Transportation And Trade In Sub-Saharan Africa:
What Direction Should Countries Take In Doha?
Workshop Paper
Post-July 2004 African Strategies for Bilateral and Multilateral Trade Negotiations
November 2004
Transportation And Trade In Sub-Saharan Africa: What Direction Should
Countries Take In Doha?*
* This paper is an abbreviated version of a longer paper which is currently in
progress.
This paper is intended for general information purposes only, and should not be relied upon as legal advice
nor is it intended to replace legal advice. It was drafted, under the coordination of Dr. Dominique Njinkeu
by Tracey Epps, and has benefited from useful insights from several ILEAP advisors. Views expressed in
this publication should not be attributed to ILEAP, its Board of Directors, its funders, or the institutions
with which lead advisors are associated. Comments can be sent to the ILEAP Secretariat
([email protected]). This paper is not for citation.
1. Introduction
The purpose of the paper is to provide background analysis to guide African countries in the
request/offer process in the transportation sector in the General Agreement on Trade and
Services (GATS) Doha Round.1
The transportation sector as defined by the GATS is a diverse sector, including air, maritime,
road and railway transportation services; and including both freight and passenger transportation
services. Within each subsector, various activities are covered, including passenger and freight
transportation, rental of transport equipment, maintenance and repair, and various supporting
services such as cargo handling, storage and warehousing, freight forwarding, agency services,
etc.
Given both the size of the sector and the widely varying circumstances throughout sub-Saharan
Africa, the paper focuses solely on freight transportation2 and includes case studies of two transit
corridors: (1) Kampala-Mombasa; and (2) Douala-Ndjamena. The purpose of the case studies is
to allow a closer analysis of transportation issues that will be of practical relevance to
policymakers and trade negotiators in countries that use those corridors. The case studies will,
however, also have relevance to other African countries where the situation bears likeness to that
in the selected corridors.
The paper will proceed as follows. Section two provides a brief overview of the transportation
sector in sub-Saharan Africa. Section three describes how transportation services are dealt with
in the GATS. Section four describes progress to date in the GATS negotiations. Section five
discusses one of the case studies (Kampala-Mombasa), while section six provides some
concluding remarks and questions intended to provoke discussion during the present workshop.
2. Transportation Services in Sub-Saharan Africa
Two important distinctions need to be made at the outset of the discussion. First, there is a
distinction between transport services that serve the public or commercial customers directly;
and transport infrastructure that is used by transport service providers.3 This distinction can be
seen, for example, between road provision and road haulage, or between port infrastructure and
stevedoring services.4 The analysis here centres on transport services. Second, there is a
distinction between the transport sector’s role as an enabler of development and of trade in
goods, and its role as a sector which constitutes imports/exports in its own right. Our interest in
The paper will also provide assistance to countries participating in the service section of the Economic Partnership Agreement
(EPA) negotiations.
2 An analysis of passenger transportation would include specific concentration on urban transportation as well as general
transportation of passengers by road, rail, sea or air.
3 Transport Sector Board - The World Bank Group, Public and Private Sector Roles in the Supply of Transport Infrastructure and Services by P.
Amos (Washington D.C., 2004).
4 Transport Sector Board - The World Bank Group, Public and Private Sector Roles in the Supply of Transport Infrastructure and Services by P.
Amos (Washington D.C., 2004).
1
the transportation sector combines both the reduction of transaction costs and the stimulation of
economic activities in other sectors, in addition to transportation as a potential source of trade in
services.
Turning to transportation as a focus for reducing transaction costs, a key issue facing importers
and exporters in sub-Saharan Africa is the high cost of freight. In 2001, freight costs as a
proportion of import value (the “transport cost factor”) averaged 13.9 percent for sub-Saharan
African countries. This compares to an average of 8.7 percent for developing countries overall.5
In landlocked countries in sub-Saharan African, the transport cost factor was even higher, at 20.7
percent.6 Landlocked countries face such high costs largely due to the additional costs and
difficulties of transporting goods overland and through neighbouring countries.
