Services Trade Capacity Building Workshop. Accra, Ghana, 8-12 March, 2005

Transcription

1 Services Trade Capacity Building Workshop Accra, Ghana, 8-12 March, 2005 Transportation and Trade in Sub-Saharan Africa: Navigating the GATS Request-Offer Process Executive Summary* *Full version of paper to be distributed in March/April 2005.

2 EXECUTIVE SUMMARY 1. INTRODUCTION The purpose of the paper which will be distributed in March/April 2005 is to guide African countries in the GATS request/offer process in the transportation sector. This Executive Summary contains the key conclusions from that paper. 2. THE IMPORTANCE OF GATS COMMITMENTS IN THE TRANSPORTATION SECTOR Transportation services play two roles in African countries, one as an enabler of development and of trade in goods through the reduction of transaction costs, and another as a sector which constitutes imports/exports in its own right. Our interest in the transportation sector extends to both these roles. The paper finds that there are serious transport-related problems facing importers and exporters in sub-saharan Africa that impede the ability of countries to trade internationally. These are (i) lack of transport infrastructure; (ii) the high cost of transport services; and (iii) inefficiencies in transport services. The paper finds that high costs and inefficiencies in particular are very often policy-induced, with causes including laws and regulations that preserve state-ownership/monopolies, lack of competition, excessive bureaucracy, opaque administrative structures, and red tape. It suggests that such policy-induced problems are avoidable and can be addressed through regulatory reform which may include introduction of more competition through opening the sector to foreign suppliers. The removal of restrictions on foreign providers in accordance with the GATS can result in more efficient, cheaper, and plentiful services. However, even assuming the suggested benefits of liberalization in the transport sector, a key question for sub- Saharan African countries remains. Namely, what benefits are likely to accrue from making GATS commitments in the transportation sector, and conversely, what detriments could follow? In other words, why make GATS commitments at all? Why not simply follow a course of liberalization in the absence of binding commitments? The answer is that there are potential benefits and negative consequences in each alternative. First, making GATS commitments is a means with which to signal credibility to both foreign and domestic investors. A commitment tells investors that the terms upon which they expend large capital outlays will remain fixed and sheltered from the arbitrary exercise of political or administrative discretion, and that the domestic market will be liberalized according to a fixed schedule. 1 As well, foreign investors are likely to be more willing to invest in a country that maintains fewer and more transparent restrictions. 2 Second, the negotiating process may be used as a political tool to advance domestic liberalization of services where there are domestic groups who 1 {Cohen, } 2 {Mosoti, 2002 #50} 1

3 resist reforms because they would benefit from continued protection. Third, making commitments can be of practical value in light of the GATS negotiating structure because making concessions in one area may assist in obtaining trade concessions elsewhere (whether in different sectors or subsectors, or in different modes). Liberalization on its own will not be able to do this. Fourth, in terms of export interests, the GATS helps to secure access to markets that are not already open. On the negative side, there is a danger that opening up markets to foreign operators may result in a concentration of operators. For example, it has been noted that a relatively small group of port operators has established a worldwide presence. 3 A danger is that dominant operators may abuse their market power and that the benefits of liberalization may be captured by foreign firms. Another potential negative aspect of liberalizing commitments under the GATS is the nature and style of adjustments required in domestic economies, including labour market adjustments where increased foreign investment alters the make-up of the domestic labour market. 3. HOW THE GATS WORKS The GATS covers all internationally-traded transport services: air, maritime, road, rail, internal waterways, and pipeline. It covers four ways in which these services can be traded, known as modes of supply. These modes are noted below and examples of their application to transportation services are provided in Appendix A. Cross-border supply services are supplied from one country to another; Consumption abroad consumers from one country purchase services in another country; Commercial presence a company from one country sets up a subsidiary or branch to provide services in another country; and Movement of natural persons individuals travel from their own country to supply services in another. The GATS has two levels of obligations: general and specific. The general obligations apply to all transportation sectors, even where they are not subject to commitments by Member governments. The most important of these is the most-favoured nation (MFN) rule which provides that Members must treat service suppliers of every other WTO Member as well as it treats those from its most favoured trading partner. In order to provide more favourable treatment to certain trading partners, however, governments may enter up to 10-year exemptions from the MFN principle in their schedules. The specific obligations only apply to those sectors which Members have committed in their national schedules. A market access commitment requires that foreign service providers be granted access to the domestic market on terms no less favourable than those provided for in its Schedule. A national treatment commitment requires 3 {The World Bank, } 2

