1. SADC negotiations on trade in transport services Workshop for 22 nd TNF Services Johannesburg 5 August 2014

2. Outline State of play in negotiations Classification issues Issues arising from sector study Summary of requests and offers Issues related to TCM Protocol How will the negotiations make a difference to regional trade Decisions required Key questions for breakout groups

3. State of play with FS negotiations Sector forum – 2012 Requests from 5 Member States Initial offers from 8 Member States (of which 2 recently received) No revised offers as yet in response to bilateral negotiations

4. Africa’s transport corridors

5. SADC’s transport corridors

6. Logistics Performance Index 2012 CountryYearLPI RankLPI ScoreCustoms Infrastruc- ture Inter- national shipments Logistics compe- tence Tracking & tracing Timeliness Singapore 201214.134.104.153.994.07 4.39 Hong Kong, China 201224.123.974.124.184.084.094.28 Finland 201234.053.984.123.854.14 4.10 Germany 201244.033.874.263.674.094.054.32 Netherlands 201254.023.854.153.864.054.124.15 Denmark 201264.023.934.073.704.144.104.21 Belgium 201273.983.854.123.733.984.054.20 Japan 201283.933.724.113.613.974.034.21 United States 201293.933.674.143.563.964.114.21 United Kingdom 2012103.903.733.953.633.934.004.19

7. Logistics Performance Index 2012 CountryYearLPI RankLPI ScoreCustoms Infrastruc- ture Inter- national shipments Logistics compe- tence Tracking & tracing Timeliness South Africa 2012233.673.353.793.503.563.834.03 Malawi 2012732.812.512.783.012.852.563.09 Madagascar 2012842.722.802.40 2.80 3.13 Tanzania 2012882.652.172.412.912.642.772.97 Namibia 2012892.652.732.722.492.652.852.52 Zimbabwe 20121032.552.312.202.672.272.503.27 Angola 20121382.282.332.482.262.00 2.59 Lesotho 20121422.242.002.12 2.421.992.73 Congo, Dem. Rep. 20121432.212.101.962.232.172.352.38

8. Bilateral transport agreements in SADC COUNTRIES Angola Botswana Lesotho Malawi Mozambique Namibia South Africa Swaziland Tanzania Zambia Zimbabwe Angola - Botswana -MOU MOU-C MOU-C /MOUMOU BRT Lesotho MOU - Malawi - BP BRT C Mozambique BP - BG/BPBRT BG/BP BRT Namibia MOU-C - BRT South Africa MOU-C /MOUMOUBRTBG/BPMOU-C -MOU BRT Swaziland MOU BRT MOU - Tanzania C BG/BP -BRT Zambia BRT - Zimbabwe BRT -

9. Bilateral transport agreements The agreements: restrict the carriage of bilateral trade to carriers from the two countries prohibit cabotage provide that the regulatory authorities of the two parties shall share information concerning traffic development define the types of permits that may be issued, namely 14 days, short term (3 months), and long term (12 months) state that cargo rates and charges shall be determined by the market provide for the establishment of a joint route management group to determine transport needs on a route, among other things

10. Transport issues Current levels of liberalization Largely liberalized – road freight transport, maritime port management, auxiliary services (freight forwarding; cargo handling; storage and warehousing) Protected – passenger services; rail Air services – maintenance and repair; sales and marketing; CRS; groundhandling Limited opportunities – inland waterways, pipelines Logistics?

