Services and SACU Paul Kruger paul@tralac

1. Services and SACU Paul Kruger paul@tralac.org

2. Introduction • Difference between trade in goods and trade in services • Services are regulated by domestic laws and regulations • Domestic legislation is used to protect services industries for example Section 64(1) of the Electronic Communications Act: “(1) A foreigner may not, whether directly or indirectly- (a) exercise control over a commercial broadcasting licensee; or (b) have a financial interest or an interest either in voting shares or paid-up capital in a commercial broadcasting licensee, exceeding twenty (20) percent. (2) Not more than twenty (20) percent of the directors of a commercial broadcasting licensee may be foreigners.” • Two restrictions on foreigners: i) market access restriction limiting the participation of foreigners to 20%; and ii) national treatment restriction favouring local directors • Creating a transparent and predictable framework

3. Scheduling • A services agreement generally consists of two main elements: a) general obligations; and b) specific commitments • Specific commitments reflect the liberalisation undertakings made by countries – it is a flexible framework • Section 64(1) of the Electronic Communications Act in a schedule:

4. Liberalisation • The schedules not only create a predictable and transparent framework but also establish a framework for liberalisation • The eventual goal is to abolish ALL restrictions: Tripartite agreement - “possibility of no restrictions in the priority sectors”. • The ‘standstill clause’ and its effect • It can remove the flexibility – prevent countries to schedule ‘future’ restrictive measures • Each sub-sector will have to be committed as seen from MERCOSUR and ASEAN • Difference between African scheduling and other regions

5. That is where the difference comes

6. Regulatory inventory • Regulatory audits can provide countries to provide countries with a clear understanding of what is happening behind the borders of each country. • All measures whether in the form of a law, regulation, rule, procedure, decision, administrative action or any other forms taken by central, regional or local governments and authorities, and non-governmental bodies in the exercise of delegated powers must be reviewed. • Perhaps a review all domestic regulation - qualification requirements and procedures, technical standards and licensing requirements and procedures – can be useful (particularly when harmonising) • Can also facilitate foreign investment, highlight regulatory weakness and identify areas for reform • Information must be stored to be easily accessible – because the ability to accurately store and administrate large amounts of regulatory information will become more important

7. GATS commitments of SACU member states

8. Committed sectors of SACU

9. SouthAfrica’s schedule in the distribution sector

10. Commitments of Malaysia in the distribution sector

11. South Africa and the region • What services strategy for SA? • Manufacturing sector is the focus of IPAP2 - this “productive” sector of the economy creates the “conditions for the services sector to grow” • Bilateral, regional or none? • SA has powerful services industries but bold action is needed • SA strategy however different from its trading partners – SA industries considerably more developed • Objectives of SACU member states are not aligned – in goods trade this is addressed through the revenue sharing mechanism • What are our options / preferences?