4 governments to afford treatment to foreign service providers that is no less favourable than that afforded to domestic providers. Members have some flexibility when making commitments. For those sectors and sub-sectors they choose to commit, governments may set limitations specifying the level of market access and the degree of national treatment they are prepared to guarantee. Governments are also able to limit commitments to one or more of the modes of supply through which services are traded. The following table provides an example of a commitment in the road transport sector. The format is that used in the national schedules: the word none indicates that the country is making a commitment in that mode with no limitations attached (looking at the market access column for example, full commitments have been made in modes one and two); the word unbound means that no commitments have been made in that mode (looking at the market access column for example, no commitments have been make in mode four); and limitations are noted where relevant (looking at the market access column for example, mode three is limited with respect to the form of incorporation allowed and the level of foreign equity investment). Modes of supply: (1) Cross-border supply (2) Consumption Abroad (3) Commercial Presence (4) Presence of Natural Persons Sector or Subsector ROAD TRANSPORT Freight Transportation Limitations on Market Access 1. None 2. None 3. Only in the form of joint ventures, with foreign equity investment not to exceed 75%. 4. Unbound 4. PREPARING FOR THE DOHA REQUEST/OFFER PROCESS Limitations on National Treatment 1. None 2. None 3. None 4. Unbound The paper suggests that there are several steps that African countries need to work through prior to engaging in the Doha Round request-offer process. These can be summarized as follows. Step 1. Define economic and social policy objectives in the transport sector Countries need a clear plan for the policy objectives they want to achieve in the transportation sector. These objectives should drive the liberalization process. Economic objectives might include introducing competition into the market so as to increase the amount and efficiency of available services. Social policy objectives might include ensuring access to transportation infrastructure for people in rural areas and services, as well as ensuring safety and security of transportation services. This step will require extensive consultation with interested stakeholders, including consumers of transport services, suppliers of transport services (both local and foreign), the public, and regulators. Step 2. Identify objectives for the request-offer process 3

5 Countries need to identify their objectives for the request-offer process. With respect to requests, countries need to identify their export interests in the transportation sector and determine how and where they wish to pursue those interests. With respect to offers, countries need to determine whether increased foreign presence in their domestic transport markets would help to advance the economic and social policy goals that they have set. Step 2 requires comprehensive consultation with stakeholders and all perspectives need to be obtained and considered, namely, regulators (e.g., port authority, vehicle licensing authority, unions, etc), service suppliers (both public and private sector), as well as consumers. The OECD has published a list of factors that countries should consider in formulating a request or offer. The list is a useful one and we reproduce it in Appendix B. Working through the items in the list will help countries to identify their objectives for the request-offer process. Step 3. Identify restrictions that (a) face their domestic suppliers in accessing and operating in foreign markets; and (b) face foreign suppliers in accessing and operating in their domestic market Step (a) necessitates finding out what non-tariff or regulatory restrictions transport service exporters are encountering in foreign markets. Step (b) necessitates consulting foreign firms established in the local market regarding difficulties they encounter in operating in the domestic market. There are many ways in which domestic rules and regulations can restrict market access and national treatment. In addition, the laws and regulations as they appear on the books will not always tell the full story and it will be important to consult with firms to ascertain how the laws/regulations actually work in practice, and the full extent of restrictions they really face. In Appendix C we list, by way of example, some of the most common restrictions on foreign firms that are seen in the transport sector. Step 4. Review the current regulatory framework and where necessary, make amendments so that a framework is in place which will support desired economic and social policy objectives, while ensuring consistency with proposed GATS commitments Having defined economic and social policy objectives, countries need to review their regulatory framework and make amendments where necessary to further their objectives. The framework should be consistent with proposed market access and national treatment commitments. The table in Appendix D provides a hypothetical example of amendments that would be required to legislation in order to remove restrictions in mode three (commercial presence). Step 5. Identify where the GATS special and differential treatment provisions could be used to their advantage Sub-Saharan African countries need to consider how they can utilize the special and differential treatment provisions in the GATS. In particular, they need to examine the possibility of including access conditions to help 4

