Services and ACP-EU Economic Partnership
The Cotonou Partnership Agreement (CPA), signed
in 2000 and ratified in 2003 by a sufficient number of states,
allows for the negotiation of Economic Partnership Agreements
(EPAs) between the European Union (EU) and African, Caribbean
and Pacific (ACP) countries in the area of services.
EU-ACP wide phase 1 negotiations started in
Sept 2002; Regionally based phase 2 negotiations launched in 2003
by ECOWAS (+ Mauritania), CEMAC (+Sao Tome), and in 2004 by ESA
and CARIFORUM (CARICOM +Dominican Republic) and others (in other
Africa, Pacific). Negotiations are set to be concluded by December
Key provisions on services include
Extend EPAs to encompass the liberalisation
of services in accordance with provisions of GATS (CPA, Art 41.4);
Reaffirmation of GATS commitments
(41.2), progressive liberalisation (41.3) and EC support for ACP
export capacity (labour, business, distribution, finance, tourism,
culture and construction) (41.5);
Need for Special and Differential
Treatment (SDT) for ACP suppliers (41.2 and 41.3);
Special sectors: Maritime Transport
(Art 42) and ICT/Telecommunications (Art 43), and Tourism (Art
Phase 1 negotiations have so far concluded that
services liberalisation in an EPA should be progressive, based
on a positive list, adapted to the level of ACP countries and
their sectors and specific constraints, and underpinned by principles
of S&D, asymmetry and positive regional discrimination. The
EC agreed to discuss liberalisation in mode 4 (temporary movement
of natural persons) in
the context of EPA negotiations. This issue is sensitive for the
EU but crucial to the ACP. The EU and the ACP also agreed that
support for the development of services sectors should be provided
to ACP countries within the context of EPAs, but there is disagreement
over the need for additional funds which can be used flexibly
and rapidly (ACP) as opposed to no additional (EU) beyond existing
EDF commitments. Finally, while the EU argues for a GATS-plus
agreement, the ACP group is unlikely to want to go (significantly)
beyond commitments in the GATS.
Mode 2. Consumption abroad: when a consumer travels
abroad to consume from the service supplier, such as in tourism,
education, or heath services.
Mode 3. Commercial presence: when a foreign owned
company sells services (eg foreign branches of banks).
Mode 4. Temporary movement of natural persons: when
independent service providers or employees of a multinational
firm temporarily move to another country.
Several options remain for Phase 2 negotiations,
Do nothing: no pain, no gain.
No services agreement but with focus
Reaffirm GATS commitments under Cotonou
and emphasise SDT (safeguards, funds, etc); pressure to sign Telecommunications
GATS plus services agreement with
new commitments by both ACP and EU, and with SDT.
There will be advantages and disadvantages associated
with each choice. Trade liberalisation with an appropriate regulatory
framework is generally associated with gains, but these may not
occur in each sector, country or group of countries. In some cases
there may be enhanced export opportunities, but in others the
domestic services capacity or its export capacity in the region
may be at risk through trade liberalisation. It is thus important
to examine which options would provide the best outcome.
On the basis of existing EU trade agreements
with developing countries it is clear that the contents of services
agreements differ and thus these are in principle negotiable:
Mode 4 provisions are more free in
EU-CEECs (or CARICOM) than in EU-MEXICO or TDCA.
Some Mode 3 and investor protection
provisions pre-establishment for EU-CEECs and EU-Chile.
Government Procurement included in
Depth of commitments varies considerably,
but is reciprocal, subject to implementation periods. Limited
depth in eg TDCA with South Africa.
EPAs aim to be WTO consistent. There are provisions
in the General Agreement for Trade in Services that would most
likely make EPAs WTO compatible while still including the possibility
for offering flexibility (or special and differential treatment)
to the ACP in terms of coverage and removal of discrimination
(GATS article V: 1 & 3). However, since the Council of Trade
in Services has not yet ruled on any regional service agreement
it is impossible to be more precise.
The Caribbean (as is the case for many ACP countries)
are involved in a number of services negotiations
CSMEthe Caribbean Single Market
and Economy which include a negative list (ie it has a list of
restrictions which member states will remove according to a fixed
scheduled until 2005. Some countries are moving faster than others.
FTAAFree Trade Area of the
Americas which includes a draft chapter on services, but proposals
by Caribbean are modestwas scheduled to be finalised in
Bilateral negotiations such as Caricom-Costa
GATS 2000 which is part of the Doha
single undertaking; this has included modest offers by St Kitts
and Suriname, while EC has made request from 11 Caribbean countriesscheduled
to be finalised by 2005.
CARIFORUM-EC EPA negotiations until
end of 2008.