High transport costs result from a number of factors, including poor infrastructure, inefficient
and unreliable transport services, coordination problems, border delays, and geographic and
economic circumstances. The competitiveness of sub-Saharan African countries is seriously
hindered by these costs which make exports less competitive and imports more expensive. Such
costs often represent a more binding constraint to greater participation in international trade than
tariffs and other trade barriers.7 It is important to unpack these costs according to the various
transportation subsectors covered by the GATS, namely, maritime, land (road and rail), and air.
Following is a brief examination of each of these subsectors, followed by a discussion of how
negotiations under the GATS may impact transportation costs.
Maritime: In 2002, the African merchant fleet held just 3.2 percent of the fleet of developing
countries and 0.6 percent of the world fleet.8 Only about one-third of the African merchant fleet
without open registers is registered in countries of sub-Saharan Africa.9 In terms of cargo, subSaharan Africa accounts for approximately 2.1 percent of world cargo.10 International shipping
services tend to be concentrated in the hands of a small number of foreign carriers. In terms of
intra-African maritime shipping, after independence, most coastal African countries established
national shipping lines, supported by a United Nations charter reserving 40 percent of the
nationally-generated freight for national carriers. However, most of these shipping lines have
very little capacity to carry goods and many simply operate as shipping agents for the reserved
national freight, chartering space on international carriers.
A key issue for sub-Saharan Africa is the operational efficiency of ports. While this has
improved in some ports with the introduction of private sector operators for container handling11,
in many ports, productivity is extremely low, providing a great hindrance to both importers and
exporters.
{UNCTAD, 2003 #29 @ 116}
{UNCTAD, 2003 #29 @ 116}
7 {The World Bank, 2001 #36 @ 97}
8 {UNCTAD, 2003 #29 @ 104} These figures do not include the Liberian open register.
9 {UNCTAD, 2003 #29 @ 106}
10 {UNCTAD, 2003 #29 @ 106}
11 {UNCTAD, 2003 #29 @ 114}
5
6
Land: There are a number of transport corridors that are critical for landlocked sub-Saharan
African countries. Road transport is the dominant means of freight transport along these
corridors.12 The cost ranges between US$1.38 and US$4.94 on major African transport
corridors. This compares to the average unit cost for transportation in the US ($1.10 per
kilometre) and the EU (US$1.10 per kilometre).13 There are several reasons for these high costs,
including substandard and badly maintained roads and trucks, cumbersome administrative
procedures, excessive controls, poor management information systems and port costs.
Railways transportation on the transit corridors in sub-Saharan Africa have suffered due to poor
infrastructure and management. Rail tracks built in colonial times often had low-weight rails and
design standards which are insufficient for today’s traffic, and which have deteriorated due to
poor maintenance, and a poorly managed rolling stock.14 As a result, rail transportation is
largely secondary to road. In addition to poor infrastructure, railways in sub-Saharan Africa tend
to be largely dominated by government monopolies which are poorly managed and inefficient.
Finally, internal waterways transportation in sub-Saharan Africa has also suffered from
insufficient investment and poor maintenance and safety standards.15
Air: Africa is the smallest region for air services in the world, reflecting its low income and lack
of air transport infrastructure. In 2002, it accounted for only 1.6% of the world air cargo traffic.
The use of air transport is very concentrated within Africa: the 10 biggest national markets
account for 90% of cargo flights. Kenya was the most important single market for international
cargo flights (i.e. intercontinental traffic and flights to other African countries) with 1,531 flights
in 2001, followed closely by South Africa with 1,333 flights and Senegal with 1,218 flights. The
low level, both in absolute and relative terms, of the intra-Africa cargo traffic illustrates an
underdeveloped intra-regional trade pattern and deficiencies in air infrastructure. However, the
importance of air transport relative to other modes of transport is increasing: the use of air
transport expanded by 7.2% a year on average during the 1990s, compared to a rise of 4.4% in
the use of road transport.