6 achieve their national policy objectives, for example, requiring commercial presence in the form of joint ventures that will employ and train local employees. 5. MAKING OFFERS AND REQUESTS Requests: The critical steps for making requests are the second and third steps. Once these have been completed, countries will be able to formulate their requests. Offers: The consequences of making offers are more far-reaching than making requests, and offers should not be made until all five steps have been completed. In making any of these offers, countries may be either (a) binding liberalizing reforms they have already made in accordance with the regulatory status quo, (b) committing to reducing exiting restrictions to trade or investment in services through de novo liberalization, or (c) making commitments that are below the regulatory status quo in terms of market access and national treatment. Whatever commitments are made, countries may decide to make them immediately binding or to pre-commit to liberalization at a later date. In Appendix E we set out examples of the kinds of requests and offers that a country can make. 5

7 APPENDIX A Modes of Supply Under the GATS Below we set out an example of what each of the four modes of supply means with respect to the various transportation subsectors. Maritime Freight transportation Mode 1: Cross-border supply: Maersk Sealand (a Danish company) ships goods for a Tanzanian company to another country = export for Denmark / import for Tanzania Mode 2: Consumption abroad: A Tanzanian company purchases freight transportation services from Maersk Sealand to ship its goods from one port in Australia to another port in Australia = export for Denmark / import for Tanzania Mode 3: Commercial presence: Maersk Sealand (a Danish company) has a branch office in Tanzania = export for Denmark / import for Tanzania Mode 4: Movement of natural persons: A Danish person goes to work at the Tanzanian branch office of Maersk Sealand = export for Denmark / import for Tanzania Rental of vessels with crew Mode 1: A Namibian company charters an Australian ship with crew to carry goods from Namibia to Australia = export for Australia / import for Namibia Mode 2: A Namibian company charters an Australian ship with crew to carry goods from one port in Australia to another port in Australia = export for Australia / import for Namibia Mode 3: An Australian shipping company sets up a branch office in Namibia to rent vessels with crew = export for Australia / import for Namibia Mode 4: An Australian national comes to Namibia to work in the branch office of its shipping company that rents vessels with crew = export for Australia / import for Namibia Maintenance and repair of vessels Mode 1: Appears to be technically infeasible. 4 4 It is possible that a person in one country performing repair services on a ship might need to telephone someone in another country to get advice on how to perform the repairs. This advice would constitute a cross-border service, however, it might be considered a consulting service and therefore not part of this sub-sector. 6

