Providers should heed GATS

When one thinks of international trade law one thinks of trading in goods, whether they are manufactured goods or agricultural goods. However if we look at the economic reports released each year on various countries, including South Africa, most countries’ economies consists largely of services, always overshadowing the contribution made by goods. The General Agreement on Trade in Services (“GATS”) is as important if not more so than the General Agreement of Tariff and Trade (“GATT”), which deals with goods, especially given South Africa’s hunger for economic growth which may be fuelled by opening our services sectors to foreigners. It would however seem as if the media choose to focus on GATT instead of GATS as the liberalisation of trade in goods is far more advanced than trade in services. This does not however mean that there has not been progress in trade in services or that the private sector can afford to put trade in services on the backburner for the time being. In fact, South Africa is busy preparing for the next round of trade negotiations on services. Service providers should take the opportunity to participate in this process. If you do not participate our negotiators will be unaware of your specific concerns and could easily negotiate to your detriment.

This disadvantage could work both ways, firstly you as a South African services provider may not be ready for an influx of foreign services providers. Perhaps if you raised your concerns the liberalisation of your specific sector could have been more gradual. The second way in which the disadvantage could affect you is that you may want to enter foreign markets and you may be aware of the barriers to your entry in these foreign markets. This is of particular significance to South African service providers as they enjoy a comparative advantage over service providers in Africa. Without disclosing the existence of these barriers our negotiators have no way of knowing about them and therefore will not insist that their counterparts give them a concession thereon.

South Africa has indeed received a number of requests from WTO members to liberalise their services sectors as listed in the current classification system. In contrast, South Africa has only made initial request in certain sector, with the majority of these request directed at their African counterparts. The process can be greatly aided if South African business become involved and air their concerns and demands.

As an example, South Africa has received requests to liberalise their financial services sector from the more prominent WTO members. In particular the request addresses the concern these members have with South African banks’ anti-competitive behaviour with the respect to the access to the national payment system. They also address a concern with respect to the residency of financial services experts in South Africa. Although South Africa currently has specific vertical and horizontal restrictions in place to protect this industry, without input from the service providers and regulatory institutions in this sector our negotiators are ill equipped to represent our industries.