Multimodal: While not a transport “subsector” as defined in the GATS, multimodal transport is
increasingly a critical aspect of transport services. Multimodal transport is a door-to-door
service which involves the use of one or more "modes" (i.e., road, rail, air, or inland water
transport) in addition to shipping by sea. One transport provider organizes and ensures door-todoor transport, or multimodal transport. Multimodal transport services are limited in subSaharan Africa where there are numerous constraints including long inland turnaround times for
containers, inadequate road infrastructure, limitations on the cross-border provision of trucking
services, and different national standards regarding safety requirements, vehicle sizes, railway
gauges, etc.
This brief overview of the various transportation subsectors in sub-Saharan Africa highlights
that, on the infrastructure side, transportation systems in sub-Saharan Africa are in critical need
{UNCTAD, 2003 #29 @ 114}
{UNCTAD, 2003 #29 @ 115}
14 See {Pedersen, 2000 #43 @ 13}
15 See {Pedersen, 2000 #43 @ 13}
12
13
of development. This is especially so in the area of land transport where road and rail networks
are inadequate in many places, but is also true of air and maritime transport. On the services
side, however, the problems are largely policy-induced. Inefficiency of services is a major
stumbling block to lower transportation costs. Inefficiency has a number of causes, including
state-ownership/monopolies, lack of competition, inadequate regulation, and red tape. Many
state-owned ports, shipping lines, airports, airlines, and logistics companies that dominate the
transport services sector are poorly managed and unresponsive to client needs, and tend to be
starved of funds for much needed investments. Cumbersome border procedures, excessive paper
work, and opaque administrative structures create additional burdens on transport services
providers and users. These policy-induced problems may be addressed within the GATS
framework and the next sections address this framework.
3. Transportation Services in the GATS
As noted above, the GATS covers air, maritime, and land transportation services. Consideration
also needs to be given to multimodal transport where activities cover pre- and onward
transportation services in rail, road, inland waterways and seaways, and the commercially related
auxiliary services (such as cargo handling, storage, warehousing, logistics activities, container
stations and depots, container servicing, freight groupage, agencies, freight forwarding).
Commitments in multimodal transport will comprise commitments within each mode of
transport.
For those subsectors they choose to commit, governments may set limitations specifying the
level of market access and the degree of national treatment they are prepared to guarantee. A
market access commitment provides that foreign service providers be granted access to the
domestic market on terms no less favourable than those provided for in its Schedule. A national
treatment commitment requires governments to afford treatment to foreign service providers that
is no less favourable than that afforded to domestic providers.
An important aspect of making market access and national treatment commitments is that
governments are able to limit commitments to one or more of the “modes of supply” through
which services are traded. It is therefore crucial to understand what each of the four modes of
supply actually means in practice. Here, we examine this question. In addition, we include a
table with examples of what each of the four modes of supply means in practice for various
different subsectors (Appendix A).
Mode 1 – Cross-Border Supply
Mode 1 is defined as the supply of a service from the territory of one Member into the territory
of another Member (“cross-border supply”). This mode of supply is similar to the traditional
notion of trade in goods where both the consumer and the supplier remain in their respective
territories when the product is delivered. For example, if a British shipping company transports
freight for a Kenyan company from Mombasa to the UK, this would constitute an export for the
UK, and an import for Kenya.
Mode 2 – Consumption Abroad
Mode 2 is defined as the supply of a service in the territory of a Member to the service consumer
of any other Member (“consumption abroad”). This situation occurs when the consumer moves
to the territory of the supplier. The consumer, although being in a foreign country, remains a
resident of their home country, giving rise to transactions between residents and non-residents.
