Services Trade Liberalisation and the Role of the Services Sector in South African Development

The paper argues that while efficient services are essential for industrialisation, generalised services trade liberalisation is not the optimal strategy for South Africa or other developing countries. It highlights the critical linkages between manufacturing and services, noting that manufacturing acts as a primary source of demand for the services sector and that a decline in manufacturing would adversely affect job creation. The author warns against 'premature deindustrialisation' and the loss of policy space resulting from 'GATS-plus' obligations in North-South regional and bilateral agreements, particularly those involving the EU and US. The document concludes that South Africa needs a strategic services trade policy aligned with its Trade Policy and Strategy Framework (TPSF) and industrial goals, rather than a blanket approach to liberalisation.

• Generalised services trade liberalisation is not considered the appropriate strategy for the services sector in South Africa or developing countries more generally, nor is it necessarily the best way to improve efficiency or exploit growth and employment potential.
• A development strategy focusing on the services sector while neglecting manufacturing is insufficient, as manufacturing is a significant source of demand for the services sector and has a higher employment multiplier for low-skilled labour.
• There is significant concern regarding the erosion of development policy space due to pressure on developing countries to accept 'GATS-plus' obligations in North-South regional and bilateral negotiations, especially concerning services, investment, and intellectual property.
• South Africa's multilateral commitments under the General Agreement on Trade in Services (GATS) were relatively extensive, covering 92 out of 160 possible subsectors, though current domestic policy often differs from these schedules.
• The paper identifies 'premature deindustrialisation'—the decline in manufacturing employment at lower per capita income levels—as a risk in South Africa, partly driven by neoliberal reforms.
• The author notes that the empirical case for services liberalisation is weakened by difficulties in defining and measuring services trade, particularly the gap between Balance of Payments definitions and GATS 'modes of supply'.
• In the context of Economic Partnership Agreement (EPA) negotiations with the EU, the EU has linked market access for developing countries to negotiations on 'new generation issues' like services, which South Africa argues requires prior domestic and regional framework development.

APA

Cattaneo, N. (2011). Services Trade Liberalisation and the Role of the Services Sector in South African Development. South African Institute of International Affairs. https://saiia.org.za/wp-content/uploads/2011/09/Occasional-Paper-94.pdf

Chicago

Cattaneo, Nicolette. Services Trade Liberalisation and the Role of the Services Sector in South African Development. South African Institute of International Affairs, 2011. https://saiia.org.za/wp-content/uploads/2011/09/Occasional-Paper-94.pdf.

Wikipedia

{{cite report |last1=Cattaneo |first1=Nicolette |title=Services Trade Liberalisation and the Role of the Services Sector in South African Development |publisher=South African Institute of International Affairs |date=September 2011 |url=https://saiia.org.za/wp-content/uploads/2011/09/Occasional-Paper-94.pdf |access-date=23 October 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{cattaneo2011services, author = {Cattaneo, Nicolette}, title = {{Services Trade Liberalisation and the Role of the Services Sector in South African Development}}, institution = {South African Institute of International Affairs}, year = {2011}, month = sep, url = {https://saiia.org.za/wp-content/uploads/2011/09/Occasional-Paper-94.pdf}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }