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AfCFTA: What next for services trade?

By Ashly Hope (Volunteer)
17 May 2019
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AfCFTA: What next for services trade?

Now that the Agreement Establishing the African Continental Free Trade Area (AfCFTA) has a firm date for entry into force, we must turn our minds to the operational phase of the AfCFTA. In the case of trade in services, key to operation are Schedules of Specific Commitments as required by Article 22 of the Protocol on Trade in Services (Services Protocol). These are still to be negotiated.

Schedules of Specific Commitments

These Schedules will contain the specific commitments each Member State makes with respect to every services sector in each of the areas: national treatment; market access and additional commitments (for example, standards or licensing matters). The Schedules form a part of the Services Protocol.

Services trade is divided into 12 sectors. At the July 2018 Summit[1], the Assembly adopted[2] five priority sectors on which initial commitments should be made:

  • Business services
  • Communication services
  • Financial services
  • Tourism and travel
  • Transport

Overall, Member States are expected to achieve substantial liberalisation, although this is not defined and nor is a timeframe articulated for reaching this – it does state that liberalisation will be achieved through successive rounds of negotiation. No decision has yet been made on any minimum threshold of subsectors or sub subsectors required to be committed. Any decision making on substantial coverage of trade volumes will be seriously limited by the lack of data on bilateral services trade.

Negotiation: a financial services example

Negotiations will be undertaken on a request-offer basis. Each Member State will make an initial offer to all other members. In financial services, for example a State might offer coverage of only one of the three financial services subsectors, such as banking and other financial services (the others are all insurance services and other) and then, under that subsector, only schedule certain sub subsectors such as financial leasing or all payment and money transmission services (there are 11 sub subsectors – (a) to (l) under the subsector banking and other financial services). If there are any limitations on any of the modes for either market access or national treatment, these would be included. Additional commitments, such as undertakings should also be listed. Such a schedule might look like something this:

Sector or subsector
Limitations on Market Access
Limitations on national treatment
Additional Commitments
Modes of supply 1) Cross border 2) Consumption Abroad 3) Commercial presence 4) Presence of natural persons

X. Financial services

     

A. Banking and other financial services

     

c. Financial leasing

1) Unbound meaning no commitment

2) None meaning no limitations

3) Financial leasing companies must be incorporated in [State Party]

4) None except as listed in horizontal section.

1) Unbound

2) None

3) None

4) Only natural persons who are nationals of [State Party] may conduct financial leasing as a sole proprietor.

 

d. All payment and money transmission services

1) Authorisation is required from the Central Bank for a foreign provider to offer cross-border money transfer services.

2) None

3) Unbound

4) Unbound

1) None

2) None

3) Unbound

4) Unbound

 

Other members may request improvements in the sectoral coverage of commitments or level of liberalisation – that is, by the reduction or elimination of restrictions. Member States may make requests to all other parties, to a single party or to a group of parties. So, in this case, a requesting Member State may see that there is no commitment in advisory services (k) and request that be included on the schedule. Or, perhaps request that the limitation on market access for financial leasing services be removed.

Timing

At the February 2019 Summit, the Assembly adopted[3] the Guidelines for Development of Specific Commitments and Regulatory Cooperation Framework for Trade in Services and the new Roadmap for Finalization of the AfCFTA negotiations.[4]

The Roadmap provides for the adoption of Schedules of Commitments in January 2022. To meet this deadline, Member States are expected to submit initial offers and requests in May and June 2019, with negotiations taking place from October to December 2019, and again between May and June 2020 and final negotiations between December 2020 and February 2021. This timeline builds in space for regional and national consultations before technical validation in March-May 2021 and legal scrubbing between June and September 2021. We understand that decisions on additional sectors – there are 7 more in the WTO Services Sector Classification List – construction, education, health and social, recreational and cultural, distribution, environment and other services – will be made in June/July 2020.


[1]  pdf Key Decisions and Declarations of the 31st African Union Summit (69 KB)  - July 2018

[2]  pdf 31st Ordinary Session of the AU Assembly: Decisions, Declarations and Resolution (972 KB)  - July 2018

[3]  pdf 32nd Ordinary Session of the AU Assembly: Decisions, Declarations, Resolution and Motions (1.73 MB)  - February 2019

[4]  pdf Report on the AfCFTA by Mahamadou Issoufou with Annexes (692 KB)  - February 2019

About the Author(s)

Ashly Hope (Volunteer)

Ashly Hope (Volunteer)

Ashly is a professional volunteer with the Australian Government’s Australian Volunteers for International Development Program, and currently serves as Research Coordinator (Trade in Services and Regulation) at tralac. Ashly has experience in policy advice and analysis in financial regulation, international economic governance and international tax. She holds a BA (Political Science)/LLB from the University of Tasmania, and an LLM (Government and Commercial) from the Australian National University.

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