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\li2320\sb0\sl-510\slmult0 \par\pard\qj\li2320\sb0\sl-510\slmult0 \par\pard\qj\l
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320\ri1053\sb418\sl-510\slmult0 \up0 \expndtw0\charscalex105 \ul0\nosupersub\cf8
\f9\fs44 The
Challenges
Facing
Least \line \up0 \expndtw0\charscalex
99 Developed Countries in the GATS \line \up0 \expndtw0\charscalex97 Neg
otiations: A Case Study of Lesotho \par\pard\ql \li2836\sb0\sl-322\slmult0 \par\
pard\ql\li2836\sb0\sl-322\slmult0 \par\pard\ql\li2836\sb202\sl-322\slmult0 \up0
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0\sl-437\slmult0 \par\pard\ql\li2836\sb166\sl-437\slmult0 \up0 \expndtw0\charsca
lex97 \ul0\nosupersub\cf10\f11\fs38 Calvin Manduna* \par\pard\qj \li2836\sb0\sl400\slmult0 \par\pard\qj\li2836\sb0\sl-400\slmult0 \par\pard\qj\li2836\sb0\sl-40
0\slmult0 \par\pard\qj\li2836\sb0\sl-400\slmult0 \par\pard\qj\li2836\sb0\sl-400\
slmult0 \par\pard\qj\li2836\sb0\sl-400\slmult0 \par\pard\qj\li2836\sb0\sl-400\sl
mult0 \par\pard\qj\li2836\sb0\sl-400\slmult0 \par\pard\qj\li2836\ri5763\sb174\sl
-400\slmult0 \up0 \expndtw0\charscalex97 \ul0\nosupersub\cf1\f2\fs36 tralac\ul0\
nosupersub\cf2\f3\fs36 \ul0\nosupersub\cf3\f4\fs30 Working Paper \line \up0 \ex
pndtw0\charscalex98 \ul0\nosupersub\cf4\f5\fs32 No 8 \par\pard\ql \li2836\sb123\
sl-276\slmult0 \up0 \expndtw-3\charscalex100 \ul0\nosupersub\cf5\f6\fs24 Novembe
r 2005 \par\pard\ql \li1599\sb0\sl-230\slmult0 \par\pard\ql\li1599\sb0\sl-230\sl
mult0 \par\pard\ql\li1599\sb0\sl-230\slmult0 \par\pard\ql\li1599\sb0\sl-230\slmu
lt0 \par\pard\ql\li1599\sb0\sl-230\slmult0 \par\pard\ql\li1599\sb0\sl-230\slmult
0 \par\pard\ql\li1599\sb202\sl-230\slmult0 \up0 \expndtw-2\charscalex100 \ul0\no
supersub\cf6\f7\fs20 The author wishes to thank Martine Julsaint-Kidane; Ron San
drey and Gus Mandigora for the \par\pard\ql \li1598\sb90\sl-230\slmult0 \up0 \ex
pndtw-2\charscalex100 helpful comments. The opinions expressed in this paper and
any errors remain the author\u8217?s own.
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Introduction _____________
____________________________________________ 1 \par\pard\ql \li1418\sb212\sl-288
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ersub\cf5\f6\fs24
Some characteristics of Lesotho\u8217?s Economy and Trade__
_____________________ 4 \par\pard\li1658\sb225\sl-276\slmult0\fi0\tx2378 \up0 \e
xpndtw-2\charscalex100 2.1\tab \up0 \expndtw-2\charscalex100 Remittances________
_____________________________________________ 6\par\pard\li1658\sb225\sl-276\slm
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100 The SACU Revenue Pool __________________________________________ 7\par\pard\
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0 \expndtw-1\charscalex100 Manufactures and the Garment Industry _______________
________________ 7\par\pard\li1658\sb223\sl-276\slmult0\fi0\tx2378 \up0 \expndtw
-2\charscalex100 2.4\tab \up0 \expndtw-1\charscalex100 The Direction of Trade in
Lesotho __________________________________ 111\par\pard\li1658\sb225\sl-276\slm
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100 Supply-side Constraints__________________________________________ 122\par\pa
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The Nature of Services Trade in
Lesotho ________________________________ 133 \par\pard\ql \li1418\sb212\sl-288\s
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Constraints faced by services suppliers and exporters in Les
otho ______________ 14 \par\pard\ql \li1418\sb212\sl-288\slmult0 \up0 \expndtw-1
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Ch
allenges facing Lesotho in the services negotiations ______________________ 16 \
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Addressing the challenges i
n the present negotiations _____________________ 188 \par\pard\ql \li1418\sb212\
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Conclusion __________________________________________
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Bibliogr
aphy ______________________________________________________ 233 \par\pard\ql \li
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\slmult0\tx4554 \up0 \expndtw0\charscalex103 \ul0\nosupersub\cf5\f6\fs24 Least d
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or indeed, a perceived lack of interest in the subject matter under

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ffect LDCs when negotiating on trade in \line \up0 \expndtw-3\charscalex100 serv
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24 Based on the four types of services transactions \line \up0 \expndtw0\charsc
alex100 subject to multilateral disciplines (i.e. modes 1-4), total measurable t
rade in services \line \up0 \expndtw-2\charscalex100 was about US$2.1 trillion b
y the end of 2004.\ul0\super\cf16\f17\fs23 3\ul0\nosupersub\cf5\f6\fs24 Develop
ing countries\u8217? services exports \line \up0 \expndtw0\charscalex100 made up
for almost 25% of this total, amounting to about US$377 billion by the end \lin
e \up0 \expndtw0\charscalex100 of 2003. The share of services in developing coun
tries\u8217? total exports has risen from \line \up0 \expndtw0\charscalex100 les
s than 10% in 1980 to nearly 21% today. Such trends in aggregate data have led \
line \up0 \expndtw0\charscalex103 some commentators to conclude that the gap bet
ween developed and developing \line \up0 \expndtw-2\charscalex100 countries in t
he share of services in total trade has been reducing (Sauve, 2005:1). \par\pard
\qj \li1418\sb0\sl-413\slmult0 \par\pard\qj\li1418\ri1220\sb14\sl-413\slmult0 \u
p0 \expndtw0\charscalex100 However, an analysis of individual developing countri
es and LDCs, especially those \line \up0 \expndtw0\charscalex100 from Africa, su
ggests otherwise. Indeed, the persistent small share of services trade \line \up
0 \expndtw0\charscalex105 for many African countries, coupled with the non-visib
ility of many services trade \line \up0 \expndtw0\charscalex105 activities and e
xports in their domestic economies and the difficulties involved in \par\pard\qj
\li1418\sb0\sl-220\slmult0 \par\pard\qj\li1418\sb0\sl-220\slmult0 \par\pard\qj\
li1418\sb0\sl-220\slmult0 \par\pard\qj\li1418\sb0\sl-220\slmult0 \par\pard\qj\li
1418\ri1250\sb7\sl-220\slmult0\fi0 \up0 \expndtw-2\charscalex100 \ul0\super\cf17
\f18\fs20\ul0\super\cf17\f18\fs19 1\ul0\nosupersub\cf18\f19\fs20 For examples o
f some of the problems that LDCs and developing countries face in trade negotiat
ions \up0 \expndtw-3\charscalex100 see Abugattas Majluf, L \up0 \expndtw-3\chars
calex100 2005. \ul0\nosupersub\cf6\f7\fs20 WTO and FTAA Services Trade Negotiat
ions: Challenges for \par\pard\ql \li1418\sb12\sl-230\slmult0 \up0 \expndtw-2\ch
arscalex100 Developing Countries with Special Reference to CARICOM.\ul0\nosupers
ub\cf18\f19\fs20 [Online]. Available: \par\pard\ql \li1418\ri1232\sb0\sl-233\sl
mult0 \up0 \expndtw-2\charscalex100 {\field{\*\fldinst {HYPERLINK "http://www.cr
nm.org/documents/studies/wto%20&%20ftaa%20services%20trade%20negotiations/" }}{\
fldrslt {\ul0\nosupersub\cf32\f33\fs20\ul http://www.crnm.org/documents/studies/
WTO%20&%20FTAA%20Services%20Trade%20Negotiations}}} \line \up0 \expndtw-2\charsc
alex100 \ul0\nosupersub\cf32\f33\fs20\ul %20-%20Majluf.pdf\ul0\nosupersub\cf18\f
19\fs20 . See also Manduna, C. 2005. \ul0\nosupersub\cf6\f7\fs20 The WTO Servic
es Negotiations: An Analysis of the \line \up0 \expndtw-2\charscalex100 GATS and
Issues of Interest for LDCs\ul0\nosupersub\cf18\f19\fs20 , South Centre T.R.A.D
.E. Working Paper No. 23. \line \up0 \expndtw-2\charscalex100 {\field{\*\fldinst
{HYPERLINK "http://www.southcentre.org/tadp_webpage/research_papers/services_pr
oject/trade_wp23_dec04.pdf/" }}{\fldrslt {\ul0\nosupersub\cf32\f33\fs20\ul http:
//www.southcentre.org/tadp_webpage/research_papers/services_project/trade_wp23_d
ec04.pdf}}} \par\pard\qj \li1418\ri1250\sb0\sl-240\slmult0\fi0 \up0 \expndtw0\ch
arscalex100 \ul0\super\cf17\f18\fs19 2\ul0\nosupersub\cf18\f19\fs20 See UNCTA
D. 2005. \ul0\nosupersub\cf6\f7\fs20 Trade In Services and Development Im
plications\ul0\nosupersub\cf18\f19\fs20 . UNCTAD Doc. No. \line \up0 \expndtw
-3\charscalex100 TD/B/COM.1/71 \up0 \expndtw0\charscalex104 (20 January) and
UNCTAD. \up0 \expndtw0\charscalex102 2003. \ul0\nosupersub\cf19\f20\fs20 Trade
in Services and Development \par\pard\ql \li1418\sb0\sl-180\slmult0 \up0 \e
xpndtw-3\charscalex100 Implications\ul0\nosupersub\cf18\f19\fs20 . UNCTAD Doc. N
o. TD/B/COM.1/55 (20 December). \par\pard\qj \li1418\ri1249\sb19\sl-230\slmult0\
fi0 \up0 \expndtw-2\charscalex100 \ul0\super\cf17\f18\fs19 3\ul0\nosupersub\cf18
\f19\fs20 Sauve, P. 2005. \ul0\nosupersub\cf6\f7\fs20 Towards Development-Frien

dly Services Negotiations.\ul0\nosupersub\cf18\f19\fs20 Paper prepared for the

Asian \line \up0 \expndtw-1\charscalex100 Development Bank High Level WTO Meetin
g on Key Doha Round Issues: Osaka, Japan, 3-5 August, \line \up0 \expndtw-2\char
scalex100 2005. \up0 \expndtw-3\charscalex100 [Online]. \up0 \expndtw-1\charscal
ex100 Available:
{\field{\*\fldinst {HYPERLINK "http://www.adb.org/documents/
events/2005/high-level-meeting-on-/" }}{\fldrslt {\ul0\nosupersub\cf32\f33\fs20\
ul http://www.adb.org/Documents/Events/2005/High-Level-Meeting-on-}}}\par\pard\q
l \li1418\sb1\sl-217\slmult0 \up0 \expndtw-3\charscalex100 \ul0\nosupersub\cf32\
f33\fs20\ul WTO/paper-sauve.pdf \par\pard\ql \li10454\sb0\sl-322\slmult0 \par\pa
rd\ql\li10454\sb95\sl-322\slmult0 \up0 \expndtw-4\charscalex100 \ul0\nosupersub\
cf15\f16\fs28 1
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{\shp {\*\shpinst\shpleft9960\shptop16051\shpright883\shpbottom16063\shpfhdr0\sh
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lineWidth}{\sv 8466}}
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{\shp {\*\shpinst\shpleft1418\shptop11906\shpright4298\shpbottom11926\shpfhdr0\s
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}}\par\pard\sect\sectd\fs24\paperw11900\paperh16840\pard\sb0\sl-240{\bkmkstart P
g4}{\bkmkend Pg4}\par\pard\li1418\sb0\sl-230\slmult0\par\pard\li1418\sb0\sl-230\
slmult0\par\pard\li1418\sb94\sl-230\slmult0\fi0\tx8798 \up0 \expndtw-3\charscale
x100 \ul0\nosupersub\cf20\f21\fs20 tralac\ul0\nosupersub\cf6\f7\fs20 Working Pa
per no. 8\tab \up0 \expndtw-3\charscalex100 {\field{\*\fldinst {HYPERLINK "http:
//www.tralac.org/" }}{\fldrslt {\ul0\nosupersub\cf18\f19\fs20 www.tralac.org}}}\
par\pard\qj \li1418\ri1218\sb274\sl-413\slmult0 \up0 \expndtw0\charscalex100 \ul
0\nosupersub\cf5\f6\fs24 measuring such trade in services,\ul0\super\cf16\f17\fs
23 4\ul0\nosupersub\cf5\f6\fs24 has led some African countries to conclude that
\line \up0 \expndtw0\charscalex104 there is not much for them to gain in the WT
O services negotiations.\ul0\super\cf16\f17\fs23 5\ul0\nosupersub\cf5\f6\fs24 A
s a result, \line \up0 \expndtw-1\charscalex100 services are not given the promi
nence enjoyed by other sectors, such as agricultural \line \up0 \expndtw0\charsc
alex104 or non-agricultural market access. This can be discerned from the resour
ces and \line \up0 \expndtw0\charscalex100 time LDCs allocate to sectoral assess
ments on services and the little support given \line \up0 \expndtw-1\charscalex1
00 to service negotiations. Although this result may not have been a conscious d
ecision \line \up0 \expndtw0\charscalex104 by officials, this has been the exper
ience of many LDCs, such as Lesotho. At the \line \up0 \expndtw0\charscalex102 s
ame time, it is important to keep in mind that multilateral negotiations on serv
ices \line \up0 \expndtw0\charscalex103 only began during the Uruguay Round. The
refore, services negotiations remain a \line \up0 \expndtw0\charscalex104 fairly
new area, when compared to goods. Likewise, it is only in recent years that \li

ne \up0 \expndtw0\charscalex107 RTAs have come to include provisions on liberali

sing services. Even internally, \line \up0 \expndtw0\charscalex108 services were
not areas that were uppermost, if at all, on the agenda of policy \line \up0 \e
xpndtw0\charscalex102 makers. Moreover, services unlike industrial goods or agri
cultural products are not \line \up0 \expndtw0\charscalex102 the remit of a sing
le Ministry, but require the involvement of several line Ministries, \line \up0
\expndtw0\charscalex103 including health, transport, communications, energy, edu
cation and so on. So far, \line \up0 \expndtw0\charscalex105 many LDCs are yet t
o overcome the challenge of coordinating effectively across \line \up0 \expndtw1\charscalex100 various Ministries in the services negotiations. From the afores
aid, it is not altogether \line \up0 \expndtw-2\charscalex100 surprising that LD
Cs and many developing countries have inherited and maintained a \line \up0 \exp
ndtw-1\charscalex100 predominant focus on industrial goods and agriculture in th
e negotiations and in their \line \up0 \expndtw-3\charscalex100 domestic policy.
\par\pard\qj \li1418\ri1220\sb405\sl-416\slmult0 \up0 \expndtw0\charscalex104 T
his paper aims to provide a brief sketch of the experience of Lesotho during the
\line \up0 \expndtw0\charscalex110 Uruguay Round and the current WTO negotiatio
ns on services, and seeks to \line \up0 \expndtw0\charscalex104 illustrate some
of the challenges which Lesotho needs to overcome during these \line \up0 \expnd
tw0\charscalex103 negotiations. At the same time, Lesotho also faces the
prospect of bilateral \line \up0 \expndtw0\charscalex105 negotiations on sev
ices together with the other Southern African Customs Union \line \up0 \expndtw2\charscalex100 (SACU)\ul0\super\cf16\f17\fs23 6\ul0\nosupersub\cf5\f6\fs24 Mem
bers. FTA talks are currently under way between SACU and the United \par\pard\li
1418\sb0\sl-230\slmult0\par\pard\li1418\sb0\sl-230\slmult0\par\pard\li1418\sb0\s
l-230\slmult0\par\pard\li1418\sb185\sl-230\slmult0\fi0 \up0 \expndtw0\charscalex
100 \ul0\super\cf17\f18\fs20\ul0\super\cf17\f18\fs19 4\ul0\nosupersub\cf18\f19\f
s20 Riddle, D.I. 2002. \ul0\nosupersub\cf6\f7\fs20 Services Export Capacity in
Developing Countries\ul0\nosupersub\cf18\f19\fs20 . Paper prepared for the WTO\p
ar\pard\li1418\sb1\sl-228\slmult0\fi0\tx6813\tx7983\tx8678 \up0 \expndtw-1\chars
calex100 Symposium on Assessment of Trade in Services,\tab \up0 \exp
ndtw-1\charscalex100 15 March\tab \up0 \expndtw-1\charscalex100 2002.\tab \up0
\expndtw-1\charscalex100 [Online]. Available:\par\pard\li1418\sb1\sl-230\slmu
lt0\fi0 \up0 \expndtw-1\charscalex100 {\field{\*\fldinst {HYPERLINK "http://www.
wto.org/english/tratop_e/serv_e/symp_mar02_riddle_e.doc/" }}{\fldrslt {\ul0\nosu
persub\cf32\f33\fs20\ul http://www.wto.org/english/tratop_e/serv_e/symp_mar02_ri
ddle_e.doc}}}\par\pard\qj \li1418\ri1246\sb0\sl-230\slmult0\fi0 \up0 \expndtw0\c
harscalex106 \ul0\super\cf17\f18\fs19 5\ul0\nosupersub\cf18\f19\fs20 Indeed, th
e Doha Development Agenda (DDA) is sometimes seen as a 'mercantilistic bargain \
up0 \expndtw0\charscalex100 between developing country exports of agricultural p
roducts and developed country services exports' \up0 \expndtw-3\charscalex100 (S
auve, 2005: 1). \par\pard\qj \li1418\ri1251\sb0\sl-230\slmult0\fi0 \up0 \expndtw
0\charscalex102 \ul0\super\cf17\f18\fs19 6\ul0\nosupersub\cf18\f19\fs20 SACU is
the world\u8217?s oldest customs union dating back to 1910. Its Member States a
re Botswana, \line \up0 \expndtw0\charscalex107 Lesotho, Namibia, South Africa,
and Swaziland. A subsequent SACU Agreement in 1969 was \line \up0 \expndtw0\char
scalex102 renegotiated in 2000 (entering into force in July 2004) in order to de
mocratise SACU (following the \par\pard\ql \li1418\sb0\sl-322\slmult0 \par\pard\
ql\li1418\sb76\sl-322\slmult0 \up0 \expndtw-11\charscalex86 \ul0\nosupersub\cf5\
f6\fs24 2\ul0\nosupersub\cf15\f16\fs28 2
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{\sp{\sn shapeType}{\sv 0}}{\sp{\sn fFlipH}{\sv 0}}{\sp{\sn fFlipV}{\sv 0}}{\sp{
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p{\sn fBehindDocument}{\sv 1}}{\sp{\sn lineColor}{\sv 0}}

