3rd December 2007
Opportunities and Risks of Liberalising Trade in Services in Mozambique
In many developing countries, the services sector has grown over the last two decades to comprise roughly half of their gross domestic production. As heavy domestic support measures in agriculture, non-tariff barriers, preference erosion and supply side constraints continue to hamper least developed country (LDC) exports to the markets of developed industrialized countries, trade in services is steadily gaining momentum as an alternative channel for providing new opportunities for diversification and economic growth.
Yet, despite this growth, the sector remains largely underdeveloped and its regulatory framework is inadequate. Most developing countries have had difficulties articulating their negotiating positions at the international level beyond rhetoric and general statements. For some, this is simply a lack of genuine understanding or familiarity with the General Agreement on Trade in Services (GATS) and the WTO negotiating context, which is symptomatic of a lack of deeper, substantive knowledge of their interests in specific sectors and modes of supply and rules. This also speaks to deficient human resources in relation to negotiating capacity. In addition, many LDCs continue to be compounded by a lack of data or real statistics on trade in services.
To address this concern, ICTSD commissioned a series of studies on the opportunities and risks of liberalising services trade in selected developing countries as part of its programme on Trade in Services and Sustainable Development. Among the work commissioned was a country study on Mozambique.
Like many developing and least developed countries, Mozambique’s services sector is an increasingly important dimension of the country’s economic development in terms of both its contribution to growth and its development potential. The present study, produced in collaboration with the Economic Justice Coalition, shows that services like transport, electricity and tourism are highly tradable. These are also priority sectors for Mozambique, which is fast becoming an exporter of these goods. In addition, Mozambique’s strategic geographic location also makes it a natural regional transport and service hub connecting several countries in Southern Africa namely: Botswana, South Africa, Swaziland, Malawi, Zambia and Zimbabwe. This is evidenced by the major role it plays in rendering transport and logistical services to the region.
Moreover, as demonstrated throughout the study, liberalisation can play a positive role in improving the competitiveness of the goods sector and other services, as well as increasing the efficiency of domestic services sectors and export opportunities. Yet, as also explored in the paper, there is a serious lack of socio-economic assessments and of an understanding of the full implications of the liberalisation and privatisation of services.
In an effort to fill this gap, this study aims to improve the understanding of linkages between possible services liberalisation (undertaken in the GATS context, where appropriate) and key public policy objectives in selected sectors; to enhance understanding of national market structures in the selected sectors and modes of supply, including on the strengths and weaknesses of the domestic services sector and existing trade flows; to facilitate interaction among Geneva-based services negotiators, national policy-makers from relevant ministries, the business community, academia and civil society actors; to identify priority sectors and sub-sectors of particular relevance to the country, define elements and conditions for trade liberalisation, market and regulatory reform, taking into account specific requests received in the GATS negotiations; and lastly, to involve national stakeholders in the definition of domestic negotiating positions.
This study comes at an opportune time for Mozambique. The opportunities and risks of liberalising trade in services are delicately balanced in an environment where regulatory and institutional authorities have been established only relatively recently, and in which restructuring is still in progress. By implementing concerted measures for macroeconomic stabilization and structural reforms, the country looks to transform its economy towards a higher degree of openness and export orientation. In this context, the paper provides a much needed backstopping analysis for the definition of Mozambique’s negotiating interests in bilateral, regional and multilateral negotiations.