SADC negotiations on trade in transport

servicesWorkshop for 22nd TNF Services

Johannesburg5 August 2014

Outline

• State of play in negotiations• Classification issues• Issues arising from sector study• Summary of requests and offers• Issues related to TCM Protocol• How will the negotiations make a difference to regional trade• Decisions required• Key questions for breakout groups

State of play with FS negotiations

• Sector forum – 2012• Requests from 5 Member States• Initial offers from 8 Member States (of which 2 recently received)• No revised offers as yet in response to bilateral negotiations

Africa’s transport corridors

SADC’stransport corridors

Logistics Performance Index 2012

Country Year LPI Rank LPI Score Customs Infrastruc-ture

Inter-national

shipments

Logistics compe-tence

Tracking & tracing Timeliness

Singapore 2012 1 4.13 4.10 4.15 3.99 4.07 4.07 4.39Hong Kong,

China 2012 2 4.12 3.97 4.12 4.18 4.08 4.09 4.28Finland 2012 3 4.05 3.98 4.12 3.85 4.14 4.14 4.10

Germany 2012 4 4.03 3.87 4.26 3.67 4.09 4.05 4.32Netherlands 2012 5 4.02 3.85 4.15 3.86 4.05 4.12 4.15

Denmark 2012 6 4.02 3.93 4.07 3.70 4.14 4.10 4.21Belgium 2012 7 3.98 3.85 4.12 3.73 3.98 4.05 4.20

Japan 2012 8 3.93 3.72 4.11 3.61 3.97 4.03 4.21United States 2012 9 3.93 3.67 4.14 3.56 3.96 4.11 4.21

United Kingdom 2012 10 3.90 3.73 3.95 3.63 3.93 4.00 4.19

Logistics Performance Index 2012

Country Year LPI Rank LPI Score Customs Infrastruc-ture

Inter-national

shipments

Logistics compe-tence

Tracking & tracing Timeliness

South Africa 2012 23 3.67 3.35 3.79 3.50 3.56 3.83 4.03Malawi 2012 73 2.81 2.51 2.78 3.01 2.85 2.56 3.09

Madagascar 2012 84 2.72 2.80 2.40 2.40 2.80 2.80 3.13Tanzania 2012 88 2.65 2.17 2.41 2.91 2.64 2.77 2.97Namibia 2012 89 2.65 2.73 2.72 2.49 2.65 2.85 2.52

Zimbabwe 2012 103 2.55 2.31 2.20 2.67 2.27 2.50 3.27Angola 2012 138 2.28 2.33 2.48 2.26 2.00 2.00 2.59Lesotho 2012 142 2.24 2.00 2.12 2.12 2.42 1.99 2.73

Congo, Dem. Rep. 2012 143 2.21 2.10 1.96 2.23 2.17 2.35 2.38

Bilateral transport agreements in SADC

COUNTRIES

Angola Botswana Lesotho Malawi Mozam

biqueNamibi

aSouth Africa

Swaziland

Tanzania Zambia Zimbab

we

Angola -

Botswana - MOU MOU-CMOU-

C /MOU MOU BRTLesotho MOU - MOU MOU Malawi - BP BRT C Mozambique BP - BG/BP BRT BG/BP BRTNamibia MOU-C - MOU-C BRT

South Africa MOU-

C /MOU MOU BRT BG/BP MOU-C - MOU BRT BRTSwaziland MOU MOU BRT MOU - Tanzania C BG/BP - BRT Zambia BRT BRT BRT - Zimbabwe BRT BRT BRT -

Bilateral transport agreements

• The agreements:• restrict the carriage of bilateral trade to carriers from the two countries• prohibit cabotage• provide that the regulatory authorities of the two parties shall share

information concerning traffic development• define the types of permits that may be issued, namely 14 days, short term (3

months), and long term (12 months)• state that cargo rates and charges shall be determined by the market• provide for the establishment of a joint route management group to

determine transport needs on a route, among other things

Transport issues

• Current levels of liberalization• Largely liberalized – road freight transport, maritime port management,

auxiliary services (freight forwarding; cargo handling; storage and warehousing)

• Protected – passenger services; rail• Air services – maintenance and repair; sales and marketing; CRS;

groundhandling• Limited opportunities – inland waterways, pipelines• Logistics?

