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12 November 2008

Programme director, honoured guests, it is a great pleasure and privilege to have been invited to make a few remarks at the opening of the first Service Exporter Network annual meeting and conference, held outside of Europe.

South Africa is pleased and privileged to have been chosen as the venue for this first event to be held in the developing world. I would like to on behalf of the Department of Trade and Industry (DTI), and of the government of South Africa, to welcome everyone here to South Africa. I hope that in addition to a productive engagement at this annual meeting and conference, you will also have an opportunity to see something of our country, and in particular to experience something of the high quality services that we are able as a country to provide to our visitors.

The Service Exporter Network (SEN) is an initiative of the Geneva based International Trade Centre (ITC). The ITC is a joint agency of the World Trade Organisation (WTO) and the United Nations Conference of Trade and Development, and its role is to provide research and technical information on matters of international trade. Our country has already benefited from a number of ITC facilities, and I myself had the opportunity to visit the ITC during a recent visit to Geneva.

Chairperson, services and trade in services, are becoming increasingly important in both developed and developing countries. The term "services" embraces a wide range of activities including, but not limited to, telecommunications, transportation, finance, insurance, distribution, information services, entertainment services and personal services. The growth of these activities in recent decades has been phenomenal. Linked to the micro electronic revolution, and the rise of information communications technology, and of knowledge based industries, services have emerged at the forefront of most economic activity including shaping and reshaping both production and trade, in traditional primary and secondary sectors.

Service sectors currently account for two thirds of global output, one third of global employment, and nearly 20 percent of global trade. Between 2000 and 2007, global services sectors grew at an annual rate of 10,1 percent, which was one percent more than the growth in trading goods.

In South Africa, service sectors contribute 74 percent of our gross domestic product, and 72 percent of our employment. Of that what we call our "back bone infrastructure," consisting of energy, transport, services and telecommunications, provide 18 percent of service sector's contribution to Gross Domestic Product (GDP), and eight percent of service sectors contribution to employment. Public service sectors such as education, health and social services, contribute 39 percent of service sector's contribution to GDP, and 47 percent of their contribution to employment. Private service sectors such as tourism, finance, business services, construction, environmental services, wholesale and retail, trade and personal services, contribute 43 percent of service sector's contribution to GDP, and 45 percent of their contribution to employment.

Service sectors such as finance and construction have been particularly significant contributors to growth during the upswing which we experienced between 2001 and 2007. In such a context, it has become increasingly imperative for us to develop strategies for service sector development, and in particular, to promote greater involvement by South African companies in trade in services.

Our Accelerated and Shared Growth Initiative for South Africa, (AsgiSA), significantly identified two important service sectors as priorities, namely Business Process Outsourcing (BPO) and off shoring, and tourism. Beyond that, and beyond the sectors which I have already mentioned, service sectors like mining, engineering, medical services, and a huge range of business services and transport and communication services, related both to expanding trade in goods, and to such important developments as our hosting of the 2010 FIFA World Cup, have huge potential in terms of their contribution to GDP and to employment.

It is for that reason that we have begun to work on a comprehensive National Service Sector framework strategy document, which is now in its first draft. This work needs to proceed expeditiously through the consultation and adoption phase, and I am sure that participation in the Service Exporter Network (SEN) will be able to offer us a number of important points of reference in this particular endeavour.

Cross border trade in services as I already indicated, is an important area for policy and international negotiations, but a relatively new matter on the agenda of most developing countries. A signalling conference was held during the WTO Ministerial in Geneva in July, to assess the state of the mandated trade in services negotiations which have been ongoing for quite a number of years.

Developing countries have historically adopted a relatively defensive stance towards negotiations on trade in services whether at multi bilateral or bi lateral level. This is probably due to the fact that developing countries perceive their service sectors to be less advanced and less developed than those in the developed world, and are consequently less in a position to benefit from an overall liberalised global trade in services environment.

In addition to that, developing countries have argued the need to retain policy space, both to allow for the fostering and development of local service sectors, and critically to allow space for necessary domestic regulation of service sectors. South Africa's offer in the WTO process, indicates that we have indeed, a relatively open domestic service sector regime, and I believe that this has been recognised by many of our partners in the WTO negotiations. But we must continue to insist, particularly at this time of global economic crisis, on the right to regulate in the public interest, and not to have this right undermined by unfair demands for access to service sector markets.

We need as South Africa, to take note of, and be proud of the fact that our domestic financial sector has thus far been relatively unscathed by the global credit crunch and financial sector meltdown. This has to a very large extent been due to the quality of our domestic regulation, and it is noteworthy that measures like our National Credit Act are now the subject of considerable international interest.

We must not allow negotiations on trade in services to undermine our regulatory capacity in this regard. But while developing countries will of necessity need to continue to take a strong defensive stance, particularly in respect of the right to regulate in the public interest, it is also necessary that developing countries begin to be much more active in identifying offensive interests in trade in services.

A feature of the current phase of negotiation on trade in services, is that some developing countries, such as India, have begun to do just that. Developing countries do have a number of comparative and potentially competitive advantages that can be created in particular service sectors, and in particular modes of supply of cross border services. It is necessary that developing countries, other than those that are currently active in advancing offensive interests in trade in services, begin to identify areas where they too could make headway by cross border exports of trade in particular services.

Such positions need of course to be informed by an identification of real capacities and real opportunities. The Business Process Outsourcing (BPO) and off-shoring industry, which has seen the migration, not just of call centres, but of many other back office processes from developed to developing countries, is but one example of an area where developing countries can benefit from an appropriately structured multi-lateral deal on trade-in services, skewed to the benefit and particular advantage of developing countries.

Again, a network like SEN, and the work of the International Trade Centre (ITC), can contribute significantly into the identification of opportunities for developing countries in the export of trade in services.

Programme director, distinguished participants, I am sure that I don't need to further belabour the point that services are important to economic growth and to employment in individual countries, and that an equitable and development orientation approach to the promotion of trade in services, can have significant developmental benefits as well.

A conference like this, a Service Exporter Network, which enables us to share experiences of issues arising in promoting service exports held here, in a developing country for the first time, is a significant event that we in South Africa welcome. We are pleased that our Department of Trade and Industry has been able to work with the ITC, the City of Johannesburg, the International Marketing Council and Johannesburg Tourism, to make this event a reality. I wish you luck with your deliberations over the next few days, and I hope that we will be able to benefit from these deliberations in the formulation of our strategies.

Thank you.

Issued by: Department of Trade and Industry
12 November 2008