8 Mode 2: An Angolan ship is taken in for repairs in Durban, South Africa to a local engineering company = export for South Africa / Import for Angola Mode 3: A South African engineering company maintains a commercial presence in Angola for the purpose of carrying out maintenance and repair services there = export for South Africa / Import for Angola Mode 4: A South African engineer works temporarily in Angola at the Angolan branch of a South African engineering company that provides maintenance and repair services there = export for South African / Import for Angola Pushing and towing services Mode 1: Appears to be technically infeasible. 5 Mode 2: A Kenyan ship obtains towage services in a French port from a French tug operations company = export for France / import for Kenya Mode 3: A French harbour tug operations company sets up a branch office to provide towage services in the port of Mombassa, Kenya = export for France / import for Kenya Mode 4: A French national visits Kenya to carry out business in the branch office of the tug operations company in Mombassa = export for France / import for Kenya Maritime cargo handling services Mode 1: Appears to be technically infeasible. Mode 2: A Cameroon company has its exports of copper unloaded in a Spanish port by a Spanish stevedoring company = export for Spain / import for Cameroon Mode 3: A Spanish stevedoring company sets up operations in Cameroon to provide stevedoring services in the port at Bonaberi = export for Spain / import for Cameroon Mode 4: A Spanish stevedore worker comes to work for three months in the Cameroon branch of the Spanish stevedoring company = export for Spain / import for Cameroon 5 The author is unaware of a practical situation where it might arise, but cross-border services in this sub-sector may be feasible where a tugging service has to cross borders, in a narrow strait for example. 7

9 Storage and warehousing services Mode 1: Appears to be technically infeasible. Mode 2: A Mozambique company stores its cassava in a warehouse in France on arrival from Mozambique prior to distribution = export for France / import for Mozambique Mode 3: A French freight company sets up warehousing operations in a Mozambique port = export for France / import for Mozambique Mode 4: A French manager spends six weeks in Mozambique to help set up its warehousing operations there = export for France / import for Mozambique Customs clearance services Mode 1: Appears to be technically infeasible Mode 2: A company from Côte d Ivoire obtains customs clearance services from a company in the Netherlands with respect to its exports of cocoa = export for the Netherlands / import for Côte d Ivoire Mode 3: A company from the Netherlands sets up a business in Côte d Ivoire to provide customs clearance services for companies exporting goods to Côte d Ivoire = export for the Netherlands / import for Côte d Ivoire Mode 4: A manager from the Netherlands company spends six weeks in Côte d Ivoire to help set up the branch there = export for the Netherlands / import for Côte d Ivoire Container station and depot services Mode 1: Appears to be technically infeasible Mode 2: Chinese shipping company utilizes container storage facilities in Mauritania to store its containers = export for Mauritania / import for China Mode 3: Chinese company operates a container storage facility in Mauritania which is sometimes used by Mauritanian companies = export for China / import for Mauritania Mode 4: A Chinese national spends three months working in the Mauritania branch of a container storage company = export for China / import for Mauritania Maritime agency services Mode 1: Appears to be technically infeasible. Mode 2: A Nigerian shipping line uses the services of an agency in South Korea to represent its shipping services there = export for South Korea / import for Nigeria Mode 3: A South Korean entity sets up an agency in Nigeria to act on behalf of South Korean shipping lines = export for South Korea / import for Nigeria 8

10 Mode 4: A South Korean manager spends six weeks in Nigeria to set up the operations for the shipping agency there and to train staff = export for South Korea / import for Nigeria Freight forwarding services Mode 1: Appears to be technically infeasible. Mode 2: A Senegalese company uses the services of a freight-forwarder in France with respect to its shipment of commodities to France and then on to Belgium export for France / import for Senegal Mode 3: A French freight-forwarding company sets up a branch in Senegal = export for France / import for Senegal Mode 4: A French administrative worker spends six months working in the branch of the French freightforwarding company in Senegal = export for France / import for Senegal Road Freight transportation Mode 1: A company from Botswana sends freight by truck from Gaborone to Johannesburg on a South African-owned truck = export for South Africa / import for Botswana Mode 2: A company from Botswana with a branch in South Africa sends freight by truck from Johannesburg to Durban = export for South Africa / import for Botswana Mode 3: The South African trucking company has a branch office in Gaborone = export for South Africa / import for Botswana Mode 4: A South African goes to work at the Gaborone branch office of the South African trucking company = export for South Africa / import for Botswana Rental of commercial vehicles with an operator Mode 1: A diamond mining company from Botswana rents a truck with operator from a South African company to take its diamonds from the mine to the port at Durban in South Africa = export for South Africa / import for Botswana Mode 2: A company from Botswana with an operation in South Africa rents a truck with operator from a South African trucking company there = export for South Africa / import for Botswana Mode 3: A South African trucking company sets up a branch in Francistown, where it rents truckers with operators = export for South Africa / import for Botswana Mode 4: A South African truck driver works for the South African trucking company based in Francistown = export for South Africa / import for Botswana 9

