Reading and drafting a services schedule

National Seminar on Trade in Services Negotiations under SADC

31 July – 1 August 2012 Lilongwe, Malawi

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Modes of supply: (1) Cross-border supply (2) Consumption abroad (3) Commercial presence (4) Pres. of natural persons Sector or sub-sector Limitations on market

access Limitations on national treatment

Additional commitments

I. HORIZONTAL COMMITMENTS

II. SECTOR-SPECIFIC COMMITMENTS

1 2 3 4

1 2 3 4

Structure of a schedule

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First Column: How to describe service sectors?

▪ There is no compulsory system However, according to Scheduling Guidelines (S/L/92), (a) schedules “require the greatest possible degree of clarity”

(b) “in general, the classification ... should be based on the Secretariat’s Services Sectoral Classification List”

▪ Reference instruments:

- Services Sectoral Classification List (W/120) - UN Central Product Classification List (CPC)

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Scheduling Problems: Sector column No clear specification of sector coverage

Mismatch between sector name and CPC number

Inconsistencies between sectoral and horizontal entries

Non-exclusion of public sector segments, where necessary (e.g. health and education)

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An example from Botswana.

Sector or subsector Limitations on market access

Limitations on national treatment

1. BUSINESS SERVICES A. Professional Services h) Medical and dental services (CPC 9312)

1) Unbound 2) None 3) Foreign-owned hospitals or clinics are encouraged to enter into joint ventures with local hospitals and clinics. 4) Unbound

(1) Unbound 2) None 3) The hospitals and clinics should

employ Botswana nationals as doctors, medical personnel and supporting staff.

4) All medical and dental practitioners should be registered with the Botswana Medical Council

(k) Other Specialized medical services

including forensic medicine, neuro-surgery, cardio-thorasic surgery, micro-vascular surgery, plastic surgery, geriatrics, and intensive care specialist

(CPC 93122)

1) Unbound 2) None 3) Only natural persons

can supply specialized medical services.

4) Unbound

1) Unbound 2) None 3) The qualifications of suppliers of

specialized medical services should be recognized by the Botswana Medical Council.

4) Unbound

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An example from Lesotho

Sector or subsector

Limitations on market access

Limitations on national treatment

9. TOURISM AND TRAVEL RELATED SERVICES

A. Hotels and

Restaurants (including catering)

(CPC 643)

1) Unbound except for

catering: none 2) None 3) Unbound except as

indicated in the horizontal section

4) Unbound except as indicated in the horizontal section

1) Unbound 2) None 3) Unbound except as indicated in the horizontal

section 4) Unbound except as indicated in the horizontal

section

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An example from Malawi.

Sector or subsector

Limitations on market access

Limitations on national treatment

10. BANKING SERVICES

(1) None (2) None (3) None (4) Unbound except as indicated in the horizontal section

(1) None (2) None (3) None (4) Unbound except as indicated in the horizontal section

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Basic Obligation (1): Where commitments are undertaken, each schedule shall specify: limitations on market access and national treatment“ (para 21 NG)

Note: Focus is on measures limiting market access rather than on implementation mechanisms (e.g. licensing requirements) or relevant laws and regulations.

How policy intentions translate into specific commitments

Policy intention Entry for mode 3, Market Access

Full discretion (no commitment)

Guarantee of status quo

Full liberalization

Future liberalization (pre-

commitment)

Partial liberalization (status quo plus)

Minimum liberalization (status quo

minus)

"Unbound"

"Foreign capital participation limited to 49%"

"None"

"Foreign capital participation limited to 49%,

none from [date]"

"Foreign capital participation limited to [49 +

X]%"

"Foreign capital participation limited to [49 -

X]%"

Current restriction in Sector A: Foreign equity ceiling of 49%

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Modes of supply: (1) Cross-border supply (2) Consumption abroad (3) Commercial presence (4) Pres. of natural persons Sector or sub-sector Limitations on market

access Limitations on national treatment

Additional commitments

I. HORIZONTAL COMMITMENTS

II. SECTOR-SPECIFIC COMMITMENTS

1 2 3 4

1 2 3 4

Structure of a schedule

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Horizontal commitments

• Apply to trade in services in all scheduled sectors unless otherwise specified;

• Aims at avoiding repetition• Takes the form of a limitation (M1-3) or of a

positive undertaking (M4)

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Role of Horizontal Limitations (Example)

Modes of supply: 1) Cross-border supply 2) Consumption abroad 3) Commercial presence 4) Presence ofnatural persons

Sector orsubsector

Limitations onmarket access

Limitations onnational treatment

Additionalcommitments

I. Horizontal CommitmentsALL SECTORSINCLUDED INTHISSCHEDULE

4) Unbound, except for thetemporary presence for up tothree years of the followingcategories of persons:A. Services Salespersons …B. Intra-corporate Transferees … Executives … Managers … Specialists … Professionals …C. Personnel Engaged in Establishment …

3) Unbound for subsidies.Acquisition of land subjectto government approval.

