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    6 Jan, 2020

    Get to know more about the SADC Protocol on Trade in Services

    Trade in goods and services constitute a major area of cooperation in support of economic development and poverty eradication in the Southern African Development Community (SADC).

    Mindful that services can play a crucial part in the transformation and sustainability of an economy, as well as to assist in the creation of employment opportunities, the SADC Heads of States and Governments signed the SADC Protocol on Trade in Services in August 2012.

    The Protocol on Trade in Services (PTIS) has six primary objectives as set out in article 2, which can be interpreted into one main objective namely, to level the playing field among SADC members by ensuring that industries and consumers take full advantage of a single regional services market.

    SADC Members are convinced that this Protocol is a step in the right direction in dealing with the challenges of globalization, hence it is expected that an integrated regional market will generate new opportunities that will strengthen the region's service capacity, efficiency and competitiveness. The Protocol, also aims to encourage competition and attract more foreign direct investment to the SADC region.

    The general obligations of the Protocol are:

    •  To cover the most favoured nation (MFN) treatment principle. According to this principle a country has to treat all SADC countries the same according to the best treatment it accords any of them.
    • To establish the right to regulate services. A country may regulate or introduce new regulations in order to meet national policy objectives provided it does not impair right and obligations arising under the Protocol.
    • To provide for guidelines on the treatment of domestic regulation. These have to be administered in a reasonable, objective, transparent and impartial manner.
    • To cover the treatment of mutual recognition. Two or more countries can agree to recognise the other’s qualifica-tions, licenses, requirements or other regulations, but have to give others the opportunity to become party to such an agreement if they can show that they conform to such measures.
    • To promote transparency of regulations.
    • To provide certain general exceptions to the obligations of the Protocol. A country can take measures going against its obligations in cases where it relates to: protection of public morals protection of human, animal or plant life or health prevention of fraud individual privacy avoidance of double taxation
    • To describe the treatment of subsidies. Subsidies are allowed, but Ministers shall decide on negotiating mechanisms or disciplines to avoid the trade distortive effects of subsidies.
    • To regulate the treatment of monopolies and exclusive service providers. Where a monopoly supplier of a service competes outside the scope of its monopoly, countries have to ensure that such a supplier does not abuse its monopoly position.

    The specific obligations of the Protocol apply in relation to the specific commitments that a country has made and relate to:

     Market access. A country undertakes not to adopt or maintain limitations or measures:

    • On the number of service suppliers.
    • On the total value of service transactions or assets.
    • On the total number of service operations.
    • On the total number of natural persons that may be employed. Which restrict or require specific types of legal entities.
    • On the participation of foreign capital (limitation of foreign shareholding) unless such limitations or measures are stipulated in that countries specific commitments.

    National treatment. This requires a country to treat foreign service providers the same as it treats its domestic service providers, unless a limitation or condition has been stipulated in that countries specific commitments.

    Progressive trade liberalization. This provides for successive rounds of negotiations within 3 years of the completion of the previous round. The first round covered the six priority services sectors i.e. communication, construction, finance, energy, tourism and transport. These negotiations were scheduled to be concluded by March 2015, but were further extended to September 2016. By March 2015, eleven SADC member states submitted offers of which most covered only communication, finance, tourism and transport services.

    Temporary movement of natural persons. Countries can apply their laws and regulations regarding entry and stay. This protocol does not extend to persons seeking employment or does not confer the right of access to the labour market of another country.

     Other matters relating to Trade in Services Protocol have provisions regulating the following issues:

    • Promotion of trade and investment by SADC Members.
    • How to treat anticompetitive business practices.
    • The non-restriction of transfers into and out of the territory of a country. This would include capital transfers, returns, payments, royalties and proceeds of the sale of investments.
    • Labour market integration agreements.
    • Denial of benefits of this Protocol to a service supplier of a SADC country where it is established that the service is being provided by an enterprise that is owned or controlled by persons of a non-SADC country.
    • Applying for a waiver of the obligations of the Protocol in the case of an emergency. Through this Protocol, SADC Member States aim to expand services exports by cooperative mechanisms that will produce a dynamic trade sector throughout the SADC region. Trade in Services will assist with the eradication of poverty by establishing better employment possibilities and by providing access to a wider range of services at competitive prices

    The article was covered in the December 2019 edition of the SADC Inside Newsletter


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