}}
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lineWidth}{\sv 8466}}
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{\shp {\*\shpinst\shpleft1960\shptop15828\shpright2166\shpbottom16031\shpfhdr0\s
hpbxpage\shpbypage\shpwr3\shpwrk0\shpfblwtxt1\shpz45\shplid2{\sp{\sn shapeType}{
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lineWidth}{\sv 8466}}
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{\shp {\*\shpinst\shpleft1418\shptop13056\shpright4298\shpbottom13076\shpfhdr0\s
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p{\sn fLine}{\sv 0}}{\sp{\sn lineType}{\sv 0}}{\sp{\sn fArrowheadsOK}{\sv 1}}{\s
p{\sn fBehindDocument}{\sv 1}}{\sp{\sn lineColor}{\sv 0}}
}}\par\pard\sect\sectd\fs24\paperw11900\paperh16840\pard\sb0\sl-240{\bkmkstart P
g5}{\bkmkend Pg5}\par\pard\li1418\sb0\sl-230\slmult0\par\pard\li1418\sb0\sl-230\
slmult0\par\pard\li1418\sb94\sl-230\slmult0\fi0\tx8978 \up0 \expndtw-3\charscale
x100 \ul0\nosupersub\cf6\f7\fs20 tralac Working Paper no. 8\tab \up0 \expndtw-3\
charscalex100 {\field{\*\fldinst {HYPERLINK "http://www.tralac.org/" }}{\fldrslt
{\ul0\nosupersub\cf18\f19\fs20 www.tralac.org}}}\par\pard\ql \li1418\sb0\sl-276
\slmult0 \par\pard\ql\li1418\sb111\sl-276\slmult0\tx7465 \up0 \expndtw0\charscal
ex102 \ul0\nosupersub\cf5\f6\fs24 States\ul0\super\cf16\f17\fs23 7\ul0\nosupersu
b\cf5\f6\fs24 and also with the European Communities \tab \up0 \expndtw0\
charscalex101 (EC) under the Economic \par\pard\qj \li1418\ri1219\sb10\sl-414
\slmult0 \up0 \expndtw0\charscalex104 Partnership Agreements (EPAs).\ul0\super\c
f16\f17\fs23 8\ul0\nosupersub\cf5\f6\fs24 Possible future FTAs might involve Ch
ina\ul0\super\cf16\f17\fs23 9\ul0\nosupersub\cf5\f6\fs24 and \line \up0 \expndt
w0\charscalex100 India.\ul0\super\cf16\f17\fs23 10\ul0\nosupersub\cf5\f6\fs24 W
hat is clear is that Lesotho faces a considerable challenge in gathering the \li
ne \up0 \expndtw0\charscalex100 necessary human and financial resources, prepari
ng for the various negotiations on \line \up0 \expndtw0\charscalex104 services a
nd also managing and coordinating various ministries which should be \line \up0
\expndtw0\charscalex100 involved in the services negotiations. The challenges hi
ghlighted in this brief are not \line \up0 \expndtw0\charscalex102 unique to Les
otho, but are being grappled with by other LDCs and indeed some of \line \up0 \e
xpndtw0\charscalex100 the poorer developing countries. Ultimately, this brief hi
ghlights the urgent need for \line \up0 \expndtw0\charscalex102 targeted techni
cal assistance for LDCs in various activities, such as sectoral \line \
up0 \expndtw-2\charscalex100 assessments of services, raising the profile and co
mpetitiveness of domestic services \line \up0 \expndtw0\charscalex105 suppliers,
improving data collection capacity, improving the understanding of the \line \u
p0 \expndtw0\charscalex104 GATS amongst officials and developing a private secto
r strategy to promote both \line \up0 \expndtw-2\charscalex100 services trade an
d exports. In part, the call on other WTO Members to assist LDCs to \par\pard\ql
\li1418\sb0\sl-233\slmult0 \par\pard\ql\li1418\sb0\sl-233\slmult0 \par\pard\ql\
li1418\ri1235\sb210\sl-233\slmult0 \up0 \expndtw0\charscalex106 \ul0\nosupersub\

cf18\f19\fs20 advent of democracy in South Africa in 1994), provide for administ

rative institutional reform and \line \up0 \expndtw-2\charscalex100 address the
emerging needs of the SACU Member States more effectively. See further \line \up
0 \expndtw-2\charscalex100 {\field{\*\fldinst {HYPERLINK "http://www.tralac.org/
pdf/new_sacu_institutions-prospects_for_regional_integration.doc/" }}{\fldrslt {
\ul0\nosupersub\cf32\f33\fs20\ul http://www.tralac.org/pdf/New_SACU_Institutions
-Prospects_for_Regional_Integration.doc}}}\ul0\nosupersub\cf18\f19\fs20 and \li
ne \up0 \expndtw-3\charscalex100 {\field{\*\fldinst {HYPERLINK "http://www.dfa.g
ov.za/foreign/multilateral/africa/sacu.htm" }}{\fldrslt {\ul0\nosupersub\cf32\f3
3\fs20\ul http://www.dfa.gov.za/foreign/Multilateral/africa/sacu.htm}}} \par\par
d\qj \li1418\ri1251\sb0\sl-233\slmult0\fi0 \up0 \expndtw0\charscalex100 \ul0\sup
er\cf17\f18\fs19 7\ul0\nosupersub\cf18\f19\fs20 The U.S. - SACU FTA negotiation
s began in June 2003, with the aim of creating the first U.S. free \line \up0 \e
xpndtw-1\charscalex100 trade area with an Africa bloc. For the U.S., an FTA with
SACU would provide access to the important \line \up0 \expndtw0\charscalex111 S
outh African market and go some way to offset the South Africa - EC Trade Develo
pment \line \up0 \expndtw-1\charscalex100 Cooperation Agreement \up0 \expndtw0\
charscalex101 (TDCA) which entered into force in January \up0 \expndtw0\ch
arscalex101 2000. From the SACU \par\pard\qj \li1418\ri1251\sb0\sl-230\slmult
0 \up0 \expndtw0\charscalex106 perspective, an FTA with the U.S. would expand an
d entrench the preferential treatment SACU \line \up0 \expndtw0\charscalex100 Me
mbers receive under the African Growth and Opportunity Act (AGOA). Hopefully thi
s will stimulate \line \up0 \expndtw-1\charscalex100 FDI flows into SACU. The SA
CU - US FTA negotiations faced a year-long deadlock since 2004 due to \line \up0
\expndtw0\charscalex100 differences over the scope of the FTA and the subject m
atter of the negotiations. In particular, SACU \line \up0 \expndtw0\charscalex10
5 was prepared to discuss market access, but wanted to exclude investment, intel
lectual property, \line \up0 \expndtw0\charscalex104 labour issues and governmen
t procurement (with South Africa concerned about the impact on its \line \up0 \e
xpndtw0\charscalex100 Black Economic Empowerment programmes). The U.S. rejected
this approach, arguing that it had a \line \up0 \expndtw0\charscalex100 Congress
ional mandate to negotiate on all subjects. The two sides met in Geneva in July
2005 and \line \up0 \expndtw0\charscalex105 the talks are expected to resume lat
er in September, with hopes to conclude the negotiations by \line \up0 \expndtw0
\charscalex102 September 2006. The framework under which the parties have agreed
to resume the talks has not \line \up0 \expndtw0\charscalex102 been made public
, but it has been hinted that the September meeting would sidestep controversial
\line \up0 \expndtw0\charscalex100 issues and instead focus on the lowering of
industrial tariffs to facilitate exchanges of manufactured \line \up0 \expndtw0\
charscalex100 goods between the two regions. There will also be exploratory exch
anges to see if the two sides can \par\pard\li1418\sb1\sl-222\slmult0\fi0\tx2580
\tx3572\tx5211\tx6173 \up0 \expndtw-3\charscalex100 bridge\tab \up0 \expndtw-3\c
harscalex100 their\tab \up0 \expndtw-3\charscalex100 differences.\tab \up0 \expn
dtw-3\charscalex100 See\tab \up0 \expndtw-3\charscalex100 {\field{\*\fldinst {HY
PERLINK "http://www.ictsd.org/weekly/04-10-06/inbrief.htm" }}{\fldrslt {\ul0\nos
upersub\cf32\f33\fs20\ul http://www.ictsd.org/weekly/04-10-06/inbrief.htm}}}\ul0
\nosupersub\cf18\f19\fs20 ,\par\pard\li1418\sb1\sl-230\slmult0\fi0\tx10155 \up0
\expndtw-3\charscalex100 {\field{\*\fldinst {HYPERLINK "http://www.afsc.org/trad
e-matters/trade-agreements/sacu.htm" }}{\fldrslt {\ul0\nosupersub\cf32\f33\fs20\
ul http://www.afsc.org/trade-matters/trade-agreements/SACU.htm}}}\ul0\tab \up0 \
expndtw-3\charscalex100 \ul0\nosupersub\cf18\f19\fs20 and\par\pard\ql \li1418\sb
1\sl-222\slmult0 \up0 \expndtw-3\charscalex100 {\field{\*\fldinst {HYPERLINK "ht
tp://www.bilaterals.org/article.php3?id_article=2526/" }}{\fldrslt {\ul0\nosuper
sub\cf32\f33\fs20\ul http://www.bilaterals.org/article.php3?id_article=2526}}} \
par\pard\qj \li1418\ri1249\sb0\sl-230\slmult0 \up0 \expndtw-2\charscalex100 \ul0
\super\cf17\f18\fs19 8\ul0\nosupersub\cf18\f19\fs20 In principle the ACP is not
obliged to start EPA negotiations on services and a decision on this will be \u
p0 \expndtw-1\charscalex100 made in 2006. However, if they do begin such talks,
the liberalisation of services should be in line with \up0 \expndtw0\charscalex1
00 the requirements of the GATS, in particular, GATS Article V which provides fo

r the sectoral coverage \up0 \expndtw0\charscalex100 of regional agreements. Alt

hough the language of GATS Article V is fairly weak, it can still be implied \up
0 \expndtw-1\charscalex100 that the EPAs should cover a significant share of ACP
- EU services trade. \par\pard\qj \li1418\ri1296\sb11\sl-220\slmult0\fi0 \up0 \
expndtw-2\charscalex100 \ul0\super\cf17\f18\fs19 9\ul0\nosupersub\cf18\f19\fs20
See further SAIIA. 2004. A SACU-China FTA: What\u8217?s in it for SA? \ul0\nos
upersub\cf6\f7\fs20 The South African Policy Monitor\ul0\nosupersub\cf18\f19\fs2
0 . \line \up0 \expndtw-3\charscalex100 [Online]. Available: {\field{\*\fldinst
{HYPERLINK "http://www.polity.org.za/pdf/fpm.pdf/" }}{\fldrslt {\ul0\nosupersub\
cf32\f33\fs20\ul http://www.polity.org.za/pdf/FPM.pdf}}}\ul0\nosupersub\cf18\f19
\fs20 and \par\pard\ql \li1418\sb12\sl-230\slmult0 \up0 \expndtw-2\charscalex10
0 {\field{\*\fldinst {HYPERLINK "http://www.saiia.org.za/modules.php?op=modload&
name=news&file=article&sid=516/" }}{\fldrslt {\ul0\nosupersub\cf32\f33\fs20\ul h
ttp://www.saiia.org.za/modules.php?op=modload&name=News&file=article&sid=516}}}
\par\pard\ql \li1418\ri2103\sb0\sl-230\slmult0\fi0 \up0 \expndtw-2\charscalex100
\ul0\super\cf17\f18\fs19 10\ul0\nosupersub\cf18\f19\fs20 See further Siddiqui,
H. 2004\ul0\nosupersub\cf19\f20\fs20 . \ul0\nosupersub\cf18\f19\fs20 India, SAC
U Gearing Up for FTA. \ul0\nosupersub\cf6\f7\fs20 The Financial Express\ul0\nosu
persub\cf18\f19\fs20 , 25 \line \up0 \expndtw-2\charscalex100 November. [Online]
. Available: {\field{\*\fldinst {HYPERLINK "http://www.bilaterals.org/article.ph
p3?id_article=1008/" }}{\fldrslt {\ul0\nosupersub\cf32\f33\fs20\ul http://www.bi
laterals.org/article.php3?id_article=1008}}}\ul0\nosupersub\cf18\f19\fs20 and \
line \up0 \expndtw-3\charscalex100 {\field{\*\fldinst {HYPERLINK "http://www.bil
aterals.org/article.php3?id_article=605/" }}{\fldrslt {\ul0\nosupersub\cf32\f33\
fs20\ul http://www.bilaterals.org/article.php3?id_article=605}}} \par\pard\li103
54\sb125\sl-310\slmult0\fi0\tx10790 \up0 \expndtw-3\charscalex100 \ul0\nosupersu
b\cf5\f6\fs24 3\tab \up0 \expndtw-4\charscalex100 \ul0\nosupersub\cf15\f16\fs28
3
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x100 \ul0\nosupersub\cf20\f21\fs20 tralac\ul0\nosupersub\cf6\f7\fs20 Working Pa
per no. 8\tab \up0 \expndtw-3\charscalex100 {\field{\*\fldinst {HYPERLINK "http:
//www.tralac.org/" }}{\fldrslt {\ul0\nosupersub\cf18\f19\fs20 www.tralac.org}}}\
par\pard\qj \li1418\ri1218\sb277\sl-410\slmult0 \up0 \expndtw0\charscalex102 \ul
0\nosupersub\cf5\f6\fs24 meet these challenges should be seen in the context of
operationalizing the GATS \up0 \expndtw0\charscalex111 Articles IV and XIX, the
Modalities for the Special Treatment for LDCs in the \up0 \expndtw0\charscalex10
7 Negotiations on Trade in Services\ul0\super\cf16\f17\fs23 11\ul0\nosupersub\cf
5\f6\fs24 and the Guidelines and Procedures for the \up0 \expndtw0\charscalex10
4 Negotiations on Trade in Services.\ul0\super\cf16\f17\fs23 12\ul0\nosupersub\c
f5\f6\fs24 To date, movement aimed at giving effect to \up0 \expndtw-3\charscal
ex100 these provisions has been disappointing. \par\pard\ql \li1418\sb0\sl-276\s
lmult0 \par\pard\ql\li1418\sb265\sl-276\slmult0 \up0 \expndtw-2\charscalex100 \u
l0\nosupersub\cf13\f14\fs24 2 Some characteristics of Lesotho\u8217?s Economy
and Trade\ul0\super\cf21\f22\fs23 13 \par\pard\qj \li1418\sb0\sl-414\slmult0 \pa
r\pard\qj\li1418\ri1219\sb96\sl-414\slmult0 \up0 \expndtw0\charscalex100 \ul0\no
supersub\cf5\f6\fs24 What are the characteristics of Lesotho\u8217?s economy? Wh
at is the extent of trade and \line \up0 \expndtw-1\charscalex100 in which secto
rs/products does it occur? The answers to these questions will help us \line \up
0 \expndtw0\charscalex105 to better understand services trade in the context of
Lesotho\u8217?s economy, expose \line \up0 \expndtw0\charscalex102 Lesotho\u8217
?s dependence on a narrow base of specialized exports, and also highlight \line
\up0 \expndtw0\charscalex100 the importance of unlocking the diversification pot
ential of services trade. Lesotho is \line \up0 \expndtw0\charscalex100 a small,
mountainous, landlocked country (entirely surrounded by South Africa) with \lin
e \up0 \expndtw0\charscalex100 no substantial natural resources other than water
, which it exports to South Africa. It \line \up0 \expndtw0\charscalex106 is bot
h an LDC, and the poorest member of SACU and is heavily dependent on \line \up0
\expndtw0\charscalex100 South Africa. Classified as a low-income and food defici
t country by the World Food \line \up0 \expndtw0\charscalex103 Programme, only 9
% of the land surface qualifies as arable land. The country has \line \up0 \expn
dtw0\charscalex100 been subject to serious drought and over-grazing in recent ye
ars. Some 80% of the \line \up0 \expndtw0\charscalex100 country\u8217?s populati
on of 1.8 million is rural. Although the majority of rural households \line \up0
\expndtw0\charscalex107 rely on subsistence agriculture, it only accounts for a
small share of household \line \up0 \expndtw0\charscalex102 incomes. Most rural
households rely for income on wage remittances from migrant \line \up0 \expndtw
0\charscalex106 labour in South Africa (mostly in mines and agriculture). Accord
ing to Lesotho\u8217?s \line \up0 \expndtw0\charscalex100 Bureau of Statistics,
agriculture employs some 69% of the labour force\u8212?largely at a \line \up0 \
expndtw-2\charscalex100 subsistence level. Although agriculture has consistently
been a major employer in the \line \up0 \expndtw0\charscalex100 economy, the se
ctor\u8217?s performance has waned in recent years (with its share of real \line
\up0 \expndtw0\charscalex100 domestic output falling from 20.7% in 1993 to 17%
in 2003) due to the deterioration \par\pard\ql \li1418\sb0\sl-230\slmult0 \par\p
ard\ql\li1418\sb0\sl-230\slmult0 \par\pard\ql\li1418\sb138\sl-230\slmult0 \up0 \
expndtw-3\charscalex100 \ul0\super\cf17\f18\fs20\ul0\super\cf17\f18\fs19 11\ul0\
nosupersub\cf18\f19\fs20 WTO Document TN/S/13 (5 September, 2003). \par\pard\ql
\li1418\sb10\sl-230\slmult0 \up0 \expndtw-3\charscalex100 \ul0\super\cf17\f18\f
s19 12\ul0\nosupersub\cf18\f19\fs20 WTO Document S/L/93 (29 March 2001). \par\p
ard\qj \li1418\ri1252\sb0\sl-230\slmult0\fi0 \up0 \expndtw0\charscalex103 \ul0\s

