Milasoa Chérel-Robson

Milasoa Chérel-Robson Africa Section, Division for Africa, Least Developed Countries and Special Programmes, UNCTAD REGIONAL INTEGRATION PART II, 24 JUNE 2011 A. From Regional Cooperation to Regional Integration :Services, Labour Mobility and Migration in AfricaB. Strengthening Regional Integration in Africa: What next?

A. From Regional Cooperation to Regional Integration :Services, Labour Mobility and Migration in Africa I. Services II. Labour Mobility and Migration

I. Services • 1. Conceptual and statistical definitions of services and their role in the development process • Conceptual definition • Statistical definition laid out in the Manual on Statistics on International Trade in Services on Trade Flows, revised version issued in 2011

I. Services • There is no consensus today among economists as to the theoretical characterization of service activities and their outputs ("services"), • “It may seem curious that the complex edifices of the major economic theories and of national accounting are constructed, in this area, on perfunctory, ambiguous definitions, particularly since we are dealing with what may well be the major division in the activity and output of developed economies.” Jean Gadrey

I. Services • Definition of services: in Smith's words, "perishes in the very instant of its production," or which, as Say put it, is "immaterial. • For Alfred Marshall: such goods "pass out of existence in the same instant that they come into it."

I. Services • Statistical definition: main components • Manufacturing services on physical inputs owned by others • Maintenance and repair • Transport • Travel • Other commercial services

I. Services • These are emerging issues: limited data • Intra-African trade in services matters: • Tariffs on trade in goods low; services still restricted so this should be next step • Complementary to production & trade of goods • Importance of “producer services”: telecoms, banking, insurance, professional & transport • Landlocked countries are particularly affected by weak “producer services” • Good “producer services” can transform a landlocked country into a transit country

I. Services Services trade & regional integration: • Until recently, marginal aspect of integration • Mostly, coordination and harmonization of rules & regulations (e.g. road & rail transport) • But also joint provision of services (e.g. Ecobank) • It is now considered to be very important: “The service economy is the new frontier for the expansion of trade, productivity and competitiveness” ECA

I. Services • 2. The state of trade in services at multilateral level • Services: paradigm shift with increased role of the private sector • Opportunities : Stimulating innovation in services, promoting investments in the sector • Regulatory challenges: Rules and Institutions

I. Services The GATS approach to services • Based on the assumption that liberalisation is a means of growth and development • Liberalisation is not deregulation • Liberalisation should be progressive • Provides a transparent legal framework that can be enforced • Provides a forum for discussions

I. Services GATS 2000 • Market Access aiming at progressively higher levels of liberalisation • Domestic regulation and GATS Rules such as safeguards, subsidies, government procurement • Special treatment to LDCs • DDA still underway • Next steps include implementation of the GATS

I. Services • 3. Regional initiatives in promoting cooperation in the provision of services in Africa • Cooperation among member states is limited to rules and regulations affecting service activities. For example, ECOWAS has enacted decisions concerning the facilitation of transport services within the region: harmonisation of highway legislation, joint research and training programmes on services. • Other examples: transnational business collaboration such as Ecobank.

I. Services • 4. Services in regional integration agreements • Explicit provisions on services trade now in RTAs (ECOWAS, COMESA, SADC): • National treatment • Right of establishment • Free movement of capital and labour • Sectoral regional initiatives on trade facilitation, tourism & communication (roaming policies)

II. Labour Mobility and Migration • 1. The importance of labour mobility in the development process • Complementarity between labour, goods and capital • Difficult to envisage successful integration without free LM • But total free labour mobility is politically sensitive

II. Labour Mobility and Migration • Pan-African migration strategy is solution: • Sending and receiving countries must all win through: • Remittances • Development of networks • Transfer of technology and skills & access to qualified labour • But there are costs that have to be minimized: • Brain-drain • Abuse of migrants • Competition over local jobs • Family separation

II. Labour Mobility and Migration • 2. The dynamics of Intra-African migration • Evidence of benefits for receiving & sending countries: • West Africa: Ivorian miracle of the 1970-1980s mainly due to migrants • South Africa benefited from labour from neighbours • Migrants’ remittances are important revenue source in many countries