This results in an import of services for the country of the consumer and an export for the
country of the service provider. For example, if a Kenyan company purchases freight
transportation services from a British shipping company to ship its flowers from Rotterdam to
London, this would constitute an export for the UK and an import for Kenya.
Mode 3 – Commercial Presence
Mode 3 is defined as the supply of a service by a service supplier of one Member, through
commercial presence in the territory of any other Member (“commercial presence”).
Commercial presence includes legal entities such as corporations, joint ventures, partnerships,
representative offices, and branches. For example, if a British shipping company establishes a
branch office in Mombasa, this would constitute an export for the UK and an import for Kenya.
Mode 4 – Movement of Natural Persons
The supply of a service by a service supplier of a Member, through presence of natural persons
of a Member in the territory of any other Member (“movement of natural persons”).16 For
example, if a British citizen spends three months working at the Mombasa branch of a British
shipping company, this would constitute an export for the UK and an import for Kenya.
Each of the four modes is important for transportation services. Mode 1 is clearly important for
international transport where services are provided across borders. Mode 2 is important for the
repair and maintenance of transport equipment (e.g., vessels and other transport equipment) and
also to ensure that consumers of transport services have access to foreign-based service
providers. The need to establish a commercial presence to manage transport service operations
makes Mode 3 extremely relevant. Mode 4 is also important as it touches upon the possibility of
hiring foreign crewmembers and officers; an essential parameter of the operating costs of this
often labour-intensive sector.
4. Why Commit to Liberalize Transportation Services?
As discussed above, the transportation sector in sub-Saharan Africa is largely inefficient and
contributes to high transaction costs which impede the ability of countries to trade
internationally. To the extent that problems are policy-induced, the GATS can be a tool by
which countries can seek to increase efficiency within their transport sector. Many sub-Saharan
16 It should be noted that the GATS does not apply to measures affecting individuals seeking access to the employment market, or to
measures regarding citizenship, residence, or employment on a permanent basis.
African countries have rules and regulations in place that drive up transport-related transaction
costs and preserve monopolies in service markets.17 Many of these rules and regulations restrict
market access for foreign providers and/or discriminate against foreign providers. The following
are some of the key ways in which domestic rules and regulations can restrict market access and
national treatment.
Market Access: Common rules that restrict market access for foreign providers in the transport
sector include:
à
à
à
à
à
à
à
à
à
à
à
à
à
à
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Foreign ownership restrictions;
Foreign equity ceilings;
Restrictive incorporation requirements (e.g., requirements with respect to nationality
of the board of directors, citizenship requirements)
Requirements and prohibitions on activities;
Authorization requirements not extended to foreign providers:
Rules governing the conduct of businesses;
Economic needs tests;
Rules that prevent multimodal operators from undertaking door-to-door contracts
(e.g., limitations on the cross-border provision of trucking services)
Standards such as safety requirements, vehicle sizes, railway gauges, or coupling and
braking systems also constrain the smooth cross-border movements of goods.18
Rules relating to customs procedures (e.g., burdensome documentation requirements).
Emergency safeguards on the number of services suppliers, services operations and
services output;
Requirements with respect to concessions authorizations;
Joint ventures and investment limitations;
Requirement to appoint a local agent; and
(For maritime transport) limitations on government-owned cargoes.
National Treatment: Some of the rules and regulations noted under the heading of “market
access” may also have the effect of discriminating against foreign providers. In addition, other
rules and regulations that may result in discrimination against foreign provides include:
à
à
à
à
à
17
18
Regulations which relate to performance requirements, where the requirements
impose an added burden on foreign providers;
Preferential treatment for domestic providers including subsidies and investment
incentives;
Discriminatory taxation;
Requirement of establishment in the country concerned to provide cabotage services;
and
Discriminatory port charges.