The combination of these "negotiating theatres"
requires a focused and consistent approach, where sequence is
important. While there may be barriers to services exports to
the EU, it may be that the reduction in such barriers can be negotiated
under GATS (through own or other countries' interests and requests).
On the other hand, some services could be better treated as an
EPA issue. There also appear to be direct links between the FTAA
and EPA: according to CPA Annex V, Art V, offers to FTAA would
need to extend to the EC.
One issue emphasised in the CPA is the need
to apply SDT to ACP suppliers. It is important to examine how
this can best be operationalised eg bv mode, sector, or country?
Financial support for services export
capacity building (eg services export promotion in ITES, or compensation
for brain drain?).
Facilitate recognition of professional
credentials using one-stop shops (EUROPASS and ACPPASS).
Information centres in and for ACP
Increase technology transfer to ACP
using "home country measures" (eg PROINVEST, EIB INFAC).
Full credit for ACP autonomous liberalisation.
Fewer or no new services commitments
by ACP (affirming GATS commitments).
EU commitments in areas of ACP export
Mode 4 for less-skilled workers;
determination of quotas: ACP business travel card (see Box 1).
Safeguard and remove mode 1 (and
3) commitments in various sectors.
Inclusion of (parts of) EU government
Operationalise Emergency Safeguard
Flexible implementation time period
(eg recognition of credentials, inventories of trade rules required
for progressive liberalisation).
In order to obtain at least modest gains from
a services agreement, the ACP regions would need to table specific
SDT options: requests for the lifting of certain barriers in the
EU, for resources in specific areas, etc. Now is the time to begin
thinking about which specific options are likely to be most effective,
considering that this process may be lengthy one. It is potentially
costly to wait and be unprepared until other have been finalised,
as different requests (for the lifting of barriers, or other SDT
options) can be made under Cotonou while the end of other negotiations
are not in sight. It would also take time and effort to formulate
and assess the costs and benefits of national and regional offers
and requests on full or partial liberalisation in certain sectors
BOX 1 INTRODUCING
AN ACP BUSINESS
The EU restricts the temporary movement of various
categories of natural persons in GATS mode 4. In particular, medium
to lower skilled workers from the ACP will find it difficult to
enter the EU to supply services. Some higher skilled workers will
be subject to quotas. Some new thinking is required so that the
EU admits temporary movement of natural persons in all categories
as long as some basic conditions are fulfilled. It has so far
not been advanced, but a proposal to set up an ACP business travel
card may help to facilitate and operationalise market access in
mode 4. As a similar example, the APEC business travel card has
been successfully introduced. Under an ACP business travel card
there could be
Visa free or visa-at-border entry for
business development purposes,
A multiple-entry visa,
Common service standards for processing
(minimum time) of temporary entry visa,
An expanded range of eligibility for
professions under "business visitor",
An expanded range of eligibility for
support staff, in particular applying to less-skilled workers.
There could be a pilot scheme running for a number
of years (covering certain ACP countries, regions or sectors).
Cardholders would be required to present their passports, but
not required to submit separate applications for business visitor
visas. Participating economies would commit to implementing the
scheme and would be free to maintain existing visa requirements
for business visitors. They would also have the responsibility
of avoiding abuse of the ACP business travel cards by registering
bona fide ACP employers (and avoiding overstaying temporary entry).
All economies would retain the right to refuse an individual without
providing reasons, or to refuse entry to ACP Business Travel Card-holders
at the border. The concept could be introduced at the ACP level,
but the precise implementation could be left to regional negotiations,
as ACP regions are interested in different services sectors.
ACP Secretariat (2004) Guidelines for the
Negotiations of EPAs
ESA States (2004) Negotiating Mandate for
the ESA-EU Economic Partnership Agreement with the European Union,
final version, Grand Bay, Mauritius, 6 February 2004.
Julian, Melissa (2004) "EPA Negotiations
Update: State of Play of the Negotiations", Trade Negotiations
Insights Vol 3 No 4.Velde, Dirk Willem te, Ian Gillson and
Sheila Page (2004), Special and Differential Treatment in Post-Cotonou
Services Negotiations, final report for the Dutch Ministry
of Foreign Affairs.
WTO (2004) Developmental Aspects of Regional
Trade Agreements and Special and Differential Treatment in WTO
Rules: GATT 1994 Article XXIV and the Enabling Clause, Communication
by the Mission of Botswana on Behalf of the ACP Group of States,
TN/RL/W/155, 26 April.
63 Mode 1. Cross-border supply: when a service crosses
a national border. An example is the purchase of insurance or
software by a consumer from a producer abroad. Back