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A GATS perspective on South Africa’s Employment Services Bill

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A GATS perspective on South Africa’s Employment Services Bill

JB Cronjé, tralac Researcher, discusses South Africa’s 2012 Employment Services Bill in the context of the country’s services commitments at the WTO

South Africa made specific commitments in terms of Article XX of the World Trade Organization’s General Agreement on Trade in Services (GATS). These commitments are contained in a schedule of specific commitments (GATS/SC/78). The Schedule of specific commitments of each WTO Member is annexed to the GATS and forms an integral part thereof. In interpreting GATS provisions and schedules, WTO dispute settlement Panels and the Appellate Body have followed the customary rules of interpretation of public international law, as set out in Articles 31 and 32 of the Vienna Convention on the Law of Treaties. The interpretation of any concession in a GATS schedule is therefore no different from interpreting any other treaty text.

In terms of South Africa’s schedule of specific commitments (GATS/SC/78), horizontal commitments were made in Mode 4 on the temporary movement of foreign services suppliers. These commitments apply horizontally to all the sectors and sub-sectors in which commitments were undertaken. South Africa’s commitments on temporary movement of persons supplying services provide market access and national treatment for the following categories of persons, namely services salespersons; intra-corporate transferees including executives, managers, specialists and professionals; and, personnel engaged in establishment of a commercial presence. According to the country’s GATS schedule, these categories of persons are afforded “temporary presence for a period of up to three years, unless otherwise specified, without requiring compliance with an economic needs test”.

Economic Needs Tests (ENTs) are not defined in the GATS. An ENT is a test that conditions market access upon the fulfilment of certain economic criteria. Labour market tests are the most common type of ENT. In terms of GATS Article XVI(2)(d), ENTs should either not be applied to the categories of persons covered by a country’s Mode 4 commitments, or if applied included in the country’s schedule of specific commitments. The most common condition for determining market access in terms of labour markets tests is the availability of similar workers in the host country, or whether a foreign worker would be competing with or displacing a domestic worker. ENTs are major entry barriers which prevent the free movement of labour. In many cases the conditions on which ENTs are based are not clearly specified or defined, leaving wide discretion in their application and thereby reducing the predictability and commercial value of commitments.

South Africa’s Employment Services Bill 38 of 2012 is currently before Parliament. The preamble to the Bill provides that its purpose is, among other things, to provide for public employment services; to provide for the establishment of schemes to promote the employment of young work seekers and other vulnerable persons; to provide for schemes to assist employees in Protected Employment Enterprises in distress to retain employment; to facilitate the employment of foreign nationals in a manner that is consistent with the objects of the Act and the Immigration Act of 2002; and to provide for the registration and regulation of private employment agencies.

The Bill also provides in Article 8(2) that the responsible government Minister may make regulations to facilitate the employment of foreign nationals which may include the following measures:

“(a) The employers must satisfy themselves that there are no other persons in the Republic with suitable skills to fill a vacancy, before recruiting a foreign national;

(b) the employers may make use of public employment services or private employment agencies to assist the employers to recruit a suitable employee who is a South African citizen or permanent resident; and

(c) preparation of a skills transfer plan by employers in respect of any position in which a foreign national is employed.”

These conditions constitute an economic needs test or labour market test and, if adopted, would violate South Africa’s schedule of specific commitments under the GATS. The provision as it is at the moment will substantially change the substance of existing GATS commitments. If the particular provision is retained it will have to be amended to exclude all categories of services suppliers in all services sectors and sub-sectors covered by South Africa’s GATS commitments from its application. Alternatively, South Africa will need to modify or withdraw its existing GATS commitments on the movement of natural persons supplying services and, if need be, negotiate compensatory adjustment with any affected WTO Member. Any Member which considers that its interests may be affected by the proposed modification or withdrawal must inform the modifying Member and all other Members and enter into negotiations with a view to reaching agreement on any necessary compensatory adjustments.

During 2013 tralac also analysed other South African legislation (click here to view the trade brief) and proposed legislation (click here to view the Discussion) which appear to be in conflict with specific aspects of the country’s commitments and obligations under the GATS. Are these cases examples of a development toward the contented disregard of GATS obligations or are they merely isolated cases of ineffective trade policy management and insufficient parliamentary oversight?

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