU consumption of services in mode 2. This is already relatively free of restrictions in the EU. Removing restrictions on tourist guides (mode 4) could give marginal benefits to ACP countries.
Recreational, cultural and sporting servicesIt would appear (see anecdotes) that removing Mode 4 restrictions, economic-needs tests (Italy), main professions (Austria), employment contract with authorised enterprise (France), etc, would facilitate ACP exports of services, including African and Caribbean entertainment groups. Removing residency requirements for publishers and owners of publishing or printing companies (mode 3) would be of less benefit to ACP companies.
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Transport servicesMany sub-sectors have been excluded from commitments. New commitments e.g. in maritime shipping could benefit ACP countries such as Kenya. There are also various unbound sectors (particularly mode 1). Only road-transport services include commitments, subject to limitations such as economic-needs tests (mode 3 and 4). However, it would appear the removal of mode 3 restrictions is not of major interest to the ACP (due to capital requirement).
By region and country It would be of some interest to examine which regions are expected to gain and which countries within regions. Again, we would need more detailed studies for this, and we provided some speculative findings. But given the widely varying performance in exports of services across regions, it could be expected that different regions gain. For instance, CEMAC and ECOWAS did not report high increases in exports of services, while EAC, SADC and COMESA did. It is also clear that specific countries within regions are expected to gain, depending on sectoral composition and other issues, such as cultural and linguistic links with the export market.
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Chapter 7 Special and Differential Treatment in post-Cotonou Negotiations
7.1 Negotiations so far Preliminary discussions on the development dimension of EPAs in the area of services have taken place, see Joint Report on the dedicated session on the development dimension of EPAS in the area of services held on 25 June 2003. Both parties agreed to the importance of the services sector to their economy. But there was some disagreement over the development issue. The report states that:
• The ACP requested support for tackling their capacity and supply-side constraints; strengthening their immediate services; increasing the efficiency and competitiveness of their domestic services and services suppliers; and developing appropriate policies as well as legal and regulatory frameworks. EPAs should include provisions for resources additional to EDF, which was found to be too slow to provide a boost to the services sector on time.
• The EC responded that funds should not be additional, but that concrete programmes should be designed for the development of the services sector. It also mentioned the set-up of an additional €20 million facility for EPA negotiations, as well as a new €50 million intra-ACP facility for trade-related needs.
• The ACP thought it could not liberalise sectors unless they had become competitive. The EC would not force the ACP to liberalise services trade, but thought it was in the best interest of the ACP.
• The Parties should undertake to start negotiations in services in 2006 at the latest.
The Joint Report ACP-EU negotiations on Economic Partnership Agreements 7th all-ECP-EU Ambassadorial level meeting at 11 July 2003, states that:
• Support for services sector has to be seen in context of CPA Art. 34.• Objectives for the services sector under EPAs should include: (a) to strengthen
capacity, efficiency and competitiveness of ACP services; (b) improve access to the EU of services originating in ACP countries (particularly mode 4); and (c) to increase ACP participation in world trade of services through access to technology, and access to distribution channels and information.
• Negotiations, if at all decided upon, based on CPA Art. 41(4), could start during or after phase 2 depending on whether national assessments of the services sector in ACP have been carried out. Liberalisation should be based on S&D, asymmetry and positive discrimination and should include balance-of-payments safeguards.
• Liberalisation of trade in services should be based on the following modalities: it should (a) be progressive depending on level of development; (b) be based on a positive list; (c) include a special safeguard mechanism; (d) include of measures to deal with anti-competitive behaviour.
• The ACP proposed that the EU should remove barriers to entry into the EU of ACP service providers in mode 4; the EU should be more transparent, and use less time-consuming visa procedures for ACP services suppliers; and mutual recognition agreements should be negotiated.
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• The EC replied that the proposals and objectives were defensive, but it stressed that it was willing to discuss the issue of mode 4 liberalisation within EPA negotiations, as it was an issue of mutual interest (though it is not clear if this refers to the interest of EU services suppliers, or simply the benefits that the EU derives from inward temporary movement. The EC was willing to apply asymmetric transition periods, to maintain intra-regional preferences, but it stressed the technical difficulties in achieving safeguard measures.
Beyond this, the EC and ACP have tabled few detailed proposals to obtain S&D, although desires have been expressed (e.g. at a COMESA workshop). It would appear that given the emphasis on S&D in services in Cotonou, it is important to consider more concrete options.
7.2 Options
Below we list 10 options for S&D in post-Cotonou services negotiations.
(S&D 1) Financial support for capacity building Resources are available within the EDF and for EPA negotiations, but one question is whether there are additional resources available within services negotiations under CPA art 41 (5). So far the EU has refused. In any case, countries and regions would need to indicate where, how and how many resources, with noticeable impact on ACP sectors, can be made available.
Riddle (2002) discusses measures to boost SME service providers: • special provisions in government procurement; • subsidies for export development and innovation activities; • universal access to public goods; • offering training; • government loan-guarantee programme for export-development
financing to small service suppliers; • provision of banking services to SMEs at standard rate; • trade conditions including improving the entry conditions for
temporary business travel, removing local-presence requirements for mode 1 supply of services, accelerating development of mutual-recognition agreements and of possibilities of freer movement of consumers to support mode 2 exports.
(S&D 2) Facilitating the recognition of professional credentials Several sectors (e.g. business services) require certain diplomas, and EC directives on mutual recognition of diplomas do not apply to nationals of third countries. The ACP regions could ask for ways in which their diplomas could be recognised in the EU. Similar intentions, such as mutual-recognition agreements, are already covered in regional agreements, including by the EU. Establishing ‘one-stop shops’ in EU member states could be considered to facilitate quick recognitions of qualification of ACP services suppliers. The EU has recently announced to introduce EUROPASS. ACPPASS could also help.
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(S&D 3) Information centre The ACP could ask for increased supply of information regarding exports of services to the EU, in particular regarding barriers to trade (similar to the GATS information centre). Importantly, it could hold regional seminars in the ACP to create awareness of what kind of trade is and what kind is not restricted. Information centres could also be merged into the one-stop shops as discussed before.
(S&D 4) Increased technology transfer Many studies (for example, George and Kirkpatrick, 2003) that show gains from services liberalisation indicate that most gains come from own liberalisation. In particular, opening up to foreign direct investment can be beneficial to the ACP under the right (policy) conditions. One of the benefits from FDI could be productivity and technological spillovers. Thus the EU could increase its support to stimulate FDI in the ACP, using so-called home country measures (Te Velde and Bilal, 2003).
(S&D 5) Full credit for autonomous liberalisation To provide the ACP with full credit for autonomous liberalisation.
(S&D 6) Fewer services commitments ACP/LDC ACP countries could ask not to be forced to make any new commitments over and above commitments made in GATS (and, if finished on time, GATS 2000). Developing countries are allowed flexibility in scope and coverage of commitments under a regional agreement consistent with Gats Article V. GATS S&D includes special provisions for LDCs to offer fewer sectors.
(S&D 7) EU commitments over and above GATS To be consistent with GATS Article V, the scope and coverage of services commitments for a developed country member needs to include substantially all sectors and modes and remove virtually all restrictions to trade. Of particular importance to the ACP are mode 4 commitments.
It has so far not been advanced, but a proposal to set up an ACP business travel card may help to facilitate and operationalise market access in mode 4. The APEC business travel card has been successfully introduced. Under an ACP business travel card there could be
• Visa free or visa-at-border entry for business development purposes, • Create multiple-entry visa, • Common service standards for processing (minimum time) of temporary entry
visa,• An expanded range of professions under ‘business visitor’, • An expanded range of support staff, in particular applying to less-skilled
workers.
There could be a pilot scheme running for a number of years (in regions, countries or sectors). Cardholders would be required to present their passports, but are not required to submit separate applications for business visitor visas. Participating economies would commit to implementing the scheme and would be free to maintain existing visa requirements for business visitors. They would also have the responsibility of avoiding abuse of the ACP business travel cards by registering bona fide ACP employers. All economies retain the right to refuse an individual without providing
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reasons, or to refuse entry to ACP Business Travel Card-holders at the border. The concept could be introduced at the ACP level, but the precise implementation could be left to regional negotiations, as ACP regions are interested in different services sectors.
Besides mode 4, the EU could safeguard the interest of ACP exporters by giving more bound commitments in mode 1 for various sectors, and removal of restrictions which refer to (labour) conditions surrounding supplies in ACP countries. It could also remove mode 3 and mode 4 in specific sectors (see section 6.3)
• Business services, • Construction and related services, • Health and education services, • Recreational, cultural and sporting services, • Tourism services.
(S&D 8) Government procurement The ACP could ask for the inclusion (e.g. health and IT services) of transparency in government procurement by the EU and its member states. Government procurement is a significant part of national income, but only part is imported, and the sector has so far been excluded from the GATS. Regional agreements, i.e. the EU-Chile and EU-Mexico, include government procurement. Health and IT services could be supplied by Caribbean countries who would have the capacity to do so.
(S&D 9) Emergency safeguards If there are significant ACP commitments, the ACP may need certain emergency safeguards in case of balance of payments problems. Work on emergency safeguards has not been finalised in GATS and RTAs do not seem to include many relevant examples. One safeguard could include the right of ACP members to develop and implement new regulations, while the EU would obey to a standstill.
(S&D 10) Flexible time periods Article V:3 (a) also allows flexibility to developing countries in RTAs with regard to implementation issues. This could apply to mutual recognition of qualifications, and to possible requirements to make inventories of services restrictions among ACP and EU countries.
7.3 Political and negotiating issues The list of S&D options in Section 7.2 is diverse and not yet very precise. It is also possible that some options are more likely to be met by an ACP supply response than others. We would also need to sketch some of the political and negotiating realities to examine whether certain options are more feasible.
As mentioned before, phase 2 EPA negotiations have not yet begun for all ACP countries/regions. But this is not an issue specific to services negotiations.
We foresee four options with regard to post-Cotonou services negotiations:
1. No services agreement. Restatement of partnership character as in CPA Art. 41:4. Channelling of current EDF resources to strengthen ACP capacity in the
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supply of services related to labour, business, distribution, finance, tourism, culture and construction and related engineering services (CPA Art. 41:5).
2. No services agreement, with some S&D options, such as additional resources, to satisfy 41:2 allowing for special and differential treatment of ACP suppliers.
3. Limited services agreement. No ACP commitments beyond GATS (CPA Art. 41:2), but with (significant) new EU commitments and inclusion of other S&D options while possible services EPAs satisfy the requirements of GATS Art. V as well as special and differential treatment in CPA Arts 41:2 and 41:5.
4. Advanced services agreement, with both the ACP and EU participating and giving more commitments than under GATS. There would need to be regional coordination of services commitments within ACP regions (this report has not discussed ACP commitments and possible responses to EU requests, see Arkell and Johnson, 2003) before engaging with the EU (while overcoming problems relating to asymmetry as in the EU-MERCOSUR negotiations), and further discussion of liberalising principles and rules, as these are in principle negotiable (see Section 3.2) as witnessed by widely varying rules in different EU free-trade agreements. While the EU-South Africa agreement can form a model, this agreement is the least extensive in terms of all EU FTAs that include services. S&D would also need to be an integral part of the negotiations.
In the background, there are various other types of negotiations on services that may demand priority. These include regional negotiations (e.g. SADC), and GATS 2000 negotiations (which may be ongoing for some time). However, it is possible that few additional negotiating resources are required, as some of the ground work is the same (what the ACP can offer to anybody and to the EU, and what the ACP wants from the EU, over and above what has been achieved in GATS 2000). Importantly, it is possible that the EU will be willing to operationalise some of the S&D options to maintain the Cotonou partnership character. It could also be easier (economically and politically) to liberalise sectors and modes (particularly mode 4) to a selected group of countries. Imports of services from the ACP account for just seven percent with half of that in tourism, and the EU does have more advanced cultural and linguistic links with some ACP countries than with other non-ACPs. On the other hand, ACP regions contain diversified economies.
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Chapter 8 Conclusions and areas for further work
This report has highlighted the issue of post-Cotonou negotiations on services. The Cotonou Partnership Agreement allows the partnership between the EU and the ACP to be extended to services. It emphasises the need for applying special and differential treatment to services negotiations with the ACP. After resolving general issues, such as agreeing on who will negotiate EPAs, we suggest at least four ways forward 1. No services agreement or new resources. 2. No services agreement, with some S&D options such as additional resources. 3. A limited services agreement. No ACP commitments beyond GATS, but with
(significant) new EU commitments and inclusion of several S&D options. 4. Advanced services agreement, with both the ACP and EU participating and giving
more commitments than under GATS. There would need to be regional coordination of services commitments within ACP regions before engaging with the EU (while overcoming problems relating to asymmetry as in the EU-MERCOSUR negotiations), and further discussion of liberalising principles and rules, as these are in principle negotiable, as witnessed by widely varying rules in different EU free trade agreement and inclusion of S&D.
We discussed 10 S&D options: 1. Financial support for services export capacity building; 2. Facilitation of the recognition of professional credentials by setting up one-stop
shops in ACP countries – called ACPPASS (similar to a recent EUROPASS initiative);
3. Information centres for ACP exporters of services; 4. Increase in technology transfer to the ACP using “home country measures” (e.g.
PROINVEST, EIB Investment Facility); 5. Full credit for autonomous ACP liberalisation of services; 6. Fewer or no services commitments by ACP/LDC countries; 7. EU commitments over and above GATS. This should cover more liberal mode 4
conditions (e.g. an ACP business travel card, see box 1), safeguarding of mode 1 supplies, and removal of restrictions in mode 3 and mode 4 in specific sectors such as business services, construction and related services, health and education services, recreational, cultural and sporting services, and tourism services. Lifting of some restrictions can be achieved more easily at ACP level than in the GATS, and the formation of EPAs under GATS article V would be key. It would be more difficult to schedule new MFN exemptions;
8. Inclusion of (parts of) EU government procurement (e.g. health and IT); 9. Operationalise Emergency Safeguards Measures for the ACP; 10. Flexible implementation time period (this could apply to mutual recognition of
qualifications and inventories of restrictions).
The need for more detailed research will depend on which option will be chosen, as we indicate in Table 8.1 below. It should be noted that in order to obtain at least modest gains from a services agreement, the ACP would need to table specific S&D options (request the lifting of certain barriers in the EU, or for EDF resources in specific areas, etc.). Now is the time to begin to consider which specific options will be most effective. It is not possible to wait until current GATS 2000 negotiations have been finalised as different requests (for lifting of barriers, or other S&D options) can be made under Cotonou and GATS 2000 negotiations may not have finished by 2005, while possible services negotiations could start in 2006.
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Table 8.1 Negotiating options and capacity needs
Option Capacity Needs (studies) Possible costs and benefits 1. No action No costs or benefits 2. New resources o Identify country and sector specific options
how financial resources can raise productivity and export capacity in the ACP.
Minor gains, few costs
3. Limited services agreement with several S&D options
o Identify country and sector specific options how financial resources can raise productivity and export capacity in the ACP.
o Identify, at the country/sector level effectiveness of other S&D options, such as EU funded ACP based information centres, or centres to enhance mutual recognition of qualifications.
o Initiate public-private dialogue to examine which trade barriers should lifted by the EU to result in a supply response in the ACP. Initiate a mode 4 study to examine feasibility and precise effects of an ACP travel card; Initiate a regional study to examine effect of various S&D options in more detail.
