1st April 2004
International Trade in Services and Sustainable Development: The Case of Tourism in South Africa
As services have become increasingly tradeable on the global market—due in part to technological developments and regulatory reform—they have consequently become more important in international trade negotiations. In addition, the recent review of the General Agreement on Trade in Services (GATS) as part of the World Trade Organization’s (WTO’s) built-in agenda has also drawn attention to trade in services. Work already undertaken under the built-in agenda will continue under the Work Programme as set out in Ministerial Declaration of the WTO Fourth Ministerial Conference held in Doha in November 2001. The Work Programme specifies that participants shall submit initial requests for specific services commitments by June 30, 2002 and initial offers by March 31, 2003.
Developing countries have been grappling with liberalization of services sectors. Two specific challenges have been encountered: domestic reform of the state monopolies; and, how GATS negotiations are likely to undermine or reinforce domestic reform efforts.
South Africa (SA) is a middle-income economy with one of the highest levels of inequality in the world—close to 30 per cent unemployment and a high incidence of poverty. The problem is compounded by the fact that the economy continues to experience low growth. There is an urgent debate about how best to create long-run growth and reduce inequality and poverty. Policy-makers and economists increasingly recognize that the services sector could become a potential lever to growth and a significant creator of more jobs.
The services sector already makes up 65 per cent of the gross domestic product (GDP), 63 per cent of employment and 74 per cent of capital formation in SA and has been the main source of growth for the economy in the 1990s. The largest sectors are community/social services (18.6 per cent), distribution services (14.5 per cent), business services (11.2 per cent), financial services (6.1 per cent) and transport services (5.3 per cent). The domination of services is more pronounced in the informal sector where petty trade, domestic work and minibus taxi-driving are the most common sources of income, although not subject to liberalization as such. Sectors such as energy and tourism also contribute significantly to the economy. Both these sectors have large, indirect effects on competitiveness, employment and output.