Honourable Speaker,
Honourable Members of Parliament,
Ladies and gentlemen.
It is an honour for me to speak at this Parliamentary Debate on the ratification of the Southern African Development Community (SADC) Protocol on Trade in Services covering the 15 Member States of SADC. The Ratification of this protocol represents a significant advance in our agenda for regional integration in Southern Africa, and beyond
Honourable Members may be aware the services sectors account for around 50% of the GDP for developing countries and around 70% for developed countries. You may also be aware that international trade in services is an important and growing component of global trade. In 2012, according to World Trade Organisation (WTO) statistics, global services exports were valued at US$4.3 trillion and accounted for 23.4 per cent of the world's total exports.
South Africa also has a well-developed services sector that accounts for around 67% of our GDP, and our trade in services accounts for 14.3% of our total trade. South Africa is very active in services trade in SADC and in Africa particularly in retail, banking, telecommunications and transport sectors. South Africa is also involved in services relating to oil production and in legal services throughout the region.
Let me provide some background to the SADC Protocol for Trade in Services. The PTS is envisioned in the founding SADC Treaty of 1996 in Articles related to areas of future cooperation, and it is also specifically noted in Article 23 of the SADC Trade Protocol. At the 32nd SADC Summit, held in Maputo, Mozambique, in August 2012, our Heads of State and Government approved that the Protocol be submitted to our national governments to fulfil their respective domestic procedures for ratification.
The Protocol before this House now sets out the legal framework for Trade in Services in SADC and this Protocol will require ratification by two-thirds of SADC Members for it to enter into force. The protocol is structured on an agreement that all members of SADC are already parties to; that is, the WTO General Agreement on Trade in Services (GATS) which itself allows for preferential services trade agreements among subsets of WTO Members such as the SADC Members.
The overall objective of the PTS is to promote regional integration in SADC by moving to establish a single, regional market for services trade. Services market integration will be an essential and significant contribution to wider regional economic integration.
In addition, the PTS aims to:
- First, promote sustainable economic growth and development in the region
- Second, enhance economic diversification and investment in the services economies of the region
- Third, promote intra-regional trade in services on the basis of mutual benefit and eliminate substantially all discrimination in services trade between Members
- Fourth, create a single market for trade in services, and importantly
- Fifth, it preserves the right of governments to regulate and to introduce new regulations in the public interest.
There is a range of general obligations and definitions under the PTS. The PTS defines the modes of services supply (cross-border, consumption abroad, commercial presence, movement of natural persons).
The PTS establishes the principle of most favoured nation treatment by which a country must treat all SADC Members according to the best treatment it accords any one for trade in services. It provides guidelines for domestic regulation affecting services trade to be administered in a reasonable, objective, transparent and impartial manner.
The PTS also allows for mutual recognition of countries’ licenses, qualifications and regulations, in instances where it can be agreed between countries. In terms of the PTS, Members retain the right to regulate the entry and stay, work and labour conditions for natural persons involved in trade in services. The PTS promotes transparency in regulations affecting trade in services and regulates treatment of monopolies and exclusive service suppliers to avoid abuse of monopoly position.
At the same time, the PTS does not prevent Members from using subsidies to support development and it excludes government procurement from any disciplines. The PTS further provides for general exceptions to allow Government to introduce measures that:
- protect public morals
- protect human, animal or plant life or health
- prevent fraud
- avoid double taxation.
There is also a range of specific obligations under the PTS. SADC Members will negotiate specific commitments to open their services markets for trade, and to limit any restrictions on the number, value, persons, or commercial presence that provide services across the region.
The PTS will oblige all SADC Members to provide national treatment through which foreign services providers must be treated the same as domestic service providers, unless stipulated otherwise in specific commitments.
The PTS further provides for progressive trade liberalisation through successive rounds of negotiations within 3 years of completion of previous round, taking into account differences in economic development. Six priority sectors are identified and agreed for the first round of negotiations namely: communication, construction, energy, finance, tourism, transport.
The other sectors will be negotiated in future rounds. The negotiations take place on a request and offer basis. Five countries (including South Africa) have submitted requests and four countries have already submitted offers.
Honourable Members, services integration represents a key step in deepening integration and development in SADC. The creation of a regional market will support emergence and development of regional firms that can provide their services to a larger market and thereby grow and prosper. Further, the steady emergence of competitive higher quality services will underpin enhanced economic activity across the region will support wider industrial and infrastructure development across SADC.
South Africa is already also a significant exporter of services to African economies and the PTS will lay the basis to enhancing the access our companies will enjoy to the region. In this way South African firms can contribute to economic development in the region particularly in countries where there is a shortage of quality and efficiently priced services that is required to underpin other economic activities.
It also needs to be said that the SADC PTS will also lay basis for a wider process on services integration in Africa through the Tripartite Free Trade Area which also envisions a trade in services agreement between the 26 member states that make up SADC, the East African Community and COMESA. The SADC Protocol on Services will be a platform for that process.
Ratification and implementation of the SADC Protocol on Trade in Services supports the National Development Plan (NDP). The NDP had identified trade in services as an area that deserves more attention and states that South Africa is not sufficiently exploiting existing demand for services. Therefore, South Africa will need to position itself on the African continent to take advantage of its capabilities.
Honourable Members, the services sectors are vital to the future development of the South African economy and these have made major contributions to employment and GDP and provide support to a competitive manufacturing sector. The Protocol and the market access negotiations that will follow will help to lay the basis for continuing to build South Africa’s service sectors that can benefit our economy and, at the same time, support wider development across the region.
Against this background, I have no hesitation in calling on Members of Parliament to ratify the Protocol. This will be an important step towards the entry into force of the Protocol and will complement the ongoing negotiations to make the specific commitments that will assist in integrating the SADC services market and make a significant contribution to the integration process in SADC, an objective to which this Government remains committed.
