Sino-African State Trading in Services: Added-Value Through Angola-Model Loaning, GATS Commitments or FTAs?

5th Annual TRAPCA Trade Conference, Arusha, November 2010

22 Pages Posted: 20 Nov 2015

See all articles by Charlotte Sieber-Gasser

Charlotte Sieber-Gasser

Geneva Graduate Institute, Centre for Trade and Economic Integration; University of Zurich - Faculty of Law

Date Written: November 1, 2010

Abstract

Despite the increasing volume of trade between China and African countries, not one single conventional free trade agreement (FTA) or economic partnership agreement (EPA) has yet been signed between an African country and China. Initially, Sino-African trade relations were to a very large extent centred on investments secured through bilateral investment agreements (BITs). The more recent Chinese investments on the African continent, however, are more informally based on FDI contracts with the state at the receiving end and a government-owned private company as the investor, or loosely attached to loans commonly known under term ‘the Angola-Model’. This rather unusual basis for economic integration and development assistance, outside the trodden path of free trade agreements and ODA, requires further analysis in order to understand how the current legal framework between China and the African continent impacts economic development and national sovereignty, and what kind of distributive consequences it may have.

It is generally agreed that moving up the path of value added production is one possible way to achieve sustainable economic growth, and that African countries tend to lag far behind in this respect. Keys to the emergence of value-added chains are, among others, reliable infrastructure and access to high-quality services. Thus, trade in infrastructural and other services is highly relevant to policies aiming at promoting value added production. As such it is worthwhile analysing the Chinese loans to African governments mentioned above in relation to their impact on the services sector, as these loans are essentially intended for infrastructural investments and services trade (particularly telecommunication and transportation). Furthermore, contrary to trade liberalisation in goods, Sino-African trade in services might bring more advantages than threats to the African economies by rendering urgently needed basic services accessible to everyone.

In this context, this paper will first attempt to define the general legal character of contracts between African governments, Chinese companies and the China Exim Bank based on the Angola-Model. It will qualify to what extent the mutual legal obligations are of public or of private nature, and explain the respective legal consequences.

The core of the paper will discuss the extent to which the kind of Sino-African services trade currently in place may foster or hinder the emergence and growth of value addition on the African continent. In doing so, the paper will focus on the impact of the recent loan-attached Sino-African infrastructural services trade, as the latter has proven to be an essential aid-for-trade ingredient for value added chain creation and growth. In this context, the paper will benchmark the current achievements of this quite unique partnership between African countries and China with the range of possibilities granted by GATS and the potential advantages slumbering in a Sino-African FTA in services. It will highlight if, where and how African governments could improve the impact on local value added activities by taking advantage of the respective policy space attached to each legal instrument regulating South-South services trade.

Keywords: Tied aid, investment, Africa, China, Angola-Model

JEL Classification: K33

Suggested Citation

Sieber-Gasser, Charlotte, Sino-African State Trading in Services: Added-Value Through Angola-Model Loaning, GATS Commitments or FTAs? (November 1, 2010). 5th Annual TRAPCA Trade Conference, Arusha, November 2010, Available at SSRN: https://ssrn.com/abstract=2691276 or http://dx.doi.org/10.2139/ssrn.2691276

Charlotte Sieber-Gasser (Contact Author)

Geneva Graduate Institute, Centre for Trade and Economic Integration ( email )

Chemin Eugène-Rigot 2A
Geneva, CH-1211
Switzerland

University of Zurich - Faculty of Law ( email )

Rämistrasse 71
Zürich, CH-8006
Switzerland

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