Wednesday, October 21, 2009

Services sector to benefit from EAC common market

Muhwezi, Godwin (New Vision Online, Kampala)

A meeting of the multi-sectoral council of the East African Community (EAC) was held in Kampala recently during which a draft common market protocol together with eight annexes was adopted.

The draft protocol contains legal provisions on the free movement of persons, removal of restrictions on the free movement of workers, and the right of residence. It proposes mutual recognition of academic and professional qualifications, free movement of capital, trade in services, and safety measures.

The protocol spells out liberalisation of trade in services, which will open up one of the fastest growing sectors in the region, which until recently was undeveloped. Developments in recent times have turned the services sector into the fastest growing industry, whose contribution to gross domestic product (GDP) can no longer be ignored.

The current trend in information and communications technologies (ICT), particularly the Internet, has given rise to business outsourcing and increased demand for professional services, thereby ushering in a new era. This era could lead us to the next revolution – the services revolution.

At present, the services sector contributes about 50% of GDP of EAC member states and is growing at about 10% annually. It is the industry that stands to benefit most from the EAC common market when all restrictions are removed.

The draft common market protocol identifies transport, financial services, communication, tourism, education, distribution and business services sectors as some of the sectors to be liberalised. Partner states will continue negotiations to liberalise other sub-sectors in the services industry after the protocol enters into force on July 1, 2010.

The EAC is also involved in negotiations with the European Commission for liberalisation of trade in services. Although negotiations can be quite challenging, experience shows that implementation is an even bigger task, hence the need for national policies on trade in services.