Trade in services in the context of SADC-EU EPA: Risks and opportunities

Abstract

The desire by the EU to include trade in services as part of the ongoing EPA negotiations with SADC has brought into sharp focus the question as to whether such a move would be in the best interest of SADC. The significance of this question lies in the widely held belief among developing countries that opening up their service sectors to foreign competition while the sector remains poorly developed would harm their developmental prospects. This article examines the merits and weaknesses of this viewpoint, by highlighting the risks that often accompany liberalisation of services between two regions that are at different levels of development. It also draws attention to the growing importance of services in world trade and how they have become an indispensable component of economic growth in developing countries. The article concludes that an EPA is not the most appropriate mechanism for achieving equitable trade in services from a SADC perspective, given the adversarial nature of the negotiations that precede its conclusion. Furthermore, rather than support an all-encompassing process involving liberalisation of all the services sectors at one go, the article advocates a more gradual process involving liberalisation of a few strategic sectors at a time, which would focus within the region initially and only expand globally with time.