11 Maintenance and repair of road transport equipment Mode 1: This mode could be considered technically infeasible, however, it could also include activities such as electronic transmission of data needed for maintenance, diagnosis of problems over a distance, etc. For example, a South African engineering company provides advice via to engineers in Mozambique = export for South Africa / import for Mozambique Mode 2: A Mozambique bus company obtains engineering services for its buses in South Africa = export for South Africa / import for Mozambique Mode 3: A South African engineering company sets up a branch office in Mozambique to provide services there = export for South Africa / import for Mozambique Mode 4: A South African national comes to Mozambique to work in the branch office of its engineering company there = export for South Africa / import for Mozambique Rail Freight transportation Mode 1: A Japanese company sends cars by rail from Durban to Windhoek on a Namibian-owned train, after booking the freight online = export for Namibia / import for Japan Mode 2: A Japanese company sends cars from Windhoek to other towns within Namibia = export for Namibia / import for Japan Mode 3: The Namibian rail company has an office in Durban = export for Namibia / import for South Africa Mode 4: A Namibian goes to work at the rail company s office in Durban = export for Namibia / import for South Africa Pushing and towing services Mode 1: Appears to be technically infeasible. Mode 2: A Namibian train obtains towage services in Durban from a South African operator = export for South Africa / import for Namibia Mode 3: A South Africa company sets up an operation to provide, among other things, pushing and towing services in Namibia = export for South Africa / import for Namibia Mode 4: A South African spends six months setting up the operation in Namibia = export for South Africa / import for Namibia 10

12 Maintenance and repair of rail transportation equipment Mode 1: This mode could be considered technically infeasible, however, it could also include activities such as electronic transmission of data needed for maintenance, diagnosis of problems over a distance, etc. For example, a South African engineering company provides advice via to engineers in Namibia = export for South Africa / import for Namibia Mode 2: A Namibian rail company obtains engineering services for its trains in South Africa = export for South Africa / import for Namibia Mode 3: A South African engineering company sets up an office in Namibia to provide services there = export for South Africa / import for Namibia Mode 4: A South African national comes to Namibia to work in the branch office of its engineering company there = export for South Africa / import for Namibia Internal Waterways Freight Mode 1: Does not appear to be technically feasible Mode 2: A British company transports arranges for transportation of its goods on the Nile River in Egypt = export for Egypt / import for the UK Mode 3: A British ferry company sets up an operation in Egypt to run freight transportation services along the Nile = export for the UK / import for Egypt Mode 4: A British national spends time working in Egypt setting up the company s operation there = export for the UK / import for Egypt Rental of vessels with crew Mode 1: Does not appear to be technically feasible Mode 2: A British company rents a vessel for transportation of its goods on the Nile River in Egypt = export for Egypt / import for the UK Mode 3: A British ferry company sets up an operation in Egypt to rent vessels with crew to provide transportation services on the Nile = export for the UK / import for Egypt Mode 4: A British national spends time working in Egypt setting up the company s operation there = export for the UK / import for Egypt Maintenance and repair of vessels Mode 1: Does not appear to be technically feasible 11

