Services and SACU Paul Kruger

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

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: 2.COMMUNICATION SERVICESLimitations on Market AccessLimitations on National Treatment D. Audio Visual Services c. Radio and Television services (CPC 9613) 1) Unbound 2) None 3) Foreign ownership limited to 20 percent for commercial broadcasting companies 4) Unbound, except as indicated in the horizontal section 1) Unbound 2) None 3) Foreign directors of commercial broadcasting companies limited to 20 percent 4) Unbound, except as indicated in the horizontal section

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

That is where the difference comes 2.COMMUNICATION SERVICESLimitations on Market AccessLimitations on National Treatment D. Audio Visual Services c. Radio and Television services (CPC 9613) 1) Unbound 2) None 3) Unbound 4) Unbound, except as indicated in the horizontal section 1) None 2) None 3) Unbound 4) Unbound, except as indicated in the horizontal section 2.COMMUNICATION SERVICESLimitations on Market AccessLimitations on National Treatment D. Audio Visual Services c. Radio and Television services (CPC 9613) 1) The regulator can prescribe local content requirements 2) None 3) Foreign ownership limited to 20 percent for commercial broadcasting companies 4) Unbound, except as indicated in the horizontal section 1) None 2) None 3) Foreign directors of commercial broadcasting companies limited to 20 percent 4) Unbound, except as indicated in the horizontal section

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

GATS commitments of SACU member states Sectors scheduled (out of 12) Sub-sectors scheduled (out of 160) Percentage of sub-sectors liberalised Botswana % Lesotho % Namibia231.88% South Africa % Swaziland395.63%

Committed sectors of SACU BotswanaLesothoNamibiaSouth AfricaSwaziland BusinessXXXXX CommunicationXXX ConstructionXX DistributionXX EducationX EnvironmentXX FinancialXX Health & SocialX TourismXXXXX Culture & Sports TransportXX OtherXX

South Africas schedule in the distribution sector

Commitments of Malaysia in the distribution sector

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?