Is Regionalism Inherently Preferable to Multilateralism as a Means of Pursuing Trade Liberalization in Services in Developing Countries? Evidence from Africa’s RTAs, IPRA Working Paper 105

This paper assessed the effectiveness of regional agreements (RTAs) in tackling many of the hurdles that potentially impede access to and presence in services markets. From the approaches and disciplines within the services trade frameworks and framework of the GATS, most major RTAs are at the same pace with GATS in securing the rule making interface between domestic regulation and trade in services, the necessity test, cross border trade in services, and mutual recognition and emergency safeguards and subsidies issues, but lag behind GATS in areas of policy sensitivities and handling of critical sectors such as telecommunication and financial services. As such, regionalism may not be a preferred means of pursuing trade liberalisation in sectors where policy sensitivities are high. Second, effective access to services markets and services exports performance involve interplay of a large number of policies measures, including those not typically falling within the scope to the services trade frameworks. Beyond reforms in services trade frameworks such as pursuing regional regulatory harmonization, Africa need to be alert to domestic policies and ensure that proper coordination exists with national officials in related policy areas. Third, entry restrictions and regulatory barriers retards growth of services exports sector as incumbent firms have no incentive to improve productivity to stay ahead of competition.