Transport issues

• Cabotage• TCM Protocol recognizes bilateralism in transport, but how does this square

with regional integration?• Transport costs increased because of empty truck movements due to route

and cabotage restrictions

• Bilateral transport agreements• Accommodated by TCM• How to reflect within TIS negotiations

Non-TIS issues

• Trade facilitation • One of the most pressing problems - the effects of customs and revenue

authority border requirements and procedures

• Transport regulations and standards• Vehicle standards, e.g. axle weights• Drivers’ regulations, e.g. drivers’ hours, work permits

Business wish list for transport

• Inter-state recognition • Charges, levies, taxes • Overloading control • Infrastructure • Border procedures and

documents • Bribery and corruption

• Market access • Drivers • Road safety • Fitness of vehicles • Varied regulations between

countries

Classification

Sun-sector Scope

Maritime Ports and shippingInland waterwaysAir Excludes services related to traffic rights – generally understood to cover

sales and marketing, computer reservation services (CRS) and aircraft maintenance and repair services)What about ground handling?

SpaceRailRoadPipelineAuxiliary services E.g. freight forwarding, storage and warehousing, cargo handling)

Transport or logistics?

Assessment of requests DRC MUS SWZ SYC ZAF

Maritime NAM: All sub-sectors MOZ, SYC, ZAF: All sub-sectors (Mode 3)

SYC: Maritime auxiliary services

All MS: All sub-sectors, especially in Mode 3

AGO, BWA, DRC, MOZ, MUS, MWI, NAM, SYC, SWZ, TZA, ZMB, ZWE: All sub-sectors

Inland waterways

NAM: All sub-sectors AGO, BWA, DRC, MOZ, MUS, MWI, NAM, SYC, SWZ, TZA, ZMB, ZWE: All sub-sectors

Air NAM: All sub-sectors SYC, ZAF: Sales and marketing, CRS, aircraft maintenance and repair, ground handling, airport management (Mode 3)

AGO, BWA, DRC, LSO, MOZ, MUS, MWI, NAM, SYC, SWZ, TZA, ZMB, ZWE: All sub-sectors

Space AGO, BWA, DRC, LSO, MOZ, MUS, MWI, NAM, SYC, SWZ, TZA, ZMB, ZWE: All sub-sectors

Assessment of requests DRC MUS SWZ SYC ZAF

Rail NAM: All sub-sectors AGO, BWA, DRC, LSO, MOZ, MUS, MWI, NAM, SYC, SWZ, TZA, ZMB, ZWE: All sub-sectors

Road NAM: All sub-sectors

SWZ: Passenger and freight; rental of commercial vehicles with driver; support services

AGO, BWA, MOZ, MUS, MWI, NAM, SYC, TZA, ZMB, ZWE: All sub-sectors

LSO: Rental of commercial vehicles with driver; support services

AGO, BWA, DRC, MOZ, MUS, MWI, NAM, SYC, SWZ, TZA, ZMB, ZWE: All sub-sectors

LSO: Passenger and freight (Modes 1 and 2); maintenance and repair (Mode 1); Rental of commercial vehicles with driver; support services

Assessment of requests DRC MUS SWZ SYC ZAF

Pipeline NAM: All sub-sectors AGO, BWA, DRC, LSO, MOZ, MUS, MWI, NAM, SYC, SWZ, TZA, ZMB, ZWE: All sub-sectors

Auxiliary NAM, SWZ: Cargo handling; storage and warehousing; freight transport agency services

AGO, BWA, MOZ, MUS, MWI, NAM, SYC, TZA, ZMB, ZWE: All sub-sectors

LSO, ZAF: Cargo handling; storage and warehousing; freight transport agency services

AGO, BWA, DRC, LSO, MOZ, MUS, MWI, NAM, SYC, SWZ, TZA, ZMB, ZWE: Cargo handling; storage and warehousing; freight transport agency services

Assessment of offersDRC MWI MUS SYC SWZ TZA ZAF ZMB

Maritime Wide sectoral coverage – Mode 2 only

Full commitment

Passenger and freight transport

(excluding cabotage), rental of vessels,

maintenance and repair

Maintenance and repair,

vessel salvaging and

refloating (49% foreign

equity limitation in

Mode 3)