uper\cf17\f18\fs19 13\ul0\nosupersub\cf18\f19\fs20 This section is based on dat

a from the Central Bank of Lesotho. 2004. \ul0\nosupersub\cf6\f7\fs20 Annual Rep
ort\ul0\nosupersub\cf18\f19\fs20 . [Online]. \line \up0 \expndtw-1\charscalex100
Available: {\field{\*\fldinst {HYPERLINK "http://www.centralbank.org.ls/publica
tions/full%20lesotho_areport.pdf;/" }}{\fldrslt {\ul0\nosupersub\cf32\f33\fs20\u
l http://www.centralbank.org.ls/publications/FULL%20Lesotho_AReport.PDF\ul0\nosu
persub\cf18\f19\fs20 ;}}}\ul0\nosupersub\cf18\f19\fs20 The Economist \line \up0
\expndtw-1\charscalex100 Intelligence Unit. \up0 \expndtw0\charscalex103 2005.
\ul0\nosupersub\cf6\f7\fs20 Country Report: Lesotho, July 2005.\ul0\nosupersub\c
f18\f19\fs20 ; WTO Trade Policy Review: Lesotho \par\pard\qj \li1418\ri1242\sb0\
sl-230\slmult0 \up0 \expndtw-1\charscalex100 1998 & 2003; WTO Documents WT/TPR/S
/36 & WT/TPR/S/114/LSO. See also Sandrey, R, Maleleka, \up0 \expndtw0\charscalex
106 D., Matlanyane, A. and Van Seventer, D. 2005. \ul0\nosupersub\cf6\f7\fs20 Le
sotho: Potential Export Diversification Study\ul0\nosupersub\cf18\f19\fs20 . \up
0 \expndtw-3\charscalex100 Lesotho Trade and Poverty Programme, July 2005. \par\
pard\ql \li1418\sb0\sl-322\slmult0 \par\pard\ql\li1418\sb0\sl-322\slmult0 \par\p
ard\ql\li1418\sb170\sl-322\slmult0 \up0 \expndtw-11\charscalex86 \ul0\nosupersub
\cf5\f6\fs24 4\ul0\nosupersub\cf15\f16\fs28 4
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{\ul0\nosupersub\cf18\f19\fs20 www.tralac.org}}}\par\pard\qj \li1418\ri1218\sb2
85\sl-400\slmult0 \up0 \expndtw-2\charscalex100 \ul0\nosupersub\cf5\f6\fs24 of s
oil quality, erosion and unfavourable weather conditions. As a result, the avail
able \line \up0 \expndtw0\charscalex108 arable land has declined from about \up0
\expndtw0\charscalex112 13% in the 1960s to about 10% today. \par\pard\qj \li14
18\ri1220\sb12\sl-410\slmult0 \up0 \expndtw0\charscalex100 Commercial agricultur
e also experienced a decline, with exports of mostly wool and \line \up0 \expndt
w-1\charscalex100 mohair accounting for 6.1% in 1993, but falling to 3.3% in 200
3 (Sandrey \ul0\nosupersub\cf22\f23\fs24 et al\ul0\nosupersub\cf5\f6\fs24 , 2005
: \line \up0 \expndtw-3\charscalex100 13). \par\pard\qj \li1418\sb0\sl-412\slmul
t0 \par\pard\qj\li1418\ri1218\sb17\sl-412\slmult0 \up0 \expndtw-1\charscalex100
Lesotho\u8217?s economic performance in recent years has been uneven. The contri
bution \line \up0 \expndtw0\charscalex106 to GDP of other primary sector activit
ies i.e. mining and quarrying is at best still \line \up0 \expndtw0\charscalex10
2 marginal (See Table 1 below).\ul0\super\cf16\f17\fs23 14\ul0\nosupersub\cf5\f6
\fs24 Unemployment has been a persistent problem for \line \up0 \expndtw0\chars
calex100 Government and is currently estimated at just over 30%.\ul0\super\cf16\
f17\fs23 15\ul0\nosupersub\cf5\f6\fs24 Lesotho\u8217?s problems have \line \up0
\expndtw0\charscalex103 been exacerbated by the high incidence of HIV/AIDS, whi
ch has hollowed out the \line \up0 \expndtw0\charscalex100 structure of the popu
lation and reduced life expectancy to just 35 years for men and \par\pard\qj \li
1418\ri1219\sb10\sl-410\slmult0 \up0 \expndtw0\charscalex100 38 years for women.
\ul0\super\cf16\f17\fs23 16\ul0\nosupersub\cf5\f6\fs24 This has had a considera
ble negative impact on the country\u8217?s \line \up0 \expndtw0\charscalex100 ec
onomic performance and social structure. Lesotho\u8217?s economic performance ov
er \line \up0 \expndtw0\charscalex100 the last three decades has been cons
trained by three factors: \up0 \expndtw-1\charscalex100 (i) intermittent \pa
r\pard\qj \li1418\ri1222\sb2\sl-420\slmult0 \up0 \expndtw-2\charscalex100 domest
ic and regional political instability (the latter due to destabilization by apar
theid \line \up0 \expndtw-1\charscalex100 South Africa); \up0 \expndtw0\charsca
lex100 (ii) structural constraints, such as poor agricultural performance
\par\pard\qj \li1418\ri1222\sb0\sl-420\slmult0 \up0 \expndtw-1\charscalex100 co
mpounded by environmental concerns, poor farming systems and low productivity, \
up0 \expndtw-2\charscalex100 and (iii) poor economic and financial management. \
par\pard\qj \li1418\sb0\sl-230\slmult0 \par\pard\qj\li1418\sb0\sl-230\slmult0 \p
ar\pard\qj\li1418\sb0\sl-230\slmult0 \par\pard\qj\li1418\ri1251\sb27\sl-230\slmu
lt0 \up0 \expndtw0\charscalex100 \ul0\super\cf17\f18\fs20\ul0\super\cf17\f18\fs1
9 14\ul0\nosupersub\cf18\f19\fs20 According to the WTO Trade Policy Review for
Lesotho for 1998, in 1996, agriculture and forestry \line \up0 \expndtw-1\charsc
alex100 represented some 12% of GDP at factor cost, down from 16% in 1990; minin
g and quarrying were an \line \up0 \expndtw0\charscalex100 obscure 0.01% of GDP
and manufacturing accounted for 16.5% of GDP. In 2003, the tertiary sector \line
\up0 \expndtw0\charscalex100 (consisting of service sectors such as wholesale a
nd retail trades, transport and communications and \line \up0 \expndtw0\charscal
ex103 public services); primary sector \up0 \expndtw0\charscalex103 (predominant
ly agriculture) and the secondary sector (including, \par\pard\qj \li1418\ri1250
\sb0\sl-240\slmult0 \up0 \expndtw0\charscalex106 manufacturing and construction)
accounted for 41%, 17.1% and 41.9% of real domestic output \line \up0 \expndtw3\charscalex100 respectively \up0 \expndtw0\charscalex107 (Sandrey et al, \up0 \
expndtw0\charscalex106 2005: 12). Services therefore represent a significant con
tributor to \par\pard\qj \li1418\ri1234\sb0\sl-240\slmult0 \up0 \expndtw0\charsc
alex100 economic output and in particular, the growth in construction activity w
as spurred by the LHWP and \line \up0 \expndtw-2\charscalex100 the large reconst
ruction expenditures of government following the destructive political riots of
1998. \par\pard\ql \li1418\sb0\sl-180\slmult0 \up0 \expndtw-1\charscalex100 \ul0
\super\cf17\f18\fs19 15\ul0\nosupersub\cf18\f19\fs20 The primary sector continu
es to be the major employer. Although the secondary and tertiary sectors \par\pa
rd\qj \li1418\ri1251\sb11\sl-230\slmult0 \up0 \expndtw0\charscalex105 contribute
more to GDP, they continue to fall behind the primary sector in terms of employ

ment. \line \up0 \expndtw0\charscalex103 Although experiencing recent declines,

the South African mining industry still absorbs a significant \line \up0 \expndt
w0\charscalex100 share of excess labour and net income from migrant labour accou
nted for 42% and 18% of national \line \up0 \expndtw0\charscalex100 income in 19
92 and 2002 respectively (Sandrey et al, 2005: 15). The number of migrant worker
s still \line \up0 \expndtw0\charscalex103 exceeds those employed in the domesti
c manufacturing sector by far (61 415 compared to 29 903 \line \up0 \expndtw-1\c
harscalex100 respectively for 2003). The Government is also a significant employ
er in the formal sector. Apart from \line \up0 \expndtw0\charscalex103 manufactu
ring and construction, most private sector employment is concentrated in unskill
ed and \line \up0 \expndtw0\charscalex100 semi-skilled categories such as domest
ic work. Construction (as well as wholesaling and retailing) is \line \up0 \expn
dtw0\charscalex106 the major employer in the services sector accounting for 54%
of labour (although this has fallen \line \up0 \expndtw-1\charscalex100 followin
g the winding down of the LHWP construction); while clothing/textiles and footwe
ar accounted \line \up0 \expndtw0\charscalex111 for the largest share of the lab
our force in the manufacturing sector averaging \up0 \expndtw0\charscalex110 73
and 14% \par\pard\ql \li1418\sb1\sl-217\slmult0 \up0 \expndtw-3\charscalex100 re
spectively between 1997 and 2003 . \par\pard\qj \li1418\ri1239\sb21\sl-220\slmul
t0\fi0 \up0 \expndtw0\charscalex100 \ul0\super\cf17\f18\fs19 16\ul0\nosupersub\c
f18\f19\fs20 See {\field{\*\fldinst {HYPERLINK "http://www.unicef.org/infobycou
ntry/lesotho_statistics.html" }}{\fldrslt {\ul0\nosupersub\cf32\f33\fs20\ul http
://www.unicef.org/infobycountry/lesotho_statistics.html}}}\ul0\nosupersub\cf18\f
19\fs20 See also \ul0\nosupersub\cf19\f20\fs20 Lesotho Country Profile \line \u
p0 \expndtw-2\charscalex100 \ul0\nosupersub\cf18\f19\fs20 at {\field{\*\fldinst
{HYPERLINK "http://news.bbc.co.uk/1/hi/world/africa/country_profiles/1063291.stm
/" }}{\fldrslt {\ul0\nosupersub\cf32\f33\fs20\ul http://news.bbc.co.uk/1/hi/worl
d/africa/country_profiles/1063291.stm}}} \par\pard\li10354\sb137\sl-310\slmult0\
fi0\tx10790 \up0 \expndtw-3\charscalex100 \ul0\nosupersub\cf5\f6\fs24 5\tab \up0
\expndtw-4\charscalex100 \ul0\nosupersub\cf15\f16\fs28 5
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}}\par\pard\sect\sectd\fs24\paperw11900\paperh16840\pard\sb0\sl-240{\bkmkstart P
g8}{\bkmkend Pg8}\par\pard\li1418\sb0\sl-230\slmult0\par\pard\li1418\sb0\sl-230\
slmult0\par\pard\li1418\sb94\sl-230\slmult0\fi0\tx8798 \up0 \expndtw-3\charscale
x100 \ul0\nosupersub\cf20\f21\fs20 tralac\ul0\nosupersub\cf6\f7\fs20 Working Pa
per no. 8\tab \up0 \expndtw-3\charscalex100 {\field{\*\fldinst {HYPERLINK "http:
//www.tralac.org/" }}{\fldrslt {\ul0\nosupersub\cf18\f19\fs20 www.tralac.org}}}\
par\pard\qj \li1418\ri1219\sb274\sl-413\slmult0 \up0 \expndtw0\charscalex106 \ul
0\nosupersub\cf5\f6\fs24 The structure of Lesotho\u8217?s economy remains very u
nbalanced, with the country \up0 \expndtw0\charscalex103 becoming increasingly r
eliant on a narrow range of activities, notably, remittances \up0 \expndtw0\char
scalex100 from migrant workers (mostly in South Africa), exports of water and po
wer to South \up0 \expndtw0\charscalex104 Africa, the SACU revenue pool, and the
manufacture of garments. Each of these \up0 \expndtw-2\charscalex100 sources of
revenue currently presents some difficulties for the Government, as will be \up
0 \expndtw0\charscalex100 shown below. Hence, a major challenge for the governme
nt is to formulate policies \up0 \expndtw-3\charscalex100 aimed at diversificati
on and creating a more balanced economy.\ul0\super\cf16\f17\fs23 17 \par\pard\ql
\li1418\sb0\sl-276\slmult0 \par\pard\ql\li1418\sb245\sl-276\slmult0 \up0 \expnd
tw-3\charscalex100 \ul0\nosupersub\cf13\f14\fs24 Remittances \par\pard\qj \li141
8\sb0\sl-413\slmult0 \par\pard\qj\li1418\ri1219\sb118\sl-413\slmult0 \up0 \expnd
tw0\charscalex100 \ul0\nosupersub\cf5\f6\fs24 Remittances of migrant workers acc
ount for over 30% of GNP (almost 45% of GDP) \line \up0 \expndtw0\charscalex100
and, in 1996, accounted for more than twice as much as export earnings. Over th
e \line \up0 \expndtw0\charscalex100 last decade the number of migrant workers h
as declined by almost half\ul0\super\cf16\f17\fs23 18\ul0\nosupersub\cf5\f6\fs24
largely due \line \up0 \expndtw0\charscalex102 to a number of factors, such as
the increased mechanization of mines (particularly \line \up0 \expndtw0\charsca
lex103 coal mines); the closure of some marginal gold mines due to escalating co
sts; the \line \up0 \expndtw0\charscalex103 relatively high mine wages that now
attract South Africans in larger numbers than \line \up0 \expndtw0\charscalex102
before; and lay-offs of Basotho workers in the South African mining industry du
e to \line \up0 \expndtw0\charscalex105 the appreciation of the Rand. In spite o
f this, miners\u8217? remittances have generally \line \up0 \expndtw0\charscalex
103 remained on an upward trend over the last decade;\ul0\super\cf16\f17\fs23 19
\ul0\nosupersub\cf5\f6\fs24 however, the traditional high \line \up0 \expndtw0\
charscalex106 share of remittances as apercentage of exports has steadily declin
ed in the last \line \up0 \expndtw-1\charscalex100 decade (WTO, TPR 1998:3). Thi
s may not in itself be a bad thing, as it indicates that \line \up0 \expndtw0\ch
arscalex100 other exports, in particular, garments, are adding to the \u8216?exp
ort basket\u8217?. In addition, \line \up0 \expndtw0\charscalex102 the consisten
cy of such revenue always remains slightly precarious and subject to \line \up0
\expndtw-1\charscalex100 external developments in South Africa which are outside
Lesotho\u8217?s control. The other \line \up0 \expndtw0\charscalex104 major res
ource providing revenue from South Africa is water. The recent Lesotho \line \up
0 \expndtw0\charscalex107 Highlands Water Project (LHWP), a joint-venture power
and water project, has \line \up0 \expndtw-1\charscalex100 resulted in fixed and
variable royalties for Lesotho from the transfer of water to South \par\pard\qj
\li1418\sb0\sl-220\slmult0 \par\pard\qj\li1418\sb0\sl-220\slmult0 \par\pard\qj\
li1418\sb0\sl-220\slmult0 \par\pard\qj\li1418\sb0\sl-220\slmult0 \par\pard\qj\li
1418\ri1250\sb147\sl-220\slmult0\fi0 \up0 \expndtw-2\charscalex100 \ul0\super\cf
17\f18\fs20\ul0\super\cf17\f18\fs19 17\ul0\nosupersub\cf18\f19\fs20 For an anal
ysis of products that have the potential to diversify Lesotho\u8217?s export bas

e see Sandrey \ul0\nosupersub\cf6\f7\fs20 et \up0 \expndtw-2\charscalex100 al\ul

0\nosupersub\cf18\f19\fs20 (2005). \par\pard\ql \li1418\sb12\sl-230\slmult0 \up
0 \expndtw0\charscalex102 \ul0\super\cf17\f18\fs19 18\ul0\nosupersub\cf18\f19\fs
20 The number of migrant mine workers fell from a peak of 126 733 in 1989 to 57
989 in 2004. See \par\pard\li1418\sb6\sl-230\slmult0\fi0\tx2519\tx3430\tx4054\t
x5276\tx6232\tx7312\tx8422\tx9622 \up0 \expndtw-3\charscalex100 Central\tab \up0
\expndtw-3\charscalex100 Bank\tab \up0 \expndtw-3\charscalex100 of\tab \up0 \ex
pndtw-3\charscalex100 Lesotho.\tab \up0 \expndtw-3\charscalex100 2004.\tab \up0
\expndtw-3\charscalex100 \ul0\nosupersub\cf6\f7\fs20 Annual\tab \up0 \expndtw-3\
charscalex100 Report\ul0\nosupersub\cf18\f19\fs20 .\tab \up0 \expndtw-3\charscal
ex100 [Online].\tab \up0 \expndtw-3\charscalex100 Available:\par\pard\ql \li1418
\sb1\sl-222\slmult0 \up0 \expndtw-3\charscalex100 {\field{\*\fldinst {HYPERLINK
"http://www.centralbank.org.ls/publications/full%20lesotho_areport.pdf/" }}{\fld
rslt {\ul0\nosupersub\cf32\f33\fs20\ul http://www.centralbank.org.ls/publication
s/FULL%20Lesotho_AReport.PDF}}} \par\pard\qj \li1418\ri1238\sb0\sl-230\slmult0 \
up0 \expndtw0\charscalex102 \ul0\super\cf17\f18\fs19 19\ul0\nosupersub\cf18\f19\
fs20 This is according the Central Bank of Lesotho 2004 Annual Report. Interest
ingly, the 2003 WTO \up0 \expndtw-1\charscalex100 Trade Policy Review for Lesoth
o concludes the opposite, and in fact finds that remittance income from \up0 \ex
pndtw-1\charscalex100 miners has fallen together with the fall in the number of
migrant mine workers. \par\pard\ql \li1418\sb0\sl-322\slmult0 \par\pard\ql\li141
8\sb84\sl-322\slmult0 \up0 \expndtw-11\charscalex86 \ul0\nosupersub\cf5\f6\fs24
6\ul0\nosupersub\cf15\f16\fs28 6
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}}\par\pard\sect\sectd\fs24\paperw11900\paperh16840\pard\sb0\sl-240{\bkmkstart P
g9}{\bkmkend Pg9}\par\pard\li1418\sb0\sl-230\slmult0\par\pard\li1418\sb0\sl-230\
slmult0\par\pard\li1418\sb94\sl-230\slmult0\fi0\tx8978 \up0 \expndtw-3\charscale
x100 \ul0\nosupersub\cf6\f7\fs20 tralac Working Paper no. 8\tab \up0 \expndtw-3\
charscalex100 {\field{\*\fldinst {HYPERLINK "http://www.tralac.org/" }}{\fldrslt
{\ul0\nosupersub\cf18\f19\fs20 www.tralac.org}}}\par\pard\qj \li1418\ri1221\sb2
85\sl-400\slmult0 \up0 \expndtw-1\charscalex100 \ul0\nosupersub\cf5\f6\fs24 Afri
ca. Average royalties are about M15 million per month and by July 2002, Lesotho
\up0 \expndtw-2\charscalex100 had received about M937 million in revenues from r
oyalties. \par\pard\ql \li1418\sb0\sl-276\slmult0 \par\pard\ql\li1418\sb267\sl-2
76\slmult0 \up0 \expndtw-3\charscalex100 \ul0\nosupersub\cf13\f14\fs24 The SACU
Revenue Pool \par\pard\qj \li1418\sb0\sl-414\slmult0 \par\pard\qj\li1418\ri1217\
sb96\sl-414\slmult0 \up0 \expndtw0\charscalex108 \ul0\nosupersub\cf5\f6\fs24 The
SACU Agreement, referred to earlier, is the principal treaty governing the \lin
e \up0 \expndtw0\charscalex102 common trade policy of SACU Member States.
The Agreement requires that \line \up0 \expndtw0\charscalex100 Members must
apply the laws set by South Africa (the largest trading partner in the \line \up
0 \expndtw0\charscalex100 customs union) concerning imports, customs,
excise, sales, anti-dumping, \line \up0 \expndtw-2\charscalex100 countervail
ing and safeguard duties. The Agreement provides for duty-free circulation \line
\up0 \expndtw0\charscalex100 of goods within the Member states and duties colle
cted by SACU members on third \line \up0 \expndtw0\charscalex109 country imports
are pooled in a common fund and subsequently distributed to \line \up0 \expndtw
0\charscalex100 Members by South Africa. The revenue-sharing formula was renegot
iated under the \line \up0 \expndtw0\charscalex102 recent Agreement. Namibia, Sw
aziland and Lesotho are particularly dependent on \line \up0 \expndtw0\charscale
x100 SACU revenue, which currently accounts for about 27%, 44% and 41% of their
total \line \up0 \expndtw0\charscalex104 revenue, respectively. As SACU\u8217?s
external tariffs gradually decline owing to both \line \up0 \expndtw0\charscalex
100 multilateral and bilateral trade negotiations, Lesotho will gradually see th
is revenue \line \up0 \expndtw0\charscalex107 decline. Hence, Lesotho, like the
other smaller SACU Members, faces a major \line \up0 \expndtw0\charscalex106 cha
llenge to move away from over-reliance on the SACU revenue pool which is \line \
up0 \expndtw0\charscalex102 unsustainable in the long-term. This entails diversi
fying its tax base and promoting \line \up0 \expndtw0\charscalex107 other non-cu
stoms revenue, as well as advancing fiscal reforms. This requires \line \up0 \ex
pndtw-1\charscalex100 technical assistance, for example, to improve tax collecti
on (this process has already \line \up0 \expndtw-3\charscalex100 started among S
ACU Members) and budgetary support. \par\pard\ql \li1418\sb0\sl-276\slmult0 \par
\pard\ql\li1418\sb264\sl-276\slmult0 \up0 \expndtw-3\charscalex100 \ul0\nosupers
ub\cf13\f14\fs24 Manufactures and the Garment Industry \par\pard\ql \li1418\sb0\
sl-276\slmult0 \par\pard\ql\li1418\sb0\sl-276\slmult0 \par\pard\ql\li1418\sb72\s
l-276\slmult0\tx3834 \up0 \expndtw0\charscalex100 \ul0\nosupersub\cf5\f6\fs24 At
independence in \tab \up0 \expndtw0\charscalex100 1966, Lesotho had virtua
lly no industrial base. However, \par\pard\qj \li1418\ri1220\sb34\sl-410\slm
ult0 \up0 \expndtw0\charscalex103 construction (in part due to the LHWP and reco
nstruction following the destructive \line \up0 \expndtw0\charscalex100 riots of
1998) and manufacturing have been significant growth sectors over the last \lin
e \up0 \expndtw0\charscalex100 decade, in particular, the clothing, textile and
footwear industries.\ul0\super\cf16\f17\fs23 20\ul0\nosupersub\cf5\f6\fs24 In t
he early \par\pard\qj \li1418\sb0\sl-240\slmult0 \par\pard\qj\li1418\sb0\sl-240\
slmult0 \par\pard\qj\li1418\sb0\sl-240\slmult0 \par\pard\qj\li1418\ri1251\sb111\
sl-240\slmult0\fi0 \up0 \expndtw-1\charscalex100 \ul0\super\cf17\f18\fs20\ul0\su
per\cf17\f18\fs19 20\ul0\nosupersub\cf18\f19\fs20 Although clothing and footwea
r now dominate Lesotho\u8217?s exports, other exports include live animals, \lin
e \up0 \expndtw0\charscalex102 crude materials \up0 \expndtw0\charscalex105 (ine
dible), television related electronics, medicaments and other miscellaneous \par
\pard\ql \li1418\sb1\sl-215\slmult0 \up0 \expndtw-3\charscalex100 manufactures.
\par\pard\li10354\sb138\sl-310\slmult0\fi0\tx10790 \up0 \expndtw-3\charscalex100