Gains, few costs
Gains, few costs
Gains, particularly by obtaining better access in mode 4 (e.g. ACP business travel card), and safeguarding mode 1 supply without restrictions. Relevant sectors would include: Business services, Construction and related services, Health and education services, Recreational, cultural and sporting services.
4 Advanced services agreement
o Identify country and sector specific options how financial resources can raise productivity and export capacity in the ACP.
o Examine the full range of liberalising principles (as in other RTAs) and how S&D can be an integral part of this at the regional level (e.g. emergency safeguards, flexibility to ACP in services commitments, targeted fund, mutual recognition agreements, transparency in EU’s government procurement, etc.)
o Initiate public-private dialogue to examine which trade barriers should lifted by the EU to result in a supply response in the ACP; Initiate a mode 4 study to examine feasibility and precise effects of an ACP travel card; Initiate a regional study to examine effect of various S&D options in more detail; also to conduct and assessment whether and how the ACP can make new commitments, first regionally and then to the EU.
Substantial possible gains, but increased possibility of losses and risks that commitments and liberalising principles do not fit the ACP.
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References
Arkell, J and M. Johnson (2003), Trade in Services, London: Commonwealth Secretariat.
Butkeviciene, J, B.B. Benadives and M. Tortora et al. (2002), ‘Services Performance in Developing Countries: Elements of the Assessment’, draft for WTO symposium 14-15 March 2002.
ECDPM (2003), ‘Comparing EU Free Trade Agreements: Investment’, draft. George, C. and C. Kirkpatrick (2003), ‘Sustainability Impact Assessment of Proposed
WTO negotiations’, report by IDPM, 4 June 2003. Gillson, I and O. Ojuwu (2003), ‘Nigeria ATTP: Assistance to Nigeria’s Preparations
for Cancún. Negotiating Brief 3. Services.’. Gonzales, A., L. Brenzel and J. Sancho (2001), ‘Health tourism and related Services:
Caribbean development and international trade submitted to the regional negotiating machinery (RNM).
Hoekman, B and C.A. P. Braga (1997), ‘Protection and Trade in Services’, World Bank Policy Research Working Paper 1747.
Hoekman, B. C. Michalopoulos and L.A. Winters (2003), ‘More Favorable and Differential Treatment of Developing Countries: Towards a New Approach in the WTO’, World Bank Policy Research Working Paper 3107.
Nikomboriak, D. and S.M. Stephenson (2001), ‘Liberalization of Trade in Services: East Asia and the Western Hemisphere’, draft report.
OECD (2002a), ‘The Relationship between regional trade agreements and the multilateral trading system: Services’, TD/TC/WP(2002)27/FINAL
OECD (2002b), ‘Quantification of costs to national welfare from barriers to services trade: a literature review’, TD/TC/WP(2000)24/FINAL
OECD (2003), ‘Services Trade Liberalisation: Identifying Opportunities and Gains. Key Findings’ TD/TC/WP(2003)25/FINAL.
Onguglo, B. and T. Ito (2003), ‘How to make EPAs WTO compatible? Reforming the rules on regional trade agreements’, ECDPM discussion paper 40.
Riddle, D. (2002), ‘Issues Regarding Small Service Suppliers for CARICOM negotiations in GATS and FTAA’, prepared for the CARICOM Regional Negotiating Machinery
Stephenson, S.M and F.J. Prieto (2002), ‘Evaluating Approaches to the Liberalization of Trade in Services: Insights from regional Experience in the Americas’, draft report.
Stephenson, S.M. (2002), ‘Can Regional Liberalization of Sevices go further than Multilateral Liberalization under the GATS?’ to appear in World Trade Review,volume 1, July 2002.
Stephenson, S.M. and P. Contreras (2001), ‘An asymmetric approach to services liberalisation: The European Union- Mercosur Case’, draft report for experts workshop/
Velde, D.W. te and M. Fahnbulleh (2003), ‘Investment Related Provisions in Regional Trade Agreements’ background paper available from http://www.odi.org.uk/iedg/projects/ec_prep.html.
Velde, D.W. te and S. Bilal (2003), ‘Foreign Direct Investment and Home Country Measures in the Lomé Conventions and Cotonou Agreement’ report for UNCTAD.
Whalley, J. and J.C. Clark (2003), ‘Competitive liberalisation and a US-SACU FTA’, NBER working paper 10168.
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Winters, L.A. (2002) , ‘The Economic Implications of Liberalising Mode 4 Trade’ , paper per prepared for the joint WTO-World Bank symposium on ‘The movement of natural persons (mode 4) under the GATS’, WTO, Geneva, 11-12 April 2002
World Bank (2002), Global Economic Prospects, Washington. WTO (1998), ‘Presence of natural persons (mode 4)’, S/C/W/75. WTO (1999), ‘Structure of Commitments for modes 1, 2 and 3’, S/C/W/99.
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Appendix A: Services Sectoral Classification List
SECTORS AND SUB-SECTORS CORRESPONDING CPC
1. BUSINESS SERVICES Section B
A. Professional Servicesa. Legal Services b. Accounting, auditing and bookkeeping services c. Taxation Services 863 d. Architectural services 8671 e. Engineering services 8672 f. Integrated engineering services 8673 g. Urban planning and landscape 8674 architectural services h. Medical and dental services 9312 i. Veterinary services 932 j. Services provided by midwives, nurses, physiotherapists and para-medical personnel 93191 k. Other
B. Computer and Related Servicesa. Consultancy services related to the 841 installation of computer hardware b. Software implementation services 842 c. Data processing services 843 d. Data base services 844 e. Other
C. Research and Development Servicesa. R&D services on natural sciences 851 b. R&D services on social sciences and humanities c. Interdisciplinary R&D services 853
D. Real Estate Servicesa. Involving own or leased property 821 b. On a fee or contract basis 822
E. Rental/Leasing Services without Operatorsa. Relating to ships 83103 b. Relating to aircraft 83104 c. Relating to other transport equipment 83101+83102+ d. Relating to other machinery and equipment 83106-83109 e. Other
F. Other Business Servicesa. Advertising services 871 b. Market research and public opinion 864 polling services
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c. Management consulting service 865 d. Services related to man. consulting 866 e. Technical testing and analysis serv. 8676 f. Services incidental to agriculture, hunting and forestry g. Services incidental to fishing 882 h. Services incidental to mining 883+5115 i. Services incidental to manufacturing 884+885 j. Services incidental to energy distribution 887 k. Placement and supply services of Personnel 872 l. Investigation and security 873 m. Related scientific and technical consulting 8675 services n. Maintenance and repair of equipment (not including maritime vessels, aircraft 633+ or other transport equipment) 8861-8866 o. Building-cleaning services 874 p. Photographic services 875 q. Packaging services 876 r. Printing, publishing 88442 s. Convention services 87909*
t. Other
2. COMMUNICATION SERVICESA. Postal services 7511
B. Courier services 7512
C. Telecommunication servicesa. Voice telephone services 7521 b. Packet-switched data transmission services 7523**
c. Circuit-switched data transmission services 7523** d. Telex services 7523** e. Telegraph services 7522 f. Facsimile services 7521**+7529** g. Private leased circuit services 7522**+7523** h. Electronic mail 7523** i. Voice mail 7523** j. On-line information and data base retrieval 7523** k. electronic data interchange (EDI) 7523** l. enhanced/value-added facsimile services, incl.
*The (*) indicates that the service specified is a component of a more aggregated CPC item specified elsewhere in this classification list.
** The (**) indicates that the service specified constitutes only a part of the total range of activities covered by the CPC concordance (e.g. voice mail is only a component of CPC item 7523).
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store and forward, store and retrieve m. code and protocol conversion n.a. n. on-line information and/or data processing (incl.transaction processing) 843** o. other
D. Audiovisual servicesa. Motion picture and video tape production and 9611 distribution services b. Motion picture projection service 9612 c. Radio and television services 9613 d. Radio and television transmission services 7524 e. Sound recording n.a. f. Other
E. Other
3. CONSTRUCTION AND RELATED ENGINEERING SERVICES
A. General construction work for buildings 512
B. General construction work for civil engineering
C. Installation and assembly work 514+516
D. Building completion and finishing work 517
E. Other
4. DISTRIBUTION SERVICES
A. Commission agents' services 621
B. Wholesale trade services 622
C. Retailing services 631+632
D. Franchising 8929 E. Other
5. EDUCATIONAL SERVICES
A. Primary education services 921
B. Secondary education services 922
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C. Higher education services 923
D. Adult education 924
E. Other education services 929
6. ENVIRONMENTAL SERVICES
A. Sewage services 9401
B. Refuse disposal services 9402
C. Sanitation and similar services 9403
D. Other
7. FINANCIAL SERVICES
A. All insurance and insurance-related services 812** a. Life, accident and health insurance services 8121 b. Non-life insurance services 8129 c. Reinsurance and retrocession 81299* d. Services auxiliary to insurance (including broking and agency services) 8140
B. Banking and other financial services (excl. insurance) a. Acceptance of deposits and other repayable funds from the public b. Lending of all types, incl., inter alia, consumer credit, mortgage credit, factoring and financing of commercial transaction c. Financial leasing 8112 d. All payment and money transmission services e. Guarantees and commitments 81199** f. Trading for own account or for account of customers, whether on an exchange, in an over-the-counter market or otherwise, the following: - money market instruments (cheques, bills, 81339** certificate of deposits, etc.) - foreign exchange 81333 - derivative products incl., but not limited to, 81339** futures and options - exchange rate and interest rate instruments, 81339** inclu. products such as swaps, forward rate agreements, etc. - transferable securities 81321* - other negotiable instruments and financial 81339**
71
assets, incl. bullion g. Participation in issues of all kinds of 8132 securities, incl. under-writing and placement as agent (whether publicly or privately) and provision of service related to such issues h. Money broking 81339** i. Asset management, such as cash or portfolio 8119+** management, all forms of collective 81323* investment management, pension fund management, custodial depository and trust services j. Settlement and clearing services for financial 81339** assets, incl. securities, derivative products, or 81319** and other negotiable instruments k. Advisory and other auxiliary financial 8131 services on all the activities listed in or 8133 Article 1B of MTN.TNC/W/50, incl. credit reference and analysis, investment and portfolio research and advice, advice on acquisitions and on corporate restructuring and strategy l. Provision and transfer of financial information, and financial data processing and related software by providers of other financial services
C. Other
8. HEALTH RELATED AND SOCIAL SERVICES (other than those listed under 1.A.h-j.)
A. Hospital services 9311
B. Other Human Health Services 9319 (other than 93191)
C. Social Services 933
D. Other
9. TOURISM AND TRAVEL RELATED SERVICES
A. Hotels and restaurants (incl. catering) 641-643
B. Travel agencies and tour operators services 7471
C. Tourist guides services 7472
D. Other
72
10. RECREATIONAL, CULTURAL AND SPORTING SERVICES (other than audiovisual services)
A. Entertainment services (including theatre, live bands and circus services) 9619
B. News agency services 962
C. Libraries, archives, museums and other cultural services 963
D. Sporting and other recreational services 964
E. Other
11. TRANSPORT SERVICESA. Maritime Transport Servicesa. Passenger transportation 7211 b. Freight transportation 7212 c. Rental of vessels with crew 7213 d. Maintenance and repair of vessels 8868** e. Pushing and towing services 7214 f. Supporting services for maritime transport 745**
B. Internal Waterways Transporta. Passenger transportation 7221 b. Freight transportation 7222 c. Rental of vessels with crew 7223 d. Maintenance and repair of vessels 8868** e. Pushing and towing services 7224 f. Supporting services for internal waterway 745** transport
C. Air Transport Servicesa. Passenger transportation 731 b. Freight transportation 732 c. Rental of aircraft with crew 734 d. Maintenance and repair of aircraft 8868** e. Supporting services for air transport 746
D. Space Transport 733
E. Rail Transport Servicesa. Passenger transportation 7111 b. Freight transportation 7112 c. Pushing and towing services 7113 d. Maintenance and repair of rail transport equipment e. Supporting services for rail transport services 743
73
F. Road Transport Servicesa. Passenger transportation 7121+7122 b. Freight transportation 7123 c. Rental of commercial vehicles with operator 7124 d. Maintenance and repair of road transport 6112+8867 equipment e. Supporting services for road transport services
G. Pipeline Transporta. Transportation of fuels 7131 b. Transportation of other goods 7139
H. Services auxiliary to all modes of transporta. Cargo-handling services 741 b. Storage and warehouse services 742 c. Freight transport agency services 748 d. Other
I. Other Transport Services
12. OTHER SERVICES NOT INCLUDED ELSEWHERE
74
Appendix B: GATS commitments
Countries 1 2 3 4 5 6 7 8 9 10 11 12 Total Angola X X X 3
Antigua and Barbuda X X X X X X 6
Argentina X X X X X X 6
Australia X X X X X X X X X X X 11
Austria X X X X X X X X X X X X 12
Bahrain X 1
Bangladesh X X 2
Barbados X X X X 4
Belize X X 2
Benin X X X X 4
Bolivia X X X X 4
Botswana X X X 3
Brazil X X X X X X X 7
Brunei Darussalam X X X X 4
Burkina Faso X 1
Burundi X X X X X 5
Cameroon X X 2
Canada X X X X X X X X 8
Central African Rep. X X X X X 5
Chad X 1
Chile X X X X X 5
Colombia X X X X X 5
Congo X X 2
Congo RP X X X X X X 6
Costa Rica X X X X X X X 7
Côte d'Ivoire X X X X X X 6
Cuba X X X X X X X 7
Cyprus X X X 3
Djibouti X X X X 4
Dominica X X X X 4
Dominican Republic X X X X X X 6
Ecuador X X X X X X X X X X 10
Egypt X X X X 4
El Salvador X X X X X X 6 European Community 12 X X X X X X X X X X X 11
Fiji X 1
Finland X X X X X X X X X 9
Gabon X X X X 4
Gambia X X X X X X X X X X X X 12
Ghana X X X X X X 6
Grenada X X X X 4
Guatemala X X X X X 5
Guinea X X X X X 5
Guinea-Bissau X X 2
Guyana X X X X X 5
Haiti X X X X X 5
Honduras X X X X 4
75
Hong Kong X X X X X X X X 8
Iceland X X X X X X X X X 9
India X X X X X X 6
Indonesia X X X X X X 6
Israel X X X X X 5
Jamaica X X X X X X X X 8
Japan X X X X X X X X X X X 11
Kenya X X X X X 5
Korea RP X X X X X X X X 8
Kuwait X X X X X X X X 8
Lesotho X X X X X X X X X X 10
Liechtenstein X X X X X X X X X 9
Macau X X X 3
Madagascar X 1
Malawi X X X X X 5
Malaysia X X X X X X X X X 9
Maldives X 1
Mali X X 2
Malta X X X 3
Mauritania X 1
Mauritius X X X 3
Mexico X X X X X X X X X X 10
Mongolia X X X X X X 6
Morocco X X X X X X X 7
Mozambique X 1
Myanmar X X 2
Namibia X X 2
New Zealand X X X X X X X X 8
Nicaragua X X X X X 5
Niger X X 2
Nigeria X X X X 4
Norway X X X X X X X X X X 10
Pakistan X X X X X X 6
Panama X X X X X X X X X X X 11
Papua New Guinea X X X X X X 6
Paraguay X X 2
Peru X X X X X X X 7
Philippines X X X X 4
Qatar X X X X X X 6
Rwanda X X X X X 5
Saint Kitts & Nevis X X X X X 5
Saint Lucia X X X X X 5
Saint Vinc. & Gren. X X X X X 5
Senegal X X X X X X X 7
Sierra Leone X X X X X X X X X X 10
Singapore X X X X X X X 7
Solomon Islands X X X X 4
South Africa X X X X X X X X X 9
Sri Lanka X X X 3
Suriname X X X 3
76
Swaziland X X X 3
Sweden X X X X X X X X X 9
Switzerland X X X X X X X X X X 10
Tanzania X 1
Thailand X X X X X X X X X X 10
Togo X X X 3
Trinidad and Tobago X X X X X X X X X 9
Tunisia X X X 3
Turkey X X X X X X X X X 9
Uganda X X 2
United Arab Emirates X X X X X X 6
Uruguay X X X X X X 6
USA X X X X X X X X X X X 11
Venezuela X X X X X X X X 8
Zambia X X X X 4
Zimbabwe X X X 3 Source: GATS schedules
77
Appendix C: EC requests in GATS 2000
Service sector Number of LDC countries (out of 29) where sector has been requested
Number of low income countries where sector has been requested (out of 41)
Professional 9 21
Business 23 36
Telecommunications 29 38
Communication 0 3
Construction 5 17
Distribution 0 6
Environmental 7 14
Education 0 0
Financial 20 30
Health 0 0
Tourism 5 9
Culture 1 7
Transport 17 26
Energy 1 6Source: http://www.wdm.org.uk/action/EUleaksmedia.htm
78
Appendix D: Types of natural persons supplying services (horizontal commitments)
No. of entries
No. of aggregate
entries
% of total entries
% of aggregate entries
Executives 45 13.7%
Managers 44 13.4%
Specialists 45 13.7%
Intr
a-co
mpa
ny
tran
sfer
ees
Others 1
135
0.3%
41.1%
Executives 22 6.7%
Managers 40 12.2%
Specialists 42
104
12.8%
31.7%
Commercial Presence 30 9.1%
Bus
ines
svi
sito
rs
Sale Negotiations 40 70
12.2%21.3%
Independent Contract Suppliers 3 3 0.9% 0.9%
Other 3 3 0.9% 0.9%
Not Specified 13 13 4.0% 4.0%
Totala 328 328 100.0% 100.0%
a Total number of entries by those 100 WTO Members that have included commitments on Mode 4 in the horizontal section of their schedules.
