HIGH-LEVEL WORKSHOP ON KEY ISSUES OF INTEREST FOR
AFRICAN COUNTRIES IN THE SERVICES NEGOTIATIONS IN THE RUN
UP TO THE SIXTH WTO MINISTERIAL CONFERENCE
Geneva, 25-26 April 2005
Introductory Remarks by Mrs. Lakshmi Puri,
Director,
Division on International Trade in Goods and Services, and Commodities,
UNCTAD
25 April 2005
Good morning,
Ambassador Rugwabiza, Coordinator of the African Group in the WTO,
Ambassador Bawuah-Edufei, Coordinator of the African Group in UNCTAD,
Distinguished Delegates and Trade Negotiators,
Dear Colleagues,
It gives me great please to welcome you to this technical workshop on the
GATS negotiations and related development issues affecting African countries. I wish bid a special welcome to representatives who have come from capitals to share your views with us in the next two days of this workshop. This is one of the value addition of this workshop, namely for capital-based officials to interact with Geneva-based trade negotiators.
UNCTAD's support to Africa in trade and development and trade negotiations including on services
Given the importance of services in African economies for trade and development, and that of services negotiations in the Doha round, this technical workshop assumes special significance. Thus, UNCTAD is pleased to organize the workshop at the request of the Ambassador of Rwanda, Coordinator of the African
Group in WTO, and in consultation with the Ambassador of Ghana, Coordinator of the African Group in UNCTAD.
UNCTAD carries out an important programme of work in terms of analysis, inter-governmental consensus building and technical assistance and capacity building in support of African countries' effective participation in multilateral trade negotiations in general, and in services as a key area. As the Doha negotiations gathers momentum in the preparation for Hong Kong Ministerial Conference and for the interim deadlines of July this year established in the July Package of last year, we will be accelerating our support to African countries in Geneva and in capitals to ensure that they can mainstream their trade and development interests into the negotiations.
Several African countries and African regional organizations have requested our assistance in respect of services, and other areas of negotiations to which we are responding positively within the means of our financial and human resources. We have received important financial support from DFID of UK and the German
Government and other donors which have enabled us to continue provding assistance on trade in services to African and other developing countries. We also will be
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contributing to the follow-up to the Tunis Roadmap and, in fact, this workshop is one initiative in implementing this roadmap. We will be contributing to the AU retreat in
May next month, as well as to the substantive preparations for the LDCs and African
Trade Ministers Meetings in June 2005.
I wish to sincerely thank the UNDP Regional Bureau for Africa for the financial support for the workshop, under the Africa Trade Capacity Building
Programme. We are grateful for UNDP's continued support. Our ongoing cooperation is focused on the common mission and vision of highlighting and integrating Africa's positive agenda in the Doha negotiations, as well as in identifying and promoting their defensive interests and fashioning what we call their 'responsive agenda'.
Engagement, rather than disengagement, in the Doha negotiations is the way forward for African countries to safeguard policy space and create trading opportunities. This kind of engagement will enable Africa, we hope, to derive development gains from the negotiations and the negotiated results of rights and obligations.
I also wish to thank the cooperating partner agencies in the Africa Trade
Capacity Building Programme that are also participating in the workshop. The challenge of assuring development gains from multilateral trade negotiations for
African countries is huge and effective partnership is needed among African countries and their cooperating partners to address this challenge. This workshop and other activities of the Africa Trade Capacity Building Programme by all cooperating partners interact to build African capacity to influence the Doha negotiations in promoting and protecting Africa's interests.
Some markers on the role of services in the world economy
Turning to the topic of this workshop, it is observed that services trade is presently among the fastest growing sector of the world economy. Trade and foreign direct investment in services is growing at a faster rate than that of goods over the past decade. Developing countries' share in world services exports increased from 14 per cent in the 1985-89 period to nearly 20 per cent in 1998-2002 period. The share of
FDI in services is also increasing. Liberalization in many countries is also leading to the private and foreign provision of services such as telecommunications, transport, and finance, which hitherto was limited to the public sector.