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}}\par\pard\sect\sectd\fs24\paperw11900\paperh16840\pard\sb0\sl-240{\bkmkstart P
g10}{\bkmkend Pg10}\par\pard\li1418\sb0\sl-230\slmult0\par\pard\li1418\sb0\sl-23
0\slmult0\par\pard\li1418\sb94\sl-230\slmult0\fi0\tx8798 \up0 \expndtw-3\charsca
lex100 \ul0\nosupersub\cf20\f21\fs20 tralac\ul0\nosupersub\cf6\f7\fs20 Working
Paper no. 8\tab \up0 \expndtw-3\charscalex100 {\field{\*\fldinst {HYPERLINK "htt
p://www.tralac.org/" }}{\fldrslt {\ul0\nosupersub\cf18\f19\fs20 www.tralac.org}}
}\par\pard\qj \li1418\ri1218\sb274\sl-413\slmult0 \up0 \expndtw0\charscalex105 \
ul0\nosupersub\cf5\f6\fs24 1990s, food products and beverages were the key manuf
acturing industries, but \line \up0 \expndtw0\charscalex100 these have been over
taken today by the clothing industry. Significant FDI flows into \line \up0 \exp
ndtw0\charscalex100 Lesotho, which have been marked by relative volatility, have
been closely related to \line \up0 \expndtw0\charscalex100 several factors: Les
otho\u8217?s preferential market access into the EU and U.S. markets; \line \up0
\expndtw0\charscalex100 Lesotho\u8217?s reputation as an efficient producer of
textiles; competitive wages; flexible \line \up0 \expndtw0\charscalex107 labour
market policies; low-cost inputs from Asia; and favourable tax treatment \line \
up0 \expndtw0\charscalex106 (Sandrey \ul0\nosupersub\cf22\f23\fs24 et al\ul0\nos
upersub\cf5\f6\fs24 , 2005: 14). Despite the clothing industry\u8217?s rapid gro
wth it faces a \line \up0 \expndtw0\charscalex103 number of threats.\ul0\super\c
f16\f17\fs23 21\ul0\nosupersub\cf5\f6\fs24 Ownership and management of Lesotho\

u8217?s clothing industry is \line \up0 \expndtw0\charscalex100 dominated by Sou

th East Asians (mostly Taiwanese, Chinese and Malaysians) who \line \up0 \expndt
w0\charscalex100 came to the country starting from the late 1980s. Today, they c
ontrol roughly 90% of \line \up0 \expndtw0\charscalex104 the industry and employ
over 90% of the labour (some 56 000 in 2003). This is a \line \up0 \expndtw0\ch
arscalex105 telling statistic. Lesotho, like many LDCs suffers from eith
er an insufficient \line \up0 \expndtw0\charscalex108 entrepreneurial class, o
r existing and potential entrepreneurs face a myriad of \line \up0 \expndtw0\cha
rscalex103 challenges, including lack of access to capital. This means that the
manufacturing \line \up0 \expndtw0\charscalex100 sector is almost entirely forei
gn owned and characterized by weak linkages with the \line \up0 \expndtw0\charsc
alex100 rest of the economy.\ul0\super\cf16\f17\fs23 22\ul0\nosupersub\cf5\f6\fs
24 The garment industry is export driven, with the U.S. receiving \line \up0 \e
xpndtw-3\charscalex100 over \up0 \expndtw0\charscalex102 90% of Lesotho\u8217?
s production. This is largely due to the African Growth \line \up0 \exp
ndtw-1\charscalex100 Opportunity Act (AGOA) which has provided a stimulus for in
creased investment and \line \up0 \expndtw0\charscalex103 growth. Exports into S
outhern Africa and Europe remain relatively small (possibly \line \up0 \expndtw0
\charscalex104 due to constraints posed by rules of origin) and industrialists d
o not appear to be \line \up0 \expndtw0\charscalex100 particularly interested in
pursuing these markets. The phasing out of the Multi-Fibre \line \up0 \expndtw0
\charscalex106 Agreement under the WTO in 2004 has placed the industry under con
siderable \line \up0 \expndtw0\charscalex100 strain, especially in light of conc
erns over the erosion of preference margins. This is \line \up0 \expndtw0\charsc
alex102 largely due to the uncertain impact of competition in the U.S. market fr
om low-cost \line \up0 \expndtw0\charscalex105 producers within similar product
lines, particularly, Mexico, Vietnam and Central \line \up0 \expndtw0\charscalex
100 American countries (Sandrey \ul0\nosupersub\cf22\f23\fs24 et al\ul0\nosupers
ub\cf5\f6\fs24 , 2005: Chapter 3). Moreover, there are concerns \line \up0 \expn
dtw0\charscalex104 over the possible end to the special proviso allowing derogat
ion from the rules of \line \up0 \expndtw-3\charscalex100 origin under AGOA. \pa
r\pard\qj \li1418\sb0\sl-220\slmult0 \par\pard\qj\li1418\sb0\sl-220\slmult0 \par
\pard\qj\li1418\sb0\sl-220\slmult0 \par\pard\qj\li1418\sb0\sl-220\slmult0 \par\p
ard\qj\li1418\sb0\sl-220\slmult0 \par\pard\qj\li1418\sb0\sl-220\slmult0 \par\par
d\qj\li1418\sb0\sl-220\slmult0 \par\pard\qj\li1418\ri1252\sb87\sl-220\slmult0\fi
0 \up0 \expndtw0\charscalex102 \ul0\super\cf17\f18\fs20\ul0\super\cf17\f18\fs19
21\ul0\nosupersub\cf18\f19\fs20 See Salm, A, Grant, W.J., Green, T.J., Haycock,
J.R. and Raimondo, J. 2002. \ul0\nosupersub\cf6\f7\fs20 Lesotho Garment \line \
up0 \expndtw0\charscalex100 Industry Sub-sector Study for the Governme
nt of Lesotho\ul0\nosupersub\cf18\f19\fs20 . SAPRN. \up0 \expndtw-1\charsc
alex100 [Online]. Available: \par\pard\ql \li1418\sb4\sl-240\slmult0 \up0 \exp
ndtw-2\charscalex100 {\field{\*\fldinst {HYPERLINK "http://www.sarpn.org.za/docu
ments/d0001166/p1285-lesotho_garment_january2002.pdf/" }}{\fldrslt {\ul0\nosuper
sub\cf32\f33\fs20\ul http://www.sarpn.org.za/documents/d0001166/P1285-lesotho_ga
rment_January2002.pdf}}} \par\pard\ql \li1418\sb1\sl-215\slmult0 \up0 \expndtw-2
\charscalex100 \ul0\super\cf17\f18\fs19 22\ul0\nosupersub\cf18\f19\fs20 Admitte
dly, this feature is also symptomatic of the way the clothing industry operates.
\par\pard\ql \li1418\sb0\sl-322\slmult0 \par\pard\ql\li1418\sb95\sl-322\slmult0
\up0 \expndtw-11\charscalex86 \ul0\nosupersub\cf5\f6\fs24 8\ul0\nosupersub\cf15
\f16\fs28 8
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p{\sn fBehindDocument}{\sv 1}}{\sp{\sn lineColor}{\sv 0}}

}}
{\shp {\*\shpinst\shpleft1246\shptop15829\shpright1964\shpbottom15830\shpfhdr0\s
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{\shp {\*\shpinst\shpleft1960\shptop15828\shpright2166\shpbottom16031\shpfhdr0\s
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{\shp {\*\shpinst\shpleft1418\shptop14205\shpright4298\shpbottom14225\shpfhdr0\s
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p{\sn fLine}{\sv 0}}{\sp{\sn lineType}{\sv 0}}{\sp{\sn fArrowheadsOK}{\sv 1}}{\s
p{\sn fBehindDocument}{\sv 1}}{\sp{\sn lineColor}{\sv 0}}
}}\par\pard\sect\sectd\fs24\paperw11900\paperh16840\pard\sb0\sl-240{\bkmkstart P
g11}{\bkmkend Pg11}\par\pard\li1418\sb0\sl-230\slmult0\par\pard\li1418\sb0\sl-23
0\slmult0\par\pard\li1418\sb94\sl-230\slmult0\fi0\tx8978 \up0 \expndtw-3\charsca
lex100 \ul0\nosupersub\cf6\f7\fs20 tralac Working Paper no. 8\tab \up0 \expndtw3\charscalex100 {\field{\*\fldinst {HYPERLINK "http://www.tralac.org/" }}{\fldrs
lt {\ul0\nosupersub\cf18\f19\fs20 www.tralac.org}}}\par\pard\qj \li1418\ri1219\s
b275\sl-412\slmult0 \up0 \expndtw0\charscalex100 \ul0\nosupersub\cf5\f6\fs24 Oth
er constraints within the industry concern challenges to improve productivity an
d \line \up0 \expndtw0\charscalex107 quality, poor working conditions, low wages
and the failure of the industry (and \line \up0 \expndtw-1\charscalex100 market
access under AGOA) to generate backward or forward linkages,\ul0\super\cf16\f17
\fs23 23\ul0\nosupersub\cf5\f6\fs24 including a \line \up0 \expndtw0\charscalex
102 failure to transfer management skills to local workers.\ul0\super\cf16\f17\f
s23 24\ul0\nosupersub\cf5\f6\fs24 Already, since 2004, more \line \up0 \expndtw
-1\charscalex100 than 6000 workers have lost their jobs following the closure of
six factories.\ul0\super\cf16\f17\fs23 25\ul0\nosupersub\cf5\f6\fs24 Hence, \l
ine \up0 \expndtw0\charscalex100 Lesotho\u8217?s garment industry faces multiple
challenges over the next few years: (i) to \line \up0 \expndtw0\charscalex103 p
reserve current production in the face of various constraints given the end of t
he \line \up0 \expndtw0\charscalex100 Multi-Fibre Agreement, and the possible en
d of AGOA; (ii) to fend off competition in \line \up0 \expndtw0\charscalex105 cl
othing export markets and to prevent the further closure of factories; and (iii)
to \line \up0 \expndtw-2\charscalex100 develop its established export base and
seek new markets (mainly in Southern Africa \line \up0 \expndtw-3\charscalex100
and the EC). \par\pard\qj \li1418\sb0\sl-420\slmult0 \par\pard\qj\li1418\ri1220\
sb2\sl-420\slmult0 \up0 \expndtw0\charscalex102 Table 1 below, shows the growth
of value added in some major sectors discussed \up0 \expndtw-3\charscalex100 abo
ve (See Sandrey et al, 2005: 17). \par\pard\qj \li1418\sb0\sl-233\slmult0 \par\p
ard\qj\li1418\sb0\sl-233\slmult0 \par\pard\qj\li1418\sb0\sl-233\slmult0 \par\par
d\qj\li1418\sb0\sl-233\slmult0 \par\pard\qj\li1418\sb0\sl-233\slmult0 \par\pard\
qj\li1418\sb0\sl-233\slmult0 \par\pard\qj\li1418\sb0\sl-233\slmult0 \par\pard\qj
\li1418\sb0\sl-233\slmult0 \par\pard\qj\li1418\sb0\sl-233\slmult0 \par\pard\qj\l

i1418\sb0\sl-233\slmult0 \par\pard\qj\li1418\sb0\sl-233\slmult0 \par\pard\qj\li1

418\sb0\sl-233\slmult0 \par\pard\qj\li1418\sb0\sl-233\slmult0 \par\pard\qj\li141
8\sb0\sl-233\slmult0 \par\pard\qj\li1418\sb0\sl-233\slmult0 \par\pard\qj\li1418\
sb0\sl-233\slmult0 \par\pard\qj\li1418\sb0\sl-233\slmult0 \par\pard\qj\li1418\sb
0\sl-233\slmult0 \par\pard\qj\li1418\sb0\sl-233\slmult0 \par\pard\qj\li1418\sb0\
sl-233\slmult0 \par\pard\qj\li1418\sb0\sl-233\slmult0 \par\pard\qj\li1418\sb0\sl
-233\slmult0 \par\pard\qj\li1418\sb0\sl-233\slmult0 \par\pard\qj\li1418\sb0\sl-2
33\slmult0 \par\pard\qj\li1418\ri1235\sb183\sl-233\slmult0\fi0 \up0 \expndtw0\ch
arscalex102 \ul0\super\cf17\f18\fs20\ul0\super\cf17\f18\fs19 23\ul0\nosupersub\c
f18\f19\fs20 Examples of potential backward or forward linkages between the for
eign and local sectors which \up0 \expndtw0\charscalex103 have failed to materia
lize include the manufacture of packing materials, labels and zippers for the \u
p0 \expndtw0\charscalex103 clothing industry, the subcontracting of certain acti
vities, and the establishment of industry-related \up0 \expndtw-2\charscalex100
training programmes, for example, for design or marketing (WTO, TPR 1998:5). \pa
r\pard\qj \li1418\ri1244\sb0\sl-230\slmult0\fi0 \up0 \expndtw-1\charscalex100 \u
l0\super\cf17\f18\fs19 24\ul0\nosupersub\cf18\f19\fs20 Foreign affiliates in Le
sotho\u8217?s garments industry continue to rely heavily on expatriates (mainly
from \up0 \expndtw0\charscalex103 East Asia) to fill technical, supervisory
and managerial posts. One could argue that this is \up0 \expndtw0\char
scalex100 understandable given that the industry is still in its developmental s
tages. However, some firms have \up0 \expndtw0\charscalex110 been in Lesotho for
over a decade, without any discernible change in terms of technical and \up0 \e
xpndtw-3\charscalex100 managerial skills transfer to locals.\par\pard\sect\sectd
\sbknone\cols2\colno1\colw1672\colsr160\colno2\colw9928\colsr160\ql \li1418\sb73
\sl-149\slmult0 \up0 \expndtw-1\charscalex100 \ul0\super\cf17\f18\fs19 25\par\pa
rd\column \ql \li20\sb6\sl-230\slmult0 \up0 \expndtw0\charscalex104 \ul0\nosuper
sub\cf18\f19\fs20 See \ul0\nosupersub\cf19\f20\fs20
Textile
Industry
Co
llapses\ul0\nosupersub\cf18\f19\fs20 ,
in \ul0\nosupersub\cf6\f7\fs20
Busi
ness
in
Africa\ul0\nosupersub\cf18\f19\fs20 ,
available
online
at
\par\pard\sect\sectd\sbknone \li1418\sb0\sl-230\slmult0\fi0 \up0 \expndtw-3\cha
rscalex100 {\field{\*\fldinst {HYPERLINK "http://www.businessinafrica.net/featur
es/trade/424691.htm" }}{\fldrslt {\ul0\nosupersub\cf32\f33\fs20\ul http://www.bu
sinessinafrica.net/features/trade/424691.htm}}}\par\pard\sect\sectd\sbknone \li1
418\sb119\sl-310\slmult0\fi8936\tx10790 \up0 \expndtw-3\charscalex100 \ul0\nosup
ersub\cf5\f6\fs24 9\tab \up0 \expndtw-4\charscalex100 \ul0\nosupersub\cf15\f16\f
s28 9
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p{\sn fBehindDocument}{\sv 1}}{\sp{\sn lineColor}{\sv 0}}
}}\par\pard\sect\sectd\fs24\paperw11900\paperh16840\pard\sb0\sl-240{\bkmkstart P
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0\slmult0\par\pard\li1418\sb94\sl-230\slmult0\fi0\tx8798 \up0 \expndtw-3\charsca
lex100 \ul0\nosupersub\cf20\f21\fs20 tralac\ul0\nosupersub\cf6\f7\fs20 Working
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p://www.tralac.org/" }}{\fldrslt {\ul0\nosupersub\cf18\f19\fs20 www.tralac.org}}
}\par\pard\li1418\sb0\sl-276\slmult0\par\pard\li1418\sb111\sl-276\slmult0\fi0 \u
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8\tx6506\tx7346\tx8186\tx9025\tx9865 \up0 \expndtw-3\charscalex100 \ul0\nosupers
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\charscalex100 1997\tab \up0 \expndtw-3\charscalex100 1999\tab \up0 \expndtw-3\c
harscalex100 2001\tab \up0 \expndtw-3\charscalex100 2003\par\pard\li1418\sb143\s
l-253\slmult0\fi0\tx5666\tx6506\tx7346\tx8186\tx9026\tx9866 \up0 \expndtw-3\char
scalex100 \ul0\nosupersub\cf24\f25\fs22 Tertiary sector\tab \up0 \expndtw-3\char
scalex100 \ul0\nosupersub\cf23\f24\fs22 9.7\tab \up0 \expndtw-3\charscalex100 -4
.3\tab \up0 \expndtw-3\charscalex100 0.5\tab \up0 \expndtw-3\charscalex100 4.3\t
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pard\li1418\sb125\sl-253\slmult0\fi0\tx5666\tx6506\tx7346\tx8186\tx9026\tx9866 \
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tx6506\tx7346\tx8186\tx9027\tx9867 \up0 \expndtw-3\charscalex100 Crops\tab \up0
\expndtw-3\charscalex100 23.1\tab \up0 \expndtw-3\charscalex100 -15.2\tab \up0 \
expndtw-3\charscalex100 -3.2\tab \up0 \expndtw-3\charscalex100 -1.1\tab \up0 \ex
pndtw-3\charscalex100 5.9\tab \up0 \expndtw-3\charscalex100 -6.9\par\pard\li1418
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{\shp {\*\shpinst\shpleft1418\shptop14895\shpright4298\shpbottom14915\shpfhdr0\s
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p{\sn fBehindDocument}{\sv 1}}{\sp{\sn lineColor}{\sv 0}}
}}\par\pard\sect\sectd\fs24\paperw11900\paperh16840\pard\sb0\sl-240{\bkmkstart P
g13}{\bkmkend Pg13}\par\pard\li1418\sb0\sl-230\slmult0\par\pard\li1418\sb0\sl-23
0\slmult0\par\pard\li1418\sb94\sl-230\slmult0\fi0\tx8978 \up0 \expndtw-3\charsca
lex100 \ul0\nosupersub\cf6\f7\fs20 tralac Working Paper no. 8\tab \up0 \expndtw3\charscalex100 {\field{\*\fldinst {HYPERLINK "http://www.tralac.org/" }}{\fldrs
lt {\ul0\nosupersub\cf18\f19\fs20 www.tralac.org}}}\par\pard\ql \li1418\sb0\sl-2
76\slmult0 \par\pard\ql\li1418\sb111\sl-276\slmult0 \up0 \expndtw-3\charscalex10
0 \ul0\nosupersub\cf13\f14\fs24 The Direction of Trade in Lesotho \par\pard\qj \
li1418\sb0\sl-420\slmult0 \par\pard\qj\li1418\ri1221\sb86\sl-420\slmult0 \up0 \e

