PPT 00

EAST AFRICAN COMMUNITY

One People, One Destiny

REVISION NO: 02 E F F E C T I V E D AT E : 0 1 / 0 9 / 2 0 2 2
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Meeting of the National Committee on Trade

in Services

EAC Mechanism for the Removal of

Restrictions on Trade in Services

September – October 2022

Presented by: Dorica Nkhata

Trade Advisor
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Outline

• Background and justification- context, purpose

• Key elements of the mechanism
• Framework modalities for the removal of restrictions on trade in
services
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THE EAST AFRICAN COMMUNITY

In Brief Vision Mission Quick Figures

The East African Community (EAC) is a regional inter- A prosperous, competitive, To widen and deepen Total Surface Area

governmental organization of the Republic of Burundi, secure, stable and politically economic, political, social 4.8 million sq. km
united East Africa. and cultural integration in
the Democratic Republic of Congo, the Republic of
order to improve the quality
Kenya, the Republic of Rwanda, the Republic of South Population
of life of the people of East
Sudan, the Republic of Uganda and the United 280 million (2020)
Africa through increased
Republic of Tanzania, with its headquarters in Arusha, competitiveness, value
GDP Nominal
Tanzania. added production and
investment. US$ 278.1 billion (2020)
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Background and Justification

Context
• EAC Treaty – PS decided to expand and intensify their economic, political,
social and cultural integration.
• key milestones on the road to the implementation of the EAC Political
Federation is the implementation of the Common Market Protocol (CMP).
• Part F (Articles 16-23) of the CMP covers matters on movement of services
across borders of Partner States.
• Article 23(1) of the Protocol provides that liberalization of trade in services
shall be progressive and in accordance with the negotiated Schedules of
Specific Commitments namely, Annex V of the CMP.

EAC REGIONAL INTEGRATION PILLARS
CUSTOMS UNION
2005
Enabling the EAC Partner
States to enjoy economies of
scale, with a view to supporting
the process of economic
development through the
establishment of a Single
Customs Territory.
A HIGHLIGHT
COMMON MARKET
2010
Accelerating economic growth
and development while
maintaining a liberal stance
towards the 5 Freedoms of
movement for all factors of
production in the region.
MONETARY UNION
2013
Laying the groundwork within a
10-year span, while allowing
the EAC Partner States to
progressively converge their
currencies into a single
currency in the Community.
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POLITICAL FEDERATION
ONGOING
Putting in place initiatives to
fast-track political integration.
In May 2017  EAC Heads of
State adopted the Political
Confederation as a transitional
model of the East African
Political Federation.
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Background and Justification- Context

• EAC CMP Article 50 provides for monitoring and evaluation of

Implementation of the Common Market.
• States that the Council shall establish a framework for monitoring and
evaluating the implementation of the Protocol, annually review the specific
commitments and programmes in this Protocol and take the necessary measures
to ensure that the Partner States adhere to their commitments and programmes
within the agreed timeframe; and evaluate the implementation of this Protocol;
every 3 years
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Background and Justification- Context

• EAC has East African Common Market Score (CMS) Card 2014, 2016, 2020 –
tracked the progress of PSs in fulfilling their commitments under the CMP in the
movement of capital, services and goods
• Objectives is to help PSs comply with their obligations and enable EAC to attract
investment, expand trade and take full advantage of its integration potential
• CMS highlighted laws and regulations of EAC PSs that still present barriers to
increased cross border trade and FDI in the region
• Focused on professional services (legal, accounting, architectural and engineering),
road transport, distribution ( retail and wholesale) and telecommunications
• There are still measures inconsistent with commitments to liberalize services in
EAC
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Background and Justification- Context

• CMS only tracks legal compliance of the implementation of the CMP and does not
measure timely implementation of the measures, completion of commitments
within target deadlines and outcomes
• EAC also has the East African Monitoring System (EAMS) – an online management
information system which includes a database
• Database is organized according to ’modules’ which are Decisions/Directives of
Council, CMP Implementation and the Development Strategy Indicators
• CMS and EAMS are not designed and suited for monitoring the removal of
specific restrictions in TIS as their formulation of indicators and collection of data
cannot foster removal of TiS restrictions
• PSs felt that there was need for a specifically targeted framework for TIS
restrictions
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Background and Justification- Context

• SCTIFI in Feb 2017, directed the EAC Secretariat to submit ToRs for development
of a mechanism for the removal of TiS restrictions

• SCTIFI adopted the EAC Mechanism for Removal of Restrictions on Trade in

Services in May 2019

• The Mechanism to monitor the removal of restrictions on trade in services is

pertinent to growth and competitiveness of the service sectors that are critical in
trade in goods, productivity of labour, growth and mobility of capital in EAC region
thereby fully attaining the Common Market
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Background and Justification- Purpose

• The purpose of the Mechanism is two-fold.