In this light, it is important for countries to develop and possess effective and competitive services sectors. For example, without access to efficient financial services, telecommunications and transport, it is difficult to convert savings into productive investments, domestic production will grow slowly, access to modern technology will be limited, and trade will flow less smoothly. It is therefore critical to support investment in infrastructural services, like water, energy and transport, as well as social infrastructure services such as education and health. In the absence of abundant domestic investment capacity in Africa, the continent would need to attract investment into infrastructural services as an important development priority.
The role of services in Africa
For most African countries, the services sector has now become the driving force for structural change of their economies. It has become for many of them the
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most important sector contributing more than 50% to their GDP. It is also a major contributor to employment, creating more jobs in the formal and informal sectors than manufacturing. For example, in some African countries, the services sectors now employ more than 60% of total formal sector employment. The dominant services sectors in Africa are social and personal services, retail trade, restaurants and hotels, and transport and communications.
In terms of trade performance, in 2002, exports of commercial services, based on balance of payment statistics, amounted to $30.9 billion and accounting for 17.9% of Africa's total exports. Commercial services imports accounted for 24.4% of total imports. In terms of global trade performance however, Africa's exports and imports account for just 2% and 3% of worldwide trade in commercial services. Obviously, this is not satisfactory. But it also indicates that there is scope for further growth, and which needs to be cultivated in the more dynamically growing services sectors that can power the economy.
Accordingly, the development and efficient supply of services is crucial for
African countries. It can affect the pace of economic growth and render it dynamic or sluggish. The services sector provides African countries, particularly LDCs and those dependent on commodities, an avenue to diversify their exports from dependence either on commodities or on a very small and highly volatile export base. They can add value by developing, producing and engaging in the exports of new and dynamic areas of internationally traded services. So services has a high diversification content.
In addition to facilitating the transition from low value-added production to high value-added production and exports, the development of competitive services sectors can also facilitate technology transfers, diffusion and absorption.
Hence, African countries have considerable development interests at stake in the services negotiations. They need in the trade negotiations to address the issues of market access, market entry and supply capacity and competitiveness.
There would be significant benefits to be achieved from appropriate domestic liberalization and reform, and from the elimination of barriers to their exports in foreign markets. It is important to stress that the pace and sequencing of reform in services sectors has to be set by African countries themselves. Also, reform requires complementary policies to help improve access to essential services for the poor. In this regard, public-private partnerships can work effectively in some cases and commitments in the area of infrastructural services need to be appropriately tailored to balance public interest and attract investment.
The GATS negotiations and African issues
At the WTO, the GATS negotiations have moved into a critical phase of bilateral negotiations with the submission of initial services offers by some Members
(mostly developed countries) in line with the WTO Doha Ministerial Declaration. At our Trade Commission last month, it was expressed that services negotiations could be considered as being in a state of "crisis" owing to limited number of offers and their limited commercial value. The onus is on WTO members, particularly the major trading nations, to re-energize the negotiations by improving the quantity and quality of their offers in terms of offering commercially meaningful market access in areas of
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specific interest to African countries, such as in Mode 4 (movement of natural persons supply services). The African Commission Report recognizes that Mode 4 is an important area where liberalization in developed countries could generate benefits for
African countries, in the range of $14 billion - this is a message that African countries should continue to stress. Although the Report recognizes that the disposition in developed countries presently is not conducive to liberalization in Mode 4.
Less than 5 African countries have presented their initial requests and even less have presented offers to their trading partners. Thus the majority of African countries have yet to present their initial requests to their trading partners.
This situation of limited participation in the market access negotiations arises from a number of factors, from our viewpoint.
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First, a key factor in the elaboration of initial requests requires an adequate understanding of the complexities of the GATS. Such understanding remains deficient even now at the national level.
Continued assistance to African countries to trade negotiators in Geneva and to policy makers and stakeholders in capitals is required to overcome this lacuna of information and knowledge regarding services negotiations.
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Second, African countries need to undertake assessment of trade in services on the basis of which to take informed decisions regarding requests and offers that could be made. Such assessment would help to determine the (a) national policy objectives and supply constraints; (b) potential comparative advantage; (c) human resources needs; and (d) concrete trading interests in services.
