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Trade in Services - Key Concepts -. SADC Workshop on Trade in Services The Hyatt, 12-13 June 2012 mjelitto@sadc.int. The mysterious world of services trade agreements. Tanzania participates in trade in services negotiations at three international fora WTO (GATS)

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sadc workshop on trade in services the hyatt 12 13 june 2012 mjelitto@sadc int

Trade in Services

- Key Concepts -

SADC Workshop on Trade in Services

The Hyatt, 12-13 June 2012

mjelitto@sadc.int

the mysterious world of services trade agreements
The mysterious world of services trade agreements..
  • Tanzania participates in trade in services negotiations at three international fora
    • WTO (GATS)
    • EAC (Common Market Protocol)
    • SADC (Draft Protocol on Trade in Services)
  • The basic concepts and rules are the almost the same
slide3

Coverage of the SADC Protocol on Trade in Services

  • MEASURES AFFECTING TRADE IN

SERVICES AT ALL GOVERNMENT LEVELS

  • ALL SERVICES (except governmental services

and measures affecting air traffic rights)

  • FOUR MODES OF SUPPLY
      • - Cross-border supply - Consumption abroad
      • - Commercial presence - Presence of nat. persons
the 4 modes of supply
The 4 Modes of Supply

Cross border supply - Mode 1

Service supplied

into the territory

of another

Member State

Service

Consumer

Service

Supplier

Service Supplier

supplies service

from territory of

one Member State

Service Consumer

receives service

in territory of any

other Member State

the 4 modes of supply1
The 4 Modes of Supply

Consumption abroad - Mode 2

Service supplied in territory

of one Member to the service

consumer of another Member State

Service Supplier

supplies service

in territory of

one Member State

Service

Consumer

Service

Supplier

Service

Consumer

Service Consumer receives

service in territory of supplier

the 4 modes of supply2
The 4 Modes of Supply

Commercial Presence - Mode 3

Any type of business

or professional

establishment

Service supplier establishes a

commercial presence in the

territory of another Member State

Service

Supplier

Service

Consumer

Service supplied

through commercial

presence

the 4 modes of supply3
The 4 Modes of Supply

Natural Persons - Mode 4

Service supplied through

presence of natural

persons in the territory

of another Member State

Service

Consumer

in what mode are the following services supplied
In what mode are the following services supplied?
  • A professional accountant from Tanzania travels to Malawi to provide accounting services to a medium-sized company.
  • An insurance company from Zambia establishes a subsidiary in Tanzania.
  • A vessel registered in South Africa is repaired in the port of Dar Es Salaam.
  • Download of music over the internet
  • Student from A takes a long-distance degree course offered by the London School of Economics
  • Car insurance bought from company established abroad
    • Does ownership of company matter?
slide9

Typical Services sector coverage

  • Business Services
  • Communication
  • Construction
  • Distribution
  • Education
  • Environmental Services
  • Health Related Services
  • Financial Services
  • Tourism
  • Recreation, Culture, Sports
  • Transport
  • Other Services

Plus

Energy-related services

(elements of Business, Distribution, transport services)

key obligation mfn treatment
Key obligation: MFN Treatment

Upon entry into force of this Protocol, with respect to any measure covered by the protocol, each State Party shall accord immediately and unconditionally to services and service suppliers of any other State Party treatment no less favourable than it accords to like services and service suppliers of any other State Party or third country. (Art 4:1)

exceptions from mfn
Exceptions from MFN
  • Services preferences granted between SADC MS (4:2)
  • Future preferential agreements of SADC MS with third countries (4:3)
  • Existing preferential agreements of SADC MS with third countries (4:4)
    • Obligation to afford reasonable opportunity to other MS to negotiate the preferences on a reciprocal basis
  • MFN Exemption Lists (4:5)
first column how to describe service sectors
First Column: How to describe service sectors?

▪ There is no compulsory system

However, according to SADC Negotiating & Scheduling Guidelines

(a) clear description of sector or subsector is needed

(b) Reference to use of GATS Scheduling Guidelines (S/L/92)

▪ Reference instruments:

- Services Sectoral Classification List (W/120)

- UN Central Product Classification List (CPC)

13

second column limitations under article 14 market access
Second Column: Limitations under Article 14 (Market Access)

All restrictions falling under Article 14 must be scheduled, regardless of whether they

- apply pre- or post-entry

- are discriminatory or not.

Quantitative restrictions can be expressed numerically, or through economic needs tests.

14

examples of art 14 limitations
Examples of Art. 14 limitations

Number of suppliers (a)

The number of licenses for cosmetology schools is limited to 48 total licenses

Value of transactions or assets (b)

Foreign banks limited to 30 percent of total domestic assets of all banks

Number of operations or quantity of output (c)

Restrictions on broadcasting time available for foreign films

15

examples of art xvi limitations ctd
Examples of Art. XVI limitations (ctd)

Number of persons employed (d)

In any artistic production given in a public place, the proportion of national performers shall not be less than 80 %

Specific types of legal entity (e)

Foreign companies are required to establish subsidiaries

Participation of foreign capital (f)

Foreign investors can hold up to 51 % of the capital

16

third column limitations under article 15
Third Column: Limitations under Article 15

(1) Treatment shall be “no less favourable than accorded to own like services and services suppliers”.

(2) … “either formally identical or formally different treatment” …

(3) relevant benchmark: no modification of “the conditions of competition” in favour of own like services or service suppliers.

17

typical national treatment limitations
Typical National Treatment Limitations

Discriminatory subsidies and other fiscal measures

Nationality and residency requirements ( mode 3)

Discriminatory licensing/registration/qualification/

training requirements

Technology transfer requirements

Prohibitions on foreign land/property ownership

Local content requirements

See also S/L/92, Attachment 1

18

which of the following measures are governments allowed to take in non scheduled sectors
Which of the following measures are governments allowed to take in non-scheduled sectors:
  • Prohibiting foreign suppliers from incorporating subsidiaries?
  • Limiting access to investors from countries with an equally open investment regime?
  • Liberalizing air links with selected countries under “open skies’ agreements
  • Denying access to foreign medical practitioners without even verifying their professional competence
to schedule or not to schedule
To schedule or not to schedule?
  • Foreign companies must provide training to local workers.
  • Board of directors of companies owning ships sailing under X’s flag must be composed of X’s nationals, the majority of which having residency in X.
  • Federal law enables provinces to grant licence for hotels based on economic needs (assessment of economic needs is based on the criteria of touristical interests & number of existing hotels).
to schedule or not to schedule1
To schedule or not to schedule

4. Foreign patients undertaking medical treatment in X must pay a special tax.

5. All banks must operate at least 1 branch per region of the country.

6. Qualifications are as follows: certified engineers, or personnel with Bachelor's degree (or above) and three years of experience in these fields.

7. Condition of one year previous residency in order to obtain licence to provide services in residential building and land sales, and other related intermediary services for purchase and sale of real‑estate.

8.All nurses must be registered with the National Association of Nurses.