• 1. To provide policy makers with a tool to assess the efficiency and
effectiveness of policy actions with a view to improving policy-making in the
implementation of the commitments undertaken under the CMP.
• 2. To ensure greater regulatory transparency and predictability, especially for
business and entrepreneurs in terms of ensuring the removal of restrictions in
trade in services.
• The Mechanism will be used to keep track of all measures restricting market
access and operations of other Partner States’ service suppliers across all sectors,
that is, committed and non- committed.
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Background and Justification- Purpose

• This approach would serve a double purpose:

• (a) monitoring the removal of non- conforming measures (for
committed sectors); and
• (b) supporting trade negotiators in determining the level of
restrictiveness of sectors and sub-sectors where commitments could
potentially be undertaken in future rounds of negotiations
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Background and Justification- Purpose

• The Mechanism takes into consideration the following:

i. Restrictions that are still in place after the schedules of commitments have been adopted by
Partner States in the first round of negotiations, thus covering all sectors where Partner States
have undertaken commitments;
ii. Restrictions that exist in sectors where Partner States have not yet undertaken commitments;
iii. Restrictions that have been introduced after the adoption of the schedules of commitments by
Partner States.
iv. Identify gaps in regulations that Partner States may have in sectors with or without
commitments, to determine areas where Partner States may require assistance for regulatory
development and reforms.
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Key Elements
• To effectively monitor the implementation of services trade in the EAC region, a qualitative and
numerical index system will be used.
• Mechanism is based on the following premises:
a. All services sectors committed by EAC Partner States should be covered since the nature and significance of a restriction
may vary according to the sector at issue. Sectoral studies/ regulatory audits are key to gather the necessary information to
build such a wide reaching monitoring system
b. Regulatory frameworks on the key elements for a well-functioning and effective implementation of commitments in all
services sectors, taking cognizance of international best practices, to be undertaken for informing areas for regulatory
development and reforms;
c. All four modes of supply should be covered since the significance and the impact of a restriction to trade in services (and
its removal) may vary according to mode of supply;
d. Information should be updated on a yearly basis to ensure a regular and constant monitoring of progress in the removal of
restrictions to services trade;
e. All measures affecting trade in services should be inputted in the database, including de jure and de facto discriminatory
measures, relevant domestic regulation measures,
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Key Elements
a. The database should be designed to allow for an extension of the sectoral coverage to include
services sectors currently not committed by EAC Partner States;
b. A notification mechanism should be established to collect and update information on a yearly
basis, preferably based on the submission of notifications by both institutional bodies (e.g.
Ministries, Agencies and regulatory authorities) and private entities (e.g. entrepreneurs) on a
rolling basis in combination with periodical studies, workshops and consultations with relevant
stakeholders;
c. All information inputted in the database should be subject to a national and EAC peer review
process that includes consultations with the business firms, academics and trade associations;
d. The monitoring system should be able to produce reports to be submitted to EAC Organs for
evaluation and potential action.
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Key elements- Qualitative elements

• Based on the WTO I-TIP Services database

• will entail the following to be put into effect:
• Creation of a database specific for the services component of the CMP, with a layout that takes into account the
information contained in the schedules of commitments rather than the structure of the main text of the Protocol;
• Identification of the categories under which each measure affecting trade in services should be classified (e.g. barriers to
market entry; restrictions to operations of foreign suppliers; barriers to competition; licensing requirements etc);
• Identification of additional criteria for the classification of restrictions to services trade (e.g. discriminatory vs non-
discriminatory; de facto vs de jure discrimination; type of measure etc);
• Designing of qualitative indicators that can estimate the level of restrictiveness of each measure (e.g. completely closed;
completely open; virtually closed with major restrictions) and the status of implementation of the restriction (e.g.
completely removed, major amendment; minor amendment; still in place).
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Key elements - Numerical index Elements

