COMESA

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COMESA

• What kind of Technical Assistance do the Small
  Developing Countries Need?
• Presented at the
• International Seminar on
• Developing Countries and Services Negotiations
• Indian Council for Research on International
  Economic Relations (ICRIER)
• 6-7 June 2006
• Delhi , India
• Chawe Mpande-Chuulu
• cmpande_at_comesa.int
• COMESA Secretariat
• Lusaka - Zambia

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PTA / COMESA Timeline
1960
1970
1980
1990
2000
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Membership

• Angola, Burundi, Comoros ,DR Congo, Djibouti,
  Egypt, Eritrea, Ethiopia, Kenya, Libya,
  Madagascar, Malawi, Mauritius, Rwanda,
  Seychelles, Sudan, Swaziland, Uganda, Zambia,
  Zimbabwe

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Rationale for Regional Integration

• Development objective is to reduce poverty and
  improve the populations quality of life.
• Achieved through economic growth.
• Economic growth depends to a large extent on
  foreign investment
• Attracting investment depends in part on-
• larger markets
• reduced costs and improved competitiveness
• predictable business operating framework
• a stable and peaceful environment.

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Growth in Services

• Traditionally exports of services by developing
  countries have mainly focused on tourism,
  transport and the movement of natural persons
• During the last decade other sectors have grown
  increasingly in importance .
• Information technology and the so-called back
  office or out-sourcing services for example
  book-keeping, compilation of data and call
  centres are sectors that have shown rapid
  increase
• Other important export sectors are professional
  services, construction, educational, audio-visual
  and health care services
• However services related to the physical movement
  of persons is a slowly growing sector in many
  countries

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Trade in Services by region Asia

• Asia is the region most successful in benefiting
  from trade in services , developments have led
  to huge exports, strong national development and
  service companies that are world leaders
• The success in Asia is largely based on exports
• At the same time several countries have many
  obstacles to market access in their own markets,
  which increases both prices and production costs

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Trade in Services by regionsub-Saharan Africa

• Asia is the winner and on the other had
  sub-Saharan Africa ( with the exception of South
  Africa) has had the weakest development
• The region participates to a very small extent in
  global trade in services and the inflow of FDI
  is smaller than any other region and affects only
  a small part of the population
• Liberalization of trade in services does not
  often lead to the expected inflow of FDI or to an
  increase in competition

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Trade in Services LDCs and Small Developing
countries

• every LDC and small developing country has on
  average exports in 30 different services sectors
  usually construction, transport, business and
  professional services
• There is more trade in services than trade in
  goods between LDCs and small developing countries
• This is largely because the commodities trade is
  concentrated around unilateral GSP programmes
  provide by the Quad US, EC, Canada and Japan
• Increases in trade in services has also helped
  several LDCs and small developing countries to
  reduce poverty
• Tourist services seem to one way for LDCs and
  small developing countries to increase their
  participation in the world economy

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Challenges in trade in Services

• trade in services is subject to greater
  protection than trade in goods
• Developed countries are more restrictive than
  developing countries where liberalisation is
  concerned
• It seems to be generally the case that economies
  with fewer trade barriers in the services sector
  have a higher GNP per capita
• In the short term most developing countries can
  make larger welfare gains by liberalising their
  own services sectors than by trying to increase
  external market access
• This is because of the positive effect that
  cheaper and efficient services have on the
  production of goods and other services

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Service Sector Performance requirements

• Dependent on prevailing conditions in individual
  countries
• Increase in trade and liberalization is highly
  dependent on countries having effective
  legislation that guarantees competition,
  alleviates adjustment costs and ensures that the
  gains reach the entire population
• sound regulatory framework
• right to regulate
• meet national policy objectives
• Incentives for effective performance

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What kind of Technical Assistance (TA) do LDCs
and small developing countries need ?

• Objective No 1
• National Assessment of trade in services in order
  to re-position the role of services in national
  economies
• Sectoral studies state of liberalisation, market
  access conditions ( in all modes of supply),
  domestic regulation( regulatory capacity and
  transparency issues), prices and performance
  indicators, quality and access issues, investment
  and employment
• This assessment work should be developing country
  appropriate and based on previous work undertaken
  in other developing countries for example
  cross-pollination between Asia, Africa and South
  America
• must be undertaken by national services
  specialists themselves in so doing building
  National Services Analytical Capacity

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Technical Assistance Needed contd.

• Objective No 2
• Development of a cadre of National Services
  Specialists at five levels specialised
  national training courses for the following
  groups of persons to cover among others the
  role of services in national economies ,
  economic theory of trade in services, the
  classification of services , trade in services
  and the multilateral trading system, bilateral
  and regional frameworks for trade in services ,
  domestic regulation of services, measuring trade
  in services ( exports, performance, quality and
  access)
• Level 1 services specialists in the civil
  service/public sector specialised national
  training courses for civil servants not only in
  trade and legal ministries but in sectoral
  ministries. Developing countries should be
  encouraged to have a Department of Services or
  Ministry of Services
• ( communications, energy, transport ), in
  particular cared of Commercial Diplomats
• Level 2 services specialists in regulatory
  bodies specialised training for technical
  staff in all regulatory bodies in the theory and
  economics of regulating services
• Level 3 private sector services specialists
  specialised training for private sector operators
• Level 4 academia and researchers
• Level 5 development of appropriate curriculum
  for under-graduate and post-graduate
  courses in Economics, Law, Development Studies,
  International Relations, ICT Courses

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Technical Assistance Needed contd.

