Domestic Preparedness for Trade in Services Liberalization: Are East African Countries prepared for Further Trade Liberalization?

Elias Peter Bagumhe


Services are the fastest growing sectors in the global economy. Over the past decades East African countries have witnessed even faster growing rates of the share of trade services in their GDPs. The total services export of EAC countries increased from USD 1868 mills in 1995 to USD 5681 mills in 2008 (WDI 2010) which is approximately three times increase compared to 1995. Along with this growth, liberalization of services trade is becoming a critical economic agenda of these economies. EAC countries have also made unilateral liberalizations in a number of services sectors since the mid 1980’s. On top of that EAC countries have also made commitment to liberalize service trade at the multilateral level. Furthermore a significant commitment of their services sectors has been made under the East African Integration Process beginning from first July 2010. This paper argues that although the importance of services as a share of overall GDP, increase with growth on FDI and employment. Its growth can be driven by number of factors, such as final demand factors and basic structural changes in production, linked to development. Weak domestic preparedness before opening up is likely to be associated with unsatisfactory and undesirable outcomes of services trade liberalization. This paper tries to expound issues that are essential on domestic preparedness for service trade liberalization and analyses the associated concerns. The purpose of this paper is not to provide answers but to shed some light on how services Trade liberalization is currently operationalized in the East African countries, in particular, that is, to open up the “black box”, and indicate the operational design elements around which variance is the highest.

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