Source: WTO (1998)
79
Appendix E: Cotonou Partnership Agreement: services related articles.
CHAPTER 4: TRADE IN SERVICES
ARTICLE 41 General Provisions
1. The Parties underline the growing importance of services in international trade and their major contribution to economic and social development. 2. They reaffirm their respective commitments under the General Agreement on Trade in Services (GATS), and underline the need for special and differential treatment to ACP suppliers of services; 3. In the framework of the negotiations for progressive liberalisation in trade and services, as provided for in Article XIX of GATS, the Community undertakes to give sympathetic consideration to the ACP States' priorities for improvement in the EC schedule, with a view to meeting their specific interests. 4. The Parties further agree on the objective of extending under the economic partnership agreements, and after they have acquired some experience in applying the Most Favoured Nation (MFN) treatment under GATS, their partnership to encompass the liberalisation of services in accordance with the provisions of GATS and particularly those relating to the participation of developing countries in liberalisation agreements. 5. The Community shall support the ACP States' efforts to strengthen their capacity in the supply of services. Particular attention shall be paid to services related to labour, business, distribution, finance, tourism, culture and construction and related engineering services with a view to enhancing their competitiveness and thereby increasing the value and the volume of their trade in goods and services.
ARTICLE 42 Maritime Transport
1. The Parties acknowledge the importance of cost-effective and efficient maritime transport services in a safe and clean marine environment as the main mode of transportation facilitating international trade and thereby constituting one of the forces behind economic development and the development of trade. 2. They undertake to promote the liberalisation of maritime transport and to this end apply effectively the principle of unrestricted access to the international maritime transport market on a non-discriminatory and commercial basis. 3. Each Party shall grant, inter alia, a treatment no less favourable than that accorded to its own ships, for ships operated by nationals or companies of the other Party, and for ships registered in the territory of either party, with respect to access to ports, the use of infrastructure and auxiliary maritime services of those ports, as well as related fees and charges, customs facilities and the assignment of berths and facilities for loading and unloading. 4. The Community shall support the ACP States' efforts to develop and promote cost-effective and efficient maritime transport services in the ACP States with a view to increasing the participation of ACP operators in international shipping services.
80
ARTICLE 43 Information and Communication Technologies, and Information Society
1. The Parties recognise the important role of information and communication technologies, as well as the active participation in the Information Society, as a pre-requisite for the successful integration of the ACP countries into the world economy. 2. They therefore reconfirm their respective commitments under existing multilateral agreements, in particular the protocol on Basic Telecommunications attached to the GATS, and invite those ACP countries, which are not yet members of these agreements, to accede to them. 3. They furthermore agree to participate fully and actively in any future international negotiation, which might be conducted in this area. 4. The Parties will therefore take measures that will enable inhabitants of ACP countries easy access to information and communication technologies, through, amongst other, the following measures:
• the development and encouragement of the use of affordable renewable energy resources;
• the development and deployment of more extensive low-cost wireless networks.
5. The Parties also agree to step up cooperation between them in the area of information and communication technologies, and the Information Society. This cooperation shall, in particular, be directed towards greater complementarity and harmonisation of communication systems, at national, regional and international level and their adaptation to new technologies.
ARTICLE 24 Tourism
Cooperation will aim at the sustainable development of the tourism industry in ACP countries and sub-regions, recognising its increasing importance to the growth of the services sector in ACP countries and to the expansion of their global trade, its ability to stimulate other sectors of economic activity, and the role it can play in poverty eradication. Cooperation programmes and projects will support the efforts of ACP countries to establish and improve the countries legal and institutional framework and resources for the development and implementation of sustainable tourism policies and programmes, as well as inter alia, improving the competitive position of the sector, especially small and medium-sized enterprises (SMEs), investment support and promotion, product development including the development of indigenous cultures in ACP countries, and strengthening linkages between tourism and other sectors of economic activity.
ARTICLE 34 Objectives
1. Economic and trade cooperation shall aim at fostering the smooth and gradual integration of the ACP States into the world economy, with due regard for their political choices and development priorities, thereby promoting their sustainable development and contributing to poverty eradication in the ACP countries.
81
2. The ultimate objective of economic and trade cooperation is to enable the ACP States to play a full part in international trade. In this context, particular regard shall be had to the need for the ACP States to participate actively in multilateral trade negotiations. Given the current level of development of the ACP countries, economic and trade cooperation shall be directed at enabling the ACP States to manage the challenges of globalisation and to adapt progressively to new conditions of international trade thereby facilitating their transition to the liberalised global economy. 3. To this end economic and trade cooperation shall aim at enhancing the production, supply and trading capacity of the ACP countries as well as their capacity to attract investment. It shall further aim at creating a new trading dynamic between the Parties, at strengthening the ACP countries trade and investment policies and at improving the ACP countries' capacity to handle all issues related to trade. 4. Economic and trade cooperation shall be implemented in full conformity with the provisions of the WTO, including special and differential treatment, taking account of the Parties' mutual interests and their respective levels of development.
ARTICLE 52 Tax Carve-out Clause
1. Without prejudice to the provisions of Article 31 of Annex IV, the Most Favoured Nation treatment granted in accordance with the provisions of this Agreement, or any arrangement adopted under this Agreement, does not apply to tax advantages which the Parties are providing or may provide in the future on the basis of agreements to avoid double taxation or other tax arrangements, or domestic fiscal legislation. 2. Nothing in this Agreement, or in any arrangements adopted under this Agreement, may be construed to prevent the adoption or enforcement of any measure aimed at preventing the avoidance or evasion of taxes pursuant to the tax provisions of agreements to avoid double taxation or other tax arrangements, or domestic fiscal legislation. 3. Nothing in this Agreement, or in any arrangements adopted under this Agreement, shall be construed to prevent the Parties from distinguishing, in the application of the relevant provisions of their fiscal legislation, between taxpayers who are not in the same situation, in particular with regard to their place of residence, or with regard to the place where their capital is invested.
82
Appendix F: EU trade with ACP, list of ACP countries Table F1: EU trade with ACP
EU TRADE WITH ACP (incl. S. Africa) (Mio ecu/euro and %) IMPORTS 1980 1990 2001 EXPORTS 1980 1990 2001
28,590 27,864 47,514 23,293 22,716 40,007Share of EU Total (%) 10.4 6.4 4.6
Share of EU Total (%) 11.5 5.8 4.1
Trade balance -5,297 -5,148 -7,507
MAIN PRODUCTS IN 2001 (Mio euro and %)
EU Imports ACP share of EU Exports ACP share of Balance
Products Value EU total by products Products Value
EU total by products
Agricultural products 12,164 14.7 Agricultural products 4,471 7.3 -7,693Energy 11,290 7.8 Energy 924 3.9 -10,366Machinery 1,766 0.6 Machinery 10,776 3.6 9,011Transport. Material 4,501 4.1 Transport. Material 9,761 6.0 5,260Chemical products 768 1.0 Chemical products 4,807 3.4 4,039Textiles and clothings 1,373 1.9
Textiles and clothings 854 2.0 -519
EU TRADE IN SERVICES WITH ACP (incl. S. Africa) (Mio ecu/euro and %)
1998 1999 2000 1998 1999 2000Imports 8,254 8,918 9,582 Exports 6,576 9,747 10,666Share of EU Total (%) 3.7 3.7 3.4
Share of EU Total (%) 2.9 3.9 3.7
Trade balance: -1,678 829 1,084
EU FOREIGN DIRECT INVESTMENT WITH ACP (incl. S. Africa) (Mio ecu/euro and %)
1998 1999 2000 1998 1999 2000Inflows 1,794 -100 1,035 Outflows 3,140 5,070 8,047Share of EU Total (%) 1.7 -0.1 0.6
Share of EU Total (%) 1.4 1.6 2.2
Inward Stocks 5,706 5,445 6,480 Outward Stocks 19,360 32,880 40,927Share of EU Total (%) 0.9 0.8 0.7
Share of EU Total (%) 2.3 2.8 2.6
Source: web-site of DG trade.
83
Table F2: List of ACP countries with WTO and LDC status ACP country WTO member LDC Angola Yes Yes Antigua and Barbuda Yes Bahamas No Barbados Yes Belize Yes Benin Yes Yes Botswana Yes Burkina Faso Yes Yes Burundi Yes Yes Cameroon Yes Cape Verde No Yes Central African Republic Yes Yes Chad Yes Yes Comoros No Yes Congo (Brazzaville) Yes Congo (Kinshasa) Yes Yes Cook Islands No Côte d'Ivoire Yes Djibouti Yes Yes Dominica Yes Dominican Republic Yes East Timor No Equatorial Guinea No Yes Eritrea No Yes Ethiopia No Yes Fiji Yes Gabon Yes Gambia Yes Yes Ghana Yes Grenada Yes Guinea Yes Yes Guinea-Bissau Yes Yes Guyana Yes Haiti Yes Yes Jamaica Yes Kenya Yes Kiribati No Yes Lesotho Yes Yes Liberia No Yes Madagascar Yes Yes Malawi Yes Yes Mali Yes Yes Marshall Islands No Mauritania Yes Yes Mauritius Yes Federal States of Micronesia No
84
Mozambique Yes Yes Namibia Yes Nauru No Niger Yes Yes Nigeria Yes Niue No Palau No Papua New Guinea Yes Rwanda Yes Yes Saint Kitts and Nevis Yes Saint Lucia Yes Saint Vincent and the Grenadines
Yes
Samoa No Yes São Tomé and Principe No Yes Senegal Yes Yes Seychelles No Sierra Leone Yes Yes Solomon Islands Yes Yes Somalia No Yes Sudan No Yes Suriname Yes Swaziland Yes Tanzania Yes Togo Yes Yes Tonga No Trinidad and Tobago Yes Tuvalu No Yes Uganda Yes Yes Vanuatu No Yes Zambia Yes Yes Zimbabwe Yes
85
Appendix G: Regional Trade Agreements Notified (and in Force) to the WTO under GATS article V (13 October 2003)
Examination process
Agreement Date of
entry into force
Date Document series Status
Canada — Chile 5-Jul-97 13-Nov-97 WT/REG38 S/C/N/65 Under factual examination
CARICOM 1-Jul-97 19-Feb-03 WT/REG155 S/C/N/229 Factual examination not started
CER 1-Jan-89 22-Nov-95 WT/REG40 S/C/N/7 Consultations on draft report
Chile — Costa Rica 15-Feb-02 24-May-02 WT/REG136 S/C/N/191 Factual examination not started
Chile — Mexico 1-Aug-99 14-Mar-01 WT/REG125 S/C/N/142 Under factual examination
EC — Bulgaria 1-Feb-95 25-Apr-97 WT/REG1 S/C/N/55 Under factual examination
EC — Czech Republic1-Feb-95 9-Oct-96 WT/REG139 S/C/N/26 Under factual examination
EC — Estonia 1-Feb-98 11-Feb-02 WT/REG144 S/C/N/188 Under factual examination
EC — Hungary 1-Feb-94 27-Aug-96 WT/REG50 S/C/N/24 Consultations on draft report
EC — Latvia 1-Feb-99 11-Feb-02 WT/REG143 S/C/N/187 Under factual examination
EC — Lithuania1-Feb-98 11-Feb-02
WT/REG145 S/C/N/189 Under factual examination
EC — Mexico 1-Mar-01 21-Jun-02 WT/REG109 S/C/N/192 Under factual examination
EC — Poland 1-Feb-94 27-Aug-96 WT/REG51 S/C/N/25 Factual examination concluded
EC — Romania 1-Feb-95 9-Oct-96 WT/REG2 S/C/N/27 Under factual examination
EC — Slovak Republic 1-Feb-95 27-Aug-96 WT/REG52 S/C/N/23 Factual examination concluded
EC — Slovenia 1-Feb-99 11-Feb-02 WT/REG146 S/C/N/190 Under factual examination
EC (Treaty of Rome) 1-Jan-58 10-Nov-95 WT/REG39
S/C/N/6 Under factual examination
EC accession of Austria, Finland and Sweden 1-Jan-95 20-Jan-95 WT/REG3 S/C/N/6 Consultations on draft report
EEA 1-Jan-94 10-Oct-96 WT/REG138 S/C/N/28 Under factual examination
EFTA 1-Jun-02 3-Dec-02 WT/REG154 S/C/N/207 Factual examination not started
EFTA - Mexico 1-Jul-01 25-Jul-01 WT/REG126 S/C/N/166 Under factual examination
EFTA - Singapore 1-Jan-03 24-Jan-03 WT/REG148 S/C/N/226 Factual examination not started
Japan - Singapore 30-Nov-02 14-Nov-02 WT/REG140 S/C/N/206 Factual examination not started
NAFTA 1-Apr-94 1-Mar-95 WT/REG4 S/C/N/4 Consultations on draft report
New Zealand - Singapore 1-Jan-01 4-Sep-01 WT/REG127 S/C/N/169 Under factual examination
Singapore - Australia 28-Jul-03 1-Oct-03 WT/REG158 S/C/N/233 Examination not requested
United States — Jordan 17-Dec-01 18-Oct-02 WT/REG134 S/C/N/193 Factual examination not started
Source: www.wto.org
86
App
endi
x H
: S&
D in
GA
TS
(see
ww
w.w
to.o
rg)
Prov
isio
n C
omm
ent
Afr
ican
gro
up p
ropo
sal:
TN
/CT
D/W
/28
(Feb
ruar
y 20
03)
Pro
visi
ons
aim
ed a
t inc
reas
ing
trad
e op
port
unit
ies
A
rtic
le I
V:1
T
he in
crea
sing
par
tici
pati
on o
f de
velo
ping
cou
ntry
Mem
bers
in
wor
ld tr
ade
shal
l be
faci
lita
ted
thro
ugh
nego
tiat
ed s
peci
fic
com
mit
men
ts, b
y di
ffer
ent M
embe
rs
purs
uant
to P
arts
III
and
IV
of t
his
Agr
eem
ent,
rela
ting
to:
(a)
the
stre
ngth
enin
g of
thei
r do
mes
tic
serv
ices
cap
acit
y an
d it
s ef
fici
ency
an
d co
mpe
titi
vene
ss, i
nter
alia
th
roug
h ac
cess
to te
chno
logy
on
a co
mm
erci
al b
asis
; (b
) th
e im
prov
emen
t of t
heir
acc
ess
to
dist
ribu
tion
cha
nnel
s an
d in
form
atio
n ne
twor
ks;
and
(c)
the
liber
alis
atio
n of
mar
ket a
cces
s in
se
ctor
s an
d m
odes
of s
uppl
y of
ex
port
inte
rest
to th
em
A d
evel
opin
g co
untr
y m
embe
r st
ated
that
dev
elop
ed c
ount
ries
sho
uld
adop
t co
mm
erci
ally
mea
ning
ful c
omm
itmen
ts in
are
as o
f in
tere
st to
dev
elop
ing
coun
trie
s to
mak
e A
rtic
le I
V m
eani
ngfu
l and
eff
ecti
ve (
S/C
/M/3
8,
para
grap
h 42
). S
ome
deve
lopi
ng c
ount
ry M
embe
rs s
tate
d th
at d
evel
opin
g co
untr
ies
had
expe
rien
ced
seri
ous
diff
icul
ties
in p
arti
cipa
ting
in th
e in
tern
atio
nal t
rade
in s
ervi
ces.