Only a few developing countries have submitted their national assessments and “issues” papers. Continue awareness building on the GATS negotiations and increased work on assessment of services is required, both at the national and regional levels, to provide useful insights into the impact of trade liberalization and help countries to establish priorities regarding requests and offers in services. UNCTAD is providing assistance in this area to African countries. Recently we assisted Rwanda, and will be assisting Nigeria. We are providing such support to SADC and COMESA member States, with financial support from the EC and DFID.
In the July Package, adopted by the WTO General Council on 1 August
2004, the Council adopted the recommendations (set out in Annex C) agreed by the
Special Session of the Council on Trade in Services. This constitutes the basis on which further progress in the services negotiations is to be pursued. The new development introduced in the July Package concerning services negotiations was the establishment of the agreed deadline of May 2005, which is next month, for the submission of revised offers (and initial offers by members that have not done so).
The setting of a date for revised (and initial) offers has placed increased pressure on
African countries in particular, considering that many of them have yet to present initial requests and offers. African countries would need to examine strategies to collectively and individually proceed with engaging in the services negotiations.
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In this context there are some issues that African countries can consider for further work and in developing collective positions.
I wish to raise some of these issues.
1.
African countries need to identify the services modes of supply and the markets of interest to them in the provision of services. Our analyses show that emphasis should be on Mode 4, construction, tourism, professional services,
ICT and IT-enabled services (as in the case of Ghana and Senegal), and others which are at the incipient stage of development. Africa needs to seek market opportunities in North-South as well as South-South trading arrangements.
2.
Focus could be placed on areas where opening up is possible in achieving developmental objectives. This includes in particular infrastructural sectors such as telecommunications, transport and financial services. These services sectors would be instrumental in the development of other sectors and the wider economy as a whole. Services assessment is important in this regard to clarify the needs in the concerned sectors.
3.
A Joint African request especially in sectors such as tourism could be considered so as to have a bargaining leverage and especially in areas where it would be important to ask for additional commitments. A similar common request could be made on Mode 4.
4.
It might also be important to develop a model schedule in some sectors such as in the maritime services sector.
5.
Individual African countries would need to review the economic implications of the commitments requested both for their economy as a whole and in the concerned sectors in terms of expected benefits and/or costs of liberalization.
The implications of the requested commitments on the domestic regulatory framework deserve careful analysis. Assessment is crucial in this case to take into consideration the sequence between liberalization and regulations.
6.
The nature of existing limitations on both market access and national treatment and the feasibility of implementing specific commitments would have to be assessed. The political and social sensitivity that commitments regarding certain services activities in a country could evoke would have to be factored.
This is also applicable to other developing countries and developed countries as well.
7.
African countries need to identify conditions to maintain or attach in opening access to their markets and additional commitments at the sectoral level and seek for concrete implementation of GATS Article IV at the multilateral level.
This includes issues on how to operationalize special and differential treatment in services, going beyond best-endeavour clauses.
8.
African countries could consider, where feasible, model offers that could then be tailor made to suit the interest of each Member. This is not to say that there are uniformities in African capacities, but to provide a kind of a model on the
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basis of which offers could be tailored to the specific situations of individual
African countries.
The interface with regional negotiations among African integration groupings and negotiations with other trading partners such as under the ACP-EU Cotonou negotiations, also need to be examined, followed closely and negotiations strategies coordinated to seek the best results for African countries in terms of building their supply capacities and exporting their services. African countries are currently engaged in multiple trade negotiations and they need to coherently address the interface between the different negotiations to consistently promote their development interests.
Many issues such as those relating to coherence of RTAs in the services area with the architecture and principles of progressive liberalization by developing countries of
GATS arise and need to be kept in mind when looking at WTO-plus or WTO-minus commitments in these South-South or North-South RTAs that African countries engage in.
This workshop, I believe, will be instrumental in enhancing the preparations of
African countries for increased participation in GATS negotiations guided by the common goal of deriving development gains from these negotiations.
I thank you
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