xpndtw0\charscalex107 \ul0\nosupersub\cf5\f6\fs24 Being an enclave, Lesotho\u821

7?s economy and trade are closely linked to its single \line \up0 \expndtw-2\cha
rscalex100 neighbour, South Africa. \up0 \expndtw-2\charscalex100 80% of Lesotho
\u8217?s imports come from South Africa (and are \par\pard\qj \li1418\ri1219\sb6
\sl-413\slmult0 \up0 \expndtw0\charscalex100 consistently in excess of domestic
output)\ul0\super\cf16\f17\fs23 27\ul0\nosupersub\cf5\f6\fs24 and a considerabl
e share of its exports \up0 \expndtw-1\charscalex100 goes to South Africa. Sout
h African investments also account for a substantial share \up0 \expndtw-1\chars
calex100 of foreign direct investment (FDI). Moreover, as a member of the Common
Monetary \up0 \expndtw0\charscalex106 Area (CMA) (which includes all SACU Membe
rs save for Botswana), Lesotho\u8217?s \up0 \expndtw0\charscalex102 currency (Lo
ti; Maloti plural) is tied to the South African Rand at a fixed rate of 1:1. \up
0 \expndtw0\charscalex109 Thus there is no exchange rate policy separate from th
at of the CMA, nor any \up0 \expndtw-3\charscalex100 exchange control on movemen
ts within the CMA. \par\pard\qj \li1418\ri1219\sb407\sl-413\slmult0 \up0 \expndt
w0\charscalex102 Partly due to difficulties involved in collecting import and ex
port data within SACU, \line \up0 \expndtw-1\charscalex100 trade statistics in L
esotho are recognized to be unreliable.\ul0\super\cf16\f17\fs23 28\ul0\nosupersu
b\cf5\f6\fs24 It is not surprising to find \line \up0 \expndtw-2\charscalex100
discrepancies between Central Bank data and those collected by the Lesotho Burea
u \line \up0 \expndtw0\charscalex104 of Statistics (BOS). As a result, it is dif
ficult to discuss trade trends and formulate \line \up0 \expndtw0\charscalex102
meaningful policy recommendations, particularly in case of trade in services whi
ch \line \up0 \expndtw0\charscalex109 are traditionally difficult to measure. Th
e direction of Lesotho\u8217?s trade is highly \line \up0 \expndtw0\charscalex10
7 concentrated. Over 90% of Lesotho\u8217?s exports are destined for the U.S. (m
ostly \line \up0 \expndtw0\charscalex106 textiles and clothing under AGOA), surg
ing from M218 million in 1995 to M3169 \line \up0 \expndtw0\charscalex103 millio
n in \up0 \expndtw0\charscalex104 2004.\ul0\super\cf16\f17\fs23 29\ul0\nosupersu
b\cf5\f6\fs24 The other significant share of exports goes to SACU countries \li
ne \up0 \expndtw0\charscalex100 (about M700 million in 2003), whereas exports to
the EC suffered a marked decline \line \up0 \expndtw0\charscalex103 over the la
st decade (falling from M74 million in 1996 to about M4 million in 2003) \line \
up0 \expndtw0\charscalex106 largely due to difficulties with rules of origin, on
ly to recover again in 2004 to an \line \up0 \expndtw0\charscalex102 estimated M
695 million. Recent amendments to Canada\u8217?s rules of origin have also \line
\up0 \expndtw0\charscalex102 enabled exports from Lesotho to that market. It ha
s even been suggested that \par\pard\qj \li1418\sb0\sl-220\slmult0 \par\pard\qj\
li1418\sb0\sl-220\slmult0 \par\pard\qj\li1418\ri1249\sb87\sl-220\slmult0\fi0 \up
0 \expndtw0\charscalex100 \ul0\super\cf17\f18\fs20\ul0\super\cf17\f18\fs19 27\ul
0\nosupersub\cf18\f19\fs20 Imports of goods and services were 113% of domestic
output in 1994 and 103% in 2002 (Sandrey \up0 \expndtw-3\charscalex100 \ul0\nosu
persub\cf6\f7\fs20 et al\ul0\nosupersub\cf18\f19\fs20 , 2005: 12). \par\pard\qj
\li1418\ri1242\sb16\sl-226\slmult0\fi0 \up0 \expndtw0\charscalex100 \ul0\super\c
f17\f18\fs19 28\ul0\nosupersub\cf18\f19\fs20 The WTO, TPR 1998:11 notes that de
tailed and \ul0\nosupersub\cf6\f7\fs20 disaggregated\ul0\nosupersub\cf18\f19\fs2
0 data for merchandise imports are \up0 \expndtw-1\charscalex100 not available
for Lesotho. The free flow of goods and services from South Africa into Lesotho
and the \up0 \expndtw0\charscalex100 absence of an effective mechanism to compi
le and store data, means that highly aggregated import \up0 \expndtw-3\charscale
x100 figures must be used to indicate trends. \par\pard\qj \li1418\ri1232\sb13\s
l-228\slmult0 \up0 \expndtw-1\charscalex100 \ul0\super\cf17\f18\fs19 29\ul0\nosu
persub\cf18\f19\fs20 Central Bank of Lesotho 2004 Annual Report. According to a
n analysis by Sandrey \ul0\nosupersub\cf6\f7\fs20 et al\ul0\nosupersub\cf18\f19\
fs20 (2005: 3-4) \line \up0 \expndtw0\charscalex104 of total exports for 2002 (
the most recent official data that were available at the time of analysis), \lin
e \up0 \expndtw-1\charscalex100 eleven of the top twenty trade lines at the HS 6
level are related to clothing exports, with either or both \line \up0 \expndtw0
\charscalex103 of the US and South Africa accounting for almost all of the trade
. Of the other nine lines, footwear, \line \up0 \expndtw0\charscalex100 water, b

ricks, TV components and milling products are destined almost exclusively for So
uth Africa'. \line \up0 \expndtw-2\charscalex100 Other promising exports include
diamonds (following the re-opening of certain mines) and furniture. \par\pard\l
i10221\sb136\sl-310\slmult0\fi0\tx10712 \up0 \expndtw-3\charscalex100 \ul0\nosup
ersub\cf5\f6\fs24 11\tab \up0 \expndtw-3\charscalex100 \ul0\nosupersub\cf15\f16\
fs28 11
{\shp {\*\shpinst\shpleft1388\shptop1108\shpright10519\shpbottom1128\shpfhdr0\sh
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{\shp {\*\shpinst\shpleft10534\shptop15501\shpright10297\shpbottom15738\shpfhdr0
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{\shp {\*\shpinst\shpleft1418\shptop12366\shpright4298\shpbottom12386\shpfhdr0\s
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}}\par\pard\sect\sectd\fs24\paperw11900\paperh16840\pard\sb0\sl-240{\bkmkstart P
g14}{\bkmkend Pg14}\par\pard\li1418\sb0\sl-230\slmult0\par\pard\li1418\sb0\sl-23
0\slmult0\par\pard\li1418\sb94\sl-230\slmult0\fi0\tx8798 \up0 \expndtw-3\charsca
lex100 \ul0\nosupersub\cf20\f21\fs20 tralac\ul0\nosupersub\cf6\f7\fs20 Working
Paper no. 8\tab \up0 \expndtw-3\charscalex100 {\field{\*\fldinst {HYPERLINK "htt
p://www.tralac.org/" }}{\fldrslt {\ul0\nosupersub\cf18\f19\fs20 www.tralac.org}}
}\par\pard\qj \li1418\ri1220\sb285\sl-400\slmult0 \up0 \expndtw0\charscalex100 \
ul0\nosupersub\cf5\f6\fs24 Canadian rules of origin might serve as a useful mode
l for the EPAs (Sandrey \ul0\nosupersub\cf22\f23\fs24 et al\ul0\nosupersub\cf5\f
6\fs24 , \up0 \expndtw-3\charscalex100 2005: 4). \par\pard\qj \li1418\sb0\sl-400
\slmult0 \par\pard\qj\li1418\ri1220\sb40\sl-400\slmult0 \up0 \expndtw0\charscale
x105 Lesotho\u8217?s exports to the Southern African Development Community (SADC
) are \line \up0 \expndtw0\charscalex102 almost negligible, although \up0 \exp
ndtw0\charscalex105 2004 data indicate that encouraging exports of \par\pa
rd\qj \li1418\ri1219\sb10\sl-413\slmult0 \up0 \expndtw0\charscalex103 medicament
s to Botswana have been growing recently. In terms of imports, more \up0 \expndt

w0\charscalex103 than 80% of Lesotho\u8217?s imports originate from SACU (though

this figure might well \up0 \expndtw0\charscalex100 include inputs for the clot
hing industry being routed through South Africa from Asia. \up0 \expndtw-3\chars
calex100 Again imports from the EC and SADC remain relatively small. \par\pard\q
l \li1418\sb0\sl-276\slmult0 \par\pard\ql\li1418\sb265\sl-276\slmult0 \up0 \expn
dtw-3\charscalex100 \ul0\nosupersub\cf13\f14\fs24 Supply-side Constraints \par\p
ard\qj \li1418\sb0\sl-415\slmult0 \par\pard\qj\li1418\ri1219\sb95\sl-415\slmult0
\up0 \expndtw0\charscalex106 \ul0\nosupersub\cf5\f6\fs24 Lesotho\u8217?s landl
ocked location and the absence or poor quality of physical \line \up0 \
expndtw0\charscalex100 infrastructure affect the country\u8217?s ability to inte
grate into the world economy. Critical \line \up0 \expndtw0\charscalex105 infras
tructural challenges include improving the availability of electricity a
nd \line \up0 \expndtw0\charscalex103 telecommunications (including addressing t
he high costs thereof), water supply\ul0\super\cf16\f17\fs23 30\ul0\nosupersub\c
f5\f6\fs24 , \line \up0 \expndtw0\charscalex100 and transport infrastructure
\up0 \expndtw0\charscalex101 (roads). These constraints affect the su
pply, \par\pard\qj \li1418\ri1219\sb7\sl-413\slmult0 \up0 \expndtw0\charscalex10
5 competitiveness and the ability to export both services and manufactures. On i
ts \line \up0 \expndtw0\charscalex106 own, Lesotho does not have the financial r
esources or the technical capacity to \line \up0 \expndtw0\charscalex106 address
these challenges. Thus, if Lesotho is to address this infrastructure and \line
\up0 \expndtw0\charscalex102 supply challenges in a meaningful way, a combined e
ffort is required, for example, \line \up0 \expndtw0\charscalex103 under the tra
de facilitation and technical assistance mechanisms of the Integrated \line \up0
\expndtw0\charscalex102 Framework\ul0\super\cf16\f17\fs23 31\ul0\nosupersub\cf5
\f6\fs24 ; various international organizations\ul0\super\cf16\f17\fs23 32\ul0\no
supersub\cf5\f6\fs24 ; bilateral technical co-operation \line \up0 \expndtw0\cha
rscalex102 initiatives under SADC and SACU; and technical assistance and
supply-side \line \up0 \expndtw-1\charscalex100 assistance under the EPAs and
the Cotonou Agreement. Yet a note of caution needs \line \up0 \expndtw0\charscal
ex100 to be sounded. The WTO, TPR (1998:20) notes that an estimated 50% of Lesot
ho's \line \up0 \expndtw-2\charscalex100 aid budget is directed at technical ass
istance. This means that Lesotho has been one \par\pard\qj \li1418\sb0\sl-230\sl
mult0 \par\pard\qj\li1418\sb0\sl-230\slmult0 \par\pard\qj\li1418\sb0\sl-230\slmu
lt0 \par\pard\qj\li1418\ri1238\sb89\sl-230\slmult0\fi0 \up0 \expndtw0\charscalex
100 \ul0\super\cf17\f18\fs20\ul0\super\cf17\f18\fs19 30\ul0\nosupersub\cf18\f19\
fs20 Despite being an exporter of water, Lesotho\u8217?s urban areas still face
some challenges in regard to \up0 \expndtw-1\charscalex100 reliable water suppl
y, largely due to the country\u8217?s mountainous terrain and the significant co
st involved \up0 \expndtw-2\charscalex100 in putting in place suitable infrastru
cture for water delivery. \par\pard\qj \li1418\ri1238\sb10\sl-230\slmult0 \up0 \
expndtw0\charscalex106 \ul0\super\cf17\f18\fs19 31\ul0\nosupersub\cf18\f19\fs20
Tralac has already been involved in Lesotho for some time now in implementing s
ome of the \up0 \expndtw-2\charscalex100 activities identified in Lesotho\u8217?
s 'action matrix', such as improving trade data; and addressing analytical \up0
\expndtw-2\charscalex100 capacity in support for trade and investment agreement
negotiations. \par\pard\qj \li1418\ri1236\sb0\sl-230\slmult0 \up0 \expndtw0\char
scalex103 \ul0\super\cf17\f18\fs19 32\ul0\nosupersub\cf18\f19\fs20 In the case
of services, at the time of writing UNCTAD was in the process of identifying nat
ional \up0 \expndtw0\charscalex102 consultants to conduct sectoral assessments (
as part of a broader SADC project), and the ITC was \up0 \expndtw-2\charscalex10
0 conducting a six phase project aimed at the private sector and services export
s. \par\pard\ql \li1418\sb0\sl-322\slmult0 \par\pard\ql\li1418\sb82\sl-322\slmul
t0 \up0 \expndtw-12\charscalex90 \ul0\nosupersub\cf15\f16\fs28 12
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0\slmult0\par\pard\li1418\sb94\sl-230\slmult0\fi0\tx8978 \up0 \expndtw-3\charsca
lex100 \ul0\nosupersub\cf6\f7\fs20 tralac Working Paper no. 8\tab \up0 \expndtw3\charscalex100 {\field{\*\fldinst {HYPERLINK "http://www.tralac.org/" }}{\fldrs
lt {\ul0\nosupersub\cf18\f19\fs20 www.tralac.org}}}\par\pard\qj \li1418\ri1219\s
b275\sl-412\slmult0 \up0 \expndtw0\charscalex105 \ul0\nosupersub\cf5\f6\fs24 of
the world's highest recipients of per capita technical assistance. However, an
\up0 \expndtw0\charscalex104 unfortunate result of this, which local policy-make
rs must vigilantly guard against, \up0 \expndtw0\charscalex109 might be a certai
n dependence on aid-funded foreign technical expertise. For \up0 \expndtw0\chars
calex103 example, technical projects could be designed but there will be a lack
of sufficient \up0 \expndtw-1\charscalex100 domestic capacity or appropriate kno
w-how to implement or support them. Providers \up0 \expndtw-3\charscalex100 of t
echnical assistance should also be mindful of this challenge. \par\pard\ql \li14
18\sb0\sl-276\slmult0 \par\pard\ql\li1418\sb245\sl-276\slmult0 \up0 \expndtw-1\c
harscalex100 \ul0\nosupersub\cf13\f14\fs24 3 The Nature of Services Trade in L
esotho \par\pard\qj \li1418\sb0\sl-414\slmult0 \par\pard\qj\li1418\ri1218\sb116\
sl-414\slmult0 \up0 \expndtw0\charscalex100 \ul0\nosupersub\cf5\f6\fs24 It was m
entioned earlier that services now account for a significant share of GDP in \li
ne \up0 \expndtw-1\charscalex100 Lesotho. The contribution of services\ul0\super
\cf16\f17\fs23 33\ul0\nosupersub\cf5\f6\fs24 to GDP over the last five years ha
s remained \line \up0 \expndtw0\charscalex104 at an average of about 40%. It is
important to identify the types of services being \line \up0 \expndtw0\charscale
x103 traded and the domestic suppliers of services and services exports if the p
rofile of \line \up0 \expndtw0\charscalex100 services is to be raised among poli
cy-makers. The International Trade Centre (ITC) \line \up0 \expndtw0\charscalex1
04 has been conducting a programme to promote services in Lesotho, part of which

\line \up0 \expndtw0\charscalex103 includes identifying services activities in

Lesotho and conducting training activities \line \up0 \expndtw0\charscalex106 ai
med at SMEs on \u8216?how to successfully export services\u8217?. Services activ
ities and \line \up0 \expndtw0\charscalex107 constraints faced by firms have bee
n identified through interviews with industry \line \up0 \expndtw-2\charscalex10
0 associations and individual firms, as well as government. According to the WTO
, TPR \line \up0 \expndtw-1\charscalex100 (1998:71) and ITC research, the growth
of services sectors in Lesotho during the last \line \up0 \expndtw0\charscalex1
02 decade has been spurred by government services, as well as wholesale and reta
il \line \up0 \expndtw0\charscalex100 services. Other significant services secto
rs include banking and insurance, tourism, \line \up0 \expndtw0\charscalex102 tr
ansportation and communications. Pockets of growth have also been identified in
\line \up0 \expndtw0\charscalex100 various types of business and professional se
rvices (for example, security services). \line \up0 \expndtw0\charscalex108 Bala
nce of payments statistics indicate that the share of a number of services \line
\up0 \expndtw-1\charscalex100 exports in total exports has declined over the la
st decade (from about 20% in 1995 to \line \up0 \expndtw-2\charscalex100 9% in 2
002), in particular transport services. However, certain services activities hav
e \line \up0 \expndtw0\charscalex102 shown some growth, for example, travel/tour
ism and the category \u8216?other services\u8217?. \line \up0 \expndtw-1\charsca
lex100 Although the development of tourism in Lesotho is a priority, it still fa
ces a number of \line \up0 \expndtw-1\charscalex100 constraints, such as,the lac
k of infrastructure outside major towns and the high costs \line \up0 \expndtw-3
\charscalex100 of travelling to Lesotho. \par\pard\qj \li1418\sb0\sl-230\slmult0
\par\pard\qj\li1418\sb0\sl-230\slmult0 \par\pard\qj\li1418\ri1248\sb38\sl-230\s
lmult0\fi0 \up0 \expndtw-1\charscalex100 \ul0\super\cf17\f18\fs20\ul0\super\cf17
\f18\fs19 33\ul0\nosupersub\cf18\f19\fs20 This includes value added in wholesal
e and retail trade (including hotels and restaurants), transport, \up0 \expndtw0
\charscalex100 and government, financial, professional, and personal services su
ch as education, health care, and \up0 \expndtw-3\charscalex100 real estate serv
ices. \par\pard\li10221\sb135\sl-310\slmult0\fi0\tx10712 \up0 \expndtw-3\charsca
lex100 \ul0\nosupersub\cf5\f6\fs24 13\tab \up0 \expndtw-3\charscalex100 \ul0\nos
upersub\cf15\f16\fs28 13
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{\shp {\*\shpinst\shpleft1418\shptop14436\shpright4298\shpbottom14456\shpfhdr0\s
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}}\par\pard\sect\sectd\fs24\paperw11900\paperh16840\pard\sb0\sl-240{\bkmkstart P
g16}{\bkmkend Pg16}\par\pard\li1418\sb0\sl-230\slmult0\par\pard\li1418\sb0\sl-23
0\slmult0\par\pard\li1418\sb94\sl-230\slmult0\fi0\tx8798 \up0 \expndtw-3\charsca
lex100 \ul0\nosupersub\cf20\f21\fs20 tralac\ul0\nosupersub\cf6\f7\fs20 Working
Paper no. 8\tab \up0 \expndtw-3\charscalex100 {\field{\*\fldinst {HYPERLINK "htt
p://www.tralac.org/" }}{\fldrslt {\ul0\nosupersub\cf18\f19\fs20 www.tralac.org}}
}\par\pard\qj \li1418\ri1219\sb274\sl-413\slmult0 \up0 \expndtw0\charscalex102 \
ul0\nosupersub\cf5\f6\fs24 An interesting feature of services traded in L
esotho, is the extent of foreign \line \up0 \expndtw0\charscalex100 ownersh
ip, particularly South African, in key sectors. These include banking (where \li
ne \up0 \expndtw0\charscalex100 three of the four commercial banks are South Afr
ican); communications (where one \line \up0 \expndtw0\charscalex100 of the two
mobile operators is South African, and South African investors also have \line \
up0 \expndtw0\charscalex100 a stake in the single fixed line operator); transpor
t (where South African Airlink is the \line \up0 \expndtw-1\charscalex100 single
commercial air transport provider operating between Lesotho and South Africa \l
ine \up0 \expndtw0\charscalex100 following the closure of Lesotho Airways); tour
ism (where several top hotels belong \line \up0 \expndtw-1\charscalex100 to Sout
h African chains); and distribution (i.e. wholesale, retail and franchising wher
e \line \up0 \expndtw-1\charscalex100 a variety of South African interests hold
significant market-share in many outlets from \line \up0 \expndtw0\charscalex103
clothing, supermarkets, fast-food, furniture, and so on). It is difficult to sa
y to what \line \up0 \expndtw-1\charscalex100 extent this level of foreign owner
ship is problematic.\ul0\super\cf16\f17\fs23 34\ul0\nosupersub\cf5\f6\fs24 Howe
ver, it would be desirable \line \up0 \expndtw-2\charscalex100 if national polic
y on services (as it should in other sectors) would provide for a greater \line
\up0 \expndtw0\charscalex100 'indigenous' stake in the ownership of some of thes
e industries.\ul0\super\cf16\f17\fs23 35\ul0\nosupersub\cf5\f6\fs24 A great cha
llenge \line \up0 \expndtw-1\charscalex100 for the Ministry of Trade, Industry,
Cooperatives and Marketing (MTICM) is to nurture \line \up0 \expndtw0\charscalex
104 local entrepreneurs who can develop services firms, and to impose conditions
on \line \up0 \expndtw-2\charscalex100 foreign investors, for example, to enter
into joint ventures with locals.\ul0\super\cf16\f17\fs23 36 \par\pard\ql \li141
8\sb0\sl-276\slmult0 \par\pard\ql\li1418\sb245\sl-276\slmult0 \up0 \expndtw-2\ch
arscalex100 \ul0\nosupersub\cf13\f14\fs24 4 Constraints faced by services supp
liers and exporters in Lesotho \par\pard\qj \li1418\sb0\sl-413\slmult0 \par\pard
\qj\li1418\ri1219\sb118\sl-413\slmult0 \up0 \expndtw0\charscalex103 \ul0\nosuper
sub\cf5\f6\fs24 Several studies have looked at the challenges facing services fi
rms in developing \line \up0 \expndtw0\charscalex100 countries\ul0\super\cf16\f1
7\fs23 37\ul0\nosupersub\cf5\f6\fs24 and the experience in Lesotho has confirme
d some of their conclusions \line \up0 \expndtw-1\charscalex100 as set out below
. The challenges affecting services firms in the private sector directly \line \
up0 \expndtw-1\charscalex100 affect Lesotho\u8217?s negotiating interests on ser
vices. If the private sector is weak, and \par\pard\qj \li1418\sb0\sl-230\slmult
0 \par\pard\qj\li1418\sb0\sl-230\slmult0 \par\pard\qj\li1418\ri1239\sb139\sl-230
\slmult0\fi0 \up0 \expndtw0\charscalex105 \ul0\super\cf17\f18\fs20\ul0\super\cf1
7\f18\fs19 34\ul0\nosupersub\cf18\f19\fs20 With reference to South African inve
stment in Lesotho, some commentators have argued that \up0 \expndtw-2\charscalex
100 certain South African companies, while being regional leaders, are not globa