(S/
C/M
/39
para
grap
hs 1
0,11
, 17,
20,
21,
23,
24
).
One
dev
elop
ing
coun
try
Mem
ber
stat
ed th
at it
app
eare
d th
at d
evel
oped
co
untr
ies
cont
inue
d to
dom
inat
e se
rvic
es tr
ade
and
that
the
expe
cted
im
prov
emen
t in
part
icip
atio
n of
dev
elop
ing
coun
trie
s ha
d no
t tak
en p
lace
. T
his
indi
cate
d th
e ne
ed f
or s
peci
al a
nd m
ore
favo
urab
le tr
eatm
ent o
f de
velo
ping
cou
ntri
es a
nd s
ugge
sted
that
dev
elop
ed c
ount
ries
had
off
ered
se
rvic
e pr
ovid
ers
of d
evel
opin
g co
untr
ies
inad
equa
te a
cces
s, w
here
as th
ose
of
deve
lope
d co
untr
ies
had
been
abl
e to
pen
etra
te d
evel
opin
g co
untr
ies'
mar
kets
. (S
/C/M
/34,
par
agra
ph 3
7). D
ata
indi
cate
that
ther
e w
ere
100
hori
zont
al
limit
atio
ns w
ith r
espe
ct to
mod
e 4,
com
pare
d to
20
for
Mod
e 2.
A d
evel
oped
cou
ntry
mem
ber
expr
esse
d th
e vi
ew th
at it
was
impo
rtan
t tha
t de
velo
ping
cou
ntri
es id
enti
fied
sec
tors
of
inte
rest
to th
em a
nd th
at M
embe
rs
cons
ider
ed th
e ro
le o
f m
arke
t ope
ning
in s
ervi
ces
for
the
grow
th a
nd th
e in
tegr
atio
n of
a c
ount
ry in
the
glob
al e
cono
my.
(S/
C/M
/35
para
grap
h 36
, and
S/
C/M
/38,
par
agra
ph 3
5).
Oth
er d
evel
opin
g co
untr
y M
embe
rs p
oint
ed to
the
need
to m
ake
Art
icle
IV
op
erat
iona
l. A
dev
elop
ed c
ount
ry M
embe
r st
ated
that
the
prim
ary
mea
ns o
f ac
com
plis
hing
the
obje
ctiv
es o
f A
rtic
le I
V w
as to
ens
ure
that
con
sum
ers
in
deve
lopi
ng c
ount
ries
– s
ervi
ce s
uppl
iers
, man
ufac
ture
rs, a
nd f
arm
ers,
as
wel
l as
indi
vidu
als
– ha
d to
aff
orda
ble,
hig
h-qu
ality
, inn
ovat
ive
serv
ices
that
mee
t th
eir
need
s an
d bu
dget
s. S
ome
of th
ese
serv
ices
will
be
prov
ided
on
a cr
oss-
bord
er b
asis
, but
mos
t will
be
prov
ided
thro
ugh
com
mer
cial
pre
senc
e. F
or
this
rea
son,
it s
houl
d be
in a
cou
ntry
’s e
cono
mic
inte
rest
to r
emov
e re
stri
ctio
ns a
nd p
rovi
de g
uara
ntee
d ac
cess
for
for
eign
ser
vice
pro
vide
rs to
en
ter
its
mar
ket t
hrou
gh b
ranc
hes,
sub
sidi
arie
s, r
epre
sent
ativ
e of
fice
s, a
nd
othe
r fo
rms
of c
omm
erci
al p
rese
nce.
(S/
C/W
/119
)
The
Gen
eral
Cou
ncil
agre
es th
at:
The
Com
mitt
ee o
n T
rade
and
Dev
elop
men
t sha
ll se
t per
iodi
c be
nchm
arks
on
fin
anci
al a
nd te
chni
cal c
oope
ratio
n an
d ot
her
mut
ual a
rran
gem
ents
un
der
whi
ch d
evel
oped
cou
ntry
Mem
bers
sha
ll ac
cord
to d
evel
opin
g co
untr
y M
embe
rs s
peci
al a
nd d
iffe
rent
ial t
reat
men
t and
und
erta
ke
com
mit
men
ts in
neg
otia
tions
as
and
whe
n he
ld d
esig
ned
to e
nsur
e:
(a)
The
str
engt
heni
ng o
f th
e ca
paci
ty, e
ffic
ienc
y an
d co
mpe
titiv
enes
s of
do
mes
tic
serv
ice
indu
stri
es o
f de
velo
ping
cou
ntry
Mem
bers
and
des
igne
d to
eff
ect t
echn
olog
y tr
ansf
er to
dev
elop
ing
coun
try
Mem
bers
; (b
) A
cces
s by
dom
esti
c se
rvic
e in
dust
ries
of
deve
lopi
ng c
ount
ry M
embe
rs
to d
istr
ibut
ion
chan
nels
and
info
rmat
ion
netw
orks
of
deve
lope
d co
untr
y m
arke
ts; a
nd
(c)
Lib
eral
isat
ion
of m
arke
t acc
ess
in s
ecto
rs a
nd m
odes
of
supp
ly o
f ex
port
inte
rest
to d
evel
opin
g co
untr
y M
embe
rs.
Dev
elop
ed c
ount
ry M
embe
rs s
hall
rese
rve
quot
as f
or s
uppl
y of
ser
vice
s by
de
velo
ping
cou
ntry
sup
plie
rs a
s m
ay b
e ap
prop
riat
e in
sec
tors
that
de
velo
ping
cou
ntry
sup
plie
rs h
ave
inte
rest
s, a
nd th
at d
evel
oped
cou
ntry
M
embe
rs s
hall
not a
dopt
hor
izon
tal l
imita
tion
s w
ith r
espe
ct to
mov
emen
t of
nat
ural
per
sons
and
sha
ll ov
er a
per
iod
of tw
o ye
ars
phas
e ou
t the
lim
itat
ions
they
mai
ntai
n at
the
adop
tion
of th
is d
ecis
ion.
Dev
elop
ed c
ount
ry M
embe
rs s
hall
twic
e ev
ery
12 m
onth
s:
(i)
repo
rt to
the
Cou
ncil
for
Tra
de in
Ser
vice
s on
how
they
are
im
plem
entin
g an
d co
mpl
ying
wit
h ta
rget
s se
t by
the
Com
mitt
ee o
n T
rade
an
d D
evel
opm
ent f
or th
e op
erat
iona
lisat
ion
of A
rtic
le I
V;
(ii)
the
Cou
ncil
for
Tra
de in
Ser
vice
s an
d th
e C
omm
ittee
on
Tra
de a
nd
Dev
elop
men
t sha
ll m
ake
reco
mm
enda
tion
s to
dev
elop
ed c
ount
ry M
embe
rs
to e
nsur
e th
e im
plem
enta
tion
of A
rtic
le I
V.
Com
mitm
ents
or
conc
essi
ons
unde
r th
e G
ener
al A
gree
men
t on
Tra
de in
Se
rvic
es, s
hall
refl
ect a
pro
port
ion
of, a
t lea
st 4
0 to
60
in s
hort
term
act
ual
gain
s, f
or d
evel
opin
g an
d de
velo
ped
coun
try
Mem
bers
res
pect
ivel
y,
prov
ided
that
spe
cial
att
enti
on s
hall
be d
emon
stra
bly
acco
rded
to th
e in
tere
sts
of d
evel
opin
g an
d le
ast-
deve
lope
d co
untr
y M
embe
rs.
87
Art
icle
IV
:2
Dev
elop
ed c
ount
ry M
embe
rs, a
nd to
th
e ex
tent
pos
sibl
e ot
her
Mem
bers
, sh
all e
stab
lish
con
tact
poi
nts
with
in
two
year
s fr
om th
e da
te o
f ent
ry in
to
forc
e of
the
WT
O A
gree
men
t to
faci
lita
te th
e ac
cess
of d
evel
opin
g co
untr
y M
embe
rs' s
ervi
ce s
uppl
iers
to
info
rmat
ion,
rel
ated
to th
eir
resp
ectiv
e m
arke
ts,
conc
erni
ng:(
a)co
mm
erci
al a
nd
tech
nica
l asp
ects
of t
he s
uppl
y of
se
rvic
es;
(b)r
egis
trat
ion,
rec
ogni
tion
an
d ob
tain
ing
of p
rofe
ssio
nal
qual
ific
atio
ns;
and
(c)t
he a
vail
abil
ity
of s
ervi
ces
tech
nolo
gy.
All
deve
lope
d co
untr
y M
embe
rs, a
nd m
any
deve
lopi
ng c
ount
ry M
embe
rs
have
est
ablis
hed
cont
act p
oint
s.
A d
evel
oped
cou
ntry
Mem
ber
expr
esse
d th
e vi
ew th
at n
ot a
ll re
leva
nt
Mem
bers
had
com
plie
d w
ith
the
notif
icat
ion
prov
isio
n in
Art
icle
IV
:2,
rega
rdin
g co
ntac
t poi
nts.
(S/
C/M
/43,
par
agra
ph 4
1 an
d S/
C/W
/ 148
). T
wo
deve
lopi
ng c
ount
ry M
embe
rs s
tate
d th
at f
or e
xam
ple,
it m
ay b
e us
eful
for
M
embe
rs to
rev
iew
the
oper
atio
n of
the
cont
act p
oint
s pr
ovid
ed f
or in
Art
icle
IV
.2. (
S/C
/W/1
20)
At m
eeti
ng o
f th
e C
ounc
il fo
r T
rade
in S
ervi
ces
on 2
6 M
ay it
had
bee
n ag
reed
that
, bas
ed o
n no
tific
atio
ns b
y M
embe
rs, t
he
Secr
etar
iat w
ould
pro
duce
a li
stin
g of
enq
uiry
poi
nts
as r
equi
red
by A
rtic
le
III:
4 an
d of
con
tact
poi
nts
as r
equi
red
by A
rtic
le I
V:2
of
the
GA
TS.
It h
ad
also
bee
n ag
reed
that
suc
h lis
tings
wou
ld b
e pl
aced
on
the
WT
O I
nter
net s
ite.
Pro
visi
ons
unde
r w
hich
WT
O M
embe
rs s
houl
d sa
fegu
ard
the
inte
rest
s of
dev
elop
ing
coun
try
Mem
bers
Art
icle
XIX
:3
For
eac
h ro
und,
neg
otia
ting
gu
idel
ines
and
pro
cedu
res
shal
l be
esta
blis
hed.
For
pur
pose
s of
es
tabl
ishi
ng s
uch
guid
elin
es, t
he
Cou
ncil
for
Tra
de in
Ser
vice
s sh
all
carr
y ou
t an
asse
ssm
ent o
f tra
de in
se
rvic
es in
ove
rall
term
s an
d on
a
sect
oral
bas
is w
ith
refe
renc
e to
the
obje
ctiv
es o
f thi
s A
gree
men
t, in
clud
ing
thos
e se
t out
in p
arag
raph
1
of A
rtic
le I
V. N
egot
iatin
g gu
idel
ines
sha
ll e
stab
lish
mod
alit
ies
for
the
trea
tmen
t of l
iber
alis
atio
n un
dert
aken
aut
onom
ousl
y by
M
embe
rs s
ince
pre
viou
s ne
goti
atio
ns, a
s w
ell a
s fo
r th
e sp
ecia
l tre
atm
ent f
or le
ast-
deve
lope
d co
untr
y M
embe
rs u
nder
the
prov
isio
ns o
f par
agra
ph 3
of A
rtic
le
IV.
At t
he r
eque
st o
f th
e C
ounc
il, th
e Se
cret
aria
t pre
pare
d a
back
grou
nd n
ote
on
the
asse
ssm
ent o
f tr
ade,
to c
ompl
emen
t its
wor
k on
sta
tistic
s (S
/C/W
/27)
and
th
e ec
onom
ic e
ffec
ts o
f se
rvic
es li
bera
lisat
ion
(S/C
/W/2
6 an
d S/
C/W
/26/
Add
.1).
Acc
ordi
ngly
, the
Sec
reta
riat
pre
pare
d a
note
on
Rec
ent
Dev
elop
men
ts in
Ser
vice
s T
rade
(S/
W/C
/94)
, whi
ch to
geth
er w
ith
othe
r ex
isti
ng d
ocum
ents
was
mea
nt to
ass
ist t
he C
ounc
il in
its
asse
ssm
ent o
f tr
ade
in s
ervi
ces.
The
Sec
reta
riat
als
o pr
oduc
ed a
n in
form
al n
ote
on ‘
Dev
elop
men
tal A
spec
ts o
f Se
rvic
es L
iber
aliz
atio
n.’
Seve
ral d
eleg
atio
ns a
lso
pres
ente
d w
ritt
en
subm
issi
ons.
On
the
basi
s of
thes
e do
cum
ents
Mem
bers
had
bee
n co
nduc
ting
an a
sses
smen
t of
trad
e at
the
Cou
ncil
mee
ting
s he
ld b
etw
een
Dec
embe
r 19
98
and
Oct
ober
199
9.
