Mauritius And The AfCFTA Part 2: Trade In Services

• Published date: 31 August 2023
• Subject Matter: International Law, International Trade & Investment
• Law Firm: International Economics Consulting Ltd.
• Author: Mr Paul Baker, Pablo Quiles and Smita Bheenick

Overview

This article is the second of a series analysing the African Continental Free Trade Area (AfCFTA) and its implications for the Mauritian business community. The first article explored the Protocol on Trade in Goods, while this second article explores the Protocol on Trade in Services.

As highlighted in Part 1¹, the AfCFTA is a landmark trade agreement, constituting the largest free trade area in the world in terms of the number of participating countries. The Agreement, which brings together 54 African countries and eight regional economic blocs, represents a combined population of 1.3 billion and total GDP estimated at USD 3.4 trillion. The AfCFTA aims to eliminate tariffs and non-tariff barriers on almost all trade in goods and services.

46 Member States ratified the Agreement as of August 2023. The Agreement comprises the following protocols: Trade in Goods, Trade in Services, Dispute Settlement, Competition Policy, Investment, and Intellectual Property Rights. The Protocol on Digital Trade and the Protocol on Women and Youth in Trade are expected to be finalised later this year (end 2023).

UNCTAD's Economic Development in Africa Report 2022 shows that African services exports doubled between 2005 and 2019, amounting to USD 124 billion in 2019 and representing 17% of total exports on average for the same period. The services sector is also a crucial part of Mauritius' economy: according to the World Bank, trade in services (imports and exports) reached 36% of GDP in 2022. The AfCFTA aims to create a single liberalised market for trade in services through the Protocol on Trade in Services (hereafter referred to as the Protocol) which was signed in 2019. Article 1(p) of the Protocol defines Trade in Services as the supply of service in the four different modes of supply as follows:

Mode 1: Cross-border trade	Service flows that move from the territory of one State party to the Agreement into the territory of another state party	Example: Banking or accounting services provided from a country A via digital tools to residents in country B
Mode 2: Consumption abroad	Service consumer moves into another State party's territory to obtain a service	Example: A tourist from country A traveling to country B to enjoy hospitality services
Mode 3: Commercial presence	Service supplier of one State party establishing territorial presence through ownership or lease of premises in another State party's territory to provide a service	Example: Service provided in country A by domestic subsidiary of foreign hotel chain headquartered in country B
Mode 4: Presence of natural persons	Consists of a person of one State party entering the territory of another State party to supply a service	Example: Accountants, doctors or teachers from a country A entering to a country B to supply their services.

Source: Author's elaboration based on Protocol on Trade in Services

Article 3 of the Protocol details the objectives of the Agreement for trade in services. These include among others: 1. enhancing competitiveness of services...