• The mechanism would also contain a quantitative part - providing for a system for transforming the qualitative
indicators/information available in the database into numerical indicators.
• Methodology will entail the transformation of qualitative information into numerical data, taking into account
both the level or restrictiveness and the status of implementation of a Partner State as regards the removal of
restrictions on trade in services
• For indicators of the level of restrictiveness:
• Completely open= 0
• Virtually open with minor restrictions =0.25
• Major restrictions=0.50
• Virtually closed with major restrictions = 0.75
• Completely closed = 1
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Key elements
• Once the level of restrictiveness of a restriction has been indicated, PSs will agree to its removal which then
provides the timeframe for the removal of the restriction or improvement on the level of restrictiveness
• Thereafter monitoring moves to considering the status of implementation of the Partner State in implementing
the agreed decision on the restriction, such as:
• For indicators of the status of implementation of the restriction
• Completely removed=0
• Major amendment = 0.25
• Minor amendment = 0.50
• Neither removed not amended = 0.75
• New introduced = 1
Type of information to be collected to operationalize the 19

Mechanism
• To establish the monitoring mechanism an analyses and classification of all measures affecting TiS are key
• Studies should identify horizontal and sectoral restrictions in PSs has to be undertaken as a prerequisite for setting up
the monitoring mechanism
• The following information should be contained in the monitoring mechanism :
• Text of the measure;
• Country that adopted the measure;
• Service sector(s) affected by the measure (with coverage extended, at least, to all service
• sectors and sub-sectors committed under the CMP);
• Mode(s) affected by the measure (with coverage extended to all four modes of supply);
• Type of measure (e.g. rule, law, decision, administrative practice);
• Type of restriction (i.e. qualitative or quantitative)
• Type of restriction (i.e. discriminatory or non-discriminatory)
• Type of restriction (i.e. to market entry or to operations or barrier to competition);
• Type of non-compliance (i.e. de jure or de facto);
• Restrictiveness qualitative indicator (e.g. completely open, completely close, virtually close with major restrictions, virtually open
with minor restrictions);
• Year measure was introduced; and
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Key elements – collection, revision and update of
information
• For a monitoring mechanism to properly function it is fundamental to ensure that the information is
accurately collected, competently revised and adequately updated in a timely and efficient manner.
• The approach for the monitoring mechanism process is inspired by the COMESA-EAC-SADC
Tripartite NTBs mechanism
• The NTBs monitoring mechanism, provides valuable insight on the design and structure of a
notification system that skillfully engages the private sector (including entrepreneurs and business
firms) that are greatly affected by the existence of barriers to trade.

• The monitoring mechanism will rely on information being collected through a variety of channels -
fieldwork, questionnaires, and desk review of publicly available documentation.

• consultations and notifications from the private sector, as exemplified by the Tripartite NTBs
monitoring mechanism, are particularly useful
Key elements – collection, revision and update of 21

information
 in order to notify changes to the regulatory framework at the national level, a reporting system shall
be established on a rolling-basis notification process, as follows:
i. Ministries, regulatory bodies or any other governmental or sub-governmental entity with
regulatory power in each EAC Partner State to notify the National Focal Point on Trade in
Services whenever a measure potentially affecting trade in services is adopted or amended;
ii. Businesses, trade associations, academics, trade experts and practitioners to notify and report
to the National Focal Point on Trade in Services any measure that they deem to act as a barrier
to trade in services;
iii. National periodical studies, workshops and consultations undertaken;
iv. The National Focal Point on Trade in Services to verify the information, together with the
relevant sectoral stakeholders, before uploading it in the system; and
v. Annual or bi-annual peer review meetings (this can also be done at the regional level).
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Key elements - frequency of system updates

 information is to be updated regularly, on a yearly basis.

 This will allow the EAC National Focal Points on Trade in Services to monitor how long it takes for
restrictions to be removed (e.g. one year, more than one year), how many restrictions are removed
every year and evaluate changes in the level of restrictiveness (at horizontal, sectoral and country
level) over time.

 on the onset a baseline or benchmark is to be developed, that is, a list of restrictions in force
currently that is to be used as a reference for comparison and analysis.

