Recently the United States pushed the other WTO negotiators into removing restrictions which prevent foreign entities from maintaining a commercial presence in WTO Member States, the so-called Mode 3 supply of cross border services in terms of the WTO’s General Agreement on Trade in Services (“GATS”). The European Union, Canada and Switzerland supported the notion as well as expressing their interest in the three other modes of supply.

Developing countries, led by India, China, Chile and Uganda in essence agreed with the United States sentiment. However it is unclear what South Africa’s position is partly as no information could be obtained on South Africa’s position. But more importantly South Africa’s position may differ substantially from that of the United States. Specifically the United States wants the removal of foreign equity limits, establishment requirements, prohibitions on the supply of cross-border services and the removal of nationality requirements in host countries. The United States interests are focused on financial, telecommunications, computers, energy, express delivery, distribution, environment and audiovisual services. It could be argued that South Africa’s BEE policy and legislation is indeed inconsistent with the demands made by the United States and indeed what other WTO Member States may demand. Where does this leave South Africa in the GATS negotiations? Should a breakthrough be reached in the agricultural and NAMA negotiations, countries’ services positions should also be clear in order to move forward in this area.

By Rian Geldenhuys
© Trade Law Chambers 2007