13 Mode 2: A British company obtains maintenance and repair services for its boats operating on the Nile River in Egypt = export for Egypt / import for the UK Mode 3: A British engineering company sets up an operation in Egypt to perform maintenance and repair of vessels that operate on the Nile = export for the UK / import for Egypt Mode 4: A British engineer spends time working in his company s Egyptian operation = export for the UK / import for Egypt Pushing and Towing Mode 1: Does not appear to be technically feasible Mode 2: A British company obtains towing services for its vessels on the Nile River in Egypt = export for Egypt / import for the UK Mode 3: A British company sets up an operation in Egypt to provide pushing and towing services along the Nile = export for the UK / import for Egypt Mode 4: A British national spends time working in Egypt setting up the company s operation there = export for the UK / import for Egypt 12

14 APPENDIX B Factors to Consider When Identifying Objectives for the Request/Offer Process (OECD) 6 The following table lists factors that countries should consider in formulating their requests and offers in the Doha Round. The first column identifies the group that will be affected by making commitments; the second column notes the possible benefits of making commitments; while the third column notes concerns that need to be addressed prior to making commitments. The concern should also be read in conjunction with step four discussed below ( putting in place an appropriate regulatory framework ) because in some instances the concerns listed can be addressed by regulatory reform. Group Possible Benefits Concerns to be addressed, including by regulatory reform Country / economy More efficient use of resources Determine the impact on domestic in general Attract more foreign investment economic performance and Expanded job opportunities; reduced brain drain regulatory conduct of various levels of policy binding (e.g., below the Enhanced labour force skills status quo, pre-commitment to Increased foreign exchange future liberalisation) earnings Ensure good quality services Increased tax revenues Ensure adequate infrastructure for Economic diversification business activities Increased services efficiency Assess impact of market opening Increased technology transfer on scope for achieving universal Increased economic growth service supply / access objectives throughout the economy Need to improve environmental stewardship and address possible adverse environmental impacts arising from liberalisation Ensure ability to regulate according to best international practices where feasible and enforce regulatory regimes adequately Maintain a stable political and economic environment Adequate means of disciplining the potential anti-competitive conduct of dominant firms (domestic and foreign) Can competition policy play a larger role in disciplining market conduct post-liberalisation? Ensure adequate tax revenues for the government Ensure adequate resources to address labour force retraining needs, particularly vis-à-vis employees in state-owned 6 {OECD, } 13

15 Group Possible Benefits Concerns to be addressed, including by regulatory reform enterprises Consumers Lower prices for services Better quality of services Greater choice; new services offerings Business Lower costs of doing business, increased profitability Ready availability of capital; reduced cost of funds Greater ability to own and dispose of assets Fewer foreign exchange limits; ability to repatriate profits Infusion of new technologies and innovation Greater adherence to international standards Enhanced scope for mergers and strategic alliances Remove red tape; increase transparency regarding domestic regulatory requirements Access to skilled labour and expertise (locally and from abroad) Access to larger markets Access to cheaper service inputs, increasing efficiency and competitiveness Assess impact of market opening on scope for achieving universal service supply / access objectives Ensure adequacy, reliability, and quality of public services Safeguard consumer rights, and provide redress for complaints Ensure sensitivity to local needs Allow local firms to recoup initial investments Encourage reinvestment in improved services Ensure the growth of local enterprises Ensure acceptance of locallyproduced services Encourage adoption of / compliance with international standards Ensure availability of appropriatelyskilled workers Ensure disclosure of financial information by foreign firms Ensure financing at competitive rates Ensure effective professional (service industry) associations 14