 This stockpiling exercise entails undertaking of horizontal and sectoral studies/regulatory audits, to
ensure that the information collected is as comprehensive and in-depth as possible.
 Key elements –Enforcement and resolution 23

mechanism

 The mechanism will use a two-pronged approach which aims at using peer review as leverage to
encourage EAC Partner States to expeditiously and appropriately comply with their commitments.
 The means to foster compliance by Partner States for the removal of restrictions will be:
 The establishment of a criterion for prioritizing the removal of restrictions through the
introduction of a traffic light-like system, similar to the one adopted for monitoring the
implementation of Summit and Council Directives and Decisions, which encourages EAC
Partner States to undertake regulatory reforms; and
 Implementation of a reporting and resolution mechanism like the one developed by Tripartite t
NTBs Monitoring System. By allowing the private sector or the general public at large to notify
a complaint about the presence of measures that allegedly affect services trade and submit a
request for such a restriction to be removed, especially if it’s a non-conforming measure to the
commitments undertaken by the Partner State in question.
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Framework Modalities for the Removal of Restrictions 24

on Trade in Services

 Removal of Restrictions to be undertaken by National and Regional Task

Forces on Trade in Services
 Each PS will establish a National Trade in Services Committees (NTSCs)
 NTSCs will be the backbone for the Regional Task Force on Trade in
Services to facilitate the removal of restrictions in the community.
 PSs will appoint an officer responsible for TiS in the Ministry responsible
for trade in services
 Officer will be National Focal Point for the purpose of technical facilitation
for the establishment of the monitoring mechanism for the removal of
restrictions and its implementation .
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Constitution of the NTSC

i. Ministry responsible for Trade – Trade in Services Officer;
ii. Other Ministries dealing with trade in services sectors, including Ministries of Foreign Affairs;
iii. Representatives of regulatory bodies of different services sectors;
iv. Representatives from the Attorney Generals’ office;
v. Private sector representatives from services sectors or representatives of services sector platforms or
committees;
vi. Ministry responsible for EAC Affairs Trade in Services and M&E experts; and

vii. EAC Secretariat Trade in services and M&E experts.

 Each National Task Force will be Chaired by the Ministry responsible for trade in
services (Trade in Services Focal Point or the Alternate), coordinated by the Trade in
Services Officer from the Ministry responsible for EAC Affairs.
 A representative from the private sector should be designated as the vice- chairperson
of the NTSC.
 Each NTSC will have bi-annual meetings with the support of the EAC Secretariat Trade
in services and M&E experts.
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Functions of the NTSCs

i. Facilitate the implementation of the mechanism for the removal of restrictions on trade in
services;
ii. Initiate policies and strategies on the removal of restrictions on trade in services in the Partner
State and for approval by the NTSC in accordance with Community laws and laws of the Partner
State;
iii. Collaborate with NTSCs and National Focal Points of the other Partner States to facilitate the
implementation of the mechanism;
iv. Disseminate information to the business community within the community on the restrictions and
non-conforming measures on trade in services identified in the Partner State and the steps to be
taken to eliminate them;
v. Refer the report or complaint of an affected party to the National Focal Point of another Partner
State, where the report or complaint is with regard to a restriction or non-conforming measure
that exists in that Partner State;
vi. Consider the reports and recommendations of the EAC Secretariat;
vii. Track and monitor any new restrictions in the community and notify the NTSC of them; and
viii. Submit periodic reports of the NTSCs to Regional Trade in Services Committee (RTSC).
Constitution of the EAC Regional Trade in Services 27

Committee ( RTSC)

 RTSC will consist of the National Focal Points on Trade in Services,

Ministry responsible for EAC Affairs M&E expert; and EAC Secretariat
Trade in services and M&E experts.
 In addition, experts drawn from other national ministries, regulatory
bodies and agencies will be part of the regional activities as necessary
for the elimination of restrictions on trade in services in their given
sectors.
 RTSC may form working groups as and when a need arises.
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Functions of RTSC

 Consider the reports of the NTSCs;

 Consider the reports and recommendations of the EAC Secretariat; and

 Submit periodic reports and make recommendations to SCTIFI on the

removal of restrictions on trade in services in the Community.
Procedure for the Removal of Restrictions on Trade in 29

Services

The removal of restrictions on trade in services will be through the following

means:
 Mutual agreement of the concerned Partner States;

 Implementation of an EAC Time Bound Programme on Trade in Services

for reporting and resolution mechanism

 Laws, regulations, directives, decisions or recommendations of Council.

