UNCTAD/CD-TFT 1 Trade in Transport Services Private Sector & Regulators Consultation

UNCTAD/CD-TFT 2 Outline SADC Protocols Introduction: key issues for trade in service Private sector participation in negotiations and regulator negotiators Key issues towards liberalization (for private sector and regulators) ◦ Policy issues ◦ Offensive and Defensive interest

UNCTAD/CD-TFT 3 The SADC Treaty and Protocols 3 SADC Treaty Protocol on Trade (1996): guarantee all transit freedom through suitable transport Undertake to harmonise and simplify customs procedures Protocol on Transport, Communications and Meteorology (1996): liberalisation and infrastructure development Protocol on Trade in Services: services sector liberalisation Protocol on Movement of Persons (2005): guarantee freedom of mtv of SADC citizen

Trade Protocol (transport services) Trade FacilitationTrade in transport services “Brick and mortar” Infrastructure issues ◦ Roads infrastructure development, weight bridge calibration, etc. Customs-related issues ◦ transit management stems/ bonds and guarantees ◦ Red tape/documentation (standardization of systems and requirements, ) Other standards and requirements ◦ Axle-load issues, vehicle standards & dimensions ◦ Road safety requirements: abnormal loads, 3 rd party MV insurance, etc. Trade policy: quota restriction administration Issues relating to discrimination ( i.e. locals are favored over foreigners ) ◦ Cabotage restrictions ◦ Recognition ◦ Multiple Road user charges ◦ 3 rd country rule Issues relating to investment ( establishing businesses abroad) Issues related to driver’s permits-movement of persons Many of the issues are overlapping !

UNCTAD/CD-TFT 5 Key issues from SADC Protocol on Trade in Services Provides for: ◦ Most-Favored –Nation Treatment: unconditionally and immediately extend other MS any favorable treatment offered to 3 rd party ◦ National treatment: non discriminatory treatment among operators (local-foreign) unless otherwise scheduled ◦ Mutual recognition of qualifications, certificates, licences (both business & driving licence) and other requirements met/obtained in another MS through an Agreement (to be negotiated) ◦ Domestic Regulation: develop disciplines on MS measures relating to qualification requirements and procedures, technical standards, and licensing requirements and procedures allow for effective market access Calls for liberalization through schedules of commitment ◦ Starting with six priority sectors : communication, energy related, finance, construction, tourism and transportation) Calls for effective regulation and transparency ◦ through prompt publication of measures applicable in services sectors, and by responding to request to share information on the same

UNCTAD/CD-TFT 6 Key Issues from Protocol on Transport, Communication and Metrology Horizontal Commitment on Transport Market liberalization (road, air and rail) to facilitate movement of goods and passengers through development of commercial road transport industry which provides effective transport services ◦ International regulatory mechanism ◦ Harmonization  Traffic regulation  Transport infrastructure  Cross border procedures etc. Institutional frameworks Funding mechanisms (infrastructure development)

UNCTAD/CD-TFT 7 Defining Trade in Services Modes of Supply Definition of 'Trade in Services’ The Draft Protocol defines how services are traded – 4 modes of supply Mode 1: Cross-Border Trade Electronic or physical movement of the services from the territory of Member Country A into the territory of Member Country B E.g. The Botswana freight transport agency faxes delivery instructions to South Africa to freight products ( over the internet, telephones e.t.c). Mode 2: Consumption Abroad Movement of consumers from the territory of Member Country A to consume a service in the territory of Member Country B E.g. A Motswana visits a South African freight forwarding agency to seek freighting services

UNCTAD/CD-TFT 8 Modes of Supply (cont.) Mode 3: Commercial Presence Establishment of a service supplier of Member Country A, through commercial presence in the territory of Member Country B T & T firm opens an office in Zambia to service the local markete.g. a subsidiary of a foreign owned T & T firm opens an office in Zambia to service the local market Mode 4: Movement of Natural Persons Temporary movement of a service provider of Member Country A to provide services in Member Country B A Botswana T & T mechanic travels to South Africa to repair the vehiclee.g. An expert who enters Botswana to temporarily provide his/her professional services (e.g. A Botswana T & T mechanic travels to South Africa to repair the vehicle ). Commercial linkages may exist among all the four modes of supply (e. Mode 3 and mode 4)

UNCTAD/CD-TFT 9 Scope & Coverage All measures affecting trade in services : purchase, payment, use, access to the public, commercial presence Measures - laws, regulations, rules, procedures, administrative decisions & actions Measures by regional, national (central and local) government  Trade in Services under the SADC Protocol on Trade in Services exclude services under governmental authority, and services procured by the Government  Excludes air traffic rights (transport)

UNCTAD/CD-TFT 10 Market access Type of limitationExamples Number of service suppliersNumerical quotas, monopolies, exclusive service suppliers Total value of service transactions or assets Numerical quotas Total number of service operations or total quantity of service output Numerical units in the form of quotas Total number of natural persons Numerical quota on number employed in a particular service sector or a service supplier may employ Specific types of legal entity or joint venture Stipulation of subsidiary, branch, representative office, JV Participation of foreign capitalmaximum percentage limit on foreign shareholding or total value of foreign investment 10

UNCTAD/CD-TFT 11 National Treatment In those sectors and modes of supply which shall be liberalised..., each State Party shall grant to services and service suppliers of another State Party … treatment no less favourable than that it accords to its own like services and service suppliers. Meaning: All SADC and domestic services and service suppliers treated unless stated 11