{The World Bank, 2001 #36 @ 109}
{The World Bank, 2001 #36 @ 110}
Just as government policy can drive up costs and increase inefficiency, it can also reduce
transport-related transaction costs and improve efficiency. That is because doing away with
overly restrictive rules and regulations and the administrative hassles and red tape that these
entail, enables the more streamlined and efficient operation of service operations. By removing
restrictions on foreign providers, and making it easier for them to provide services, government
policy can result in more efficient, cheaper, and plentiful services. However, even assuming the
benefits of liberalization in the transport sector, a key question for sub-Saharan African countries
remains. Namely, what benefits are likely to accrue from making commitments in the
transportation sector, and conversely, what detriments could follow? In other words, why make
GATS commitments at all? Why not simply follow a course of liberalization in the absence of
binding commitments? The answer is that there are potential benefits and negative consequences
in each alternative.
First, making GATS commitments is a means with which to signal credible commitment to
ensure a favourable climate for both foreign and domestic investors. A commitment tells
investors that the terms upon which they expend large outlays in sunk costs will remain fixed and
sheltered from the arbitrary exercise of political or administrative discretion, and that the
domestic market will be liberalized according to a fixed schedule.19 Second, the negotiating
process may be able to be used to advance domestic liberalization of services where there are
interest groups that resist reforms. Third, making commitments can be viewed as of practical
value in light of the GATS negotiating structure in that making concessions in one area may
assist in obtaining trade concessions elsewhere (whether in different sectors or subsectors, or in
different modes).
On the negative side, there is the danger that opening up markets to foreign operators may result
in a concentration of operators. For example, it has been noted that a relatively small group of
port operators has established a worldwide presence.20 A danger is that dominant operators may
abuse their market power and that the benefits of liberalization may be captured to some extent
by foreign firms.
Another potential negative aspect of liberalizing commitments under the GATS is the nature and
style of adjustments required in domestic economies, including labour market adjustments where
increased foreign investment alters the make-up of the domestic labour market. A key issue for
sub-Saharan African countries is thus the need to act in accordance with domestic reform
priorities and overall development objectives.
A key to successful liberalization is the development of appropriate regulatory mechanisms.
Regulatory intervention is necessary to remedy market failures, to protect consumer interests and
the environment, and to ensure the safety of services supplied. However, it is important for subSaharan African countries to ensure that they have the capacity to put in place the necessary
regulatory mechanisms and that careful consideration has been given to identifying the most
appropriate mechanisms.
19
20
{Cohen, 2004 #44 @ 15}
{The World Bank, 2001 #36 @ 116}
5. The State of Play in GATS Negotiations
During the Uruguay Round, Members were invited to schedule commitments in the
transportation sector with respect to market access and national treatment. However, progress in
the transport sector was limited. In maritime transport, only 39 Members offered commitments,
most with significant limitations. Negotiations were extended until June 1996 but no agreement
could be reached and as a result negotiations were suspended. Liberalization of air transport
services was also very limited. Commitments were made by 45 Members but only related to
three ancillary services – aircraft repair and maintenance, selling and marketing services, and
computer reservation services. The GATS expressly excludes the issue of air traffic rights.
Road transport attracted the most commitments (40 Members), while rail transport only attracted
commitments from 10 Members. Of the commitments made during the Uruguay Round, the
most restrictions were seen with respect to mode three (commercial presence).
The Doha Round encompasses negotiations on services with the objective of broadening and
deepening the commitments made during the Uruguay Round. To this end, offers and requests
are currently being tabled. A total of 45 WTO Members (counting the EU as one) have now put
forward offers. A preliminary analysis of 16 of these offers (including those made by the EC,
US, Japan, and Canada) shows that offers are still relatively limited, with numerous restrictions
of the type noted above applicable in mode three.
