On 18 August 2012 the Southern African Development Community (SADC) Secretariat stated that the SADC Member States agreed on a Protocol in Trade in Services. SADC Protocol on Trade in Services has been a long awaited affair. It presents SADC services providers with the opportunity to provide their services to other SADC Member States, an opportunity that is scarcely afforded to foreigners and almost never given the appropriate legal recognition within the region.

The Protocol on Trade in Services will also go a long way to facilitating trade in goods within the current free trade agreement applicable to SADC as many services are necessary in order to effectively trade in goods (such as transport, telecommunication and financial services to name a few). Currently many of these services are underdeveloped or ineffective within SADC.

The question is whether the SADC Protocol on Trade in Services really does provide the appropriate legal protection for foreign service providers. Recently we have seen that the SADC Tribunal was suspended which means that foreigners cannot enforce their rights under any legal agreement (such as the Protocol on Trade or the Protocol on Trade in Services). The government of South Africa has also recently announced that they are desirous of terminating their bilateral investment treaties which provided protection to foreign investors against expropriation as the foreigner may enforce its rights through arbitration.

The SADC Protocol on Trade in Services provides for its own rules of procedures for settling disputes, but for the rest the dispute settlement mechanism seems to rely on the SADC Tribunal. Obviously if the SADC Tribunal is currently suspended, it would not assist foreign service providers in enforcing their rights. However save for the rules of procedure which differs within the context of the SADC Protocol on Trade in Services the most important difference is that the dispute settlement mechanism only allows for State to State dispute settlement (as we have under the SADC Protocol on Trade). This means that a service provider company cannot enforce its own rights. This is contrary to the provisions of the Protocol of the Tribunal (leading to a fragmentation in SADC law) and will only allow the company to enforce its rights if, and only if, it can convince its government to take the matter on dispute. This is not an ideal state of affairs for business, but it seems to follow the thinking about the possible new SADC Tribunal (to read our article thereon please click here).

The SADC Trade Protocol on Trade in Services is further only a framework agreement in the sense that the actual opportunities will be found in the commitments that each SADC Member State make. These commitments in essence tell you how a foreign service provider can gain access to a market and once market access have been granted, how that foreigner will be treated differently vis-a-vie any national. Initially the commitments will only be on the six priority services sectors agreed upon, namely communication, construction, energy-related, financial, tourism and transport services. These are of course the subject of negotiation. According to the SADC Trade Protocol on Trade in Services the negotiation on these commitments must be concluded within three years of the start of the negotiations. The date of the start of the negotiations has not been determined and in light of the history of concluding SADC negotiations and emphasis placed on the SADC-EAC-COMESA Tripartite free trade negotiations it is likely that it will still be a very long time until business can rely on any real commitments.

This sentiment is perhaps also conveyed by the fact that 6 of the 15 SADC Member States did not sign the SADC Protocol on Trade in Services despite the SADC Secretariat reporting that the relevant authorities were present. Angola, Botswana, Namibia, Madagascar, South Africa and Zimbabwe did not sign the protocol. If all the signatures are eventually obtained it still does not present a legal framework as it will only enter into force within 30 days after two-thirds of the Member States have ratified the protocol in accordance with their own national constitutional procedures. Experience has shown that this too may take a very long time.

This does not mean that service providers cannot access the SADC market. It merely means that they will have to pay particular attention to the legal risks and avenues open to them.

Rian Geldenhuys

© Trade Law Chambers 2012