II. Labour Mobility and Migration • 3. Labour mobility in regional integration agreements • Many RTAs have provisions on free movement of labour: • Progress has been noted (ECOWAS, EAC, COMESA) • But still resistance due to political considerations • Need for a positive agenda on intra-African African migration

B. Strengthening Regional Integration in Africa: What next? I. Trade in Information and Communication Services: emerging opportunities for Africa II. The East African Community (EAC) and the negotiation of Economic Partnership Agreements (EPAs) III. Some policy recommendations for strengthening regional integration in Africa

I. Trade in Information and Communication Services: emerging opportunities for Africa

II. The East African Community (EAC) and the negotiation of Economic Partnership Agreements (EPAs) • EPAs and intra-Africa trade: what is at stake? • EPAs are the culmination of a series of agreements among ACP countries and the EU: from the Lomé Conventions to the Cotonou Agreement. • EPAs are expected to provide specific rights and obligations to each of the following clusters of countries: West Africa, Eastern and Southern Africa (ESA), Central Africa, SADC, the Caribbean and the Pacific.

II. The East African Community (EAC) and the negotiation of Economic Partnership Agreements (EPAs) • EPAs aspire to help create regional markets by increasing regional integration. • EPAs fall under the North-South RTAs classification. • Negotiations on EPAs were initially expected to be completed by September 2007. However, in some countries, the controversy raised by the loss of customs revenue and a potential flood of EU imports, among other concerns, resulted in campaigns to stop their signing.

II. The East African Community (EAC) and the negotiation of Economic Partnership Agreements (EPAs) • What is being done to address concerns? • The three Regional Economic Communities (RECs) in East and Southern Africa – COMESA, the East African Community (EAC) and SADC – joined forces in a Tripartite Initiative in 2005. A road map has been set for the achievement of a Tripartite Free Trade Area (FTAs) by January 2012. • The tripartite arrangement has also committed to more coordination and harmonization on EPA negotiations and multilateral negotiations including the WTO Doha Development Round Negotiations.

II. The East African Community (EAC) and the negotiation of Economic Partnership Agreements (EPAs) • The latest developments on the EAC and EPAs • Financial constraints stalled the EPA negotiations between the EAC and EU • Negotiations were also stalled because of disagreements on development components, and export taxes. • In April this year: EAC resumed negotiations with the EU

III. Some policy recommendations for strengthening regional integration in Africa • Regional cooperation strategy centred on infrastructure: • Paving Africa’s key trading roads at a cost of $32 billion could generate additional trade of $250 billion over 15 years • Investing in trade facilitation: Ghana & Mozambique for example have experienced its benefits & cost-effectiveness • IAT should be component of a fuller development strategy clarifying Africa’s development interests

III. Some policy recommendations for strengthening regional integration in Africa Undertaking FDI projects on regional level • Pooling of limited country’s resources is more realistic • Creating common interests in itself fosters integration • Encouraging regional rather than bilateral investment treaties Deepening regulatory system to encourage IAI • Share best practices (e.g. SA’s Industrial Development Corp.) • Harmonize investment policies at the regional level Strengthening the financial sector will facilitate intra-African economic and financial transactions

III. Some policy recommendations for strengthening regional integration in Africa • Address issue of barriers to services trade • Identify offensive and defensive interests & determine how negotiate in different fora: • Regional RTAs • North-South inter-regional context (EPAs) • Multilateral context (WTO/GATS) • Consider development of “producer services” as basis for effective integration

III. Some policy recommendations for strengthening regional integration in Africa • Enforcing RTA provisions on labour mobility • Translate them into national policies • Given political sensitivity, adopt gradual & targeted approach • Adopt region-wide labour mobility policy: • NEPAD’s two-pronged approach takes account of needs of both sending and receiving countries • Develop a database on intra-African migrations • Limit imbalances in benefits between sending and receiving countries.

Thank you !

Milasoa Chérel-Robson