Viola Sawere, Regional Trade Policy Expert, comments on the regulation of movement of services providers in the East African Community and lessons for the ongoing Tripartite and Continental FTA negotiations

The East African Community (EAC) member states agreed, under Article 104 of the Treaty, to adopt measures to achieve free movement of persons, labor and services and ensure the enjoyment of the right of establishment and residence of their citizens with the community. In line with article 76 of the Treaty, the EAC Common Market Protocol (CMP) which provides for these freedoms was signed in 2009 and it entered into force in July 2010. The objective of the CMP is to widen and deepen the socio-economic cooperation among the state parties. Article 2 states that the scope of the CMP extends to, among others, the removal of restrictions on movement of labour and removal of measures that restrict movement of services and service suppliers, harmonisation of standards to ensure acceptability of services that are traded. Movement of labour is provided for under Part D of the CMP, the applicable rights and conditions are captured in Article 10 and the commitments on the categories/cadre of workers are reflected Annex II (the schedules on free movement of worker). In addition, Article 11 provides for harmonization and mutual recognition of academic and professional qualifications to facilitate the movement of labor. Movement of services is provided for under Part F and according to Article 16 (2), it includes the supply of services through the four modes such as cross-border (mode 1), consumption abroad (mode 2), commercial presence (mode 3) and presence of a natural persons (mode 4). It covers all services in any services sector but member states agreed on a positive list schedule of specific commitments (see Annex V of CMP), in seven priority sectors i.e. business, communication, distribution, financial, educational, tourism and transport services. The commitments on mode 4 are linked to the commitments on movement of workers in Annex II of the CMP. However, two years since implementation, member states have not been able to exercise the rights of services providers due to challenges related to the linkage of the two freedoms. It is of interest to try to understand the challenges as well as assess the progress made to address them.

The General Agreement on Trade in Services (GATS) defines mode 4 as supply of services through temporary presence of a natural persons of a member in the territory of any other member. GATS further states that mode 4 does not apply to measures affecting natural persons seeking access to the employment market of a member, citizenship, residence or employment on a permanent basis. These two criteria help to differentiate movement of workers and services but the second criterion would not apply in the context of the EAC because the CMP includes both the movement of workers and services. Article 16 (2d) of the CMP provides that services can be supplied through the presence of a service supplier (referred to as Mode 4 in Annex V), who is a citizen of a Partner State in the territory of another Partner. Unlike the GATS definition, this definition does not include the word “temporary”. Article 1 of the CMP defines a citizen as a national of a Partner State recognized under the laws governing citizenship in the Partner State, and a national of a Partner State as a natural or legal person who is a national in accordance with the laws of the Partner State. Reading Articles 1 and 16(2d) together, services can be supplied through the presence of service supplier, who is a citizen, a natural or legal person, in the territory of another Partner State. In addition, according to Article 1 of the CMP a worker is a person who performs services for and under the direction of another person in return for remuneration and the Treaty (Article 1) defines a person as a natural or legal person. However, Article 16(7b) states that “services” include services that normally provided for remuneration, in so far as they are not governed by the provisions relating to free movement of goods, capital and persons. From these definitions, the CMP does not provide a clear difference between a worker and a services provider but subjects.

The International Labor Organisation’s International Standard Classification of Occupations was used for provisions related to movement of workers while WTO services classification i.e. W/120 list was used for services commitments. This resulted in a miss-match of the categories provided for in the schedule of workers and the services providers relevant for provision of services in the listed services sectors. Other discrepancies on movement of services in the CMP include for example, lack of a provision on market access limitations although Annex V has a column to this effect. In addition, there were complaints that the link makes it harder for short time services providers as they are being subjected to all the conditions of the workers including permit requirements. According to the CMP, a citizen of EAC is allowed to reside in another country for up to six months as long as (s)he will not engage in economic activity, of course the reality may be different. The screening of whether the person is intending to engage in economic activity starts with the information provided in the declaration forms at the ports of entry. If the person declares the intention to engage some economic activity, then the person will be subjected to permit i.e. work or residence, requirements. It is clear that the CMP does not provide a clear-cut distinction between the mode 4 and worker, which is suggestive of the linkage. Interestingly, Article 11 (harmonisation and mutual recognition of academic and professional qualifications), paragraph 1 seems to be limited to movement of labour and not services. However, there is some progress made in harmonising academic qualifications and mutual recognition agreement (MRA) for professional services. So far, member states have concluded MRAs covering accounting, engineering, architectural and veterinary services while negotiations are on-going for agreements on advocates and land surveying services.

Generally, the challenges spring not only from linkages but also the provisions of the Protocol. The question is whether the schedules deliver the objective of wider and deeper market integration. The solution to these challenges, to a large extent, requires amendments to both the Protocol and the member states’ schedules. Therefore, in September 2014, the Council of Ministers directed member states to submit proposals to address the discrepancies in the CMP on movement of services. Although the progress has been slow, member states since agreed to renegotiate the movement of services. The issues being renegotiated include an article on market access and Mode 4 categories, revised schedules of commitments and implementation regulations. This offers a lesson for the COMESA-EAC-SADC Tripartite and the CFTA negotiations to ensure that enough time and effort is invested in the drafting of the agreement, to avoid renegotiation as is the case in the EAC.

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