88
Fle
xibi
lity
of c
omm
itm
ents
, of
acti
on, a
nd u
se o
f po
licy
inst
rum
ents
Art
icle
V:3
E
cono
mic
Int
egra
tion
(a)
Whe
re
deve
lopi
ng c
ount
ries
are
par
ties
to a
n ag
reem
ent o
f the
type
ref
erre
d to
in
Art
icle
V:1
, fle
xibi
lity
shal
l be
prov
ided
for
rega
rdin
g th
e co
nditi
ons
set o
ut in
Art
icle
V:1
, par
ticul
arly
with
re
fere
nce
to A
rtic
le V
:1(b
) th
ereo
f, in
ac
cord
ance
with
the
leve
l of
deve
lopm
ent o
f the
cou
ntri
es
conc
erne
d, b
oth
over
all a
nd in
in
divi
dual
sec
tors
and
sub
-sec
tors
. (b)
N
otw
ithst
andi
ng A
rtic
le V
:6, i
n th
e ca
se o
f an
agre
emen
t of t
he ty
pe
refe
rred
to in
Art
icle
V:1
invo
lvin
g on
ly d
evel
opin
g co
untr
ies,
mor
e fa
vour
able
trea
tmen
t may
be
gran
ted
to ju
ridi
cal p
erso
ns o
wne
d or
co
ntro
lled
by n
atur
al p
erso
ns o
f the
pa
rtie
s to
suc
h an
agr
eem
ent.
It w
as f
elt t
hat t
here
was
no
need
to c
lari
fy w
hat w
as m
eant
by
spec
ial a
nd
diff
eren
tial
trea
tmen
t of
deve
lopi
ng c
ount
ries
in A
rtic
le V
. (S/
C/M
/35
para
grap
h 46
) In
res
pons
e to
a q
uest
ion,
it w
as c
lari
fied
that
the
need
for
fle
xibi
lity
wit
h re
spec
t to
cove
rage
of
such
agr
eem
ents
whe
n a
deve
lopi
ng c
ount
ry w
as
invo
lved
was
a p
oint
cer
tain
ly r
aise
d an
d ta
ken
note
of
in th
e re
port
s of
the
CR
TA
. (S/
C/M
/46,
par
agra
ph 3
5)
89
Art
icle
XIX
:2
Neg
otia
tion
of S
peci
fic
Com
mit
men
ts
The
pro
cess
of l
iber
alis
atio
n sh
all
take
pla
ce w
ith
due
resp
ect f
or
nati
onal
pol
icy
obje
ctiv
es a
nd th
e le
vel o
f dev
elop
men
t of i
ndiv
idua
l M
embe
rs, b
oth
over
all a
nd in
in
divi
dual
sec
tors
. The
re s
hall
be
appr
opri
ate
flex
ibil
ity
for
indi
vidu
al
deve
lopi
ng c
ount
ry M
embe
rs fo
r op
enin
g fe
wer
sec
tors
, lib
eral
isin
g fe
wer
type
s of
tran
sact
ions
, pr
ogre
ssiv
ely
exte
ndin
g m
arke
t ac
cess
in li
ne w
ith
thei
r de
velo
pmen
t si
tuat
ion
and,
whe
n m
akin
g ac
cess
to
thei
r m
arke
ts a
vail
able
to fo
reig
n se
rvic
e su
ppli
ers,
att
achi
ng to
suc
h ac
cess
con
diti
ons
aim
ed a
t ach
ievi
ng
the
obje
ctiv
es r
efer
red
to in
Art
icle
IV
. (se
e se
ctio
n on
Art
icle
IV
).
In th
e U
rugu
ay R
ound
, and
the
follo
w u
p ne
goti
atio
ns o
n ba
sic
tele
com
mun
icat
ions
and
fin
anci
al s
ervi
ces,
dev
elop
ing
coun
try
Mem
bers
. ha
ve m
ade
use
of f
lexi
bilit
y ap
prop
riat
e to
thei
r le
vel o
f de
velo
pmen
t by
in
the
mak
ing
of c
omm
itm
ents
. For
inst
ance
, of
the
99 M
embe
rs w
ho h
ave
mad
e co
mm
itm
ents
on
80 s
ecto
rs o
r fe
wer
of
the
Sect
oral
Cla
ssif
icat
ion
Lis
t, 98
are
de
velo
ping
cou
ntry
Mem
bers
. (S/
C/W
/94)
. Use
has
bee
n m
ade
of ti
me-
dela
yed
com
mit
men
ts (
phas
e in
s) in
som
e se
ctor
s.
Art
icle
XV
M
embe
rs r
ecog
nize
that
, in
cert
ain
circ
umst
ance
s, s
ubsi
dies
may
hav
e di
stor
tive
eff
ects
on
trad
e in
ser
vice
s.
Mem
bers
sha
ll en
ter
into
ne
goti
atio
ns w
ith a
vie
w to
de
velo
ping
the
nece
ssar
y m
ulti
late
ral
disc
iplin
es to
avo
id s
uch
trad
e-di
stor
tive
eff
ects
. The
neg
otia
tions
sh
all a
lso
addr
ess
the
appr
opri
aten
ess
of c
ount
erva
iling
pro
cedu
res.
Suc
h ne
goti
atio
ns s
hall
reco
gniz
e th
e ro
le
of s
ubsi
dies
in r
elat
ion
to th
e de
velo
pmen
t pro
gram
mes
of
deve
lopi
ng c
ount
ries
and
take
into
ac
coun
t the
nee
ds o
f M
embe
rs,
part
icul
arly
dev
elop
ing
coun
try
Mem
bers
, for
fle
xibi
lity
in th
is a
rea.
Fo
r th
e pu
rpos
e of
suc
h ne
gotia
tion
s,
Mem
bers
sha
ll ex
chan
ge in
form
atio
n co
ncer
ning
all
subs
idie
s re
late
d to
tr
ade
in s
ervi
ces
that
they
pro
vide
to
thei
r do
mes
tic
serv
ice
supp
liers
.
90
Art
icle
III
: 4
Eac
h M
embe
r sh
all r
espo
nd
prom
ptly
to a
ll re
ques
ts b
y an
y ot
her
Mem
ber
for
spec
ific
info
rmat
ion
on
any
of it
s m
easu
res
of g
ener
al
appl
icat
ion
or in
tern
atio
nal
agre
emen
ts w
ithi
n th
e m
eani
ng o
f pa
ragr
aph
1. E
ach
Mem
ber
shal
l als
o es
tabl
ish
one
or m
ore
enqu
iry
poin
ts
to p
rovi
de s
peci
fic
info
rmat
ion
to
othe
r M
embe
rs, u
pon
requ
est,
on a
ll su
ch m
atte
rs a
s w
ell a
s th
ose
subj
ect
to th
e no
tific
atio
n re
quir
emen
t in
para
grap
h 3.
Suc
h en
quir
y po
ints
sh
all b
e es
tabl
ishe
d w
ithi
n tw
o ye
ars
from
the
date
of
entr
y in
to f
orce
of
the
Agr
eem
ent E
stab
lishi
ng th
e W
TO
(re
ferr
ed to
in th
is A
gree
men
t as
the
‘WT
O A
gree
men
t’).
A
ppro
pria
te f
lexi
bilit
y w
ith
resp
ect
to th
e ti
me-
limit
wit
hin
whi
ch s
uch
enqu
iry
poin
ts a
re to
be
esta
blis
hed
may
be
agre
ed u
pon
for
indi
vidu
al
deve
lopi
ng c
ount
ry M
embe
rs.
Enq
uiry
poi
nts
need
not
be
depo
sito
ries
of
law
s an
d re
gula
tion
s.T
echn
ical
ass
ista
nce
91
Art
icle
XX
V:2
T
echn
ical
Co-
oper
atio
n Te
chni
cal
assi
stan
ce to
dev
elop
ing
coun
trie
s sh
all b
e pr
ovid
ed a
t the
mul
tila
tera
l le
vel b
y th
e Se
cret
aria
t and
sha
ll b
e de
cide
d up
on b
y th
e C
ounc
il fo
r T
rade
in S
ervi
ces.
On
25 J
une
1999
, the
Ser
vice
s C
ounc
il he
ld a
spe
cial
Inf
orm
atio
n Se
ssio
n on
T
elec
omm
unic
atio
n Se
rvic
es. T
he I
nfor
mat
ion
Sess
ion
exam
ined
in d
epth
te
chni
cal a
ssis
tanc
e to
dev
elop
ing
coun
trie
s on
reg
ulat
ory
issu
es s
uch
as th
e es
tabl
ishm
ent o
f an
inde
pend
ent r
egul
ator
, int
erco
nnec
tion
and
com
peti
tive
safe
guar
ds. E
xper
ts f
rom
oth
er in
tern
atio
nal i
nter
gove
rnm
enta
l org
aniz
atio
ns
incl
udin
g th
e In
tern
atio
nal T
elec
omm
unic
atio
ns U
nion
and
the
Wor
ld B
ank
part
icip
ated
as
wel
l as
natio
nal r
egul
ator
s fr
om c
apita
ls. O
n 26
May
200
0, th
e C
ounc
il fo
r T
rade
in S
ervi
ces
adop
ted
the
text
of
the
coop
erat
ion
agre
emen
t be
twee
n th
e In
tern
atio
nal T
elec
omm
unic
atio
n U
nion
and
the
Wor
ld T
rade
O
rgan
izat
ion
(S/C
/9/R
ev.1
). S
ubse
quen
tly, t
he I
TU
Cou
ncil
also
ado
pted
the
text
at i
ts a
nnua
l ses
sion
hel
d on
19-
28 J
uly.
Par
agra
ph 6
of
the
agre
emen
t st
ates
that
the
WT
O a
nd I
TU
sec
reta
riat
s w
ill e
ndea
vour
to c
oope
rate
on
mat
ters
rel
atin
g to
tech
nica
l ass
ista
nce
and
tech
nica
l coo
pera
tion
. A
deve
lopi
ng c
ount
ry M
embe
r st
ress
ed th
e im
port
ance
of
tech
nica
l ass
ista
nce,
w
hich
sho
uld
not o
nly
be a
don
or/r
ecip
ient
pro
cess
, but
als
o a
shar
ing
of
reso
urce
s an
d a
coop
erat
ive
com
mit
men
t. X
XV
:2. (
S/C
/M/3
9, p
arag
raph
24)
.
One
del
egat
ion
stre
ssed
that
tech
nica
l ass
ista
nce
was
par
ticul
arly
nee
ded
by
thos
e M
embe
rs w
ho w
ere
unde
rtak
ing
regu
lato
ry r
efor
ms.
Tha
t del
egat
ion
was
al
read
y in
volv
ed in
pro
vidi
ng te
chni
cal a
ssis
tanc
e in
the
tele
com
mun
icat
ions
se
ctor
. (S/
C/M
/31
para
grap
h 28
)
The
dra
ft r
epor
t of
the
CT
D (
TN
/CT
D/W
/25/
Rev
.1)
sugg
ests
that
‘T
he
Gen
eral
Cou
ncil
inst
ruct
s th
e W
TO
Sec
reta
riat
to p
ursu
e w
ith
a vi
ew to
co
nclu
ding
arr
ange
men
ts w
ith r
elev
ant i
nter
natio
nal i
nstit
utio
ns th
at h
ave
the
tech
nica
l ass
ista
nce
capa
city
to a
ssis
t dev
elop
ing
and
leas
t-de
velo
ped
coun
try
Mem
bers
in a
ddre
ssin
g th
eir
supp
ly-s
ide
and
infr
astr
uctu
ral c
onst
rain
ts a
nd
thei
r de
velo
pmen
t nee
ds in
the
serv
ices
sec
tor.
Thi
s sh
all b
e w
itho
ut p
reju
dice
to
the
prer
ogat
ive
of th
e C
ounc
il fo
r T
rade
in S
ervi
ces
to d
ecid
e up
on
tech
nica
l ass
ista
nce
to d
evel
opin
g co
untr
ies
whi
ch s
hall
be p
rovi
ded
at th
e m
ulti
late
ral l
evel
by
the
Secr
etar
iat,
in a
ccor
danc
e w
ith
Art
icle
XX
V.2
.’
Ann
ex o
n Te
leco
mm
unic
atio
ns:
para
grap
h 6(
c) I
n co
oper
atio
n w
ith
rele
vant
inte
rnat
iona
l org
aniz
atio
ns,
Mem
bers
sha
ll m
ake
avai
labl
e, w
here
pr
actic
able
, to
deve
lopi
ng c
ount
ries
in
form
atio
n w
ith r
espe
ct to
te
leco
mm
unic
atio
ns s
ervi
ces
and
deve
lopm
ents
in te
leco
mm
unic
atio
ns
and
info
rmat
ion
tech
nolo
gy to
ass
ist
in s
tren
gthe
ning
thei
r do
mes
tic
tele
com
mun
icat
ions
ser
vice
s se
ctor
.
92
Pro
visi
ons
rela
ting
to le
ast-
deve
lope
d co
untr
y M
embe
rs
A
rtic
le I
V:3
Inc
reas
ing
Par
tici
pati
on
of D
evel
opin
g C
ount
ries
.Spe
cial
pr
iori
ty s
hall
be
give
n to
the
leas
t-de
velo
ped
coun
try
Mem
bers
in th
e im
plem
enta
tion
of A
rtic
le I
V:1
and
2.
Par
ticu
lar
acco
unt s
hall
be
take
n of
th
e se
riou
s di
ffic
ulty
of t
he le
ast-
deve
lope
d co
untr
ies
in a
ccep
ting
ne
goti
ated
spe
cifi
c co
mm
itm
ents
in
view
of t
heir
spe
cial
eco
nom
ic
situ
atio
n an
d th
eir
deve
lopm
ent,
trad
e an
d fin
anci
al n
eeds
.
The
Gen
eral
Cou
ncil
agre
es t
hat
the
refe
renc
es t
o ‘f
lexi
bilit
y’ a
nd ‘
mor
e fa
vour
able
tre
atm
ent’
wit
h re
spec
t to
agr
eem
ents
for
libe
ralis
atio
n of
tra
de
in
serv
ices
am
ong
deve
lopi
ng
coun
try
Mem
bers
, sh
all
mea
n th
at
the
agre
emen
ts s
hall
not b
e re
quir
ed to
com
ply
wit
h th
e ru
les
set o
ut in
Art
icle
V
pro
vide
d th
at th
e ag
reem
ents
are
ent
ered
into
with
in th
e fr
amew
ork
of o
r fo
rm
part
of
w
ider
ec
onom
ic
liber
alis
atio
n or
re
gion
al
inte
grat
ion
prog
ram
mes
.
