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Does the AfCFTA Protocol on Trade in Services allow for Flexibilities?


Does the AfCFTA Protocol on Trade in Services allow for Flexibilities?

Does the AfCFTA Protocol on Trade in Services allow for Flexibilities?

This question is being asked in the context of national preparations for the African Continental Free Trade Area (AfCFTA) trade in services negotiations. In principle, all African Union Member States must submit offers on commitments in order to adopt the relevant Schedule under the AfCFTA Protocol on Trade in Services. The AfCFTA Council of Ministers wants these negotiations to be concluded by 30 June 2022. The Council’s Press Release of 28 January 2022 notes that the AfCFTA negotiations on trade in services “are in an advanced stage of completion with 46 member states having submitted offers on their schedules of specific commitments”. But negotiations will now move to the next level when common agreement must be found. Original offers will be refined and adjusted.

For trade in services under the AfCFTA there is a game plan. It consists of the texts of the AfCFTA Agreement and the Protocol on Trade in Services (the latter contains the basic principles for liberalising trade in services under the AfCFTA), and the relevant negotiating modalities. The technical detail about service-related obligations appears (or will appear) in Annexes attached to the Protocol on Trade in Services.

The AfCFTA is a member-driven process and decisions are taken on the basis of consensus. The services negotiations are technically complex and must accommodate the needs of a large number of countries at different levels of development. Many belong to Regional Economic Communities (RECs) with their own trade in services instruments. Several others do not. It is important to note that the RECs are not parties to the AfCFTA, individual States are. If they belong to a REC which has already achieved deep levels of integration and has formed a Common Market (as the East African Community has, for example, done) different layers of services related obligations must be reconciled. These countries have to ensure that they protect the integrity of their REC services trade regimes when making offers to the rest of the continent as part of the AfCFTA negotiations. Overlapping membership issues mean that this could be a difficult exercise.

International trade negotiations are about accommodating the offensive and defensive interests of all the participating nations. Offers and counter-offers are extended and negotiated till agreement among a critical number is reached. When participating Governments want to know about the “flexibilities” which might be available when they have to accept binding obligations, it is presumably to find out whether it is possible to accept less onerous obligations, could limit the extent of commitments, or have longer time frames in which to begin implementation.

When the General Agreement on Trade in Services (GATS) of the World Trade Organisation (WTO) was negotiated, it was, for example, agreed that Developing Countries would be entitled to certain flexibilities.

“While the notion of progressive liberalisation is one of the basic tenets of the GATS, Article XIX provides that liberalisation takes place with due respect for national policy objectives and members’ development levels, both overall and in individual sectors. Developing countries are thus given flexibility for opening fewer sectors, liberalising fewer types of transactions, and progressively extending market access in line with their development situation. Other provisions ensure that developing countries have more flexibility in pursuing economic integration policies, maintaining restrictions on balance of payments grounds, and determining access to and use of their telecommunications transport networks and services. In addition, developing countries are entitled to receive technical assistance from the WTO Secretariat.”[1]

What is the position in the AfCFTA? Article 7 of the Protocol on Trade in Services deals with Special and Differential Treatment in a different manner. It provides that in order to ensure increased and beneficial participation in trade in services by all, State Parties shall:

  • provide special consideration to the progressive liberalisation of service sectors commitments and modes of supply which will promote critical sectors of growth, social and sustainable economic development;

  • take into account the challenges that may be encountered by State Parties and may grant flexibilities such as transitional periods, within the framework of action plans, on a case by case basis, to accommodate special economic situations and development, trade and financial needs in implementing this Protocol for the establishment of an integrated and liberalised single market for trade in services; and

  • accord special consideration to the provision of technical assistance and capacity-building through continental support programmes.

The WTO is a multilateral body where developing countries and Least Developed Countries (LDCs) unite around special and differential treatment demands vis-à-vis the developed world. In the AfCFTA most of the participating countries are developing. There are also 33 LDCs. Under Article 7 of the Services Protocol the accommodation of special needs and the granting of transitional periods will be specific and only available within the framework of action plans, on a case by case basis. These options are in principle available to all such cases and in all such instances. They will have to be requested. For now, the challenge is to find consensus in negotiating services related commitments, not whether specific flexibilities are available by way of exemptions.

[1] https://www.wto.org/english/tratop_e/serv_e/gatsqa_e.htm

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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