The Protocol on Trade in Services is one of the 6 protocols that constitute the AfCTA trading block. Having looked at the Protocol on Trade in Goods in the previous article, we will be diving deeper into Trade in Services in this article.
Here’s what this article fully covers:
- What does the Protocol on Trade in Services mean and cover?
- How does it function?
- What are the expected challenges?
- What has been done to solve some of these issues?
- How to protect and position your business for success in AfCFTA?
AfCFTA: Protocol on Trade in Services
This protocol provides a continental framework of principles and rules to guide trade in services. In this case, “services” refers to “the production, distribution, marketing, sale and delivery of a service’ according to Article 1 (definitions) and focuses on 5 key areas – financial services, communication, transport, tourism and business services.
How Does the Protocol on Trade in Services Function?
The protocol would allow businesses to offer their services across the AfCFTA market, liberalizing trade in services and removing trade barriers to further drive trade in services.
It is believed that if well negotiated and implemented, the protocol on trade in services will contribute to the achievement of economies of scale, reduce business costs, improve the allocation of resources, spur (domestic and foreign) investment and promote regional value chains.
What Are the Expected Challenges?
As is well known, services sectors are heavily reliant on regulation to ensure a competitive but secure business environment. This is even more essential in such an elaborate trade arrangement as the AfCFTA.
But the fact that the implementation of the AfCFTA is member-driven poses a challenge as some states do not have any existing domestic regulatory frameworks for the services sector.
What Has Been Done to Solve Some of These Issues?
To solve the issue of providing an appropriate regulatory framework that will work best for all, negotiating states have engaged with the private sector in the preparations for these sector commitments and regulatory framework negotiations.
These companies would be in the best position to identify what the challenges to trade are and the opportunities that are available for short- and long-term benefits.
How to Protect and Position Your Business for Success in AfCFTA?
As a big business or investor in the services sector, a clear understanding and direct participation in the development of the industry regulations as relevant to the AfCFTA is key to strategically positioning your business for success. This would require getting involved once negotiations are completed and the protocol moves into operation.
For small businesses, collaborations and strategic partnerships will provide an edge, giving SMEs a chance to arm themselves with these value chains and maximize opportunities. This would also allow SMEs to mobilize and leverage resources for collectively beneficial growth.
Written by Ikechukwu Ibeawuchi for Upside Africa