Southern Africa: SADC protocol on trade in services enters into force
The Southern African Development Community (SADC) protocol on trade in services entered into force on January 13, SADC Executive Secretary Elias Magosi announced recently.
Namibia and 10 other SADC Member States have deposited instruments of ratification while five Member States, Angola, Democratic Republic of Congo, Madagascar and the United Republic of Tanzania as well as the Union of Comoros, have yet to ratify the Protocol.
The SADC Protocol provides the framework for a preferential trade agreement covering all commercial and tradable services in any service sector.
The protocol aims to encourage increased intra-regional trade in services through the gradual removal of unnecessary or burdensome regulation affecting the cross-border supply of services in the SADC region, a process known as progressive liberalisation. Barriers to trade in services are found in the way nations regulate services, for example through a country’s banking or transport laws, where measures can be found that limit the ability of service providers foreigners to trade freely across borders, or which discriminate against foreign service providers in the market and distort competition in favor of domestic providers.
The Protocol offsets general and specific obligations obliging ratifying or acceding Member States (referred to as “State Parties”) to grant each other preferential market access and non-discriminatory (“domestic”) treatment for SADC service providers. State Parties shall guarantee to extend to all SADC State Parties the best terms of trade that they grant to a SADC State Party or a non-SADC State Party, including non-SADC member countries.
In addition, States Parties shall ensure that the same market access conditions for particular services and service suppliers, as set out in the accompanying sectoral commitments, will not be made more restrictive or discriminatory in relation to their own “like” (comparable) national services and services. Suppliers.
Sectoral commitments, and any related limitations, are set out in national schedules of commitments (similar to tariff schedules) for the sectors that have been the subject of negotiations. The schedules of commitments differ between State Parties, reflecting different levels of national service sector development and regulatory capacity and/or experience.
The first round of these sectoral negotiations ended in 2019 and covered communication, financial, tourism, transport, construction and energy-related services. A second round of negotiations has been endorsed by SADC trade ministers in 2021, covering regional trade in the remaining sectors, namely: business services; Distribution; educational, health and social services; environmental services; and recreational, cultural and sporting services.
The first round schedules/schedules adopted include commitments in the six priority sectors by all Member States, with the exception of the outstanding schedules of Mozambique (with respect to energy-related services), Madagascar (construction and energy-related services) and Angola and Comoros. – is not yet party to the Protocol (all six sectors). Member states agreed to negotiate outstanding offers in the six sectors in the second round of negotiations.
The commitments adopted have also been underpinned by annexes to the Protocol containing certain common regulatory principles related to trade in certain sectors aimed at underpinning market access and national treatment conditions. The annexes, which are also binding on each state party, draw on the experience of the World Trade Organization (WTO) as well as other preferential or regional trade agreements covering trade in services.
Following the entry into force of the Protocol, the adopted schedules of commitments covering the six priority sectors and the annexes became binding as of January 13, 2022. It should be noted that the Protocol provides for the denial of benefits to commercial enterprises non-Party States (i.e. including SADC Member States which have not yet ratified the Protocol), therefore, services and service providers from Member States which have not yet ratified/acceded to the Protocol remain ineligible for its benefits. This means that even if the schedules of commitments adopted in the first round include commitments from the DRC, Madagascar and the United Republic of Tanzania, these commitments will only become effective when these Member States ratify the Protocol and deposit their instruments. ratification with SADC. Secretariat.
The road to get there was long. Originally, SADC Heads of State and Government agreed in 2000 to create a preferential trade agreement covering the services sector, building on the protocol on trade signed in 1996. Originally intended to form an annex to the protocol on trade, it was recognized that a trade agreement the agreement on services would require a significantly different framework, just as it had done in the WTO with the creation of the General Agreement on trade in services (GATS). Accordingly, negotiations on a stand-alone agreement on trade in services began in 2006, based on the GATS framework. The resulting agreement, the Protocol on Trade in Services, was opened for signature in 2012.
While in many cases the commitments negotiated in the six sectors reflect existing national laws and regulations, the binding nature of the commitments means that potential service suppliers from the SADC region can enter other SADC markets. safely reassured that the regulatory conditions for trade in services are legally enforceable and cannot be made more restrictive in the future. This is particularly important for service providers wishing to develop cross-border trade or invest in a commercial presence in another State Party. Creating regulatory certainty through binding commitments and ensuring that SADC service providers can consult on local requirements through the Protocol’s transparency obligations are seen as making the terms of trade and more attractive competition for potential traders and investors.
Welcoming the entry into force of the Protocol, Magosi said: “This Protocol, which has been slow to develop, is a major new building block in the legal structures of SADC, and a vital complement to the trade agenda. SADC regional. more than 50% of GDP in most SADC Member States, and in addition to being economically important in their own right, they account for an increasing share of value added in the production of goods. I welcome its entry into force, urge Member States that have not yet ratified to do so and complete the SADC family of those who have, and encourage an ambitious outcome for the second round of negotiations that are now underway. »