ECOWAS S PERSPECTIVES AND PRIORITES FOR TRADE IN SERVICES SECTOR,

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1 ECONOMIC COMMUNITY OF WEST AFRICAN STATES COMMUNAUTE ECONOMIQUE DES ETATS DE L AFRIQUEL DE L OUEST L ECOWAS S PERSPECTIVES AND PRIORITES FOR TRADE IN SERVICES SECTOR, A PRESENTATION BY HONONOURABLE M. B. DARAMY, COMMISIONER FOR TRADE, CUSTOMS, TOURISM, INDUSTRY AND FREE MOVEMENT, ECOWAS COMMISSION, ABUJA AT THE SEMINAR ON SERVICES AND INVESTMENT IN THE CONTEXT OF THE EU-WEST AFRICA EPAs ORGANISED BY THE EUROPEAN COMMISION AT HOTEL LESAMEDIES, DAKAR, SENEGAL JANUARY 2009

2 Format of Presentation 1. ECOWAS perspectives on trade in services 2. Preliminary discussions on trade in Services between West Africa and European Union EPA; 3. The general Agreement on Trade in services and Services in the EPAs ; 4. Objectives for West Africa in trade in Services during the first t and second phases of the West Africa - EU EPA negotiations ; 5. Constraints facing the development of the services sector in West Africa 6. Conclusions: Actions/measures required by both West Africa and the European Union to remove the constraints to the development of service sectors in West Africa.

3 ECOWAS PERSPECTIVES ON TRADE IN SERVICES Over the last two decades, the service sector of the economy has grown in importance, contributing to a growing share of GDP and employment in many countries. Presently, the service sector contributes about 60% of global output, 30% of global employment and 20% of global trade. The World Bank (ODI briefing Note Series 2008) estimated that liberalization of trade in services will add US$ 6 trillion to incomes i in developing countries by 2015, which is 4 times that obtained from trade in goods. Services are heterogenous, intangible and usually produced and consumed in the same location. Services are key inputs to other economic sectors and are part of o the investment climate, Impact overall business performance, on the level of investment and hence growth and productivity in a particular economy.

4 ECOWAS PERSPECTIVES ON TRADE IN SERVICES Potential contribution to development is in terms: GDP, job creation, input to other economic sectors, health, education, water and sanitation etc Import of services brings greater competition, international best practices, better skills and technologies and investment capital of export and import services.

5 2. PRELIMINARY DISCUSSIONS BETWEEN WEST AFRICA AND EUROPEAN UNION EPAs ON SERVICES The WA negotiators and their counterparts at the EU agreed in principle that the EPA should: Contribute to improving the overall efficiency of the economy and d the competitiveness ( considered to be a growth and development catalyst ) of all the service sectors and sub sectors deemed priority sectors and sub-sectors, sectors, strengthen the regulatory mechanisms, Ensure better promotion of competition in those sectors and Improve the statistical system on services. The parties also subscribed to the cardinal principle under the EPA negotiations, the improvement of special and differential treatment. ent. It was emphasized in the joint report that the commitments to be subscribed to by the European Union under the EPA shall take into account the provisions of paragraph 4 of article 34 and paragraph h 2 of article 41 of the CPA and article XIX of the GATS by virtue of o which the Community pledges to give sympathetic attention to the priorities of ACP states in order to improve the list of EC commitments, so as to take care of the specific interests of these countries

6 2. PRELIMINARY DISCUSSIONS BETWEEN WEST AFRICA AND EUROPEAN UNION EPAs ON SERVICES Consequently, the WA region expects that the EPA text on services to be agreed to by both parties will conform to the commitments referred to above and rest on the guiding principles on which the EPA negotiations on services will be based. Thus, both parties agreed to address the key challenges of the services sectors in West Africa, namely, The low level of development of the sectors ; The low level of export of services ; The poor technical and human resource capacity of the regulatory agencies and mechanisms.

7 3. THE GENERAL AGREEMENT ON TRADE IN SERVICES GATS AND SERVICES IN THE EPA: GATS, was one of the outcomes of the Uruguay round of negotiations that came into force in It stipulated the progressive liberalization of trade in services s and its harmonization with trade in goods. There was no obligation on the part of any WTO member to open up any services sector to external trade. Every WTO member is free to choose which sector and to what extent it can open its services sector to foreign operators. Even if a WTO member opens its trade in services, GATS recognizes the right of such WTO member to regulate that sector. It is to be noted that services supplied in the exercise of the functions of Government are excluded from GATS.

8 4. OBJECTIVES FOR WEST AFRICA IN TRADE IN SERVICES DURING THE FIRST AND SECOND PHASES OF THE WA - EU EPA NEGOTIATIONS During the second phase, , 2007, a joint WA/EU technical committee on Services was established and was overseen by the MMC. The objectives of both phases 1 and 2 were guided by the following principles: Gradual liberalization with appropriate local capacity building programmes ; Key role in development, if it benefits the entire economy including agriculture and industry ; Special and differential treatment provisions to be considered Substantial sectoral coverage to achieve synergy Elimination of discrimination in most sectors while providing for transitional periods for implementation Negotiation of specific commitments in all service procurement methods.

9 4. OBJECTIVES FOR WEST AFRICA IN TRADE IN SERVICES DURING THE FIRST AND SECOND PHASES OF THE WA - EU EPA NEGOTIATIONS The following criteria were established for the selection of priority service sectors: Importance of sector to national economy, Sectors with large trade flows (financial and quantitative), Long lasting impact on economy, Long lasting impact on employment, health, education and vulnerable groups, Supplies essential natural resources and linked to major national resources and has impact on social, human and economic development. Some sectors were identified as follows: Distributions, tourism and travel, construction and related engineering, financial services, recreation, sports and culture, transport (air, marine, waterways, rail, air and all services related to all modes of transport.

10 5. CHALLENGES FACING THE DEVELOPMENT OF THE SERVICES SECTORS IN WEST AFRICA Supply side constraints, limited domestic market Limited access to financial services and technology Deficiency in skills and training Inadequate or underdeveloped infrastructure Inefficient bureaucracies, Inadequate regulatory systems and legal institutions, political instability and security considerations are added burdens. Specific sectors have inherent risks, e.g. The financial sector Presently, in West Africa, Ghana is the only West African country in the top 10 in Africa of African services trade.

11 Conclusion: MEASURES REQUIRED TO TACKLE THE CHALLENGES TWO PERSPECTIVES: West Africa and EU. 1. West African Countries: Improve domestic governance and regulatory framework Increase competition by eliminating government monopolies and oligopolies Liberalise those service sectors that will attract FDI and appropriate technology Develop some service sectors with neighbours, examples, MRU, Gambia and Senegal Enhance export capacity and human development

12 EUROPEAN UNION: Include in the draft text on services provisions on special and differential treatment to place the two regions on unequal terms considering the size of the economies and levels of development of the two regions Include greater commitments on the part of the EC in favour of West Africa, than the ones the community made at the WTO Commitments made by the EC should support the development of the West African economy The EC should first and foremost stress the development of service sectors and sub-sectors sectors in West Africa

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