lly competitive. As a result \up0 \expndtw0\charscalex102 of these companies hav

ing a 'first mover' advantage on the continent, the host countries might find \u
p0 \expndtw0\charscalex100 themselves locked in with an investor that is not nec
essarily providing the most competitive service, \up0 \expndtw0\charscalex100 be
aring in mind their domestic market might be too small to attract competition fr
om other investors. \up0 \expndtw0\charscalex104 An example of this is the high
cost, comparatively speaking, of telecoms and banking services in \up0 \expndtw1\charscalex100 South Africa. One could argue that South African firms in these
sectors, take their 'high-cost services'. \up0 \expndtw0\charscalex104 with them
into the continent and foist these expensive services upon the recipient countr
ies. See \up0 \expndtw-3\charscalex100 Manduna, Calvin. \ul0\nosupersub\cf6\f7\f
s20 Africans Investing in Africa.\ul0\nosupersub\cf18\f19\fs20 [Online]. Availa
ble: \par\pard\ql \li1418\sb10\sl-230\slmult0 \up0 \expndtw-3\charscalex100 {\fi
eld{\*\fldinst {HYPERLINK "http://www.tralac.org/scripts/content.php?id=3634/" }
}{\fldrslt {\ul0\nosupersub\cf32\f33\fs20\ul http://www.tralac.org/scripts/conte
nt.php?id=3634}}} \par\pard\ql \li1418\sb1\sl-217\slmult0 \up0 \expndtw-2\charsc
alex100 \ul0\super\cf17\f18\fs19 35\ul0\nosupersub\cf18\f19\fs20 This would be
a form of 'economic empowerment' for Lesotho nationals. \par\pard\qj \li1418\ri1
251\sb13\sl-230\slmult0\fi0 \up0 \expndtw0\charscalex104 \ul0\super\cf17\f18\fs1
9 36\ul0\nosupersub\cf18\f19\fs20 Formulating the appropriate policy mix to ens
ure 'broad ownership' by locals, and avoiding the \line \up0 \expndtw0\charscale
x105 emergence of an elite of local business is not a simple task, as experience
on the continent has \line \up0 \expndtw-2\charscalex100 shown. \par\pard\li141
8\sb7\sl-230\slmult0\fi0 \up0 \expndtw0\charscalex100 \ul0\super\cf17\f18\fs19 3
7\ul0\nosupersub\cf18\f19\fs20 Riddle, D.I. 2002. \ul0\nosupersub\cf6\f7\fs20 S
ervices Export Capacity in Developing Countries\ul0\nosupersub\cf18\f19\fs20 . P
aper prepared for the WTO\par\pard\li1418\sb1\sl-228\slmult0\fi0\tx6813\tx7983\t
x8678 \up0 \expndtw-1\charscalex100 Symposium on Assessment of Trade i
n Services,\tab \up0 \expndtw-1\charscalex100 15 March\tab \up0 \expndtw-1\c
harscalex100 2002.\tab \up0 \expndtw-1\charscalex100 [Online]. Available:\par\
pard\li1418\sb1\sl-230\slmult0\fi0 \up0 \expndtw-1\charscalex100 {\field{\*\fldi
nst {HYPERLINK "http://www.wto.org/english/tratop_e/serv_e/symp_mar02_riddle_e.d
oc/" }}{\fldrslt {\ul0\nosupersub\cf32\f33\fs20\ul http://www.wto.org/english/tr
atop_e/serv_e/symp_mar02_riddle_e.doc}}}\par\pard\ql \li1418\sb0\sl-322\slmult0
\par\pard\ql\li1418\sb76\sl-322\slmult0 \up0 \expndtw-12\charscalex90 \ul0\nosup
ersub\cf15\f16\fs28 14
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g17}{\bkmkend Pg17}\par\pard\li1418\sb0\sl-230\slmult0\par\pard\li1418\sb0\sl-23
0\slmult0\par\pard\li1418\sb94\sl-230\slmult0\fi0\tx8978 \up0 \expndtw-3\charsca
lex100 \ul0\nosupersub\cf6\f7\fs20 tralac Working Paper no. 8\tab \up0 \expndtw3\charscalex100 {\field{\*\fldinst {HYPERLINK "http://www.tralac.org/" }}{\fldrs
lt {\ul0\nosupersub\cf18\f19\fs20 www.tralac.org}}}\par\pard\qj \li1418\ri1220\s
b275\sl-412\slmult0 \up0 \expndtw0\charscalex100 \ul0\nosupersub\cf5\f6\fs24 lac
ks information on market access barriers in foreign markets or lacks the ability
to \up0 \expndtw0\charscalex105 either export such services or compete against
foreign suppliers in the domestic \up0 \expndtw-1\charscalex100 market, they
cannot develop a significant lobby and/or provide supporting \up0
\expndtw0\charscalex100 contributions to the negotiations process. Moreove
r, the fragmented nature of \up0 \expndtw0\charscalex100 domestic services f
irms (scattered across various services sectors) means that they \up0 \expndtw0\
charscalex106 find it difficult to speak with one voice when engaging the Govern
ment. Industry \up0 \expndtw0\charscalex100 associations and umbrella bodies in
Lesotho are often poorly organized or \ul0\nosupersub\cf22\f23\fs24 de facto \up
0 \expndtw0\charscalex100 \ul0\nosupersub\cf5\f6\fs24 no longer functioning. Eve
n where industry associations function relatively well, their \up0 \expndtw-3\ch
arscalex100 focus is predominantly on the domestic market and not exports. \par\
pard\qj \li1418\ri1219\sb407\sl-414\slmult0 \up0 \expndtw0\charscalex100 Domesti
c firms in Lesotho also face problems characteristic of other LDCs, such as \lin
e \up0 \expndtw0\charscalex100 difficulties accessing capital (including the lac
k of a government guarantor) owing to \line \up0 \expndtw0\charscalex100 the lac
k of collateral. Moreover, formal financial institutions tend to avoid lending t
o \line \up0 \expndtw0\charscalex100 perceived \u8216?high-risk\u8217? clients.
This means small firms can only resort to informal lines \line \up0 \expndtw0\ch
arscalex100 of credit, which often involve high interest rates. Normally the fai
lure to access credit \line \up0 \expndtw0\charscalex100 means firms are not in
a position to take risks or take advantage of possible market \line \up0 \expndt
w0\charscalex106 access opportunities. Firms are often unable to export due to l
ack of capacity to \line \up0 \expndtw-1\charscalex100 identify opportunities in
export markets or to take advantage of such opportunities. In \line \up0 \expnd
tw0\charscalex100 certain activities, such as education, training and consultanc
y, it was observed that \line \up0 \expndtw0\charscalex100 domestic firms some
times faced significant competition from foreign suppliers, \line \up0 \ex
pndtw-3\charscalex100 sometimes due to donor-funded projects in the case of cons
ultancies. \par\pard\qj \li1418\sb0\sl-413\slmult0 \par\pard\qj\li1418\ri1220\sb
14\sl-413\slmult0 \up0 \expndtw0\charscalex103 Domestic firms (and some governme
nt officials) repeatedly complained about the \up0 \expndtw-1\charscalex100 high
costs of telecoms and internet services. Both services are still to become read
ily \up0 \expndtw0\charscalex103 available outside of the urban areas. The
re is therefore an urgent need for \up0 \expndtw-1\charscalex100 Governmen
t to address these infrastructural issues, which affect the competitiveness \up0
\expndtw0\charscalex100 of local firms and their ability to supply certain serv
ices. It was observed that there is \up0 \expndtw0\charscalex105 as yet no Gover

nment strategy to promote services trade. The Lesotho National \up0 \expndtw0\ch
arscalex102 Development Corporation (LNDC) is the Government\u8217?s main parast
atal agency for \up0 \expndtw0\charscalex103 implementing the country's industri
al development policies. However, the LNDC\u8217?s \up0 \expndtw-1\charscalex100
focus is predominantly on industrial goods and hence there is no government age
ncy \up0 \expndtw-2\charscalex100 spearheading the development interests of serv
ices firms. \par\pard\li10221\sb0\sl-310\slmult0\par\pard\li10221\sb0\sl-310\slm
ult0\par\pard\li10221\sb0\sl-310\slmult0\par\pard\li10221\sb74\sl-310\slmult0\fi
0\tx10712 \up0 \expndtw-3\charscalex100 15\tab \up0 \expndtw-3\charscalex100 \ul
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{\shp {\*\shpinst\shpleft10295\shptop15730\shpright1219\shpbottom15742\shpfhdr0\
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g18}{\bkmkend Pg18}\par\pard\li1418\sb0\sl-230\slmult0\par\pard\li1418\sb0\sl-23
0\slmult0\par\pard\li1418\sb94\sl-230\slmult0\fi0\tx8798 \up0 \expndtw-3\charsca
lex100 \ul0\nosupersub\cf20\f21\fs20 tralac\ul0\nosupersub\cf6\f7\fs20 Working
Paper no. 8\tab \up0 \expndtw-3\charscalex100 {\field{\*\fldinst {HYPERLINK "htt
p://www.tralac.org/" }}{\fldrslt {\ul0\nosupersub\cf18\f19\fs20 www.tralac.org}}
}\par\pard\qj \li1418\ri1220\sb275\sl-412\slmult0 \up0 \expndtw0\charscalex103 \
ul0\nosupersub\cf5\f6\fs24 From the foregoing, it is not surprising that some mi
ght conclude that there is very \line \up0 \expndtw0\charscalex103 little to be
gained for domestic firms in the various services negotiations which the \line \
up0 \expndtw0\charscalex102 Government is currently engaged in. Indeed, Lesotho\
u8217?s interests would seem to be \line \up0 \expndtw0\charscalex108 mostly def
ensive. This means ensuring that services concessions will result in \line \up0
\expndtw0\charscalex103 development gains and that domestic firms are not
overwhelmed by foreign \line \up0 \expndtw0\charscalex105 competitors. It ha
s already been mentioned that Lesotho exports excess labour, \line \up0 \expndtw
-1\charscalex100 mostly into South Africa, and receives a significant amount of
income in remittances. \line \up0 \expndtw0\charscalex103 However, apart from mi
grant mine workers, the authorities were unable to provide \line \up0 \expndtw0\
charscalex110 data as to labour movement in other sectors, in terms of numbers o
f workers \line \up0 \expndtw0\charscalex100 (especially university graduates/pr
ofessionals/semi-skilled workers) leaving to work \line \up0 \expndtw0\charscale
x100 outside Lesotho; their destination countries; or whether this movement is t
emporary \line \up0 \expndtw0\charscalex109 or permanent. Hence, even if we conc

lude that Lesotho has an interest in the \line \up0 \expndtw0\charscalex102 move
ment of persons, in the absence of statistics as to sectors where suc
h \line \up0 \expndtw0\charscalex100 movements occur and the markets to which su
ch persons move, then it is difficult to \line \up0 \expndtw-3\charscalex100 for
mulate national policy on this issue. \par\pard\qj \li1418\sb0\sl-414\slmult0 \p
ar\pard\qj\li1418\ri1218\sb13\sl-414\slmult0 \up0 \expndtw0\charscalex105 The MT
ICM which is responsible for formulating, implementing and coordinating \line \u
p0 \expndtw0\charscalex109 Lesotho's industrial and trade policies has since tak
en an interest in domestic \line \up0 \expndtw0\charscalex102 services and expor
ts. It is hoped that this will result in the formulation of a services \line \up
0 \expndtw0\charscalex107 promotion strategy in the not too distant future. Part
of this strategy will have to \line \up0 \expndtw0\charscalex106 consider measu
res to promote and support domestic services firms in identified \line \up0 \exp
ndtw0\charscalex100 sectors. As a comparative example, firms in the garment indu
stry receive significant \line \up0 \expndtw0\charscalex107 assistance in the fo
rm of subsidies (rebates), a two-tier exchange rate to offset \line \up0 \expndt
w-2\charscalex100 against the strength of South African Rand and a concessionary
tax rate. \par\pard\ql \li1418\sb0\sl-276\slmult0 \par\pard\ql\li1418\sb244\sl276\slmult0 \up0 \expndtw-2\charscalex100 \ul0\nosupersub\cf13\f14\fs24 5 Chal
lenges facing Lesotho in the services negotiations \par\pard\qj \li1418\sb0\sl-4
12\slmult0 \par\pard\qj\li1418\ri1220\sb120\sl-412\slmult0 \up0 \expndtw0\charsc
alex100 \ul0\nosupersub\cf5\f6\fs24 The MTICM is responsible for formulating, im
plementing and coordinating Lesotho's \line \up0 \expndtw0\charscalex102 industr
ial and trade policies. The MTICM has faced considerable challenges in the \line
\up0 \expndtw-1\charscalex100 services negotiations, both in terms of technical
and institutional capacity, and also in \line \up0 \expndtw0\charscalex100 coor
dinating the various ministries, private sector and non-state actors that ought
to \line \up0 \expndtw0\charscalex100 be contribute to national debate on servic
es. An analysis of Lesotho\u8217?s experience in \line \up0 \expndtw0\charscalex
100 the Uruguay Round is telling. Lesotho\u8217?s GATS schedule of specific comm
itments \par\pard\ql \li1418\sb0\sl-322\slmult0 \par\pard\ql\li1418\sb0\sl-322\s
lmult0 \par\pard\ql\li1418\sb139\sl-322\slmult0 \up0 \expndtw-12\charscalex90 \u
l0\nosupersub\cf15\f16\fs28 16
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{\shp {\*\shpinst\shpleft2166\shptop16030\shpright11602\shpbottom16045\shpfhdr0\
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g19}{\bkmkend Pg19}\par\pard\li1418\sb0\sl-230\slmult0\par\pard\li1418\sb0\sl-23
0\slmult0\par\pard\li1418\sb94\sl-230\slmult0\fi0\tx8978 \up0 \expndtw-3\charsca
lex100 \ul0\nosupersub\cf6\f7\fs20 tralac Working Paper no. 8\tab \up0 \expndtw3\charscalex100 {\field{\*\fldinst {HYPERLINK "http://www.tralac.org/" }}{\fldrs
lt {\ul0\nosupersub\cf18\f19\fs20 www.tralac.org}}}\par\pard\qj \li1418\ri1220\s
b277\sl-410\slmult0 \up0 \expndtw0\charscalex102 \ul0\nosupersub\cf5\f6\fs24 con
tains commitments in some 85 sub-sectors and activities out of a possible 155. \
line \up0 \expndtw0\charscalex102 This is similar to commitments made by some mi
ddle income countries and differs \line \up0 \expndtw0\charscalex102 markedly fr
om other LDCs, the majority of whom made commitments in fewer than \par\pard\ql
\li1418\sb121\sl-276\slmult0 \up0 \expndtw0\charscalex100 20 sub-sectors or acti
vities. Lesotho\u8217?s commitments cover all but two sectors, that is \par\pard
\qj \li1418\ri1219\sb10\sl-415\slmult0 \up0 \expndtw0\charscalex100 (i) health\u
l0\super\cf16\f17\fs23 38\ul0\nosupersub\cf5\f6\fs24 and (ii) recreational, cul
tural and sporting services. According to officials \line \up0 \expndtw0\charsca
lex108 from the MTICM, towards the conclusion of the Uruguay Round, there was an
\line \up0 \expndtw0\charscalex111 urgency to become one of the founding Member
s of the WTO. It was rightly \line \up0 \expndtw0\charscalex100 recognized that
it would become difficult to negotiate favourable terms of accession \line \up0
\expndtw-1\charscalex100 after the establishment of the WTO. The truth of this f
act is clear if one considers that \line \up0 \expndtw0\charscalex108 low-income
countries, such as Moldova and the Kyrygz Republic had to make \line \up0 \expn
dtw0\charscalex105 commitments in nearly all activities as part of their terms o
f accession. However, \line \up0 \expndtw0\charscalex105 ironically, Lesotho fin
ds itself having made extensive initial commitments, whose \line \up0 \expndtw-2
\charscalex100 results might not be so different from those felt by some accedin
g countries. \par\pard\qj \li1418\ri1218\sb407\sl-413\slmult0 \up0 \expndtw0\cha
rscalex100 During the Uruguay Round, the MTICM established an interministerial c
ommittee, in \line \up0 \expndtw0\charscalex100 order to obtain inputs from stak
eholders as to the nature of policy in various sectors. \line \up0 \expndtw0\cha
rscalex102 These inputs then had to be transformed and formulated into
a schedule of \line \up0 \expndtw0\charscalex100 commitments. According to of
ficials, there was no real understanding at the time of \line \up0 \expndtw0\cha
rscalex105 what the WTO was all about. Indeed, Lesotho joined the Urug
uay Round \line \up0 \expndtw0\charscalex103 negotiations at a late stage and t
herefore did not put forward specific proposals to \line \up0 \expndtw0\charscal
ex102 address its national concerns. Officials also had a great deal of 'catchin
g up' to do. \line \up0 \expndtw0\charscalex103 Some Ministries were represented
in the interministerial committee by staff with a \line \up0 \expndtw-1\charsca
lex100 limited understanding of the prevailing policy in their respective minist
ries, especially \line \up0 \expndtw0\charscalex102 as it related to the trade n
egotiations. Indeed, in certain instances, representatives \line \up0 \expndtw-2
\charscalex100 confused practice with policy. There was also a lack of understan
ding of the technical \line \up0 \expndtw0\charscalex103 aspects of scheduling a
nd the MTICM did not have much time to meet repeatedly \line \up0 \expndtw0\char
scalex107 with stakeholders to discuss policy and scheduling issues. Moreover, a
s stated \line \up0 \expndtw0\charscalex106 earlier, the MTICM itself had limite
d capacity and therefore, was in a very weak \line \up0 \expndtw0\charscalex109
position to provide the required guidance to other stakeholders. In part, some \
line \up0 \expndtw-2\charscalex100 assistance was received from the WTO Secretar
iat in Geneva, which helped to clarify \line \up0 \expndtw-2\charscalex100 certa
in issues. The outcome of the exercise was the existing and rather extensive \pa
r\pard\qj \li1418\sb0\sl-230\slmult0 \par\pard\qj\li1418\sb0\sl-230\slmult0 \par
\pard\qj\li1418\ri1237\sb139\sl-230\slmult0 \up0 \expndtw0\charscalex106 \ul0\su
per\cf17\f18\fs20\ul0\super\cf17\f18\fs19 38\ul0\nosupersub\cf18\f19\fs20 Note,
however, that there may still be indirect implications for Lesotho\u8217?s heal
th sector, as the \up0 \expndtw0\charscalex104 country has made commitments for
health professionals, notably, in medical and dental services, \up0 \expndtw-2\c
harscalex100 veterinary services, midwives and nurses, physiotherapists and para
medical personnel. \par\pard\li10221\sb135\sl-310\slmult0\fi0\tx10712 \up0 \expn