16 APPENDIX C Examples of Common Restrictions on Market Access and National Treatment in the Transportation Sector Market Access Foreign ownership restrictions and/or equity ceilings; Limitations on the form of commercial presence (e.g., only allowed in the form of a joint venture or a joint stock company); Restrictive incorporation requirements (e.g., requirements with respect to nationality of the board of directors, citizenship requirements); National Treatment Regulations which relate to performance requirements, where the requirements impose an added burden on foreign providers; Preferential treatment for domestic providers including subsidies and investment incentives; Requirement that a certain percentage of crew/staff be nationals; Requirement for economic needs test; Discriminatory taxation; Restrictive rules governing the conduct of businesses by foreign suppliers; Limiting licenses to certain areas / ports / airports / routes and maintenance of monopoly rights in certain areas (e.g., ports); Requirements for service contracts to be submitted to government agency for authorization; Requirement of establishment in the country concerned to provide cabotage services; and Standards such as safety requirements, vehicle sizes, railway gauges, or coupling and braking systems that constrain the smooth cross-border movements of goods. 7 Requirement to appoint a local agent; (For maritime transport) requiring mandatory use of a designated supply of port services by foreign shipping service suppliers; (For maritime transport) discriminatory port charges. Rules relating to customs procedures (e.g., burdensome documentation requirements). (For maritime transport) reservation of government cargo for national ships. 7 {The World Bank, } 15

17 APPENDIX D Example of Required Regulatory Amendments Sector or Subsector Status Quo: Law/Regulation in Country X Resulting limitations on Market Access in Mode 3 Resulting limitations on National Treatment in Mode 3 Road freight transportation Investment Act Investment legislation limits foreign equity investment to 25%. Investment legislation limits foreign equity investment. Road Transport Act Economic needs test No limitations. required for foreign and domestic operators. Economic and social objectives: 1. To increase competition and efficiency in the road freight transportation sector. 2. To build capacity and expertise in the transportation sector. 3. To ensure services are provided in rural and remote areas. Changes required: Changes required to the Investment Act to increase the ceiling on foreign equity investment; and to the Road Transport Act to remove the requirement for an economic needs test and to impose certain service obligations on both domestic and foreign providers. Resulting Situation: Sector or Subsector Road freight transportation Law/Regulation in Country X Investment Act Resulting limitations on Market Access in Mode 3 Foreign equity investment permitted up to a maximum of 75% Resulting limitations on National Treatment in Mode 3 No limitations. Road Transport Act No limitations. No limitations 16

18 APPENDIX E Options for Making Requests Option for Making Requests Request another Member to add a sector or subsector that is not already included in its schedule. Request another Member to remove existing limitations or reduce its level of restrictiveness with respect to market access and/or national treatment. Request additional commitments other than market access or national treatment. Request another Member to remove its MFN exemptions. Example Make commitments in a road transport subsector which was not previously scheduled e.g., maintenance and repair In the road freight transport sector there may be a foreign equity limitation of 49% and a request may seek the removal of that limitation or ask that the ceiling be raised to 75%. Request that a country change its truck driving licensing regulations. Request that a country remove an exemption whereby it provides preferential treatment to neighbouring countries with respect to road freight transportation. Options for Making Offers Option for Making Offers Exclude an entire transport subsector Exclude part of a transport subsector Exclude one or more modes of supply for any subsector Limit access in any subsector and/or mode of supply by scheduling market access restrictions Discriminate against foreign suppliers in any subsector and/or mode of supply by scheduling limitations on national treatment Schedule a MFN exemption in order to be able to discriminate among foreign suppliers Discriminate among foreign suppliers where they are a party to a regional agreement which meets the requirements of Article V of the GATS Pre-commit to liberalisation at a future date Make additional commitments such as those regarding qualifications, licensing or standards Example Do not make any commitments in road transport Make commitments in road transport, but not in maintenance and repairs Offer cross border (mode one) commitments in road freight transportation, but do not offer commercial presence (mode two) commitments Require foreign trucking companies that wish to establish a commercial presence (mode three) to establish by way of a joint venture with a local company Provision of preferential subsidies to domestic trucking companies with a commercial presence (mode three). Preferential granting of permits to suppliers from neighbouring countries (mode three) Vehicle tax exemptions for companies from certain countries on the basis of regional convention on the grounds of reciprocity pursuant to the convention (modes one and three) Commitment to provide mode three access in road freight transportation services from 2012 Commitment to amend axle-load standards so as to facilitate increased market access. 17