6. Case Study: Kampala-Mombasa Corridor
As noted above, the paper will include a case study of both the Kampala-Mombasa corridor, and
the Douala-Ndjamena corridor. To date, analysis has commenced only on the KampalaMombasa corridor. Work to date in this regard highlights the inadequate infrastructure with
respect to inland transportation. In Uganda, for example, the dominant means of freight
transportation is road (given the inefficiency of the railways), yet the poor state of many of the
existing roads and the general paucity of the road network present a significant impediment to
trade. Development of infrastructure in this regard is therefore critical. Uganda exporters and
importers experience additional impediments when goods cross the Kenyan border en route
either to or from the port at Mombasa and with the services at the port of Mombasa itself. It has
been reported that port services in Mombasa are so inefficient that some traffic is diverting to the
port of Dar es Salaam in Tanzania.
The Kampala-Mombasa corridor is part of a wider transportation corridor covered by the
Northern Corridor Transit Agreement (NCTA). This Agreement covers the use of transportation
facilities of East Africa served by the port of Mombasa. The parties to the Agreement are
Burundi, Kenya, Rwanda, DRC, and Uganda. It includes the rail network between Kampala and
Mombasa; and the road routes from Mombasa via Malaba and Busia to Kampala. The objective
of the NCTA is to promote the use of the Northern Corridor as a most effective route for the
surface transport of goods between the parties. The parties have agreed to grant each other the
right of transit through their respective territories and to provide all possible facilities,
regulations and procedures for that purpose, without any discrimination.
In addition to their role in facilitating trade, transport services along the Kampala-Mombasa
corridor are important as imports and exports in their own right. On the export side, for example,
both Uganda and Kenya have capacity to export transport services in one of several ways,
including: (i) importers from third countries may pay for transport costs (either road, rail,
internal waterways, or air) in accordance with the terms of purchase of goods from
Uganda/Kenya (e.g., where the sale contract is on FOB terms); (ii) Ugandan or Kenyan
exporters may pass on the costs of transport services to customers through sale contracts e.g.,
CIF or CFR; or (iii) foreign nationals or entities may purchase transport services in Uganda or
Kenya e.g., when their goods need to pass through their territory in transit. With respect to the
third means, Uganda and Kenya’s road and rail networks provide linkages to the sea for the land
locked countries of Rwanda, Burundi, parts of eastern Democratic Republic of Congo (DRC),
and southern Sudan.
On the import side, as a landlocked country, Uganda is inevitably required to import transport
services in order to move goods from Uganda to the sea, through the port either at Mombasa,
Kenya or Dar es Salaam, Tanzania. Of course, it also imports transport services whenever an
exporter or importer pays for transport services to export/import goods to and from Kenya.
Likewise, Kenya will import transport services when it sends goods to Uganda and utilizes
Ugandan transport providers.
Only Kenya made commitments in the Uruguay Round, and these were limited to air and road
transport. Commitments were particularly limited in mode three where Kenya made no
commitments in road transport. We understand that these commitments have not been expanded
in Kenya’s Doha round offer to date.
Both Uganda and Kenya have already taken steps towards liberalizing aspects of their
transportation sectors, with varying degrees of progress. Committing such liberalization under
the GATS would enhance the credibility of the programmes with foreign investors. Uganda and
Kenya (as well as the other parties to the NCTA) need to pay particular attention to the KampalaMombasa corridor in the request/offer process. This is particularly important to Uganda as a
landlocked country. Consideration needs to be given to where liberalization would help in
improving the efficiency of services along the corridor, while respecting the obligations already
entered into under the NCTA. For example, there might be merit in Uganda requesting Kenya to
provide access for its (Ugandan) providers to provide services in Kenya and vice versa; and
ensuring that commitments are made in each country so that multi-modal operators (whether
domestic or foreign) are not restricted in their ability to provide services along the length of the
corridor. Where infrastructure exists (e.g., the port at Mombasa), making commitments to
liberalize the provision of services will likely (combined with other steps to encourage foreign
investment) play a critical role in achieving greater efficiency of services.