Sour
ces:
ww
w.w
to.o
rg a
nd o
ffic
ial d
ocum
ents
93
Appendix I: Background data Table I.1: Services as a Percentage of GDP for ACP Countries 2000
Country Services as % of GSP Country Services as % of GSP
Palau 84 Mozambique 50
Djibouti 82 Mauritania 50
Antigua and Barbuda 76 Benin 50
Barbados 73 Comoros 47
St. Lucia 72 Chad 47
Vanuatu 72 Malawi 46
Marshall Islands 71 Niger 44
Seychelles 71 Lesotho 43
Cape Verde 71 Uganda 42
Suriname 70 Burkina Faso 41
St. Kitts and Nevis 68 Sudan 40
Grenada 68 Gabon 40 St. Vincent and the 66 Togo 40
Jamaica 63 Guinea 40
Mauritius 63 Guyana 40
São Tomé and Principe 62 Ghana 39
Eritrea 62 Tanzania 39
Kenya 62 Swaziland 39
Dominica 58 Rwanda 38
Zimbabwe 57 Cameroon 38
Madagascar 56 Mali 38
Tonga 56 Ethiopia 37
Trinidad and Tobago 55 Papua New Guinea 31
Namibia 55 Burundi 31
Senegal 55 Guinea-Bissau 29
Dominican Republic 55 Congo, Dem. Rep. 27
Gambia, The 54 Central African Republic 25
Cote d'Ivoire 54 Nigeria 25
Belize 54 Congo, Rep. 23
Fiji 53 Angola 21
Zambia 52 Sierra Leone 19
Botswana 51 Equatorial Guinea 5
94
Table I.2: ACP Services Exports as Percentage of Total Exports16
16 Source: UNCTAD Handbook of Statistics, 2003.
1980 1985 1990 1995 2000 1980 1985 1990 1995 2000 Antigua and Barbuda
63 90 94 87 91 Guyana 4 22 25 22 22
Cape Verde 70 79 84 87 90 Burkina Faso 16 14 18 18 18 Saint Lucia 41 55 54 68 87 Uganda 1 6 18 18 18 Bahamas 13 29 86 90 83 Zimbabwe 9 20 13 18 18 Samoa 31 38 79 86 81 Suriname 24 18 6 17 18 Seychelles 80 79 74 79 79 Namibia 9 9 9 17 17
Barbados 59 54 74 78 79 Solomon Islands
14 10 21 17 17
Dominican Republic
24 44 60 68 76 Cameroon 20 39 16 13 17
Saint Kitts and Nevis
26 53 66 81 76 Togo 15 27 30 14 14
Grenada 54 58 69 82 74 Lesotho 27 39 36 16 14 Vanuatu 54 54 75 73 73 Mali 16 27 16 13 13 Kiribati 54 52 72 72 72 Zambia 9 7 7 7 13 Saint Vincent and the Grenadines
53 23 33 63 72 Trinidad and Tobago
9 10 14 12 12
Comoros 17 13 26 70 70 Chad 1 19 11 11 11
Gambia 37 36 63 70 70 Papua New Guinea
3 5 14 11 11
Djibouti 67 67 67 67 67 Botswana 13 6 9 10 10 Sierra Leone 14 12 25 63 63 Somalia 23 9 9 9 9 Dominica 37 26 37 58 62 Côte d'Ivoire 13 10 12 10 9 Jamaica 28 50 46 52 61 Malawi 10 10 8 4 8 Madagascar 12 15 29 37 55 Swaziland 8 12 15 14 8
Tonga 56 66 49 52 52 Central African Republic
6 11 13 11 6
United Republic of Tanzania
24 30 24 45 48 Gabon 12 6 9 7 6
Haiti 27 39 21 47 47 Guinea-Bissau
32 32 16 5 5
Mozambique 30 46 45 59 47 Nigeria 4 2 7 5 5 Fiji 28 43 43 46 46 Congo 10 5 6 5 5 Ethiopia 19 38 47 42 44 Niger 5 10 7 4 4 Belize 19 19 43 45 44 Burundi 2 2 8 4 4 Rwanda 14 17 22 17 42 Angola 5 5 2 3 3
Mauritius 23 21 29 33 41 Equatorial Guinea
6 6 6 3 3
São Tomé and Principe
6 17 40 40 40 Liberia 2 3 3 3 3
Kenya 29 30 43 31 29 Mauritania 11 4 3 3 3 Benin 45 15 47 28 28 Guinea 12 12 12 2 2 Senegal 29 27 32 27 27 Sudan 32 46 26 13 1 Ghana 8 5 8 7 23 ACP 11 15 20 22 22
95
Table I.3: ACP Services Exports ($ Millions)17
1980 1985 1990 1995 2000 1980 1985 1990 1995 2000 Dominican Republic
305 579 1,086 1,894 3,143 Zambia 126 57 94 77 114
Bahamas 731 1,104 1,465 1,523 1,995 Vanuatu 36 36 56 75 106 Jamaica 375 564 976 1,568 1,988 Cape Verde 10 25 30 57 99 Mauritius 132 116 478 773 1,067 Gambia 18 24 53 38 99
Barbados 332 420 627 844 1,055 Saint Kitts and Nevis
8 23 54 80 93
Nigeria 1,127 316 965 608 980 Dominica 6 10 33 61 86 Kenya 511 411 774 851 701 Suriname 166 70 31 101 85 Zimbabwe 145 271 253 469 646 Sierra Leone 37 18 45 71 73 United Republic of Tanzania
165 106 131 566 615 Swaziland 32 24 102 150 72
Trinidad and Tobago
383 246 322 331 574 Mali 39 46 71 68 61
Fiji 179 230 377 524 505 Samoa 8 10 34 53 61 Ghana 102 31 79 139 490 Togo 61 71 114 64 54 Antigua and Barbuda
45 150 308 348 406 Solomon Islands
12 8 19 35 51
Ethiopia 100 203 261 310 387 Rwanda 18 26 31 11 39 Cameroon 348 456 369 242 383 Burkina Faso 17 11 34 38 38 Côte d'Ivoire 477 343 425 426 369 Lesotho 22 14 34 30 36 Senegal 191 206 356 364 351 Liberia 13 15 33 33 33 Botswana 74 52 183 236 346 Malawi 32 26 37 19 31 Mozambique 118 66 103 242 325 Comoros 2 2 6 27 27 Namibia 106 106 106 301 315 Djibouti 34 34 34 28 26 Madagascar 55 49 129 219 314 Mauritania 25 15 14 19 24 Saint Lucia 41 70 149 264 307 Sudan 250 315 134 82 24 Seychelles 87 105 162 200 298 Chad 0 14 23 23 23 Papua New Guinea
36 48 198 321 248 Guinea 52 52 91 17 17
Gabon 294 119 214 191 221 Kiribati 4 5 8 17 17 Uganda 4 23 12 104 182 Tonga 9 10 11 15 14 Haiti 84 106 43 98 178 Niger 30 29 22 12 12
Angola 93 129 65 113 155 Central African Republic
8 12 17 17 10
Benin 52 26 109 159 155 Somalia 42 9 9 9 9
Belize 18 22 83 117 152 Guinea-Bissau
2 6 4 2 6
Grenada 21 31 63 98 145 Equatorial Guinea
6 6 5 4 5
Guyana 18 47 85 130 144 São Tomé and Principe
1 1 3 3 3
Congo 104 55 65 55 128 Burundi 2 3 7 4 2 Saint Vincent and the Grenadines
18 19 41 72 124 Total 7999 7852 12355 16040 20842
17 Source: UNCTAD Handbook of Statistics, 2003.
96
Tab
le I
.4:
AC
P S
ervi
ces
Exp
orts
by
Sect
or 2
000
($ m
illio
ns)
Cou
ntry
T
otal
se
rvic
es
Tra
nspo
rt
Tra
vel
Com
mun
icat
ions
C
onst
ruct
ion
Com
pute
r an
d in
form
atio
n se
rvic
es
Insu
ranc
e Fi
nanc
ial
serv
ices
Roy
alti
es
and
licen
se
fees
Oth
er
busi
ness
se
rvic
es
Pers
onal
, cu
ltura
l an
d re
crea
tion
al
serv
ices
Gov
ernm
ent
serv
ices
n.
i.e
Ang
ola
113
36
10
7
59
Ant
igua
and
Bar
buda
41
5 64
29
1
16
5
30
8
Bah
amas
2,
023
54
1,81
4
13
114
27
B
arba
dos
1,09
0 25
72
3 28
3
17
80
75
0 10
4 0
35
Bel
ize
172
11
122
7
12
20
B
enin
19
4 41
85
0
2 9
22
35
Bot
swan
a 26
0 38
16
2 3
1
9 10
0
14
24
B
urki
na F
aso
69
12
11
10
35
B
urun
di
6 1
1
0
0
4
Cam
eroo
n 30
4 11
7 36
2
13
15
2
0 57
62
Cap
e V
erde
67
34
10
10
2
0
1
9 C
entr
al A
fric
an R
epub
lic
69
9 3
3
2
52
Cha
d 41
4
8
0
11
17
Com
oros
35
4
21
2
7 C
ongo
76
32
5
18
21
C
ôte
d'Iv
oire
43
6 75
57
36
9
0 23
19
0
149
67
D
jibo
uti
151
16
4 1
6
12
4 D
omin
ica
88
6 47
3 1
0 28
2 D
omin
ican
Rep
ublic
3,
228
71
2,86
0 13
9
72
85
E
thio
pia
506
215
57
18
10
0 1
4
80
1 11
9 Fi
ji
564
170
291
5
7
52
40
G
abon
21
7 89
17
1
6
71
6
26
Gam
bia
54
8 28
0
2
15
G
hana
50
4 98
33
5
5
52
15
Gre
nada
15
1 6
93
3
7
36
6
Gui
nea
117
13
1 0
0
3
10
1 G
uine
a-B
issa
u 6
0
2
3 G
uyan
a 13
3 33
33
61
3
4 H
aiti
104
5 90
1
2
6
Jam
aica
2,
026
329
1,33
3 20
9
40
12
13
6 36
10
38
K
enya
96
8 41
1 25
7 22
0 4
7
0
266
Kir
ibat
i 8
3 1
0
0 3
0 L
esot
ho
43
1 24
0
12
0
7 L
iber
ia
35
9 5
1
20
Mad
agas
car
364
51
121
6 20
3 1
1 10
9 0
50
Mal
awi
37
17
16
0
4
M
ali
88
22
25
3
17
19
M
auri
tani
a 28
2
11
6
9
97
AC
P S
ervi
ces
Exp
orts
by
Sect
or 2
000
($ m
illio
ns)
cont
d.
Cou
ntry
T
otal
se
rvic
es
Tra
nspo
rt
Tra
vel
Com
mun
icat
ions
C
onst
ruct
ion
Com
pute
r an
d in
form
atio
n se
rvic
es
Insu
ranc
e Fi
nanc
ial
serv
ices
R
oyal
ties
an
d lic
ense
fe
es
Oth
er
busi
ness
se
rvic
es
Pers
onal
, cu
ltura
l an
d re
crea
tion
al
serv
ices
Gov
ernm
ent
serv
ices
n.
i.e
Mau
ritiu
s 1,
071
223
542
16
9 3
43
21
0 20
7 2
4 M
ozam
biqu
e 32
5 98
74
8
0
14
6
N
amib
ia
315
27
8 9
0 0
2 3
0 9
14
N
iger
33
0
7 0
0
5
21
N
iger
ia
608
100
17
4
488
Papu
a N
ew G
uine
a 32
1 35
25
4
25
8
R
wan
da
62
12
24
3
23
Sain
t Kitt
s an
d N
evis
97
9
58
1
3
7
14
3
Sain
t Luc
ia
309
10
277
4
16
1
Sain
t Vin
cent
and
the
Gre
nadi
nes
126
11
75
2
15
22
2 Sa
moa
56
2
35
0
16
3
São
Tom
é an
d Pr
inci
pe
4 0
2 0
0
1
1
Sene
gal
512
56
168
2
1
137
14
8 Si
erra
Leo
ne
87
10
57
0
4
16
Solo
mon
Isl
ands
42
1
16
0
18
6
Som
alia
36
1
6
2
27
Su
dan
27
15
5 3
0
0
1 3
Suri
nam
e 91
37
16
0
32
6 Sw
azila
nd
74
15
34
2
2 0
0
19
3
Tog
o 87
22
13
1
28
24
Ton
ga
26
3 7
0
0
16
Tri
nida
d an
d T
obag
o 34
3 19
4 77
30
29
12
U
gand
a 10
4 19
78
7
Uni
ted
Rep
ublic
of
Tan
zani
a 61
5 57
37
7 27
23
0
13
21
0 97
0
V
anua
tu
82
11
45
19
6
Zam
bia
107
65
13
4
13
12
Z
imba
bwe
264
112
64
3
1
73
11
98
Table I.5: ACP Services Exports by Region, 1980 -2000, $ mn
ACP Services Exports by Region 1980-2000
0
500
1000
1500
2000
2500
3000
3500
4000
4500
5000
1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000
$ M
illio
ns
UEMOA
COMESA
SADC
ECOWAS
EAC
CEMAC
99
Intra- and Extra-EU Imports and Exports
1984 1986 1988 1990 1992 1994 1996 1998 2000 2002
$ M
illi
ons
0
500000
1000000
1500000
2000000
2500000
Goods ExportsServices ExportsGoods ImportsServices Imports
Extra-EU Imports and Exports
1984 1986 1988 1990 1992 1994 1996 1998 2000 2002
$ M
illio
ns
0
200000
400000
600000
800000
1000000
Goods ExportsServices ExportsGoods ImportsServices Imports
Table I.6: EU Trade in Services
100
France Services Trade
1986 1988 1990 1992 1994 1996 1998 2000
$ M
illio
ns
0
20000
40000
60000
80000
100000
Austria Services Trade
1992 1994 1996 1998 2000
$ M
illio
ns
0
5000
10000
15000
20000
25000
30000
35000
Belgium-Luxembourg Services Trade
1992 1994 1996 1998 2000
$ M
illio
ns0
10000
20000
30000
40000
50000
60000
Denmark Services Trade
1994 1996 1998 2000
$ M
illio
ns
0
5000
10000
15000
20000
25000
30000
Finland Services Trade
1992 1994 1996 1998 2000
$ M
illio
ns
0
2000
4000
6000
8000
10000
12000
Germany Services Trade
1986 1988 1990 1992 1994 1996 1998 2000
$ M
illio
ns
0
20000
40000
60000
80000
100000
120000
140000
160000
Table I.7: EU Member state trade in services
Extra-EU Services ExportsExtra-EU Services ImportsTotal Services ExportsTotal Services Imports
101
Greece Services Trade
1986 1988 1990 1992 1994 1996 1998 2000
$ M
illio
ns
0
5000
10000
15000
20000
25000
Ireland Services Trade
1986 1988 1990 1992 1994 1996 1998 2000
$ M
illio
ns
0
10000
20000
30000
40000
Italy Services Trade
1986 1988 1990 1992 1994 1996 1998 2000
$ M
illio
ns
0
20000
40000
60000
80000
Netherlands Services Trade
1992 1994 1996 1998 2000
$ M
illio
ns
0
10000
20000
30000
40000
50000
60000
Portugal Services Trade
1986 1988 1990 1992 1994 1996 1998 2000
$ M
illio
ns
0
2000
4000
6000
8000
10000
Spain Services Trade
1986 1988 1990 1992 1994 1996 1998 2000
$ M
illio
ns
0
10000
20000
30000
40000
50000
60000
70000
102
Sweden Services Trade
1992 1994 1996 1998 2000
$ M
illio
ns
0
5000
10000
15000
20000
25000
United Kingdom Services Trade
1986 1988 1990 1992 1994 1996 1998 2000
$ M
illio
ns
0
20000
40000
60000
80000
100000
120000
140000
103
Table I.8: EU Services Trade with ACP as a Proportion of Total EU Services Trade 200118