X Mainly none Unbound except for Mode 2

X

Inland waterways

Wide sectoral coverage – Mode 2 only

Full commitment

X X X X Unbound except for Mode 2

X

Air Wide sectoral coverage – Mode 2 only

X Broad commitments in three sub-

sectors – unbound in Mode 3 for

maintenance and repair

X X Passenger and freight

transportation; also includes

rental, maintenance

and repair and support services

Unbound in passenger and freight except for Mode 2; None except foreign equity

limit in ancillary air

services

X

Assessment of offers

DRC MWI MUS SYC SWZ TZA ZAF ZMB

Space X X X X X X Unbound except for Mode 2

X

Rail Wide sectoral coverage – Mode 2 only

Broad commitment – passenger and

freight unbound in

Mode 3

X X X Passenger, freight and

maintenance and repair - mainly none

Unbound except for Mode 2

X

Road Wide sectoral coverage – Mode 2 only

Broad commitment – passenger and

freight unbound in

Mode 1

X X Passenger and freight

(Mode 2 only); full

commitment for other sub-

sectors

Passenger and freight - mainly none

Unbound except for

Mode 2 and Mode 3 –

mainly None

Freight transport only, Mode 2 (full

commitment); Mode 3

(incorporation in Zambia + nationality

requirements)

Assessment of offers

DRC MWI MUS SYC SWZ TZA ZAF ZMB

Pipeline X Full commitment

X X X X Unbound except for Mode 2

X

Auxiliary services

Wide sectoral coverage – Mode 2 only

Cargo handling,

storage and warehousing,

freight transport agency services

Storage and warehousing,

freight transport agency

services and other services

X Cargo handling,

storage and warehousing,

freight transport agency services

X Unbound except for Mode 2

X

Issues raised in sector study

• Road: A commitment from all Member States to deregulate the supply of road transport services and focus on the achievement and promotion of the quality of transport services to meet the objectives of Chapter 6 of the TCM Protocol

• this could include a commitment to review the relevance of restrictive measures such as the “third country rule”, which the study observes that the RISDP was intended to review in its “Facilitation of Road Transport Market Liberalisation Project”, which aimed to develop a multilateral road transport agreement to replace the myriad of bilateral agreements;

• Rail: The need to develop a model for regional railways that will create separate entities for track supply and maintenance, safety regulator, economic regulator and train operators in order to create conditions to permit competition

Issues raised in sector study

• Ports and maritime: The need for institutional restructuring of most ports in the region to create a system of single port authorities with local landlord jurisdiction under a national ports authority and regulator

• Air: A commitment and action plan to implement the Yamoussoukro Decision on air transport

Trade provisions in TCM Protocol

Road transport• “Member States shall facilitate the unimpeded flow of goods and

passengers between and across their respective territories by promoting the development of a strong and competitive commercial road transport industry which provides effective transport services to consumers.” (Article 5.1, TCM Protocol)

• “Member States shall progressively introduce measures to liberalize their market access policies in respect of the cross-border carriage of goods [following three Phases of liberalization] [albeit guided by the need to ensure reciprocal benefits …].” (Article 5.3, TCM Protocol)

Trade provisions in TCM Protocol

Rail transport• “Member States shall facilitate the provision of a seamless, efficient, predictable,

cost-effective, safe and environmentally-friendly railway service which is responsive to market needs and provides access to major centres of population and economic activity.” (Article 7.1, TCM Protocol)

Maritime and inland waterways• “Member States shall promote the economic and social development of the region

by developing and implementing harmonized international and regional transport policies in respect of the high seas and inland waterways.” (Article 8.1, TCM Protocol)

• Article 8 includes such provisions as “promoting the role of the private sector in providing cargo handling services” and “the progressive elimination of restrictions, if any, on cabotage by ships registered in a Member State”

Trade provisions in TCM Protocol

Air services• Article 9 includes the provision that Member States agree to “the

gradual liberalization of intra-regional air transport markets for the SADC airlines”.

Key questions for breakout groups

Transport costs

1. How significant an issue for the SADC region are transport costs?

2. What can we learn from the study on competitive markets in transport services to help the negotiations on transport services?

Offers

3. With eight offers covering transport services, how far have requests have been met?

4. How far would these offers make a real difference to regional trade and regional integration in transport services? What is still needed?

Key questions for breakout groups

Sector study recommendations3. To what extent do Member States believe the sector

recommendations are appropriate to the objectives of regional integration in transport services?

4. How could the current negotiations support progress in these issues?

5. What scope is there for reflecting liberalization objectives in a reference paper of pro-competitive regulatory principles for the transport sector?