dtw-3\charscalex100 \ul0\nosupersub\cf5\f6\fs24 17\tab \up0 \expndtw-3\charscale

x100 \ul0\nosupersub\cf15\f16\fs28 17
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0\slmult0\par\pard\li1418\sb94\sl-230\slmult0\fi0\tx8798 \up0 \expndtw-3\charsca
lex100 \ul0\nosupersub\cf20\f21\fs20 tralac\ul0\nosupersub\cf6\f7\fs20 Working
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p://www.tralac.org/" }}{\fldrslt {\ul0\nosupersub\cf18\f19\fs20 www.tralac.org}}
}\par\pard\qj \li1418\ri1220\sb277\sl-410\slmult0 \up0 \expndtw0\charscalex102 \
ul0\nosupersub\cf5\f6\fs24 schedule of commitments, when compared to those of ot
her LDCs and even some \up0 \expndtw0\charscalex100 developing countries. On
close scrutiny, certain commitments inscribed in the \up0 \expndtw-2\chars
calex100 schedule contain errors. Moreover, some do not accurately reflect Gover
nment policy \up0 \expndtw0\charscalex102 as it was then and even now. In certai
n instances, domestic legislation is still to be \up0 \expndtw-3\charscalex100 a
mended to reflect what is inscribed in the commitments. \par\pard\ql \li1418\sb0
\sl-276\slmult0 \par\pard\ql\li1418\sb265\sl-276\slmult0 \up0 \expndtw-2\charsca
lex100 \ul0\nosupersub\cf13\f14\fs24 6 Addressing the challenges in the presen
t negotiations \par\pard\qj \li1418\sb0\sl-415\slmult0 \par\pard\qj\li1418\ri121
9\sb95\sl-415\slmult0 \up0 \expndtw0\charscalex110 \ul0\nosupersub\cf5\f6\fs24 W
here do the above problems leave Lesotho today? At the outset it must be \line \
up0 \expndtw0\charscalex104 emphasized that there is very little time rem

aining in the present round of \line \up0 \expndtw0\charscalex103 negotiati

ons; and it is highly likely that the new WTO Director-General will seek to \lin
e \up0 \expndtw0\charscalex105 secure a conclusion to the round as early as poss
ible. Thus, whatever initiatives \line \up0 \expndtw0\charscalex100 officials in
Lesotho carry out in connection with the services negotiations, they need \line
\up0 \expndtw0\charscalex102 to be mindful of time. Bureaucratic decision makin
g in developing sectoral policies \line \up0 \expndtw0\charscalex105 must be r
emoved as far as possible, especially since services require the \line
\up0 \expndtw0\charscalex104 involvement of various line ministries. It is sugge
sted that in the present round of \line \up0 \expndtw0\charscalex103 negotiation
s, it would be sufficient for Lesotho to confine itself to making technical \lin
e \up0 \expndtw0\charscalex101 rectifications, and slight modification to i
ts schedules \up0 \expndtw0\charscalex101 (as several other WTO \par\pard\qj
\li1418\ri1220\sb0\sl-413\slmult0 \up0 \expndtw0\charscalex108 Members are doin
g). A technically improved Schedule of Commitments would \up0 \expndtw0\charscal
ex108 adequately reflect the current status quo in Lesotho; prioritize its devel
opment \up0 \expndtw-1\charscalex100 priorities through the inscription of appro
priate conditions; and provide a sound basis \up0 \expndtw-3\charscalex100 for f
uture liberalisation. \par\pard\qj \li1418\sb0\sl-413\slmult0 \par\pard\qj\li141
8\ri1220\sb1\sl-413\slmult0 \up0 \expndtw0\charscalex104 It is encouraging that
officials in the MTICM recognize that they were ill-prepared \line \up0 \expndtw
-1\charscalex100 when negotiating on services in the Uruguay Round. There is cer
tainly a desire to be \line \up0 \expndtw0\charscalex105 better organized in the
current negotiations and also to improve institutional and \line \up0 \expndtw0
\charscalex102 technical capacity. Although Lesotho is yet to submit any individ
ual requests or an \line \up0 \expndtw-2\charscalex100 offer, officials have beg
un to organize themselves institutionally so that the necessary \line \up0 \expn
dtw0\charscalex110 preparatory work can be carried out. These efforts coincide w
ith the sectoral \line \up0 \expndtw0\charscalex107 assessments that UNCTAD will
be assisting Lesotho with. A working group on \line \up0 \expndtw0\charscalex10
4 services has been established, and should be formalized shortly to i
nclude \line \up0 \expndtw0\charscalex106 representatives from various ministrie
s, the private sector and non-state actors. \line \up0 \expndtw0\charscalex103 H
owever, this time around, it is envisaged that considerable effort will be made
to \par\pard\ql \li1418\sb0\sl-322\slmult0 \par\pard\ql\li1418\sb0\sl-322\slmult
0 \par\pard\ql\li1418\sb139\sl-322\slmult0 \up0 \expndtw-12\charscalex90 \ul0\no
supersub\cf15\f16\fs28 18
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}}\par\pard\sect\sectd\fs24\paperw11900\paperh16840\pard\sb0\sl-240{\bkmkstart P
g21}{\bkmkend Pg21}\par\pard\li1418\sb0\sl-230\slmult0\par\pard\li1418\sb0\sl-23
0\slmult0\par\pard\li1418\sb94\sl-230\slmult0\fi0\tx8978 \up0 \expndtw-3\charsca
lex100 \ul0\nosupersub\cf6\f7\fs20 tralac Working Paper no. 8\tab \up0 \expndtw3\charscalex100 {\field{\*\fldinst {HYPERLINK "http://www.tralac.org/" }}{\fldrs
lt {\ul0\nosupersub\cf18\f19\fs20 www.tralac.org}}}\par\pard\qj \li1418\ri1219\s
b276\sl-411\slmult0 \up0 \expndtw0\charscalex107 \ul0\nosupersub\cf5\f6\fs24 dis
cuss sectoral policies and to assess existing commitments. Indeed, it will be \l
ine \up0 \expndtw-1\charscalex100 interesting to investigate what the result of
having scheduled extensive commitments \line \up0 \expndtw-2\charscalex100 in th
e Uruguay Round has been, and whether foreign suppliers have entered Lesotho \li
ne \up0 \expndtw-1\charscalex100 in any significant numbers. International organ
izations providing technical assistance \line \up0 \expndtw0\charscalex103 can
certainly play a meaningful role here, in terms of providing training
for \line \up0 \expndtw0\charscalex100 stakeholders on the GATS and the broader
negotiations, providing assistance in the \line \up0 \expndtw0\charscalex110 de
velopment of a national policy for the promotion of services industries and \lin
e \up0 \expndtw-3\charscalex100 assisting with assessments. \par\pard\qj \li1418
\sb0\sl-410\slmult0 \par\pard\qj\li1418\ri1220\sb20\sl-410\slmult0 \up0 \expndtw
0\charscalex104 In attempting to formulate sectoral policies, officials face sig
nificant constraints in \line \up0 \expndtw0\charscalex104 terms of obtaining re
liable and comprehensive data on trade in services. Without \line \up0 \expndtw0
\charscalex108 such data it is difficult for officials to measure sectors of str
ength \up0 \expndtw-3\charscalex100 (comparative \par\pard\qj \li1418\ri1219\sb8
\sl-413\slmult0 \up0 \expndtw0\charscalex109 advantage), growth potential or wea
kness, or identify where their offensive or \line \up0 \expndtw0\charscalex100 d
efensive interests lie, except in very general terms. It is suggested that a pro
ject to \line \up0 \expndtw-1\charscalex100 establish permanent mechanisms for t
he collection, analysis and storage of services \line \up0 \expndtw0\charscalex1
03 data is required.\ul0\super\cf16\f17\fs23 39\ul0\nosupersub\cf5\f6\fs24 I
ndeed, such data will be valuable not just for the WTO \line \up0 \exp
ndtw0\charscalex103 negotiations, but also for bilateral FTA negotiations. Moreo
ver, improved data can \line \up0 \expndtw0\charscalex100 help policy makers to
identify areas where their promotion strategies are working or \line \up0 \expnd
tw-1\charscalex100 failing. Whatever activities on improvement of data are embar
ked upon, these should \line \up0 \expndtw0\charscalex108 be consistent with ini
tiatives on data collection being undertaken under SACU \line \up0 \expndtw0\cha
rscalex104 structures. In fact, it is suggested that the ideal situation would b
e for SACU as a \line \up0 \expndtw0\charscalex100 whole to eventually develop u
niform mechanisms for dealing with data on services. \line \up0 \expndtw0\charsc
alex106 This is so, especially if, as is hoped, SACU will develop regional polic
ies on the \line \up0 \expndtw-2\charscalex100 liberalisation and promotion of i
ntra-SACU trade in services. Given the high degree of \line \up0 \expndtw-2\char
scalex100 interlinkage between Lesotho and South Africa\u8217?s economies, Lesot
ho should strive to \line \up0 \expndtw0\charscalex100 exploit its structural co
mplementarities with its larger neighbour and identify specific \line \up0 \expn
dtw0\charscalex100 services activities which can be developed and exported into
the South African and \line \up0 \expndtw0\charscalex108 broader SACU market. Me
asures that affect the mode 4 supply of services by \line \up0 \expndtw0\charsca
lex103 Lesotho nationals into South Africa, such as permits or work vi
sas and the \line \up0 \expndtw0\charscalex104 recognition of qualifications n
eed to be identified in order to develop proposals to \line \up0 \expndtw-3\char
scalex100 address these issues. \par\pard\ql \li1418\sb0\sl-230\slmult0 \par\par
d\ql\li1418\sb0\sl-230\slmult0 \par\pard\ql\li1418\sb0\sl-230\slmult0 \par\pard\
ql\li1418\sb0\sl-230\slmult0 \par\pard\ql\li1418\sb139\sl-230\slmult0 \up0 \expn
dtw-3\charscalex100 \ul0\super\cf17\f18\fs20\ul0\super\cf17\f18\fs19 39\ul0\nosu
persub\cf18\f19\fs20 Existing initiatives focus on trade data for goods. \par\p

ard\li10221\sb135\sl-310\slmult0\fi0\tx10712 \up0 \expndtw-3\charscalex100 \ul0\

nosupersub\cf5\f6\fs24 19\tab \up0 \expndtw-3\charscalex100 \ul0\nosupersub\cf15
\f16\fs28 19
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{\shp {\*\shpinst\shpleft1418\shptop14895\shpright4298\shpbottom14915\shpfhdr0\s
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g22}{\bkmkend Pg22}\par\pard\li1418\sb0\sl-230\slmult0\par\pard\li1418\sb0\sl-23
0\slmult0\par\pard\li1418\sb94\sl-230\slmult0\fi0\tx8798 \up0 \expndtw-3\charsca
lex100 \ul0\nosupersub\cf20\f21\fs20 tralac\ul0\nosupersub\cf6\f7\fs20 Working
Paper no. 8\tab \up0 \expndtw-3\charscalex100 {\field{\*\fldinst {HYPERLINK "htt
p://www.tralac.org/" }}{\fldrslt {\ul0\nosupersub\cf18\f19\fs20 www.tralac.org}}
}\par\pard\qj \li1418\ri1218\sb274\sl-413\slmult0 \up0 \expndtw0\charscalex100 \
ul0\nosupersub\cf5\f6\fs24 The MTICM also faces problems due to the departure of
staff and the attendant loss \up0 \expndtw0\charscalex106 of institutional memo
ry. There are no easy ways to address this situation, which \up0 \expndtw0\chars
calex103 might require balancing staff needs for further training, and
the provision of \up0 \expndtw-3\charscalex100 competitive remuneration. \par\
pard\qj \li1418\ri1219\sb407\sl-413\slmult0 \up0 \expndtw-1\charscalex100 The in
volvement of the private sector in the trade negotiations is crucial since it is
the \line \up0 \expndtw-1\charscalex100 private sector that is involved in a si
gnificant share of trade. A major challenge facing \line \up0 \expndtw0\charscal
ex104 the MTICM is to increase awareness and understanding on trade in services
and \line \up0 \expndtw0\charscalex100 opportunities (both domestic and for expo
rt) among local firms. Government support \line \up0 \expndtw0\charscalex100 to

the private sector is required to help address certain issues, for example, barr
iers \line \up0 \expndtw-2\charscalex100 to entry in foreign markets, access to
capital and so on. The MTICM needs to embark \line \up0 \expndtw0\charscalex107
on an information dissemination campaign (also for various line ministries) and
\line \up0 \expndtw0\charscalex105 organize services industry associations into
a coherent group through which the \line \up0 \expndtw0\charscalex103 parties ca
n engage in dialogue, identify the needs and interests of local firms and \line
\up0 \expndtw0\charscalex110 develop strategies to address these. One suggestion
would be to establish a \line \up0 \expndtw-1\charscalex100 permanent 'desk' in
the MTICM that deals with industry queries and training activities \line \up0 \
expndtw-1\charscalex100 concerning trade in services. Private sector input is al
so necessary when conducting \line \up0 \expndtw-3\charscalex100 national sector
al assessments in order to develop sectoral policies. \par\pard\qj \li1418\sb0\s
l-413\slmult0 \par\pard\qj\li1418\ri1218\sb14\sl-413\slmult0 \up0 \expndtw0\char
scalex106 The dearth of internal technical expertise affects not only the abilit
y to deal with \up0 \expndtw0\charscalex107 services nationally, but also limits
the amount of support which the MTICM can \up0 \expndtw0\charscalex100 provide
to negotiators in Geneva. To some extent this weakness has been mitigated \up0 \
expndtw0\charscalex103 by the existence of an LDC group in the WTO which adopts
common positions on \up0 \expndtw0\charscalex104 certain issues. However, it is
still necessary and desirable for Lesotho to develop \up0 \expndtw-1\charscalex1
00 significant institutional capacity to enable it to be an active player in its
own right and \up0 \expndtw-3\charscalex100 within the LDC group as well. \par\
pard\qj \li1418\ri1219\sb407\sl-413\slmult0 \up0 \expndtw0\charscalex104 Finally
, it is worth mentioning that the GATS Preamble, Articles IV and XIX:2, the \lin
e \up0 \expndtw0\charscalex102 Modalities for the Special Treatment for Least De
veloped Country Members in the \line \up0 \expndtw0\charscalex107 Negotiations o
n Trade in Services\ul0\super\cf16\f17\fs23 40\ul0\nosupersub\cf5\f6\fs24 and t
he Guidelines and Procedures for the \line \up0 \expndtw0\charscalex100 Negotiat
ions on Trade in Services\ul0\super\cf16\f17\fs23 41\ul0\nosupersub\cf5\f6\fs24
all contain various provisions that recognize the \par\pard\ql \li1418\sb0\sl-2
30\slmult0 \par\pard\ql\li1418\sb0\sl-230\slmult0 \par\pard\ql\li1418\sb0\sl-230
\slmult0 \par\pard\ql\li1418\sb149\sl-230\slmult0 \up0 \expndtw-3\charscalex100
\ul0\super\cf17\f18\fs20\ul0\super\cf17\f18\fs19 40\ul0\nosupersub\cf18\f19\fs20
WTO Document No. TN/S/13 (5 September, 2003). \par\pard\ql \li1418\sb1\sl-217\
slmult0 \up0 \expndtw-3\charscalex100 \ul0\super\cf17\f18\fs19 41\ul0\nosupersub
\cf18\f19\fs20 WTO Document No. S/L/93 (29 March, 2001). \par\pard\ql \li1418\s
b0\sl-322\slmult0 \par\pard\ql\li1418\sb95\sl-322\slmult0 \up0 \expndtw-12\chars
calex90 \ul0\nosupersub\cf15\f16\fs28 20
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g23}{\bkmkend Pg23}\par\pard\li1418\sb0\sl-230\slmult0\par\pard\li1418\sb0\sl-23
0\slmult0\par\pard\li1418\sb94\sl-230\slmult0\fi0\tx8978 \up0 \expndtw-3\charsca
lex100 \ul0\nosupersub\cf6\f7\fs20 tralac Working Paper no. 8\tab \up0 \expndtw3\charscalex100 {\field{\*\fldinst {HYPERLINK "http://www.tralac.org/" }}{\fldrs
lt {\ul0\nosupersub\cf18\f19\fs20 www.tralac.org}}}\par\pard\qj \li1418\ri1219\s
b275\sl-412\slmult0 \up0 \expndtw0\charscalex102 \ul0\nosupersub\cf5\f6\fs24 neg
otiating difficulties facing LDCs and their special economic situation.
This \up0 \expndtw0\charscalex104 includes the lack of institutional and human
capacities to analyse and respond to \up0 \expndtw-1\charscalex100 requests and
offers. Having highlighted above some of the difficulties facing Lesotho, \up0 \
expndtw0\charscalex105 other WTO Members should take heed of these issues in the
negotiations when \up0 \expndtw0\charscalex100 making requests to Lesotho and o
ther LDCs and also in allowing sufficient flexibility \up0 \expndtw0\charscalex1
06 for them. Lesotho\u8217?s negotiators should also be mindful of the fact that
LDCs are \up0 \expndtw0\charscalex107 entitled to make limited commitments in t
erms of sectors, modes of supply and \up0 \expndtw0\charscalex106 scope, which a
re compatible with their development, trade and financial needs. \up0 \expndtw0\
charscalex104 Moreover, they are entitled to attach conditions to the provision
of market access \up0 \expndtw0\charscalex100 aimed at achieving the objectives
of GATS Article IV, i.e. increasing the participation \up0 \expndtw-3\charscalex
100 of developing countries in trade in services.\ul0\super\cf16\f17\fs23 42 \pa
r\pard\qj \li1418\sb0\sl-413\slmult0 \par\pard\qj\li1418\ri1218\sb15\sl-413\slmu
lt0 \up0 \expndtw0\charscalex100 \ul0\nosupersub\cf5\f6\fs24 An analysis of Leso
tho\u8217?s GATS schedule of specific commitments reveals that such \line \up0 \
expndtw0\charscalex100 conditions aimed at operationalizing GATS Article IV are
virtually non-existent, save \line \up0 \expndtw-1\charscalex100 for a proviso o
n Mode 4 under horizontal commitments which states that 'enterprises \line \up0
\expndtw0\charscalex100 must also provide for training in higher skills for the
locals to enable them to assume \line \up0 \expndtw-1\charscalex100 specialized
roles'. It is suggested that Lesotho needs to consider ways in which such \line
\up0 \expndtw0\charscalex100 conditions can be built into the schedule based on
predetermined sectoral policies. \line \up0 \expndtw0\charscalex100 Analysis o
f Lesotho\u8217?s investment framework reveals that although certa
in \line \up0 \expndtw0\charscalex104 \u8216?development\u8217? provisions are i
ncluded, for example, requirements for investors to \line \up0 \expndtw0\charsca
lex104 transfer skills, these are generally not \u8216?policed\u8217? by authori
ties. A clear example of \line \up0 \expndtw0\charscalex106 failure to monitor i
mplementation of \u8216?development\u8217? conditions is in the garments \line \
up0 \expndtw0\charscalex102 sector, where despite the existence of some firms fo
r over a decade, management \line \up0 \expndtw0\charscalex108 and more technica
l skills still remain with expatriates. Therefore, it is crucial to \line \up0 \
expndtw0\charscalex100 monitor implementation of conditions if Lesotho is

