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REGIONAL STRATEGY MEETING HONG KONG TRADE MINISTERIAL CONFERENCE

OUTCOMES: IMPLICATIONS FOR POVERTY REDUCTION IN SADC

Topic: Zambia’s CSO Response to the Outcomes on GATS/Services and Implications for Poverty Reduction.

Prepared by: Stephen L. MuyakwaDevelopment Consultant

Chairperson: Civil Society Trade Network of Zambia (CSTNZ). 6 – 7th April 2006 - Gauteng, South Africa

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Background to the World Trade Organisation

General Agreement on Tariffs and Trade 1947 (GATT) gave birth to the WTO in 1995 comprising four trade arrangements. These are:

• A) GATT 1994• B) Trade Related Intellectual Property Rights

(TRIPS)• C) General Agreement in Trade in Services

(GATS) and • D) Dispute Settlement Understanding (DSU)

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Major WTO Challenges• The GATT 1994 included the controversial

Agreement on Agriculture (AoA)• The TRIPS Agreement is controversial for of limiting

access to technology to developing countries• The GATS is controversial because of i) developing

countries have no capacity to engage in trade in services, ii) Critical services were would become out of rich of the poor if handled by MNCs and iii) developing countries already had too much WTO work on their plates.

• The DSU is not fully impartial- favours developed countries

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Key Elements of the GATS

• Positive list of services a member wants to liberalise in terms of market access and national treatment and

• Modes of supplying services ie:• (i) supply of service from one country to another country

(cross border supply);• (ii) supply of service from one country to the consumer

of another country (consumption abroad); • (iii) supply of service by a supplier of one country

through commercial presence in another country (commercial presence) and

• (iv) supply of service by a supplier of one country through the presence of natural persons of one country in another country (presence of natural persons).

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The State of Play in the Negotiations on GATS

Negotiations on GATS started in 2000.• The deadline for the submission of initial requests was

June 30, 2002• The deadline for submission of initial offers was March

31, 2003• The conclusion of the GATS negotiations was not later

than January 1, 2005. • Negotiations on Safeguards to be completed by March

15, 2002• The Assessment of Trade in Services to be carried out

before the actual negotiations take place.• There will be credit for autonomous liberalization.

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Zambian CSO Demands on GATS

• LDCs must not accede to the requests/ pressures from developed countries to further liberalize

• LDCs be given their right to regulate services and liberalize according to their national development policy priorities

• GATS mode-4 to developed countries to a) accept qualifications of people from LDCs and b) grant market access and national treatment to people from LDCs.

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Movement of Natural Persons in Africa.

• Gender and Migration

• Migration and HIV/AIDS

• Effects of migration on development

• Temporary Migration and Development

• Major Challenges in Policy Responses to Migration

• Some Barriers to mode 4

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Effects of migration on development

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Post-Hong Kong Negotiations

• Annec C was adopted• This entailed plurilateral negotiations among

some members which should take place with any opening extended to other members.

• Services were the only area where individual countries (Cuba and Venezuela) expressed formal reservations

• LDCs like Zambia exempted from making commitments

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Poverty and Zambia Overall and extreme poverty in Zambia, in rural and urban areas, 1991-1998

Year Zambia Rural Urban

Overall poverty Extreme poverty Overall poverty Extreme poverty Overall poverty Extreme poverty

1991 69.7 58.2 88.0 80.6 48.6 32.3

1993 73.8 60.6 92.2 83.5 44.9 24.4

1996 69.2 53.2 82.8 68.4 46.0 27.3

1998 72.9 57.9 83.1 70.9 56.0 36.2

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Services and Economic Activity in Zambia

Table 1: Proportions of GDP by kind of Economic Activity  

2001 2002 2003 2004

Primary Sector (Agriculture/mining) 24.2 24.4 24.3 24.8

Secondary sector ( manufacturing) 14.3 14.4 14.5 14.3

Tertiary (Services sector) 54.8 55.6 56.3 56.6

construction 5.6 6.3 7.3 8.0

Wholesale and Retail 19.4 19.7 20.0 20.0

Restaurants bars and Hotels 2.4 2.5 2.5 2.5

Transport and communications 6.5 6.4 6.4 6.5

Financial Intermediation 8.3 8.3 8.2 8.1

Real Estates and Business Services 8.2 8.1 7.8 7.5

Community, social and personal services 4.4 4.3 4.1 3.9

Others 6.7 5.6 4.9 4.3

Total GDP 100 100 100 100

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Conclusions

• There are some critical structural impediments to Zambia’s ability to fully engage in the trade in services

• There are risks and opportunities in trade in services which need careful analysis.

• The above analysis suggests that there is a paucity of data on trade in services generally and migrant remittances in particular in Zambia.

• There are very high poverty levels in Zambia that require serious attention from policy makers.

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Recommendations

• Zambia should quickly develop a trade policy encompassing all relevant areas of trade including trade in services

• Zambia should, as a matter of urgency, establish a “Globalisation Directorate” in the Office of the President to spearhead complex multi- institutional arrangements such as services and financial arrangements.

• Zambia should make requests to developed countries for mode 4 to enable the country benefit from services trade as a way of reducing poverty.

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Recommendations (continued)

• Zambian Civil Society should build capacity to assist the government in trade negotiations generally and services negotiations specifically.

• Zambia should carry out an impact study of the potential impact of further liberalization in services and develop appropriate safeguard measures.

• Zambia should develop a mechanism for capturing data on trade in services generally and migrant remittances in particular.