S

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  The voice of the European Service Industries
for International Trade Negotiations in Services
 

• Séminaire sur les commerce des services
• Organisé par IsDB
• Casablanca, 15 18 juin 2009
• Regionalism Vs Multilateralism
• The case of EU/African countries
• Point of view of EU businesses" 
• Pascal Kerneis - Managing Director
• ESF (European Services Forum) 

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• In addition of the multilateral trade
  negotiations in the WTO framework, the EU has
  started a large number of Regional or Bilateral
  Trade Negotiations (RTA, FTA) but has concluded
  only one so far
• EU/GCC (Gulf Cooperation Council) (1991 - 2009?)
• EU/Mercosur (negotiations since 1999)(?)
• EU/ACP (6 Economic Partnership Agreements
  12/2007?)
• EU/Mediterranean countries (EuroMed)(2008)
• EU/Central America (5 1 countries)
• EU/Andean Countries (down to 3 countries
  Columbia, Peru Ecuador)
• EU/ASEAN 7 - (?) (suspended)
• EU/Canada (launched in May 2009)
• EU/China
• EU/India
• EU/Libya
• EU/South Korea (2007-2009?)
• EU/Ukraine

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• European Partnership Agreements (EPA) between the
  EU ACP countries the Theory (1)
• ?A full Regional agreement with 6 regions,
  regrouping 75 ACP countries ( SA)
• EU-CARIFORUM 15 countries Antigua and Barbuda,
  Bahamas, Barbados, Belize, Dominica, the
  Dominican Republic, Grenada, Guyana, Haiti,
  Jamaica, Saint Lucia, Saint Vincent and the
  Grenadines, Saint Christopher and Nevis,
  Suriname, and Trinidad and Tobago.
• EU-West Africa ECOWAS Mauritania Benin,
  Burkina faso, Cape Verde, Côte dIvoire, Gambia,
  Ghana, Guinea, Guinea Bissau, Liberia, Mali,
  Mauritania, Niger, Nigeria, Senegal, Sierra
  Leone, Togo 16 countries
• EU-Central Africa CEMAC STP Cameroon,
  Central Africa Republic, Chad, Congo, Congo DR,
  Equatorial Guinea, Gabon, Sao Tome Principe 8
  countries
• EU-Pacific 14 countries Cook Islands, Fiji,
  Kiribati, Marshall Islands, Micronesia, Nauru,
  Niue, Palau, Papua New Guinea, Samoa, Salomon
  Islands, Tonga, Tuvalu and Vanuatu,

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• European Partnership Agreements (EPA) between the
  EU ACP countries the Theory (2)
• 5. EU-East Africa
• East Southern Africa ESA ESA is a diverse EPA
  group including Indian Ocean islands (Comoros,
  Madagascar, Mauritius and Seychelles), countries
  from the Horn of Africa (Djibouti, Ethiopia,
  Eritrea and Sudan) and some countries of Southern
  Africa (Malawi, Zambia and Zimbabwe) 11
  countries.
• b) Eastern African Community EAC Burundi,
  Kenya, Rwanda, Tanzania, and Uganda 5 countries
• 6. EU-SADC The Southern African Development
  Community consists of 15 members. Seven of them
  are negotiating an EPA with the EU as the SADC
  EPA Group. These countries are Angola, Botswana,
  Lesotho, Mozambique, Namibia, Swaziland and South
  Africa 7 countries

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• European Partnership Agreements (EPA) between the
  EU ACP countries the practice!
• Full EPA signed with 14 CARIFORUM countries. The
  EU still works with Haiti to join the EPA soon.
• To date, interim agreements have been concluded
  with
• Central Africa A regional agreement with
  Cameroon (other countries in the region finally
  opted not to join the agreement)
• Southern Africa (SADC region) A regional
  agreement with Botswana, Lesotho, Swaziland,
  Mozambique and Namibia (But only 3 signed in June
  09)
• West Africa Individual agreements signed with
  Ivory Coast and Ghana
• East Africa A regional agreement with the East
  African Community (Kenya, Uganda, Tanzania,
  Rwanda and Burundi)
• Eastern and Southern Africa (ESA region) A
  regional agreement with Comoros, Madagascar,
  Mauritius, Seychelles, Zambia,
• The Pacific A regional agreement with Papua New
  Guinea and Fiji.
• I.e. we have only signed agreements with 35
  countries out of 76, and services commitments has
  been taken only by 14 countries!

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• Interests of European Services Sectors in EPA
  Regions countries
• EPA Regions countries should open services
  negotiations with the EU in the EPA framework,
  with the aim
• a) To reach a  GATS   agreement, in
  accordance with GATS Article 5 The impact of
  this would be
• Sending a strong signal to foreign investors
  (legal security of investments)
• Contribution to the integration of the region in
  the world economy.
• b) To increase the cooperation with European
  services companies
• Joint-ventures, subsidiaries, branches, back
  offices, transfers of skills in both ways, etc.
• But, What countries have agreed instead to do in
  Interim SADC EPA initialled in December 2007?
  (Art 67)
• To liberalise 1 services sector (out of 12) by
  each of the participating countries,
• To agree on a standstill clause for all services
  sectors (as in Art. V.1.b (ii) of GATS,
• To agree to negotiate progressive liberalisation
  with substantive sectoral coverage within a
  period of 3 years following the conclusion of a
  full EPA.