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Mutual Agreement of the Concerned Partner States

 When a restriction on trade in services is reported to an NTSC or to a

National Focal Point on trade in services by an affected party, the
concerned Partner State or States will as a first priority, hold
discussions for the removal of the restriction.
 Where the Partner State or States do not agree on the removal of the
restriction, the Partner State from which affected party originates,
will notify the EAC Secretary General and request the matter be
referred to Council.
 If the Partner State from which the affected party originates does not
notify the EAC Secretary General within 30 days, the affected party will
have the right to notify the EAC Secretary General directly.
Implementation of an EAC Time Bound Programme on 31

TiS for Reporting and Resolution Mechanism

 A Partner State whose parties are affected by the restriction in another
Partner State, may initiate the process of removal of the restriction by
submitting to the Partner State where the restriction exists, a notification
in writing.

 The notification will include:

 A description of the restriction on trade in services; and
 Request for information regarding the restriction.

 PS that issues a notification will submit a copy of it to the EAC Secretary

General.
Implementation of an EAC Time Bound Programme on 32

TiS for Reporting and Resolution Mechanism

 An NTSC that receives a report or a complaint on a restriction on TiS
within the Partner State, will investigate the report or complaint and
prepare a plan for the removal of the restriction.
 The plan for the removal of the restriction will include:
 The impact of the restriction on the business in the Partner State, the type of limitation (whether it’s a
market access or national treatment limitation), mode of supply affected and the institutions of the
Partner State responsible for the restriction;
 The timeframe for the removal of the restriction and the performance benchmarks and means to be
used to verify the elimination of the restriction; and
 The challenges that may be encountered in the process of removing the restriction and the
recommended solution to the challenge.
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Introduction
 PS that receives the notification will within 10 days of receiving it, provide a written
response to the requesting Partner State on the issues specified in the notification.

 Where the responding Partner State is not able to respond to a notification within 10
days, the Partner State shall inform the requesting Partner State of the reasons for the
delay in responding and shall submit its response within twenty-five days of receipt of
the notification.
 The Partner State that issues a response to a notification will submit a copy of the
response to the Secretary General.
 Where a Partner State fails to resolve a matter relating to a restriction on trade in
services, the EAC Secretary General will within fifteen days of receipt of the response,
convene a meeting of the concerned Partner States to resolve a matter relating to the
restriction.
Laws, Regulations, Directives, Decisions or 34

Recommendations of Council

 Where the concerned Partner States fail to remove a restriction on trade in

services, mutually or through the EAC Time Bound Programme on Trade in
Services, the EAC Secretary General will refer the matter that is not resolved to
the Council.
 Council will consider the matter and issue a directive, decision or
recommendation with regard to the removal of the restriction on trade in
services in question.
 Any person aggrieved by the directive, decision or recommendation of the
Council on the matter, may refer the matter to the EACJ
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Role of the Council in the Removal of Restrictions

 Council will generally coordinate and monitor the removal of restrictions

in the Partner States.
 Council will at least annually:
 Receive reports of the restrictions on trade in services that exist in the Partner States that
will be tabled in the Assembly for consideration;
 Cause the EAC Secretariat to compile and disseminate information on the restrictions
existing in the Partner States;
 Advice the Partner States on the removal of restrictions on trade in services; and
 Cause the EAC Time Bound Programme for the removal of restrictions on trade in services
to be updated, as may be necessary.
 Council may recommend to the Summit to impose, as may be
appropriate, any enforcement measures against a Partner State that fails
to comply with any directive, decision or recommendation of the Council.
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Do you have any Questions?

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EAST AFRICAN COMMUNITY

EAC Close
Afrika Mashariki Road
P.O. Box 1096
Arusha, Tanzania
Tel: +255 (0)27 216 2100
Fax: +255 (0)27 216 2190
Email: eac@eachq.org
www.eac.int