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QUALITY OF SERVICES REGULATION IN SA ‘HAS LARGELY SHIELDED THE COUNTRY FROM THE GLOBAL CREDIT CRUNCH’ (South Africa)

Posted by Gilmour Poincaree on November 13, 2008

Posted to the web on: 13 November 2008

Trade and Industry Editor

SA SHOULD not allow trade negotiations in services to undermine the country’s regulatory capacity but Deputy Trade and Industry Minister Rob Davies should insist on its right to regulate in the public interest, Deputy Trade and Industry Minister Rob Davies yesterday said.

The remarks appeared to be a veiled reference to the European Union’s (EU’s) demand for services liberalisation in negotiations on the economic partnership agreement (EPA). SA opted out of an interim EPA at the end of last year, in part because of an EU demand that services liberalisation form part of the agreement.

Davies yesterday said South African services industries had few interests in the EU, which meant the agreement would see SA making concessions without receiving much benefit in return.

Speaking at the opening of the annual conference on the Service Exporter Network conference, an initiative of the Geneva-based International Trade Centre, Davies said SA had largely been shielded from the global credit crunch exactly because of the “quality of domestic regulation” and measures such as the National Credit Act were now “the subject of considerable international interest”.

Services sectors account for 66% of global output, a third of global employment and almost 20% of global trade. In SA services’ contribution to the economy was even greater, with 72% of people employed in service-oriented sectors while these industries contribute almost 75% of the country’s gross domestic product.

Because of the huge contribution of services industries to the economy, the trade and industry department has started work on a comprehensive national services sector framework strategy document. Davies was coy on details, as the document was only in a first draft, but akin to the national industrial development policy framework, which has earmarked industrial sectors for development, the services strategy will earmark support measures to spur growth in services industries.

But he also called for a more ambitious approach among developing countries in multilateral trade negotiations.

The deputy minister said SA was interested in a multilateral services agreement in the World Trade Organisation (WTO) because it could hold tremendous potential for developing countries, particularly in south-south trade relationships. Two years ago SA tabled a services offer in the WTO and Davies said there was recognition among other countries that SA’s services sectors were relatively open. But while SA was in favour of increased trade in services, the deputy minister insisted that this needed to be underpinned by “the right to regulate in the public interest and the right to deliver public services”.

The global financial meltdown is, however, expected to also spill into other services industries and stymie trade in services, and Davies called for greater ambition in multilateral services negotiations, citing the example of India, which has started formulating its strategic interests in services export markets.

“While developing countries will of necessity need to continue to take a strong defensive stance, particularly in respect of the right to regulate in the public interest, it is also necessary that developing countries be much more active in identifying offensive interests in trade in services,” he said.

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PUBLISHED BY ‘BUSINESS DAY’ (South Africa)

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