• Objective No 3
• Inclusion of Services in National Economic
  Policies
• Development of NATIONAL SERVICES POLICIES
  STRATEGIES as a section of NATIONAL ECONOMIC
  PLANS and should be encouraged actively to be
  distinctively included in Poverty Reduction
  Strategy Papers ( PRSPs), DTIS, National and
  Regional Indicative Programs , Trade Policy
  Reviews

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Technical Assistance Needed contd.

• Objective No 4
• Locking in Services Reforms
• National Level development of supporting
  legislative and regulatory framework to LOCK-IN
  autonomous services and future reforms
• Regional Level vast majority of LDCs and small
  developing countries are members of Regional
  Economic Communities (RECs) and the development
  of regional supporting legislative regulatory
  frameworks to LOCK IN services reforms
• Multilateral Level after locking in at the
  national level and regional levels then locking
  at the MTS can be eased and more coherent given
  that appropriate sequencing has taken place

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Technical Assistance Needed contd.

• Objective No 5
• Mode Specific Assistance
• Mode 1 ICT Reform
• Mode 2 Recognition and Accreditation
• Mode 3 performance related training, systems
  related training and access to information
  channels for set up
• Mode 4 specialist as opposed to generalist
  training, recognition, certification,
  registration, accreditation and revitalisation of
  vocational training

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Technical Assistance Needed contd.

• Objective No 6
• Participation in International/ UN Services
  related Bodies and Standards Setting Bodies
• Targeted resources towards the increased
  participation of LDCs and small developing
  countries in international, UN services and
  standard setting bodies taking the form of
  active recruitment of personnel from developing
  countries through increased quotas, allocation of
  developing country representatives in governing
  bodies eg ITU, IPU, World Tourism Organisation,
  IATA etc

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Technical Assistance Needed contd.

• Objective No 7
• Special Assistance to SMEs/MSMEs
• Development of appropriate and localised
  training packages for the delivery and if
  possible trade of services in SMEs and MSMEs
  given the fact that the majority of corporate
  entities in LDCs and small developing countries
  are small

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Technical Assistance Needed contd.

• Objective No 8
• Advocacy for Services
• Development of appropriate and localised
  advocacy material for trade and delivery of
  services

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Complimentary Financial Assistance

• Objective No 9
• Services Development Budgets/Funds
• IFIs, Multilateral Development Banks, Regional
  Development Banks, Investment Banks need to
  allocate specific investment and lending
  resources ( both supply and demand driven) for
  the concerted development of the services sectors
  both to public , private and public-private
  operators in developing countries, including
  the establishment of regulatory authorities . At
  the moment there is over-focus on trade and
  export finance for commodities. Major funds
  should be actively increased and developed by the
  IBRD, European Investment Bank ( EIB),
  International Finance Corporation in particular
  those of the developing regions
• This should be complimented by resources on-lent
  and allocated by continental banks such as
  African Development Bank (AfDB) , Asean
  Development Bank, Inter-American Development Bank
  .
• The focus being SMEs and MSMEs financing

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COMESA Experience

• In COMESA we have received resources from EDF and
  DfID to undertake TA Objective No 1 in
  collaboration with UNCTAD, World Bank and other
  specialised agencies

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COMESA Regional Work on Services

• Comprehensive assessment of the state of trade in
  services in COMESA ( excl Libya as became member
  after programme launched) countries
• Develop a regional programme on integrating
  services
• to Assist in GATS negotiations
• to facilitate EPA negotiations with the EU

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Regional Assessment Work Programme

• National assessments in Outlining
• GATS status
• extent of liberalisation
• policy environment
• regulatory environment
• sector performance and
• GATS templates

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GATS Templates

• Collation of national regulations in all sectors
  
• conversion of all national regulations in all
  sectors into GATS-type language
• Four modes of Supply
• Market Access Limitations
• National Treatment Limitations
• Domestic Regulation

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Sectoral Assessment

• Extent of liberalisation factors behind private
  entry and how open sectors are, where the
  restrictions are, why restrictions are there
• Policy environment competition and entry
  requirements
• Regulatory environment characteristics of the
  regulator
• Market Structure number of firms, market share,
  ownership patterns
• Performance indicators price and quality
  measures and employment and investment data

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Sectors being covered

• Financial( Banking, Insurance and Securities)
• Communications ( Postal and Courier, Audio-Visual
  and Telecommunications,)
• Transport( Road, Rail, Inland Waterways,
  Maritime, Air and Services related to all modes
  of transport),
• Construction and related engineering,
• Business services( Other Business, Computer
  Related and Professional Services),
• Tourism,
• Health,
• Education
• Energy
• Distribution
• Mode IV ( horizontal)

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Capacity Building under the Regional
Assessment

• All countries have members of their respective
  national working groups on services who are
  government experts , experts from regulatory
  bodies and experts from industry associations who
  have been trained in the development of the
  National GATS Templates and Sectoral Assessments
• All in all in each country their are four
  experts working on the National GATS Templates
  and 10 experts working on the Sectoral
  Assessments
• A total of 14 experts per country working on
  assessing trade in services - regional cadre of
  252

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Way forward

• To enable a comprehensive and meaningful
  programme we need more resources in the other TA
  objectives