UNCTAD/CD-TFT 12 Classification  WTO developed 12 Sectors further divided into 160 sub-sectors (MTN,GNS/W/120, July 1991) 1.Business services 2.Communication 3.Construction and Related Engineering 4.Distribution 5.Educational 6.Environmental 7.Financial 8.Health Related and Social 9.Tourism and Travel Related 10.Recreational, Cultural and Sporting 11.Transport 12.Others (not included elsewhere)  List based on the UN Central Product Classification (CPC) – provisional version  Schedules based on the WTO classification, UN CPC Provisional version, or independently defined sub-sectors

UNCTAD/CD-TFT 13 CLASSIFICATION - Transport Services 3. Transport Services A. Maritime Transport Services B. Internal Waterways Transport C. Air Transport Services D. Space Transport E. Rail Transport Services F. Pipeline Transport G. Services Auxiliary to all Modes of Transport (cargo-handling services, storage and warehouse services, freight transport agency services and others)

UNCTAD/CD-TFT 14 What services are covered? Cargo/freight transport services Passenger transportation Rental of vessels/equipment ( with/out crew) Maintenance and repair Push and towing services Supporting services Parking services, bus station services, Highway or tunnel operations, navigation aid services etc. Other ancillary services Warehousing, cargo handling (exl. Air), 14

UNCTAD/CD-TFT 15 CRITICAL QUESTIONS TO IDENTIFY REQUESTS AND OFFERS

UNCTAD/CD-TFT 16 Participation in the Liberalization Negotiations Private sector and Regulator involvement is necessary & vital particularly in negotiating liberalisation commitments Collaboration among Policy Makers, Regulator, and Private sector Identify key players and establish consultation mechanism & compose negotiating team Familiarize with the Protocols & Guidelines, identify offensive and defensive interests Offers and requests should reflect your interests, Prepare fall back positions

UNCTAD/CD-TFT 17 Key Players in Road freight services Private sector and Civil society ◦ Transport operators, ◦ Distributors, ◦ Freight forwarders, ◦ Shippers ◦ Transport associations and NGOs dealing with Transport ◦ Consumer protection associations Government ◦ Transport Regulators, competition & National Road Authorities ◦ Customs and border agencies, local governments, ◦ Other Agencies i.e. weights/measurements/standards bureaus, traffic police, etc.

UNCTAD/CD-TFT 18 Identify offensive interests (Private Sector) Which SADC markets is your business (or your association’s members) interested in expanding into, and what trade barriers are stopping you (or them)? What market access/national treatment restrictions exist on: ◦ Setting up a business; criteria for new entrants; price controls; restrictions on commercial presence; national treatment discrimination; nationality or residency requirements?

UNCTAD/CD-TFT 19 Offensive interests Target markets: ◦ Which Country? ◦ What type of service/ customers? Market access: what market entry restriction do transport operators face in other MS including: ◦ Registration and licensing requirements, ◦ Limitations on number of operators?, ◦ Joint venture requirement?

UNCTAD/CD-TFT 20 Offensive interests (cont’d.) Are there discriminatory measures in the country of interest that are based on nationality/residence? -> e.g. different road user fees/charges, allocation of routes, market segment etc. what are desirable regulatory changes in the target market for better market access ? -> ◦ Legislation (registration and licensing) ◦ Standard documentation ◦ Harmonisation of drivers training and licensing

UNCTAD/CD-TFT 21 Defensive interest Are there any measures favoring local suppliers in the home market: ◦ do they need to be maintained? ◦ For which purpose and how long? ◦ Do the benefit of maintaining these measures outweigh the costs to consumers (higher prices) plus the maintenance of similar restrictions by other SADC partners? What is the domestic suppliers’ capacity development policy? Empowerment policy? Balanced sequencing of regulatory reforms and market liberalization

UNCTAD/CD-TFT 22 Regulators What national and regional legal frameworks are in place? Are they coherent? What are the market demands? Are existing operators efficient and effective? What reforms are required to match MD? What measures in place to ensure fair competition? Is there capacity to manage the reforms and competition? How to manage abuse of rights by operators? What is the desired level of control?

UNCTAD/CD-TFT 23 Key Policy Issues What is the national trade in services agenda? policy? objective? What are the sector policy objectives? What is the state of play? What are the services development initiatives? What are the cross-cutting issues? Are they coordinate and coherent? Is there shared understanding across sectors? Sensitivity of the sector and the balance of consumer protection and broad-based access, local operator(s) protection Vs. efficiency and effectiveness What other commitments have been undertaken in the sectors under other agreements? What are options for achieving balanced benefits and simplicity in administering implementation of these agreements?

UNCTAD/CD-TFT 24 How important is harmonization in SADC of the various transport regulations, standards and procedures for vehicles, drivers and transport operators? What are business’s main priorities?

UNCTAD/CD-TFT 25 Key Regional Preparation for Trade in Services Negotiations Conduct sectorial studies: build on existing (identify restrictions and state of play) ◦ Made available in Services website Carryout sectorial consultations (national & regional level) Devise mechanism of dealing with horizontal and cross-cutting issues (MRAs, transparency, subsidies, movement of NP etc.)

UNCTAD/CD-TFT 26 Conclusion Liberalization is desirable, thus ◦ Capitalize on commitment under the two Protocols ◦ Political backup is necessary to facilitate implementation ◦ Private sector advocacy for liberalization is important Complementary efforts are necessary such as ◦ Accelerated harmonization of regulatory frameworks ◦ Infrastructure development ◦ Trade facilitation commitment and related implementation

UNCTAD/CD-TFT 27 Thank You By: Viola Sawere Trade Policy Advisor SADC/GFA Trade in Services Project