4) Unbound , except formeasures concerning thecategories of naturalpersons referred to in theMarket Access column.

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Horizontal Section MalawiModes of supply: 1) Cross-border supply 2) Consumption abroad 3) Commercial presence 4) Presence of natural persons

Sector or subsector

Limitations on market access

Limitations on national treatment

Additional commitments

I. Horizontal Commitments ALL SECTORS INCLUDED IN THIS SCHEDULE

4) Unbound except for measures concerning the entry and temporary stay of natural persons employed in management and expert jobs for the implementation of foreign investment.

The employment of such persons shall be agreed upon by the contracting parties and approved by the Ministry of Home Affairs.

3) With permission from the Reserve Bank of Malawi, a foreign-controlled company can obtain loans or overdrafts of up to one third of the value of its paid up capital

4) Unbound except for

measures concerning the categories of persons referred to in the market access column.

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SCHEDULING PROBLEMS (II)Inscription of

o Laws and regulations rather than measures

o Minimum requirements rather than ceilings (MA)

o Unspecified licensing and authorization requirements

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SCHEDULING PROBLEMS (III)

Inscription of

Measures falling under Article VI (DOMESTIC REG)

Departures from general obligations (Part II), including

o MFN-inconsistent measures (reciprocity etc.)

o Foreign exchange restrictions

Measures covered by GENERAL EXEMPTIONS

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Case A.

Sector or subsector

Limitations on market access

ALL SECTORS INCLUDED IN THIS SCHEDULE

3) Commercial presence requires that foreign service providers incorporate or establish the business locally in accordance with the provision of [...]land laws (Companies Act of 1973). Enterprises with foreign investment in [...]land have the same rights and responsibilities as domestic enterprises.

4) In [...]land, entry and residence of foreign natural persons (service providers) are subject to the Immigrations Control Act of 1993 and labour laws. In accordance with [...]land legislation, the employment of foreign natural persons for implementation of the foreign investment shall be agreed upon by the contracting parties and be subject to approval by the [...]land Government, and such personnel shall be employed in management and expert jobs only.

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Case E.

Sector or subsector

Limitations on market access

Limitations on national treatment

1. BUSINESS SERVICES

A. Professional Services

(a) Legal services (CPC 861)

(1) None (2) None (3) Only through sole proprietorships and partnerships (4) None

(1) None (2) None (3) None (4) Foreign practitioners must have obtained local or Commonwealth diploma, and be registered with Bar in any Commonwealth state.

(h) Medical and dental services (CPC 9312)

(1) None (2) None (3) None (4) Unbound except for

specialist physicians

(1) None (2) None (3) None (4) Unbound except for senior executives.

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Some examples from country x

Sector or subsector

Limitations on market access

Limitations on national treatment

e) Engineering services

(CPC 8672)

1) Unbound 2) None 3) The foreign company

should be a registered institution and allowed to practise in its country of origin.

4) Unbound except as

indicated in the Horizontal Commitments.

1) Unbound 2) None 3) The qualifications of foreign professional

employed by the company should be recognized by the appropriate legislation Council and in its absence the [xx] Institute of Engineers.

4) Unbound except as indicated in the Horizontal Commitments.

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Some examples from country x

Sector or subsector

Limitations on market access

Limitations on national treatment

D. Real estate services

a) Involving own or leased property

(CPC 821)

1) The service should be supplied through commercial presence.

2) None 3) Unbound 4) Unbound except as indicated in the Horizontal Commitments.

1) The service supplier should meet all residency requirements.

2) None 3) Unbound 4) Unbound except as indicated in the Horizontal Commitments.

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Measures/policies not affected by Specific Commitments

• Non-discriminatory domestic regulation (standards, licensing requirements, etc.)

• Government procurement (exempt from MFN, MA & NT)

• Non-discriminatory subsidies

• Non-discriminatory measures promoting or restricting exports

• Requirement of a visa etc.

• Barriers not associated with Government measures (e.g. private decisions or natural resource limitations (non-availability of space, etc.))

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Commitments by Malawi’s Trading Partners

SADC Member States

South

Africa

Leso

tho

Mala

wi

Mau

ritius

Zimbab

we

Botswan

a

Mozam

bique

Zambia

DRC

Swazi

land

Angola

Namibia

Tanzan

ia

9180

3327

21 19 17 16 12 9 5 3 1

Number of GATS Commitments

Distribution of by services sectors

Business

Communication

Constructi

on

Distrib

ution

Education

Environmental

Finan

cial

Health

Tourism

Recreati

onal

Transp

ort0

2

4

6

8

10

12

14

*Red bars denote SADC priority sectors