7. Conclusion and Questions for Discussion
Concluding Remarks
The challenge for sub-Saharan African countries in the transportation sector is to evaluate their
transportation sectors and determine where liberalization is desirable, and where making
commitments under the GATS would be beneficial by consolidating liberalization programmes
already in place, or assisting to implement a liberalization programme. Attention needs to be
paid to the four modes of supply within each subsector in order to determine where liberalization
would be most beneficial and where limitations might be warranted. Factors to consider will
include the potential impact of commitments on investment, employment, and access to services.
In addition, it is important that countries consider the best way of sequencing the steps involved
in liberalization, and ensure that they have adequate regulatory capacity before moving ahead
with commitments under the GATS.
A key aspect of the transportation sector in many sub-Saharan African countries is lack of
infrastructure and this needs to be considered when making commitments, as without the
necessary infrastructure, there is little potential for services to be provided, whether by domestic
or foreign providers. Where adequate infrastructure exists, liberalization will likely increase
efficiency in the sector. In such sectors, foreign investment if it is forthcoming, may well be
beneficial.
Where countries are situated on a transport corridor such as the Kampala-Mombasa corridor, a
key goal of the negotiations should be to improve efficiency of services along the corridor, while
respecting any obligations entered into under regional agreements. Countries should thus be
looking at multimodal service provision, with a view to opening the way for multi-modal
providers to operate without undue restriction along the length of the relevant corridor. Further,
where adequate infrastructure exists, making commitments to liberalize the provision of services
will likely (combined with other steps to encourage foreign investment) play a critical role in
achieving greater efficiency of services and should thus be seriously considered.
Countries essentially have three choices in making offers in the Doha round; they can bind
liberalizing reforms they have already made in accordance with the status quo, they can
commitment to further liberalization, or they can make commitments that are below the status
quo in terms of market access and national treatment. Where a country decides to bind the status
quo, this will send a signal to investors that they are serious with respect to continued openness
of the sector in question. Depending on the treatment that the status quo accords to foreign
providers, this may be a significant step in terms of appearances to investors. Where
liberalization has been undertaken, commitments to bind such liberalization should only be made
where it has been established that the liberalization is working as anticipated and that a
regulatory framework is in place to deal with increased investment and/or increased provision of
services by foreign providers.
A country may decide to bind below the status quo where they are not sure that the reforms
already undertaken have been successful, or where there is concern that the current regulatory
framework is not adequate to cope with increased investment and/or provision of services by
foreign providers. Binding below the status quo may in some cases be a prudent move and may
indicate to investors that while the country is open to increased investment and/or provision of
services by foreign providers, it is not prepared to commit beyond its current means. Depending
on how much more generous the commitments are from the country’s Uruguay Round
commitments, making commitments below the status quo may in some cases still provide some
bargaining power.
Making commitments above the status quo is potentially risky where it is not yet clear what the
impacts of liberalization would be (both social and economic), where the details of liberalization
have not been fully worked out, and where an adequate regulatory framework is not yet in place.
Questions for Discussion
In what sectors/subsectors is liberalization potentially beneficial? Where has liberalization been
undertaken with successful results? Did foreign investment follow liberalization? What lessons
are there to be learned from countries’ previous experience with liberalization?
Where is foreign investment desirable in the transport sector and, if commitments were made
under the GATS, what is the probability of such investment being forthcoming?
Given the lack of infrastructure with respect to road and rail transportation, is there any purpose
to be served by making commitments under the GATS at this stage? It is unlikely, for example,
that a foreign trucking company will invest in Uganda if there are no roads.
Should commitments be made on a staggered basis? That is, make commitments where the
infrastructure exists (e.g., port facilities and aspects of air transport) in an effort to attract foreign
investment and improve efficiency, while focusing on infrastructure in regards to land transport.
What export opportunities exist for sub-Saharan African countries in the transport sector?
Do sub-Saharan African countries have the capacity to put in place the necessary regulatory
mechanisms that need to accompany liberalization in the transport sector?
What are the potential downsides to making commitments in the transport sector (economic or
social)?