11. Transport issues Cabotage TCM Protocol recognizes bilateralism in transport, but how does this square with regional integration? Transport costs increased because of empty truck movements due to route and cabotage restrictions Bilateral transport agreements Accommodated by TCM How to reflect within TIS negotiations

12. Non-TIS issues Trade facilitation One of the most pressing problems - the effects of customs and revenue authority border requirements and procedures Transport regulations and standards Vehicle standards, e.g. axle weights Drivers’ regulations, e.g. drivers’ hours, work permits

13. Business wish list for transport Inter-state recognition Charges, levies, taxes Overloading control Infrastructure Border procedures and documents Bribery and corruption Market access Drivers Road safety Fitness of vehicles Varied regulations between countries

14. Classification Sun-sectorScope MaritimePorts and shipping Inland waterways AirExcludes services related to traffic rights – generally understood to cover sales and marketing, computer reservation services (CRS) and aircraft maintenance and repair services) What about ground handling? Space Rail Road Pipeline Auxiliary servicesE.g. freight forwarding, storage and warehousing, cargo handling)

15. Transport or logistics?

16. Assessment of requests DRCMUSSWZSYCZAF Maritime NAM: All sub-sectors MOZ, SYC, ZAF: All sub-sectors (Mode 3) SYC: Maritime auxiliary services All MS: All sub-sectors, especially in Mode 3 AGO, BWA, DRC, MOZ, MUS, MWI, NAM, SYC, SWZ, TZA, ZMB, ZWE: All sub-sectors Inland waterways NAM: All sub-sectors AGO, BWA, DRC, MOZ, MUS, MWI, NAM, SYC, SWZ, TZA, ZMB, ZWE: All sub-sectors Air NAM: All sub-sectors SYC, ZAF: Sales and marketing, CRS, aircraft maintenance and repair, ground handling, airport management (Mode 3) AGO, BWA, DRC, LSO, MOZ, MUS, MWI, NAM, SYC, SWZ, TZA, ZMB, ZWE: All sub- sectors Space AGO, BWA, DRC, LSO, MOZ, MUS, MWI, NAM, SYC, SWZ, TZA, ZMB, ZWE: All sub- sectors

17. Assessment of requests DRCMUSSWZSYCZAF Rail NAM: All sub-sectors AGO, BWA, DRC, LSO, MOZ, MUS, MWI, NAM, SYC, SWZ, TZA, ZMB, ZWE: All sub- sectors Road NAM: All sub-sectors SWZ: Passenger and freight; rental of commercial vehicles with driver; support services AGO, BWA, MOZ, MUS, MWI, NAM, SYC, TZA, ZMB, ZWE: All sub- sectors LSO: Rental of commercial vehicles with driver; support services AGO, BWA, DRC, MOZ, MUS, MWI, NAM, SYC, SWZ, TZA, ZMB, ZWE: All sub-sectors LSO: Passenger and freight (Modes 1 and 2); maintenance and repair (Mode 1); Rental of commercial vehicles with driver; support services

18. Assessment of requests DRCMUSSWZSYCZAF Pipeline NAM: All sub-sectors AGO, BWA, DRC, LSO, MOZ, MUS, MWI, NAM, SYC, SWZ, TZA, ZMB, ZWE: All sub- sectors Auxiliary NAM, SWZ: Cargo handling; storage and warehousing; freight transport agency services AGO, BWA, MOZ, MUS, MWI, NAM, SYC, TZA, ZMB, ZWE: All sub- sectors LSO, ZAF: Cargo handling; storage and warehousing; freight transport agency services AGO, BWA, DRC, LSO, MOZ, MUS, MWI, NAM, SYC, SWZ, TZA, ZMB, ZWE: Cargo handling; storage and warehousing; freight transport agency services

19. Assessment of offers DRCMWIMUSSYCSWZTZAZAFZMB Maritime Wide sectoral coverage – Mode 2 only Full commitment Passenger and freight transport (excluding cabotage), rental of vessels, maintenance and repair Maintenance and repair, vessel salvaging and refloating (49% foreign equity limitation in Mode 3) XMainly none Unbound except for Mode 2 X Inland waterways Wide sectoral coverage – Mode 2 only Full commitment XXXX Unbound except for Mode 2 X Air Wide sectoral coverage – Mode 2 only XBroad commitments in three sub- sectors – unbound in Mode 3 for maintenance and repair XXPassenger and freight transportation; also includes rental, maintenance and repair and support services Unbound in passenger and freight except for Mode 2; None except foreign equity limit in ancillary air services X