to ensure that the desired \line \up0 \expndtw-3\charscalex100 development

gains materialize. \par\pard\qj \li1418\sb0\sl-226\slmult0 \par\pard\qj\li1418\s
b0\sl-226\slmult0 \par\pard\qj\li1418\sb0\sl-226\slmult0 \par\pard\qj\li1418\sb0
\sl-226\slmult0 \par\pard\qj\li1418\sb0\sl-226\slmult0 \par\pard\qj\li1418\sb0\s
l-226\slmult0 \par\pard\qj\li1418\sb0\sl-226\slmult0 \par\pard\qj\li1418\sb0\sl226\slmult0 \par\pard\qj\li1418\sb0\sl-226\slmult0 \par\pard\qj\li1418\sb0\sl-22
6\slmult0 \par\pard\qj\li1418\ri1231\sb182\sl-226\slmult0\fi0 \up0 \expndtw0\cha
rscalex100 \ul0\super\cf17\f18\fs20\ul0\super\cf17\f18\fs19 42\ul0\nosupersub\cf
18\f19\fs20 A communication from Cuba and other developing countries noted that
GATS Article IV and other \line \up0 \expndtw0\charscalex104 declarations in fa
vour of developing countries have so far not been implemented, and there is an \
line \up0 \expndtw-1\charscalex100 urgent need to rectify this shortcoming. See
Communication from Cuba, Pakistan, Senegal, Sri Lanka, \line \up0 \expndtw-1\cha
rscalex100 Tanzania, Uganda, Zambia and Zimbabwe. WTO Document No. S/CSS/W/131 (
6 December 2001). \par\pard\li10221\sb136\sl-310\slmult0\fi0\tx10712 \up0 \expnd
tw-3\charscalex100 \ul0\nosupersub\cf5\f6\fs24 21\tab \up0 \expndtw-3\charscalex
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0\slmult0\par\pard\li1418\sb94\sl-230\slmult0\fi0\tx8798 \up0 \expndtw-3\charsca
lex100 \ul0\nosupersub\cf20\f21\fs20 tralac\ul0\nosupersub\cf6\f7\fs20 Working
Paper no. 8\tab \up0 \expndtw-3\charscalex100 {\field{\*\fldinst {HYPERLINK "htt

p://www.tralac.org/" }}{\fldrslt {\ul0\nosupersub\cf18\f19\fs20 www.tralac.org}}

}\par\pard\ql \li1418\sb0\sl-276\slmult0 \par\pard\ql\li1418\sb111\sl-276\slmult
0 \up0 \expndtw0\charscalex103 \ul0\nosupersub\cf13\f14\fs24 7 Conclusion \par
\pard\qj \li1418\sb0\sl-414\slmult0 \par\pard\qj\li1418\ri1218\sb96\sl-414\slmul
t0 \up0 \expndtw-1\charscalex100 \ul0\nosupersub\cf5\f6\fs24 This paper has soug
ht to provide a brief sketch of some of the problems that Lesotho \line \up0 \ex
pndtw0\charscalex104 has faced in the past and continues to face when negotiatin
g on services. These \line \up0 \expndtw0\charscalex107 problems are not unique
to Lesotho but also affect other LDCs and even some \line \up0 \expndtw0\charsca
lex100 developing countries, albeit in varying degrees. The problems relate firs
t to internal \line \up0 \expndtw0\charscalex106 constraints within the MTICM, w
hich is the Ministry responsible for coordinating \line \up0 \expndtw0\charscale
x109 national activities on services. Thus the MTICM needs to address institutio
nal \line \up0 \expndtw0\charscalex100 capacity constraints, so that it can be i
n a position to provide guidance to other line \line \up0 \expndtw0\charscalex10
0 ministries and the private sector in the negotiations. The second problem rela
tes to \line \up0 \expndtw0\charscalex100 the fragmented nature and weakness of
the private sector. Domestic services firms \line \up0 \expndtw0\charscalex103 a
re generally inward looking, not focused on exports,\ul0\super\cf16\f17\fs23 43\
ul0\nosupersub\cf5\f6\fs24 and face competition from \line \up0 \expndtw0\chars
calex103 South African and other foreign firms. This competition may well increa
se with the \line \up0 \expndtw0\charscalex100 signing of the EPAs and the U.S.
- SACU FTA. Hence, the MTICM needs to embark \line \up0 \expndtw0\charscalex103
on a comprehensive programme to identify sectors and activities where Lesotho\u8
217?s \line \up0 \expndtw-2\charscalex100 comparative advantage lies, and develo
p measures to promote and support domestic \line \up0 \expndtw-2\charscalex100 f
irms to become more competitive in these sectors. At this stage, it might be too
early \line \up0 \expndtw0\charscalex112 to expect the private sector to provid
e support to the MTICM in the services \line \up0 \expndtw0\charscalex100 negoti
ations, as is the case in more developed countries. Hence, the MTICM really \lin
e \up0 \expndtw-3\charscalex100 has to take the lead in the negotiations to a la
rge extent. \par\pard\qj \li1418\ri1219\sb406\sl-415\slmult0 \up0 \expndtw-1\cha
rscalex100 The lack of reliable data can be a significant constraint when develo
ping strategies to \line \up0 \expndtw0\charscalex100 promote trade in services
or measuring their subsequent success. It was suggested \line \up0 \expndtw0\cha
rscalex107 that Lesotho would do well to embark on a programme to significantly
improve \line \up0 \expndtw0\charscalex106 mechanisms for the collection, analys
is and storage of data. There is significant \line \up0 \expndtw0\charscalex103
scope for technical assistance in addressing all the above challenges. It has be
en \line \up0 \expndtw-1\charscalex100 cautioned that technical assistance shoul
d ensure that domestic capacity is built and \line \up0 \expndtw0\charscalex102
that skills are transferred to ensure that there is domestic capacity to evaluat
e and \line \up0 \expndtw0\charscalex100 implement policy recommendations. Othe
r WTO Members should be mindful of the \line \up0 \expndtw0\charscalex100 seriou
s constraints that face LDCs both in the negotiations, and in terms of trying to
\line \up0 \expndtw0\charscalex100 develop their services capacity. Members sho
uld therefore afford LDCs the flexibility \par\pard\qj \li1418\sb0\sl-230\slmult
0 \par\pard\qj\li1418\sb0\sl-230\slmult0 \par\pard\qj\li1418\ri1244\sb38\sl-230\
slmult0 \up0 \expndtw-1\charscalex100 \ul0\super\cf17\f18\fs20\ul0\super\cf17\f1
8\fs19 43\ul0\nosupersub\cf18\f19\fs20 This is not to suggest that the promotio
n of exports should be the sole priority. Rather, there should \up0 \expndtw0\ch
arscalex103 be a dual and complementary approach, which targets and promotes cer
tain services activities for \up0 \expndtw-3\charscalex100 export and other acti
vities for the domestic market. \par\pard\ql \li1418\sb0\sl-322\slmult0 \par\par
d\ql\li1418\sb92\sl-322\slmult0 \up0 \expndtw-12\charscalex90 \ul0\nosupersub\cf
15\f16\fs28 22
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g25}{\bkmkend Pg25}\par\pard\li1418\sb0\sl-230\slmult0\par\pard\li1418\sb0\sl-23
0\slmult0\par\pard\li1418\sb94\sl-230\slmult0\fi0\tx8978 \up0 \expndtw-3\charsca
lex100 \ul0\nosupersub\cf6\f7\fs20 tralac Working Paper no. 8\tab \up0 \expndtw3\charscalex100 {\field{\*\fldinst {HYPERLINK "http://www.tralac.org/" }}{\fldrs
lt {\ul0\nosupersub\cf18\f19\fs20 www.tralac.org}}}\par\pard\qj \li1418\ri1218\s
b274\sl-413\slmult0 \up0 \expndtw0\charscalex103 \ul0\nosupersub\cf5\f6\fs24 to
pursue their development objectives, and provide them with support to develop \l
ine \up0 \expndtw0\charscalex100 and strengthen their domestic firms as set out
in the GATS, the Modalities for LDCs \line \up0 \expndtw0\charscalex106 and the
Guidelines for the Services Negotiations. This includes the provision of \line \
up0 \expndtw0\charscalex100 market access in sectors and modes of supply of inte
rest to LDCs. Lastly, given the \line \up0 \expndtw-1\charscalex100 current narr
ow basket of exports, the majority of which are dangerously reliant on the \line
\up0 \expndtw0\charscalex110 continued existence of a margin of preference and
foreign investment, it is in \line \up0 \expndtw0\charscalex103 Lesotho\u8217?s
interests to continue efforts aimed at investigating possibilities for
\line \up0 \expndtw0\charscalex105 diversification. By raising the profile of se
rvices, the MTICM can explore ways to \line \up0 \expndtw0\charscalex104 develop
various services sectors and activities and generate much needed \line
\up0 \expndtw-3\charscalex100 employment and income. \par\pard\ql \li1418\sb0\s
l-276\slmult0 \par\pard\ql\li1418\sb245\sl-276\slmult0 \up0 \expndtw0\charscalex
102 \ul0\nosupersub\cf13\f14\fs24 8 Bibliography \par\pard\ql \li1418\sb0\sl-4
13\slmult0 \par\pard\ql\li1418\ri1219\sb118\sl-413\slmult0 \up0 \expndtw-2\chars
calex100 \ul0\nosupersub\cf5\f6\fs24 Abugattas Majluf,\ul0\nosupersub\cf18\f19\f
s20 \ul0\nosupersub\cf5\f6\fs24 L\ul0\nosupersub\cf18\f19\fs20 . \ul0\nosupersu

b\cf5\f6\fs24 2005. \ul0\nosupersub\cf22\f23\fs24 WTO and FTAA Services Trade Ne

gotiations: Challenges \line \up0 \expndtw-2\charscalex100 for Developing Countr
ies with Special Reference to CARICOM.\ul0\nosupersub\cf5\f6\fs24 [Online]. Ava
ilable: \line \up0 \expndtw-2\charscalex100 {\field{\*\fldinst {HYPERLINK "http:
//www.crnm.org/documents/studies/wto%20&%20ftaa%20services%20trade/" }}{\fldrslt
{\ul0\nosupersub\cf33\f34\fs24\ul http://www.crnm.org/documents/studies/WTO%20&
%20FTAA%20Services%20Trade}}} \line \up0 \expndtw-3\charscalex100 \ul0\nosupersu
b\cf33\f34\fs24\ul %20Negotiations%20-%20Majluf.pdf \par\pard\li1418\sb0\sl-276\
slmult0\par\pard\li1418\sb262\sl-276\slmult0\fi0\tx5138\tx8233 \up0 \expndtw0\ch
arscalex101 \ul0\nosupersub\cf5\f6\fs24 Central Bank of Lesotho.\tab \up0
\expndtw0\charscalex101 2004. \ul0\nosupersub\cf22\f23\fs24
Annual Report\u
l0\nosupersub\cf5\f6\fs24 .\tab \up0 \expndtw0\charscalex101 [Online]. Availab
le:\par\pard\li1418\sb138\sl-276\slmult0\fi0 \up0 \expndtw0\charscalex101 {\fiel
d{\*\fldinst {HYPERLINK "http://www.centralbank.org.ls/publications/full%20lesot
ho_areport.pdf/" }}{\fldrslt {\ul0\nosupersub\cf33\f34\fs24\ul http://www.centra
lbank.org.ls/publications/FULL%20Lesotho_AReport.PDF}}}\par\pard\ql \li1418\sb0\
sl-276\slmult0 \par\pard\ql\li1418\sb257\sl-276\slmult0 \up0 \expndtw-2\charscal
ex100 \ul0\nosupersub\cf5\f6\fs24 The Economist Intelligence Unit. 2005. \ul0\n
osupersub\cf22\f23\fs24 Country Report: Lesotho, July 2005. \par\pard\qj \li1418
\ri1219\sb26\sl-420\slmult0 \up0 \expndtw0\charscalex100 \ul0\nosupersub\cf5\f6\
fs24 Manduna, C. 2005. \ul0\nosupersub\cf22\f23\fs24 The WTO Services Negotiatio
ns: An Analysis of the GATS and \line \up0 \expndtw-2\charscalex100 Issues of In
terest for LDCs\ul0\nosupersub\cf5\f6\fs24 , South Centre T.R.A.D.E. Working Pap
er No. 23. [Online]. \line \up0 \expndtw-3\charscalex100 Available: \par\pard\qj
\li1418\ri1378\sb0\sl-420\slmult0 \up0 \expndtw-2\charscalex100 {\field{\*\fldi
nst {HYPERLINK "http://www.southcentre.org/tadp_webpage/research_papers/services
_project/trade_/" }}{\fldrslt {\ul0\nosupersub\cf33\f34\fs24\ul http://www.south
centre.org/tadp_webpage/research_papers/services_project/trade_}}} \line \up0 \e
xpndtw-3\charscalex100 \ul0\nosupersub\cf33\f34\fs24\ul wp23_dec04.pdf \par\pard
\ql \li1418\ri1271\sb380\sl-420\slmult0 \up0 \expndtw-2\charscalex100 \ul0\nosup
ersub\cf5\f6\fs24 Riddle, D.I. 2002. \ul0\nosupersub\cf22\f23\fs24 Services Expo
rt Capacity in Developing Countries\ul0\nosupersub\cf5\f6\fs24 . Paper prepared
\up0 \expndtw-2\charscalex100 for the WTO Symposium on Assessment of Trade in Se
rvices, 15 March 2002. \line \up0 \expndtw-3\charscalex100 [Online]. Available:
\par\pard\ql \li1418\sb90\sl-288\slmult0 \up0 \expndtw-3\charscalex100 {\field{\
*\fldinst {HYPERLINK "http://www.wto.org/english/tratop_e/serv_e/symp_mar02_ridd
le_e.doc/" }}{\fldrslt {\ul0\nosupersub\cf33\f34\fs24\ul http://www.wto.org/engl
ish/tratop_e/serv_e/symp_mar02_riddle_e.doc}}} \par\pard\li10221\sb0\sl-310\slmu
lt0\par\pard\li10221\sb0\sl-310\slmult0\par\pard\li10221\sb0\sl-310\slmult0\par\
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nosupersub\cf5\f6\fs24 23\tab \up0 \expndtw-3\charscalex100 \ul0\nosupersub\cf15
\f16\fs28 23
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0\slmult0\par\pard\li1418\sb94\sl-230\slmult0\fi0\tx8798 \up0 \expndtw-3\charsca
lex100 \ul0\nosupersub\cf20\f21\fs20 tralac\ul0\nosupersub\cf6\f7\fs20 Working
Paper no. 8\tab \up0 \expndtw-3\charscalex100 {\field{\*\fldinst {HYPERLINK "htt
p://www.tralac.org/" }}{\fldrslt {\ul0\nosupersub\cf18\f19\fs20 www.tralac.org}}
}\par\pard\ql \li1418\sb0\sl-276\slmult0 \par\pard\ql\li1418\sb111\sl-276\slmult
0 \up0 \expndtw0\charscalex105 \ul0\nosupersub\cf5\f6\fs24 SAIIA. 2004. A SACU-C
hina FTA: What\u8217?s in it for SA? \ul0\nosupersub\cf22\f23\fs24 The South Af
rican Policy \par\pard\li1418\sb138\sl-276\slmult0\fi0\tx2789\tx4186\tx5731\tx10
088 \up0 \expndtw-3\charscalex100 Monitor\ul0\nosupersub\cf5\f6\fs24 .\tab \up0
\expndtw-3\charscalex100 [Online].\tab \up0 \expndtw-3\charscalex100 Available:\
tab \up0 \expndtw-3\charscalex100 {\field{\*\fldinst {HYPERLINK "http://www.poli
ty.org.za/pdf/fpm.pdf/" }}{\fldrslt {\ul0\nosupersub\cf33\f34\fs24\ul http://www
.polity.org.za/pdf/FPM.pdf}}}\ul0\tab \up0 \expndtw-3\charscalex100 \ul0\nosuper
sub\cf5\f6\fs24 and\par\pard\qj \li1418\ri1352\sb12\sl-420\slmult0 \up0 \expndtw
-2\charscalex100 {\field{\*\fldinst {HYPERLINK "http://www.saiia.org.za/modules.
php?op=modload&name=news&file=article&sid=51/" }}{\fldrslt {\ul0\nosupersub\cf33
\f34\fs24\ul http://www.saiia.org.za/modules.php?op=modload&name=News&file=artic
le&sid=51}}} \line \up0 \expndtw-3\charscalex100 \ul0\nosupersub\cf33\f34\fs24\u
l 6 \par\pard\qj \li1418\ri1215\sb409\sl-410\slmult0 \up0 \expndtw0\charscalex10
3 \ul0\nosupersub\cf5\f6\fs24 Salm, A, Grant, W.J., Green, T.J., Haycock, J.R. a
nd Raimondo, J. 2002. \ul0\nosupersub\cf22\f23\fs24 Lesotho \line \up0 \expndtw2\charscalex100 Garment Industry Sub-sector Study for the Government of Lesotho\
ul0\nosupersub\cf5\f6\fs24 . SAPRN. [Online]. \line \up0 \expndtw-3\charscalex10
0 Available:{\field{\*\fldinst {HYPERLINK "http://www.sarpn.org.za/documents/d00
01166/p1285-/" }}{\fldrslt {\ul0\nosupersub\cf33\f34\fs24\ul http://www.sarpn.or
g.za/documents/d0001166/P1285-}}}\par\pard\ql \li1418\sb111\sl-288\slmult0 \up0
\expndtw-3\charscalex100 \ul0\nosupersub\cf33\f34\fs24\ul lesotho_garment_Januar
y2002.pdf \par\pard\qj \li1418\sb0\sl-420\slmult0 \par\pard\qj\li1418\ri1219\sb3
\sl-420\slmult0 \up0 \expndtw0\charscalex106 \ul0\nosupersub\cf5\f6\fs24 Sandrey
, R, Maleleka, D., Matlanyane, A. and Van Seventer, D. 2005. \ul0\nosupersub\cf2
2\f23\fs24 Lesotho: \line \up0 \expndtw0\charscalex100 Potential Export Diversif
ication Study\ul0\nosupersub\cf5\f6\fs24 . Lesotho Trade and Poverty Programme,
July \line \up0 \expndtw-3\charscalex100 2005. \par\pard\ql \li1418\sb0\sl-276\s
lmult0 \par\pard\ql\li1418\sb243\sl-276\slmult0 \up0 \expndtw-2\charscalex100 Sa
uve, P. 2005. \ul0\nosupersub\cf22\f23\fs24 Towards Development-Friendly Service
s Negotiations\ul0\nosupersub\cf5\f6\fs24 . Paper \par\pard\ql \li1418\ri1617\sb
31\sl-413\slmult0 \up0 \expndtw-2\charscalex100 prepared for the Asian Developme
nt Bank High Level WTO Meeting on Key Doha \line \up0 \expndtw-3\charscalex100 R
ound Issues: Osaka, Japan, 3-5 August, 2005. [Online]. Available: \line \up0 \ex
pndtw-2\charscalex100 {\field{\*\fldinst {HYPERLINK "http://www.adb.org/document
s/events/2005/high-level-meeting-on-wto/paper-/" }}{\fldrslt {\ul0\nosupersub\cf
33\f34\fs24\ul http://www.adb.org/Documents/Events/2005/High-Level-Meeting-on-WT
O/paper-}}}\line \up0 \expndtw-3\charscalex100 \ul0\nosupersub\cf33\f34\fs24\ul
sauve.pdf \par\pard\ql \li1418\sb0\sl-276\slmult0 \par\pard\ql\li1418\sb245\sl-2
76\slmult0 \up0 \expndtw-2\charscalex100 \ul0\nosupersub\cf5\f6\fs24 Siddiqui, H
. 2004\ul0\nosupersub\cf13\f14\fs24 . \ul0\nosupersub\cf5\f6\fs24 India, SACU Ge
aring Up for FTA. \ul0\nosupersub\cf22\f23\fs24 The Financial Express\ul0\nosupe
rsub\cf5\f6\fs24 , 25 \par\pard\qj \li1418\ri1346\sb26\sl-420\slmult0 \up0 \expn
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