Exports Imports Exports Imports
Austria Africa 0.2% 0.1% Italy Africa 1.0% 1.0%
Caribbean 0.3% 0.2% Caribbean 0.2% 1.0%
Pacific 0.0% 0.0% Pacific 0.0% 0.1%
Belgium-Luxembourg
Africa 0.4% 0.4% Netherlands Africa 0.6% 1.2%
Caribbean 0.6% 1.2% Caribbean 1.1% 1.7%
Pacific 0.1% 0.0% Pacific 0.0% 0.1%
Denmark Africa 0.3% 0.4% Portugal Africa 2.8% 2.3%
Caribbean 0.4% 0.3% Caribbean 0.7% 0.8%
Pacific 0.0% 0.0% Pacific 0.0% 0.0%
Finland Africa 0.1% 0.1% Spain Africa 0.3% 1.0%
Caribbean 0.1% 0.0% Caribbean 1.0% 1.1%
Pacific 0.0% 0.0% Pacific n/a n/a
France Africa 4.3% 3.5% Sweden Africa 0.5% 0.2%
Caribbean 0.6% 0.9% Caribbean 0.6% 0.6%
Pacific 0.0% 0.0% Pacific 0.0% 0.0%
Germany Africa 1.6% 1.8% United Kingdom
Africa 2.4% 1.8%
Caribbean 1.2% 0.5% Caribbean 1.2% 1.2%
Pacific 0.0% 0.0% Pacific 0.1% 0.0%
Greece Africa 2.2% 2.1% EU Africa 1.3% 1.1%
Caribbean 0.8% 0.5% Caribbean 0.9% 1.0%
Pacific 0.2% 0.1% Pacific 0.0% 0.0%
Extra-EU Africa 4.8% 4.2%
Caribbean 1.7% 2.6%
Pacific 0.1% 0.1%
18 Includes intra-EU trade except where specified. Data not available for Ireland.
104
Tab
le I
.9:
EU
Exp
orts
and
Im
port
s of
Ser
vice
s 20
01 (
$ m
illio
ns)19
TO
TA
L
SER
VIC
ES
TO
TA
L
SER
VIC
ES
Tra
nspo
rtat
ion
Tra
nspo
rtat
ion
Tra
vel
Tra
vel
Gov
ernm
ent
serv
ices
G
over
nmen
t se
rvic
es
Oth
er
com
mer
cial
se
rvic
es
Oth
er
com
mer
cial
se
rvic
es
Exp
orts
Im
port
s E
xpor
ts
Impo
rts
Exp
orts
Im
port
s E
xpor
ts
Impo
rts
Exp
orts
Im
port
s A
ustr
ia
Wor
ld
3284
4 31
551
4969
33
42
1020
4 89
07
358
64
9152
73
01
A
fric
a 64
36
5
4 3
12
5 0
19
19
C
arib
bean
85
71
41
10
4
18
0 0
23
43
Pa
cifi
c 1
3 0
0 0
0 0
0 0
2 B
elgi
um-L
uxem
bour
g W
orld
50
286
4332
3 10
169
8365
76
16
1058
6 13
42
460
3115
9 23
912
A
fric
a 18
1 16
0 47
82
71
52
6
3 56
22
Car
ibbe
an
326
517
13
103
27
201
0 0
285
213
Pa
cifi
c 38
13
0
0 5
3 0
0 33
11
D
enm
ark
Wor
ld
2690
4 23
529
1613
6 12
262
4633
55
37
n/a
n/a
n/a
n/a
A
fric
a 72
93
41
37
1
3 n/
an/
an/
an/
a
Car
ibbe
an
113
63
97
35
1 1
n/a
n/a
n/a
n/a
Pa
cifi
c 2
1 1
1 0
1 n/
an/
an/
an/
aE
U
Wor
ld
6331
70
6289
06
1444
98
1427
27
1761
98
1758
23
1137
9 13
123
3010
97
2972
35
A
fric
a 96
96
8863
23
73
2483
17
50
3487
37
0 64
7 43
91
1224
Car
ibbe
an
5120
52
41
1141
12
67
407
1460
47
15
7 30
58
2136
Paci
fic
223
202
60
74
17
82
5 3
140
47
Finl
and
Wor
ld
5827
80
97
1562
25
72
1440
18
52
58
115
2704
35
13
A
fric
a 3
5 1
0 0
0 1
5 4
0
Car
ibbe
an
4 4
2 2
0 0
0 1
3 2
Pa
cifi
c 1
0 0
0 0
0 0
0 0
0 Fr
ance
W
orld
80
161
6233
1 18
017
1718
6 30
138
1794
6 52
3 92
5 31
483
2627
3
Afr
ica
3424
21
73
802
816
782
712
66
269
1774
37
4
Car
ibbe
an
503
578
110
305
123
131
2 14
26
6 12
8
Paci
fic
6 18
1
1 2
13
1 2
4 4
Ger
man
y W
orld
91
394
1458
39
2072
2 25
360
1842
1 51
932
4446
13
22
4780
4 67
226
A
fric
a 14
72
2685
26
6 24
3 71
15
08
25
44
518
286
C
arib
bean
10
84
720
238
276
0 0
8 16
83
8 42
8
Paci
fic
36
27
3 17
0
0 0
0 33
10
G
reec
e W
orld
19
448
1157
5 81
52
4787
91
69
4173
72
39
6 20
55
2220
Afr
ica
429
245
345
206
36
12
1 1
46
25
C
arib
bean
15
0 61
13
2 54
8
3 0
0 11
4
Pa
cifi
c 30
10
29
7
1 0
0 0
0 2
19 S
ourc
e: O
EC
D S
tatis
tics
on I
nter
nati
onal
Tra
de in
Ser
vice
s. I
nclu
des
intr
a-E
U tr
ade.
105
EU
Exp
orts
and
Im
port
s of
Ser
vice
s 20
01 (
$ m
illio
ns)
cont
d.
TO
TA
L
SER
VIC
ES
TO
TA
L
SER
VIC
ES
Tra
nspo
rtat
ion
Tra
nspo
rtat
ion
Tra
vel
Tra
vel
Gov
ernm
ent
serv
ices
G
over
nmen
t se
rvic
es
Oth
er
com
mer
cial
se
rvic
es
Oth
er
com
mer
cial
se
rvic
es
Exp
orts
Im
port
s E
xpor
ts
Impo
rts
Exp
orts
Im
port
s E
xpor
ts
Impo
rts
Exp
orts
Im
port
s Ir
elan
d W
orld
21
303
3684
9 14
42
2619
27
62
2877
19
9 92
16
901
3126
1
Afr
ica
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
C
arib
bean
n/
an/
an/
an/
an/
an/
an/
an/
an/
an/
a
Paci
fic
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
Ital
y W
orld
57
520
5719
6 81
76
1189
3 25
907
1421
6 57
5 16
55
2286
2 29
431
A
fric
a 57
3 59
6 85
21
9 98
30
8 0
1 38
9 68
Car
ibbe
an
139
583
21
84
39
413
0 0
79
85
Pa
cifi
c 1
55
0 4
1 52
0
0 0
0 N
ethe
rlan
ds
Wor
ld
5291
3 54
890
1963
8 14
082
6717
12
005
957
1592
25
601
2721
1
Afr
ica
319
662
245
290
0 9
4 26
2 70
10
2
Car
ibbe
an
585
935
278
227
19
43
12
108
277
557
Pa
cifi
c 13
38
6
27
0 0
0 0
7 12
Po
rtug
al
Wor
ld
8801
61
90
1579
19
84
5475
21
03
112
182
1634
19
21
A
fric
a 24
6 14
0 31
58
98
41
10
5
108
36
C
arib
bean
66
51
2
8 49
27
0
1 15
16
Paci
fic
2 2
0 1
1 2
0 0
0 0
Spai
n W
orld
58
264
3398
6 85
91
8643
32
753
5961
n/
an/
an/
an/
a
Afr
ica
162
332
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
C
arib
bean
58
6 38
7 98
59
52
13
2 n/
an/
an/
an/
a
Paci
fic
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
Swed
en
Wor
ld
2198
7 22
933
5186
35
99
4270
69
20
239
98
1230
2 12
315
A
fric
a 10
4 53
4
12
7 13
4
n/a
91
n/a
C
arib
bean
13
2 12
7 4
61
4 19
2
1 12
2 47
Paci
fic
4 2
1 0
0 1
0 0
4 0
Uni
ted
Kin
gdom
W
orld
11
1884
95
617
1756
4 22
683
1887
3 37
970
2191
28
40
7325
7 32
124
A
fric
a 26
47
1683
50
1 51
6 58
3 81
7 24
8 57
13
16
292
C
arib
bean
13
47
1144
10
5 43
81
47
2 23
16
11
39
613
Pa
cifi
c 89
33
19
16
7
10
4 1
59
6
Afr
ica
= A
fric
a –
Egy
pt –
Mag
hreb
– S
outh
Afr
ica
106
Tab
le I
.10:
Com
posi
tion
of
expo
rts
for
sele
cted
AC
P c
ount
ries
(w
here
bre
akdo
wn
is a
vaila
ble)
Val
ue, $
, m
illio
n,
2000
T
rans
port
T
rave
l C
omm
unic
atio
ns
Con
stru
ctio
n
Com
pute
r an
d in
form
atio
n se
rvic
es
Insu
ranc
e Fi
nanc
ial
serv
ices
Roy
alti
es
and
licen
se
fees
Oth
er
busi
ness
se
rvic
es
Pers
onal
, cu
ltura
l an
d re
crea
tion
al
serv
ices
Gov
ernm
ent
serv
ices
n.
i.e
Jam
aica
2,
026
16%
66
%
10%
2%
1%
1%
0%
2%
0%
2%
Bar
bado
s
1,09
0 2%
66
%
3%
0%
2%
7%
7%
0%
10%
0%
3%
Mau
ritiu
s
1,07
1 21
%
51%
1%
1%
0%
4%
2%
0%
19
%
0%
0%
Swaz
iland
74
20
%
46%
3%
3%
0%
0%
26
%
4%
C
ôte
d'Iv
oire
43
6 17
%
13%
8%
2%
0%
5%
4%
0%
34
%
15
%
Tan
zani
a 61
5 9%
61
%
4%
4%
0%
2%
3%
0%
16%
0%
Ken
ya
968
42%
27
%
2%
0%
0%
1%
0%
27
%
Eth
iopi
a
506
42%
11
%
4%
2%
0%
0%
1%
16
%
0%
24%
Nam
ibia
31
5
88%
3%
0%
0%
1%
1%
0%
3%
4%
107
Appendix J: Business Process Outsourcing to Developing countries. Relocating call centres and back-office functions in the financial services industry to developing countries. (Based on draft note dated December 2003 on the same subject).
The UK financial services industry is at the centre of the debate on outsourcing, with many major banks announcing that they will establish or use call centres in India.
Outsourcing parts of the production process abroad is a relatively new phenomenon for the services sector but not for the goods sector. The globalisation of goods production has long been influenced by a number of factors such as liberalisation of economic policies; technical change, particularly in information and communication technologies; falling transport costs; and economies of scale.
The search for cheaper production costs has led global firms to relocate parts of the production process abroad and thus to fragmentation of production (e.g. electronics, automobiles). Firms would maintain design, R&D or marketing functions in the headquarters in developed countries, and relocate labour and less skill-intensive production processes, such as assembly, to low-cost developing countries. Integrated production processes could be characterised by as series of production blocks which are connected by various service links.
There has also been an increase in networks of firms across borders through the emergence of global value chains (in textile/clothing, flowers, canned fruit, coffee, furniture, etc.), often involving outsourcing rather than ownership of overseas subsidiaries. A value chain includes the full range of activities that are required to bring a product or service from conception, through the intermediary phases of production (transformation and producer services inputs) to delivery to final consumers and ultimate disposal after use. A chain consists of a number of different enterprises, each specialising in different functions, but linked to each other by certain ways of co-operation in a network facilitated by communication and services.
While the services sector facilitated both fragmentation of the production process and the emergence of global value chains in the goods sector, the services sector itself has been less associated with global outsourcing. This was probably because services needed to be provided directly to customers, on site, or at least within the country of the customer. This has all changed, thanks mainly to rapid changes in information and communications technology.
Outsourcing and the UK financial services industry
Estimates vary, but analysts say that by 2010 between 100,000 (Troika)- 200,000 (Amicus) call centre jobs could be outsourced from the UK to India. There could also be a significant relocation of back-office functions in the financial services industry such as administration and data processing. A recent study found that 28 financial firms have over the past two years outsourced more than 50.000 jobs to India serving British customers.
Deloitte estimates that 2mn of 13mn insurance and banking jobs in developed economies in North America, Europe and Asia could move to India by 2008. The
108
survey found that financial institutions expect to reduce costs by nearly $1.4 bn by 2008 by sending work to low-cost centres like India. Thirty percent of the survey respondents currently have existing offshore operations and that percentage is expected to reach 75 percent within two years. It also suggested that the firms achieve 39 percent cost savings from moving operations to low-cost centres. There are several reasons behind the growth in outsourcing, including:
• Average cost savings of 40% on labour and administration costs. • The workforce willing to work for call centres in India is more skilled than in
many developed countries • Improved communications technology lowering the costs of calls and other
communication• Improved business climate in key developing countries
The latter two may help to explain why the growth in outsourcing takes place now and not decades ago. There could also be unforeseen costs, e.g.
• Different cultures leading to unsatisfied customers of call centres Table J.1 provides some recent examples of business process outsourcing in the UK financial services industry. It also shows that outsourcing has generated a lot of debate.
Table J.1: Business Process Outsourcing in the UK financial services industry Recent examples. Function Country and
number of jobs involved
Company reasoning
HSBC Back-office processing jobs
4000 by the end of 2003 in India, China and Malaysia
• HSBC defended transfer of work to India by arguing that the bank was a global company and insisting that it would not affect the quality of customer service and pointing out that jobs were being created in India.
• Quality of service provided from the sub-continent is better than in the UK
Norwich Union / Aviva
Administrative insurance jobs; 350 in call centres, 2000 in back-office and administration
2350 in India by end of 2004
• Company in an ‘increasingly competitive environment’
• Reduce labour and administration costs on every policy by 40 per cent
Lloyds TSB Call centre jobs 1500 jobs in India by end of 2004
• Lloyds said: ‘It has been very hard to recruit and retain staff for call centres around the UK.’
Barclays Back-office staff 500
Effects of outsourcing on host countries (e.g. India) Call centres and back-office staff have been in growing demand in India through expansion of multinational operations but mainly through an increase in outsourcing arrangements. GE Capital Services opened India’s first international call centre in 1995. It now employs more than 5,000 people, whose jobs range from collecting money from delinquent credit-card users to data-mining. Swissair and British Airways have centres that run frequent-flyer programmes and the handling of errors in computer messages. American Express has a big back-office operation near Delhi. The main gain for the host-country seems to be the number of jobs and derived incomes. At present there are 650,000 workers employed in the Indian IT sector, of which around 275,000 in call centres, 200,000 in software and 175,000 in multinational operations. The fastest growth is in call-centres. The growth in
109
knowledge-based industries contributes to a focus on education, which can raise growth and investment. However, knowledge industries will not provide work to the poorest rural workers. More labour-intensive services such as call centres could provide many jobs, but not in the tens of millions. In addition, there are likely to be few externalities and productivity spillovers from call centres, making it difficult to rely on call centres as the main source of growth. Nevertheless, the growth in call centres provides a welcome source of employment.