20. Assessment of offers DRCMWIMUSSYCSWZTZAZAFZMB Space XXXXXX Unbound except for Mode 2 X Rail Wide sectoral coverage – Mode 2 only Broad commitment – passenger and freight unbound in Mode 3 XXX Passenger, freight and maintenance and repair - mainly none Unbound except for Mode 2 X Road Wide sectoral coverage – Mode 2 only Broad commitment – passenger and freight unbound in Mode 1 XXPassenger and freight (Mode 2 only); full commitment for other sub- sectors Passenger and freight - mainly none Unbound except for Mode 2 and Mode 3 – mainly None Freight transport only, Mode 2 (full commitment); Mode 3 (incorporation in Zambia + nationality requirements)

21. Assessment of offers DRCMWIMUSSYCSWZTZAZAFZMB Pipeline X Full commitment XXXX Unbound except for Mode 2 X Auxiliary services Wide sectoral coverage – Mode 2 only Cargo handling, storage and warehousing, freight transport agency services Storage and warehousing, freight transport agency services and other services XCargo handling, storage and warehousing, freight transport agency services XUnbound except for Mode 2 X

22. Issues raised in sector study Road: A commitment from all Member States to deregulate the supply of road transport services and focus on the achievement and promotion of the quality of transport services to meet the objectives of Chapter 6 of the TCM Protocol this could include a commitment to review the relevance of restrictive measures such as the “third country rule”, which the study observes that the RISDP was intended to review in its “Facilitation of Road Transport Market Liberalisation Project”, which aimed to develop a multilateral road transport agreement to replace the myriad of bilateral agreements; Rail: The need to develop a model for regional railways that will create separate entities for track supply and maintenance, safety regulator, economic regulator and train operators in order to create conditions to permit competition

23. Issues raised in sector study Ports and maritime: The need for institutional restructuring of most ports in the region to create a system of single port authorities with local landlord jurisdiction under a national ports authority and regulator Air: A commitment and action plan to implement the Yamoussoukro Decision on air transport

24. Trade provisions in TCM Protocol Road transport “Member States shall facilitate the unimpeded flow of goods and passengers between and across their respective territories by promoting the development of a strong and competitive commercial road transport industry which provides effective transport services to consumers.” (Article 5.1, TCM Protocol) “Member States shall progressively introduce measures to liberalize their market access policies in respect of the cross-border carriage of goods [following three Phases of liberalization] [albeit guided by the need to ensure reciprocal benefits …].” (Article 5.3, TCM Protocol)

25. Trade provisions in TCM Protocol Rail transport “Member States shall facilitate the provision of a seamless, efficient, predictable, cost-effective, safe and environmentally-friendly railway service which is responsive to market needs and provides access to major centres of population and economic activity.” (Article 7.1, TCM Protocol) Maritime and inland waterways “Member States shall promote the economic and social development of the region by developing and implementing harmonized international and regional transport policies in respect of the high seas and inland waterways.” (Article 8.1, TCM Protocol) Article 8 includes such provisions as “promoting the role of the private sector in providing cargo handling services” and “the progressive elimination of restrictions, if any, on cabotage by ships registered in a Member State”

26. Trade provisions in TCM Protocol Air services Article 9 includes the provision that Member States agree to “the gradual liberalization of intra-regional air transport markets for the SADC airlines”.

27. Key questions for breakout groups Transport costs 1.How significant an issue for the SADC region are transport costs? 2.What can we learn from the study on competitive markets in transport services to help the negotiations on transport services? Offers 1.With eight offers covering transport services, how far have requests have been met? 2.How far would these offers make a real difference to regional trade and regional integration in transport services? What is still needed?

28. Key questions for breakout groups Sector study recommendations 3.To what extent do Member States believe the sector recommendations are appropriate to the objectives of regional integration in transport services? 4.How could the current negotiations support progress in these issues? 5.What scope is there for reflecting liberalization objectives in a reference paper of pro-competitive regulatory principles for the transport sector?