Overview of Lesotho’s and its Trading Partners’ Services Liberalization Commitments

National Seminar on Trade in Services Negotiations under SADC and SADC EPA

Maseru Sun, 2-4 July 2012mjelitto@sadc.int

SADC Member States

South

Africa

Leso

tho

Mala

wi

Mau

ritius

Zimbab

we

Botswan

a

Mozam

bique

Zambia

DRC

Swazi

land

Angola

Namibia

Tanzan

ia

9180

3327

21 19 17 16 12 9 5 3 1

Number of GATS Commitments

Distribution of by services sectors

Business

Communication

Constructi

on

Distrib

ution

Education

Environmental

Finan

cial

Health

Tourism

Recreati

onal

Transp

ort0

2

4

6

8

10

12

14

*Red bars denote SADC priority sectors

Lesotho’s commitments by sector*

Business

Communication

Constructi

on

Distrib

ution

Education

Environmental

Finan

cial

Tourism

Transp

ort05

101520253035404550

non-committedcommitted

*Denotes incidence of commitments, by sub-sector, without assessment of depth/quality

An even closer look (1)

1. Communication Services– Full commitment on courier services– M1 & 3 commitments on value-added telecom services– No commitment on basic telecom services– M1 commitments on audiovisual services

2. Construction Services– M 2& 3 commitments on all categories, except

• Pre-erection work at construction sites (511)• Special trade construction work• Renting services of equipment with operator

An even closer look (2)3. Financial Services

– M2 &3 commitments on all insurance services except auxiliary services (broking and agency services)

– M3 commitments in banking services except• Financial Leasing• Participation in issues of securities• Settlement and clearing services for financial assets• Advisory and auxiliary services• Provision and transfer of financial information

4. Tourism and travel-related services– M 2&3 commitments on Tour Guide Services– No commitments on Hotels and Restaurants (exc. M2), and Travel

Agencies and Tour Operator Services

An even closer look (3)5. Transport Services

– M3 commitments in Road freight and passenger, and maintenance and repair of equipment

– No commitments on• Maritime, Internal Waterways, Air, Space, Pipeline, auxiliary services

6. Energy-related services– No distinct classification category in WTO

– Commitments in the following “energy-related services:• Engineering and integrated engineering• Management consulting and related services• Technical Testing• Construction for civil engineering• Wholesale trade services of solid, liquid and gaseous fuels • Retailing services of fuel oil, bottled gas, coal, and woods

– No commitments in:• Services incidental to mining (883 & 5115)• Engineering-related scientific and technical consulting services

Overall assessment• Few priority sectors in which new commitments can be made

– Basic Telecom– Some Financial Services – Tourism (Hotels, tour operators)– Auxiliary transport services– Services Incidental to Mining

• …but some potential for improving existing commitments― M3 audiovisual services― M1 road transport services― M1 Insurance― M1/2 Banking Services

M4: Commitment to allow “4 expat senior executives and specialized skill personnel” Room for improvement?

Economic partnership with the EU in services and investment

• EU likely to bring commitments in some 90% of services sectors to the table (based on Cariforum outcome)

• Commitments comprise 27 EU Member States• Usability of commitments needs to be

evaluated closely against Lesotho’s trade potential

Economic partnership with the EU in services

• EU proposes chapters on best practice regulation in certain sectors (telecom, financial services, computer services, postal and courier, maritime transport)

• Commitments comprise 27 EU Member States• Usability of commitments needs to be

evaluated closely against Lesotho’s trade potential

Negotiations under SADC –main principles

• Conducted through request - offer method • Requests exchanged before offers• Requests to one or more trading partner• To be circulated through the SADC Secretariat• Full transparency: requests to any trading

partner shared with all trading partners

Making requests to trading partners

1. Evaluate trading opportunities in the relevant sectors

Where are you trading already now? what sectors? what markets? What modes?

Potential to expand services trade ? what sectors? what markets? What modes?

Making requests to trading partners

2. Examine current market situation Are the sectors of interest listed in commitments of trading

partners? What is the level of commitments?

• Have relevant Modes been bound?• Are they subject to quotas or equity restrictions? Etc.• Are your suppliers facing discrimination?

Are certain regulatory measures of concern? Are there MFN exemptions that affect your interests?

Making requests to trading partners

3. Strategic Considerations Evaluate the requests in accordance with their

economic, and strategic importance Requests also to non-key markets? Horizontal requests? ->covering all sectors, MS, equally Compare the value of your requests with the value of

your offers – are they roughly commensurate? …take into account current level of openness, LDC

status etc.

Formulating offers1 Assess the REQUESTS received2 Evaluate trade & development interests

Promotion of FDI? Improvements in business and/or social

infrastructures? Promotion of knowledge transfer? Reduction/elimination of domestic supply gaps? Other social/economic/regional policy objectives?

3 Draft proposed offer

Consult with relevant ministries & stakeholders

Use existing schedule/or list of MFN exemptions as a basis, then clearly mark changes (use agreed editorial conventions)

Consider technical corrections and clarifications

Consult SADC Secretariat for advice if needed

Summary: What do you want?Underpin national development objectives

Sustainable development and poverty

reduction

Employment

Export diversificatio

n

Technology transferLocalisation

Investment

Strategic drivers• Remove barriers on foreign

markets• Gain preferences

Increase current exports

• Where is FDI, skills needed to develop potential?

• Enhance access for potential exports

Develop potential

• Where does competition need to be introduced?

• Is opening up sufficient?

Reduce business

costs

• What vulnerable sectors have high employment?

• Is adjustment possible? (timing)

Defend sensitivities

Trade offs

Thank you very much for your attention

Question?Comments?