While pay is much lower than in the UK, reports suggest that pay in Indian call centres is high by national standards, e.g. double what a fully qualified local teacher can earn. The quality of work can be compromised particularly when workers need to work long shifts during the night to make up for differences in time zones. Some reports suggest that rate of attrition in this sector is high in India at 40%, but this problem is common to India and the UK
110
App
endi
x K
: C
onso
lidat
ed E
U G
AT
S sc
hedu
le
Lim
itat
ions
on
full
com
mitm
ents
N
oC
om
Unb
ound
com
mitm
ents
Mod
e 1
M
ode
2
Mod
e 3
M
ode
4
Mod e 1
Mod e 3
MA
N
T
MA
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MA
N
T
MA
N
T
MA
N
T
MA
N
T
1 B
US
INE
SS S
ER
VIC
ES
A.
Prof
essi
onal
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vice
s
?
a.
Leg
al S
ervi
ces
S
D, F
IN,F
,S
DK
,S
D,
UK
,DK
,FIN
,F,
GR
,S
D,
UK
,DK
,FIN
,F,G
R,S
F,
P F,
P A
A
b.A
ccou
ntin
g, a
uditi
ng a
nd
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keep
ing
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ices
S
D
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L,F
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c.
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atio
n Se
rvic
es
A,B
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d.
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hite
ctur
al s
ervi
ces
D
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e.
Eng
inee
ring
ser
vice
s
E
,I,P
B,D
K,N
L,S
,UK
,E,G
R,I
,P,U
K
B,D
K,N
L,S
,UK
,E,G
R,I,
P,U
K
G,I
,P
G,I
,P
f.
Inte
grat
ed e
ngin
eeri
ng
serv
ices
B
,DK
,NL
,S,U
K,E
,GR
,I,P
,UK
B
,DK
,NL
,S,U
K,E
,GR
,I,P,
UK
G
,I,
PG
,I,
P
g.
Urb
an p
lann
ing
and
land
scap
e D
I,P
D
K,N
L,S
,UK
,B,D
,E,G
R,P
,I D
K,N
L,S
,UK
,B,D
,E,
GR
,P,I
B
,G,
I,P
arch
itec
tura
l ser
vice
s
h.
Med
ical
and
den
tal s
ervi
ces
E,I
,IR
L,P
,D,F
,S,U
K
SD
K,I
,DK
,D,F
,GR
,P,S
D
K,I
,DK
,D,F
,GR
,P,S
E
U
EU
i. V
eter
inar
y se
rvic
es
D,D
K,E
,I,IR
L,P
,UK
,F,S
S
D
,F,G
R,P
,I,S
D
,F,G
R,P
,I,S
EU
E
U
j.Se
rvic
es p
rovi
ded
by
mid
wiv
es, n
urse
s,
A,E
,I,P
,F
A
,DK
,GR
,P,I
A,D
K,G
R,P
,I
EU
E
U
phys
ioth
erap
ists
and
par
a-m
edic
al p
erso
nnel
k.
Oth
er
E
U
EU
B.
Com
pute
r an
d R
elat
ed S
ervi
ces
a.C
onsu
ltanc
y se
rvic
es r
elat
ed
to th
e
B
,DK
,I,N
L,S
,GR
inst
alla
tion
of
com
pute
r ha
rdw
are
111
Lim
itat
ions
on
full
com
mitm
ents
N
oC
om
Unb
ound
com
mitm
ents
Mod
e 1
M
ode
2
Mod
e 3
M
ode
4
Mod e 1
Mod e 3
MA
N
T
MA
N
T
MA
N
T
MA
N
T
MA
N
T
MA
N
T
b.So
ftw
are
impl
emen
tatio
n se
rvic
es
B,D
K,I,
NL,
S,G
R
c.
Dat
a pr
oces
sing
ser
vice
s
B
,DK
,I,N
L,S
,GR
d.
Dat
a ba
se s
ervi
ces
B,D
K,I,
NL,
S,G
R
e.
O
ther
C.
Res
earc
h an
d D
evel
opm
ent S
ervi
ces
a.R
&D
ser
vice
s on
nat
ural
sc
ienc
es
X
b.R
&D
ser
vice
s on
soc
ial
scie
nces
and
hum
aniti
es
I,P
F
,I,P
c.In
terd
isci
plin
ary
R&
D
serv
ices
X
D
. R
eal E
stat
e Se
rvic
es
a.In
volv
ing
own
or le
ased
pr
oper
ty
E,F
IN,E
,FIN
D
K
DK
,E,G
R,F
,I,P
D
K,E
,GR
,F,I,
P
IR
L IR
L
b.
O
n a
fee
or c
ontr
act b
asis
F
,I,P
,GR
F
,I,P
,GR
IRL
IRL
E.
Ren
tal/L
easi
ng S
ervi
ces
wit
hou
t Ope
rato
rs
a.
Rel
atin
g to
shi
ps
F,S
F,S
F,S
D
D
b.
R
elat
ing
to a
ircr
aft
EU
EU
c.R
elat
ing
to o
ther
tran
spor
t eq
uipm
ent
d.R
elat
ing
to o
ther
mac
hine
ry
and
equi
pmen
t
e.
Oth
er
F.
O
ther
Bus
ines
s Se
rvic
es
a.
Adv
erti
sing
ser
vice
s
B
,D,I,
S,U
K,G
R,I,
UK
b.M
arke
t res
earc
h an
d pu
blic
op
inio
n
polli
ng s
ervi
ces
c.M
anag
emen
t con
sulti
ng
serv
ice
B,D
,DK
,I,S
,UK
d.Se
rvic
es r
elat
ed to
man
. co
nsul
ting
112
Lim
itat
ions
on
full
com
mitm
ents
N
oC
om
Unb
ound
com
mitm
ents
Mod
e 1
M
ode
2
Mod
e 3
M
ode
4
Mod e 1
Mod e 3
MA
N
T
MA
N
T
MA
N
T
MA
N
T
MA
N
T
MA
N
T
e.
Tec
hnic
al te
stin
g an
d an
alys
is
serv
.
E
,I,P
D,D
K,S
,UK
,I,P
,UK
I
I
f.
Serv
ices
inci
dent
al to
ag
ricu
lture
, hun
ting
and
E,I,
P
I,P
,A
I I
fore
stry
g.
Serv
ices
inci
dent
al to
fis
hing
h.
Serv
ices
inci
dent
al to
min
ing
E,P
E,P
,A
P
i.Se
rvic
es in
cide
ntal
to
man
ufac
turi
ng
X
j.Se
rvic
es in
cide
ntal
to e
nerg
y di
stri
buti
on
X
k.Pl
acem
ent a
nd s
uppl
y se
rvic
es o
f Pe
rson
nel
E,B
,F,I,
D
D,E
,IR
L,
P,E
U,F
,N
L
D,E
,IR
L,
P,E
U,F
,N
L
D,P
D
,P
l. In
vest
igat
ion
and
secu
rity
A
,E,D
K,F
IN
DK
B
,DK
,E,P
,F,I
B,E
,F,
I,P
B,E
,F,
I,P
m.
Rel
ated
sci
entif
ic a
nd
tech
nica
l con
sulti
ng
D
E
,I,P
,F,I
F
D,F
,I,P
serv
ices
n.M
aint
enan
ce a
nd r
epai
r of
eq
uipm
ent
(n
ot in
clud
ing
mar
itim
e ve
ssel
s, a
ircr
aft
or
oth
er tr
ansp
ort e
quip
men
t)
o.
B
uild
ing-
clea
ning
ser
vice
s
p.
Phot
ogra
phic
ser
vice
s
EU
E
U
q.
Pack
agin
g se
rvic
es
E
U
EU
r.
Pr
intin
g, p
ublis
hing
S
I S
,FIN
S,F
IN
s.
C
onve
ntio
n se
rvic
es
t.
Oth
er
D
K
DK
,A
DK
,FIN
,A
2C
OM
MU
NIC
AT
ION
SE
RV
IC
ES
A.
Post
al s
ervi
ces
X
B
. C
ouri
er s
ervi
ces
X
113
Lim
itat
ions
on
full
com
mitm
ents
N
oC
om
Unb
ound
com
mitm
ents
Mod
e 1
M
ode
2
Mod
e 3
M
ode
4
Mod e 1
Mod e 3
MA
N
T
MA
N
T
MA
N
T
MA
N
T
MA
N
T
MA
N
T
C.
Tel
ecom
mun
icat
ion
serv
ices
P,G
R,
E,IR
L (a
ndbe
low
)
P
,GR
,F ,E
,IRL
(and
bel
ow)
A
A
D.
Aud
iovi
sual
ser
vice
s
X
E
. O
ther
X
3C
ON
STR
UC
TIO
N A
ND
RE
LA
TE
D E
NG
INE
ER
ING
SE
RV
ICE
S
I,P
,GR
GR
,NL,
F,A
E
U
EU
cp
c 51
11:
B,D
K,S
,UK
4
DIS
TR
IBU
TIO
N S
ER
VIC
ES
A
. C
omm
issi
on a
gent
s' s
ervi
ces
F
E,I,
P
F
,I F
,I
B
. W
hole
sale
trad
e se
rvic
esE
,I,P
E,I,
P,F
E
,I,P
,F
C
. R
etai
ling
serv
ices
B,D
K,F
,I,P
,S
F
E
U
EU
D
. Fr
anch
isin
g
E.
Oth
er
5 E
DU
CA
TIO
NA
L S
ER
VIC
ES
A
. Pr
imar
y ed
ucat
ion
serv
ices
F
,I
G
R
F
,GR
,I
B
. Se
cond
ary
educ
atio
n se
rvic
es
F,I
GR
F,G
R,I
C.
Hig
her
educ
atio
n se
rvic
es
F,I
E,I
D
K,F
,I
G
D.
Adu
lt ed
ucat
ion
E
. O
ther
edu
cati
on s
ervi
ces
6E
NV
IRO
NM
EN
TA
L S
ER
VI
CE
S
A.
Sew
age
serv
ices
E
U
EU
B
. R
efus
e di
spos
al s
ervi
ces
E
U
EU
C.
Sani
tati
on a
nd s
imila
r se
rvic
es
EU
E
U
D.
Oth
er
S
E
U
EU
7 FI
NA
NC
IAL
SE
RV
ICE
SA
,DK
,D
,FIN
,F
,I,P
,S
A,D
K,
D,F
IN,
F,I,
P,S
A,D
K,D
,FIN
,I,IP
A
,B,E
,GR
,FIN
,F
,I,IR
L,P
,S
A,B
,E,G
R,F
IN,F
,I,IR
L,P
,SA
,DK
,I,E
,GR
A
,DK
,I,E
,GR
A.
All
insu
ranc
e an
d in
sura
nce-
rela
ted
serv
ices
114
Lim
itat
ions
on
full
com
mitm
ents
N
oC
om
Unb
ound
com
mitm
ents
Mod
e 1
M
ode
2
Mod
e 3
M
ode
4
Mod e 1
Mod e 3
MA
N
T
MA
N
T
MA
N
T
MA
N
T
MA
N
T
MA
N
T
B.
Ban
king
and
oth
er f
inan
cial
se
rvic
esB
,IRL
D
,FIN
,GR
,UK
A,B
,DK
,E,F
IN,
F,G
R,I,
IRL,
P,
S,U
K
A,B
,DK
,E,F
IN
,F,G
R,I,
IRL,
P,S
,UK
F
,GR
,I F
,GR
,I
I
(exc
l. in
sura
nce)
C.
Oth
er
8.H
EA
LT
H R
EL
AT
ED
AN
D
SOC
IAL
SE
RV
ICE
S
(oth
er th
an th
ose
liste
d un
der
1.A
.h-j
.)
A
. H
ospi
tal s
ervi
ces
L,P
,B,A
,E,F
,I
F,G
R
EU
E
U
B.
Oth
er H
uman
Hea
lth S
ervi
ces
X
A
A
C.
Soci
al S
ervi
ces
F
F
E
U
EU
D
. O
ther
9.T
OU
RIS
M A
ND
TR
AV
EL
R
EL
AT
ED
SE
RV
ICE
S
A.
Hot
els
and
rest
aura
nts
(inc
l. ca
teri
ng)
I
F
EU
E
U
B.
Tra
vel a
genc
ies
and
tour
ope
rat
ors
serv
ices
B,F
IN,I,
P
A
,B,D
,DK
,I,IR
L,S
.F,G
R,I,
IRL
C.
Tou
rist
gui
des
serv
ices
GR
,E,I,
P,F
I,P
D.
Oth
er
10.
RE
CR
EA
TIO
NA
L,
CU
LT
UR
AL
AN
D
SPO
RT
ING
SE
RV
ICE
S
(oth
er th
an a
udio
visu
al
serv
ices
)
A.
Ent
erta
inm
ent s
ervi
ces
(inc
ludi
ng th
eatr
e, li
ve
S
A
,F,I
EU
F
,I ba
nds
and
circ
us s
ervi
ces)
B.
New
s ag
ency
ser
vice
s
EU
F
,I,P
E
U
P
EU
C.
Lib
rari
es, a
rchi
ves,
mus
eum
s an
d ot
her
X
cultu
ral s
ervi
ces
115
Lim
itat
ions
on
full
com
mitm
ents
N
oC
om
Unb
ound
com
mitm
ents
Mod
e 1
M
ode
2
Mod
e 3
M
ode
4
Mod e 1
Mod e 3
MA
N
T
MA
N
T
MA
N
T
MA
N
T
MA
N
T
MA
N
T
D.
Spor
ting
and
othe
r re
crea
tion
al s
ervi
ces
S
I
X
E
. O
ther
11
. T
RA
NSP
OR
T S
ER
VIC
ES
A
. M
ariti
me
Tra
nspo
rt S
ervi
ces
X
D
D
B.
Inte
rnal
Wat
erw
ays
Tra
nspo
rt
X
D
D
C.
Air
Tra
nspo
rt S
ervi
ces
X
S,E
US
,EU
D
. Sp
ace
Tra
nspo
rt
X
E
. R
ail T
rans
port
Ser
vice
s
X
E
U
EU
F.
R
oad
Tra
nspo
rt S
ervi
ces
E
U
EU
a.
Pass
enge
r tr
ansp
orta
tion
P
,IRL,
DK
,I,P
,E
,DK
,FIN
,S,E
U,A
S
D
K,P
D
K,P
F
EU
b.
Fr
eigh
t tra
nspo
rtat
ion
I,S
S
E
U
EU
E
U
EU
c.R
enta
l of
com
mer
cial
ve
hicl
es w
ith
oper
ator
d.M
aint
enan
ce a
nd r
epai
r of
ro
ad tr
ansp
ort
E
U
EU
e.
Supp
ortin
g se
rvic
es f
or r
oad
tran
spor
t ser
vice
s
G.
Pipe
line
Tra
nspo
rt
EU
,A
,S
EU
,A
,S
a.
Tra
nspo
rtat
ion
of f
uels
b.
Tra
nspo
rtat
ion
of o
ther
goo
ds
H.
Serv
ices
aux
iliar
y to
all
mod
es
of tr
ansp
ort
X
I.
Oth
er T
rans
port
Ser
vice
s
X
12.
OT
HE
R S
ER
VIC
ES
NO
T I
NC
LU
DE
D E
LSE
WH
ER
E
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