Trade Briefs
Policy Brief: Southern Africa Customs Union – Getting ready for services negotiations
tralac has worked with Trade and Industrial Policy Strategies (TIPS) on Trade in Services matters in the Southern African Customs Union (SACU). Although the 2002 SACU Agreement does not cover services, SACU member states are engaging trade in services issues in the context of regional trade agreement negotiations and this Policy Brief considers how SACU can prepare for services negotiations.
Overview
For many African states, negotiations to liberalise trade in services is a relatively new experience. Southern African Development Community (SADC), Common Market for Eastern and Southern Africa (COMESA) and East African Community (EAC) member states are set to negotiate services at several levels – regional, bilateral, multilateral and even at the supra-regional level in the context of the Tripartite agreement.
Trade in services is not a feature of the 2002 Southern African Customs Union (SACU) agreement, and although the Heads of State and Government hinted at the possibility when they undertook to develop “SACU positions on new generation issues”, it is unlikely that services will be negotiated in the context of SACU any time soon. SACU member states already have to contend with bilateral services negotiations with the European Union (EU) (Botswana, Lesotho, Swaziland), regional negotiations as part of SADC (all five SACU member states), regional negotiations as part of COMESA (Swaziland), and even at the supra-regional level as part of the Tripartite negotiations. This is already ambitious, particularly for a country with limited capacity such as Swaziland.
These negotiations are mostly focused on services liberalisation, which addresses regulatory barriers relating to the access and treatment of foreign services suppliers. If SACU member states feel the need to directly address the issue of services within the configuration, the basis of the discussion should be deeper integration. With deeper integration, the focus should be shifted from liberalising the barriers that exist at the borders, towards addressing the behind-the-border issues, which exist within the jurisdiction of the member states.
Deeper integration, among other things, includes domestic issues such as transparency, competition regulation, specific sectoral disciplines, mutual recognition and the harmonisation of certain areas. Some of these issues are, however, also addressed at the regional level of SADC, so SACU member states will have to carefully define the scope of the negotiations according to their needs and expectations.
In the wider region, only EAC member states have concluded binding commitments to liberalise certain services sectors. COMESA member states still have to start negotiating rounds to agree on binding commitments, while the SADC member states are in the final stages of approving the SADC Protocol on services. According to the draft text, SADC negotiating rounds to liberalise trade in services will be concluded within three years after the adoption of the Protocol. During these negotiating rounds, countries will draft ‘schedules of specific commitments’ which will form an integral part of the services framework.
These specific commitments are legal obligations undertaken by the individual countries concerning the level of market access permitted to foreign services suppliers and the conditions under which they are allowed to operate domestically. Specific commitments are recorded in the national schedules of each member state on a sector-by-sector basis and only bind the countries to the extent that they have committed themselves. Basically these schedules set the parameters for foreign participation in a country’s domestic services industries.
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