tralac Trade in Services Workshop – Rwanda, 9-12 December 2008
tralac presented a workshop in Gisenyi, Rwanda from 9 to 12 December 2008. The first part of the workshop gave participants an introduction to the role of law and institutions in international trade. The history of the WTO, its basic rules and objectives as well as the sources of WTO law were discussed. This included a brief overview of the GATS and a more in-depth discussion on the traditional agenda of trade in goods.
Participants learned about the objectives, principles and basic rules of the GATT, with emphasis being placed on the MFN obligation, the national treatment obligation, and the progressive reduction of tariffs. Certain WTO rules allow countries to conclude FTAs and customs unions as exceptions to the principles of non-discrimination set out in the MFN provisions.
The growth of these regional trading blocs – often known as regional integration agreements or regional trading arrangements – is one of the major recent developments of international trade. These various forms of integration as well as the conditions for establishing such agreements were explained to the participants. Specific reference was also made to the prevailing situation in Rwanda, including its involvement in trading arrangements such as COMESA, the EAC and the ESA EPA.
The participants became acquainted with the process of negotiating trade agreements – from the initialing and signing, to the ratification and implementation of international agreements. Depending on the nature of the obligations contained in the relevant agreements and the intention of the parties, the subsequent implementation of obligations may also require certain domestic steps. The domestic incorporation of international agreements and the role of national parliaments in the ratification of the international agreements formed integral elements of this discussion. The first part of the workshop was concluded by providing a brief overview of the new issue of investment, and its associated rules and objectives.
The second part of the workshop dealt with the issue of trade in services. The concept of trade in services was explained to the participants and put into context by contrasting it with the traditional issue of trade in goods. The objective was to find a definition for a ‘service’ by guiding the participants through the characteristics of services, the relationship between services and goods and the range of activities that can considered a ‘service’.
Participants were familiarized with the W120 Classification list used in the GATS and subsequent negotiations as well as the definition of trade in services as contained in the GATS. Art. I(2) of GATS defines “trade in services” in terms of the mode of supply. The emphasis is placed on the way in which the service is traded rather than on its inherent characteristics, thereby concentrating on the economic element or legal nature of the transaction to drive the scope of the definition. The modes of supply were discussed in detail by means of practical examples and selected extracts from the GATS schedules of the EAC Member States. The participants also completed a practical exercise to identify the different modes of supply in order to reinforce their knowledge of the topic.
The benefits and gains of services liberalization for developing countries were discussed including the motivation for countries to enter into negotiations on trade in services. The intermediate role of services in the various sectors and their use in the production of goods and other services were emphasized and clarified. The price and quality of services are crucial elements in determining the cost of all other products and services in the economy.
Participants were however cautioned that domestic and practical considerations must be taken into account before a liberalization strategy is formulated. Another exercise was undertaken in which participants had to decide how to articulate a strategy to liberalise trade in services in a hypothetical African country.
An overview of the regulation of trade in services was provided next, including the economic and social reasons for services regulation. The different government polices and instruments affecting international trade in services were discussed and defined in four categories. These included i) Quotas, local content and prohibitions; ii) Price based instruments; iii) Standards, licensing/prohibitions and procurement; and iv) Discriminatory access to distribution networks. The various instruments were indentified and practical examples given.
The supply side constraints preventing developing countries from exporting efficiently were also identified and discussed through the use of practical examples. The session was concluded by identifying factors influencing the decisions of foreign companies to invest in Rwanda. Whether a company expands their presence in another country depends on a number of things besides the regulatory barriers to trade.
The opportunities and threats must be weighed up against the costs of setting up operations, the potential for growth, and, the risk profile in that market. Barriers to entry can therefore be in the form of regulatory constraints, or simply the nature of the markets. Participants were asked to identify the different types of regulations by distinguishing between market access restrictions, national treatment restrictions and domestic regulations.
The focus of the workshop then turned to the multilateral rules and obligations on trade in services. The GATS is the first multilateral trade agreement to cover international transactions in services. All members of the WTO (including Rwanda) are signatories to the GATS and therefore have to assume the resulting obligations. Consequently, regardless of a country’s trade policy stance, officials need to be familiar with the content of this Agreement and its implications for trade and development.
As a result, the objective of the particular session was to explain the general objectives of the Agreement and to clarify the obligations of Members (with particular emphasis on Transparency, MFN, Domestic Regulation, Market Access and National Treatment) within this legal framework.
Finally the workshop considered the specific commitments made by all the EAC Member States during the GATS negotiations. The core sectoral, sub-sectoral and modal commitments were clarified in order for the participants to understand the determination of ‘substantially all services trade’ as defined in GATS Art. V. This overview of the schedules of commitment prepared the students for the final assignment where they were expected to complete a schedule of specific commitments for a hypothetical developing country. A number of recommendations were made by key stakeholders and on that basis the participants had to schedule certain commitments.