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• EU-GCC (Golf Cooperation Council)
• (6 countries Bahrain, Oman, Qatar, Saudi-Arabia,
  United Arab Emirates)
• Suspended, but discussions going on
• - Very advanced on all elements of the Agreement,
  including an interesting set of offers in
  services
• Still a couple of open items that need to be
  finalised.
• Blocking issue Export Taxes
• - Objective to conclude negotiations as soon as
• possible
• - No dates for the next round agreed,
  consultations
• expected

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• EU-MEDITERRANEAN COUNTRIES
• The EUs Mediterranean partner countries are
  Algeria, Egypt, Israel, Jordan, Lebanon,
  Morocco, Palestinian Authority, Syria, Tunisia 9
  countries
• Apart from Syria, every Mediterranean country in
  the Euro-Mediterranean partnership has concluded
  Association Agreements with the EU.
• Associated countries enjoy duty free access to
  the EU market for manufactured goods and
  preferential treatment for exports of
  agricultural, processed agricultural and
  fisheries products. Tariffs will gradually be
  dismantled for EU exports to the Mediterranean
  region the process has already been completed
  in Tunisia.
• The objective is to substantially liberalise
  trade in goods and services between the EU and
  its Mediterranean partners, who already enjoy
  very open access to EU services markets. Further
  progress, including attracting new investment to
  the region, is being negotiated.
• Negotiations on services and establishment
  Discussions in 2006-2007 took place at regional
  Euro-Mediterranean format, for a common
  framework. In 2008, bilateral negotiations
  started on voluntary basis with Morocco, Egypt,
  Tunisia and Israel. But apparently at a rather
  low path!

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Hierarchy of European Business Interestsin Trade
Negotiations

• What EU companies want
• WTO DDA
• Regional Trade Agreements (with Integrated
  Markets)
• Bilateral Agreements
• Autonomous Liberalisation BUT

• gtWhat is happening in the reality
• Autonomous Liberalisation
• FTAs
• RTAs
• WTO ?? !!!

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• How Services Commitments in WTO or in Regional
  Trade Agreements can be beneficial for the
  sustainable economic development, including to
  IDB Member Countries?

• By attracting FDI in the services sectors
• Experience shows that a services sector foreign
  investor which invests in a country do stay for a
  long period.
• By participating to financing of pension funding,
  to long term infrastructures projects, etc.
  (enabling infrastructure services), telecom
  network, energy network, etc.

• By attracting transfers of expertise and know-how
  of foreign services suppliers, which will allow
  services of
• Better quality, increase competitiveness of SMEs,
• Better price, Reduce the cost of doing business.
• More choice for the consumers

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• Pros Cons of Regional Trade Agreement
• Stronger Regional Integration To improve the
  efficiency of services and of investments to
  create economies of scale in the RegionA larger
  market is a more attractive market.
• (remember the figures of the EU internal trade!
  57)
• Investment in Infrastructure services for the
  benefit of the whole region Construction of
  roads, rails, harbours, etc. Telecommunication
  network, Financial Services, Express courier,
  maritime transport, IT, Environmental Services,
  etc.
• _ Risk of slowing down the ambitions to the
  lowest level standard of the region
• - Risk of slowing down the process at the speed
  of the least interested country in the region

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• Given the lack of progress in most of the
  Regional Trade Negotiations, the European
  Services sectors business community prefers now
  to push for trade negotiations with countries of
  the willing, and try to agree on far reaching
  commitments.
• Unfortunately for developing countries, it seems
  that developed countries are more interested
  (Korea, Canada, Japan, Taiwan, Singapore, )
• We hope that the Mediterranean neighbours will
  take the current negotiating opportunities to
  catch up!

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• Main barriers to Services liberalisation
• Obligation to enter the market through joint
  venture
• Limitations on capital ownership
• Limitations on licences allotted to foreign
  companies
• Restrictions on branching,
• Limitations in doing business in local currency
• Lack of National Treatment in many services
  sectors
• Local employment requirements
• Long and burdensome administrative procedures
• Restrictions on real estate access
• Lack of transparency in domestic regulation
  (economic needs tests, etc.)

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• List of criteria that a CEO looks at when taking
  a decision to invest in a developing countries
• Potential market (size, income per capita)
• Existing competition, special treatment for local
  players
• Benefits prospects at short, medium and long
  terms
• Good governance (level of corruption,
  transparency of the legislation, etc.)
• State of the regulation (existing barriers at all
  levels, implementation of the regulations)
• FDI incentives (special zones, tax incentives,
  etc.)
• Country Risk political stability,
  WTO/Bilateral-Regional Trade agreement sector
  specific binding commitments, i.e.
• ?The WTO GATS/RTA trade policy negotiated
  commitments are only additional criterion for
  companies to tick. But they can often make the
  difference. For the Developing countries, it is
  an additional opportunity to seize as to attract
  FDI.

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• THANK YOU FOR YOUR ATTENTION!
• Pascal KERNEIS
• Managing Director
• European Services Forum ESF
• 168, Avenue de Cortenbergh
• B 1000 BRUSSELS
• Tel [phone]
• Fax [phone]
• Email esf_at_esf.be

Website www.esf.be