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What is the AfCFTA Approach to the Regulation of Trade in Services?


What is the AfCFTA Approach to the Regulation of Trade in Services?

What is the AfCFTA Approach to the Regulation of Trade in Services?

The AfCFTA Protocol on Trade in Services is a first endeavour to liberalize intra-African trade in services. For several States the task at hand is a novel one.  It involves deeper governance reforms than what is typically associated with trade in goods. This is because the extent of public ownership and the degree of domestic regulatory intervention has traditionally been higher in the services sector than in the goods sector. As pointed out in the 2019 World Trade Report of the WTO: “Many of the barriers to trade in services consequently lie in regulatory regimes, not only at borders, but deep behind borders, in a myriad of domestic regulations that constrain the manner in which commercial services business is conducted.”[1]

The implementation of the Trade in Services Protocol of the AfCFTA will face an additional problem; the absence, in some countries, of rules-based national regulatory regimes. As stated by one commentator: “Services have been considered non-tradable and therefore outside the scope of trade policy-making until quite recently.[2]

The implementation of international trade and integration agreements is approached as a member-driven enterprise. Article 5 of the AfCFTA Agreement says the AfCFTA shall be governed by certain principles, the first of which is that it shall be “driven by Member States of the African Union”. Domestic conditions and policies have a direct impact on the pace and extent of liberalisation commitments and subsequent compliance with African trade and integration agreements. Supra-national oversight structures are absent, and this Protocol does not create any. The only inter-State institution for Implementation, Monitoring and Evaluation is the Committee on Trade in Services, which the Council of Ministers shall establish. It shall carry out such functions as may be assigned to it by the Council of Ministers.[3]

The AfCFTA Protocol on Trade in Services essentially applies “to measures by State Parties affecting trade in service”.[4] The State Parties shall “progressively liberalise trade in services across the African continent on the basis of equity, balance and mutual benefit, by eliminating barriers to trade in services”.[5] They may introduce new regulations on services and services suppliers within their territories “in order to meet national policy objectives, in so far as such regulations do not impair any rights and obligations arising under this Protocol.[6]

A final assessment of the new regimes for liberalizing trade in services will depend on the commitments accepted in individual State Schedules. That process is still to be completed. Once the content of individual schedules for the five priority sectors is known[7], domestic regulation takes place in terms of Article 9. It contains careful wording and qualifications to cater for domestic needs and choices:

  • Each State Party shall ensure that all such measures are administered in a reasonable, objective, transparent and impartial manner.

  • There must be judicial, arbitral or administrative tribunals or procedures which provide for the prompt review of appropriate remedies for administrative decisions affecting service suppliers.

  • State Parties shall provide for objective and impartial review.

  • Where authorisation is required for the supply of a service, the competent authorities shall, within a reasonable period, inform the applicant of the decision, including information concerning the status of the application.

How will these principles be implemented and enforced? The first requirement relates to the principle of transparency. Each State Party must publish all relevant measures which pertain to or affect the operation of this Protocol.[8]

Service regulators must respect due process requirements. In States with well-developed Administrative Law (or with Constitutions containing provisions on Administrative Justice) the associated remedies will be readily available. They are already part of the law of the land and protect the rights of all legal and natural persons. This will include service providers domestically incorporated or lawfully present in the State in question. Where such remedies are not yet available, the necessary legal reforms should be undertaken.

There must also be regulatory frameworks for each of the sectors. They will be agreed at some future date. “State Parties shall negotiate sector specific obligations through the development of regulatory frameworks for each of the sectors…. State Parties agree that negotiations for continuing the process shall commence following the establishment of the AfCFTA, based on the work programme to be agreed by the Committee on Trade in Services.[9]

[1] Jane Drake-Brockman Why regulatory cooperation matters for business, World Trade Report 2019 at 189.

[2] Nordas Domestic regulation: what are the costs and benefits for international trade in services? In Lim and De Meester, WTO Domestic Regulation and Services Trade, Cambridge University Press, 2014 at 47.

[3] Art 26.

[4] Art 2(1).

[5] Art 3(2)(e).

[6] Art 8.

[7] Art 18(4): The list of Priority Sectors and the Modalities on Trade in Services shall be annexed to this Protocol and shall form an integral part hereof.

[8] Art 5.

[9] Art 18(2).

About the Author(s)

Gerhard Erasmus

Gerhard Erasmus is a founder of tralac and Professor Emeritus (Law Faculty), University of Stellenbosch. He holds degrees from the University of the Free State, Bloemfontein (B.Iuris, LL.B), Leiden in the Netherlands (LLD) and a Master’s from the Fletcher School of Law and Diplomacy. He has consulted for governments, the private sector and regional organisations in southern Africa. He has also been involved in the drafting of the South African and Namibian constitutions. He grew up in Namibia.

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