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 recently announced.
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 exportable services in all service sectors.
The Protocol aims to encourage 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 referred to as progressive liberalization. Barriers to trade in services are found in the way countries regulate services, for example through a country’s banking or transportation laws, where measures can be found that limit the ability of foreign service providers to trade freely across borders, or which discriminate against foreign service providers within the marketplace and distort competition in favor of domestic providers.
The Protocol compensates for granting every other preferential and non-discriminatory (“domestic”) market access treatment for SADC service providers the general and specific obligations binding on the ratification or accession of Member States (referred to as “ States Parties”). State Parties shall guarantee to extend to all SADC State Parties the best terms for trade which they grant to a SADC State Party or a non-SADC State Party, including non-SADC 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 related restrictions are set out in national schedules of commitments (similar to tariff schedules) for the sectors that have been negotiated. Schedules of commitments differ between different States Parties, reflecting different levels of national service sector development and regulatory capacity and/or experience.
The first round of these sectoral negotiations was concluded in 2019 covering communication, finance, 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 other sectors, namely: business services; Distribution; educational, health and social services; environmental services; and recreational, cultural and sporting services.
The first round lists of commitments / programs adopted include commitments in the six priority sectors by all Member States, except for exceptional schedules by Mozambique (in relation to energy-related services), Madagascar (construction and services related to energy) and Angola and Comoros – yet to become party to the Protocol (all six sectors). Member states agreed to negotiate outstanding offers in the six sectors in the second round of negotiations.
Commitments made have also been supported by annexes to the Protocol containing certain common regulatory principles related to trade in certain sectors aimed at underpinning market access conditions and national treatment. 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 concerning trade in services.
After the entry into force of the Protocol, both the adopted schedules of commitments covering the six priority sectors and the annexes became binding from 13 January 2022. It should be noted, the Protocol provides for the denial of benefits to companies Non-State Parties (i.e. including SADC Member States which are yet to ratify the Protocol), service providers and therefore services from Member States which are yet to ratify/accede to the Protocol remain ineligible to its advantages. 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 reach this point 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. Initially planned for form an annex to the Protocol on Trade, it was recognized that a trade agreement on services would require a very different framework, just as it had at the WTO with the creation of the General Agreement on Trade in Services (GATS ). Accordingly, negotiations on a in 2006, a stand-alone agreement on trade in services began based on the GATS framework. The agreement reached, 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 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 local requirements through the protocol’s transparency obligations is seen as making the conditions for trade and competition more attractive to traders and potential investors.
Welcoming the entry into force of the Protocol, Magosi said: “This Protocol, which has been long in its development, is a major new element in the legal structures of SADC, and an indispensable complement to the agenda of the SADC regional trade. Services account for over 50% of GDP in most SADC Member States, and while economically important in their own right account for an increasing share of value added in the production of goods. I welcome its entry into force, urge Member States that have yet to ratify to do so and complete the SADC family of those that have, and encourage an ambitious outcome to the second round of negotiations that are underway. “.