The services sector accounts for 60 per cent of Egypt's GDP, and more than half of the total of employment. A recent conference organised by the Egyptian Centre for Economic Studies (ECES) focussed on the services sector, its current shape, the challenges it faces and possibilities for reform. Entitled Towards More Efficient Services in Egypt, the conference featured a host of prominent experts who provided the audience with an in-depth look at various aspects of the services sector in Egypt, from tourism and financial services to wholesale and distribution services. On the fringes of the conference, Niveen Wahish spoke to Abdel-Hamid Mamdouh, director of the World Trade Organisation's (WTO) Trade in Services Division, on where on the road to liberalisation he believes Egypt's services sector lies today How has the Egyptian services sector evolved in recent years? There has been a paradigmatic shift in the services economy, shifting from the old model whereby services were always government functions, to a private sector-led competitive market structure in which the services sector has become much more dynamic. Services are of much higher quality, much wider diversity and at lower prices, which actually has tremendous positive implications for the rest of the economy, not just in terms of competitiveness but also in quality of life and social welfare. This shift is happening in Egypt as well. You can see it in the area of mobile phone services or banking services. It is happening in Egypt at a certain pace because it cannot be done overnight. You need to develop a policy vision for the sector: decide where you want to take it, how much you want to liberalise it and introduce competition in the market. According to this policy vision, the regulatory framework is developed to organise how private operators are going to practise in the market. Liberalisation would need to be administered in doses and accompanied by the right policy and regulatory reforms. This regulatory challenge is very complex for governments to face. The diversity of sectors requires different approaches. What are Egypt's commitments to the WTO in the area of services? Egypt is a founding member of the WTO, since 1995. And when a country is member, it means it is also a member of all the agreements under the WTO, including the services agreement. Egypt submitted a number of liberalisation commitments in the area of construction, tourism, telecoms, financial services and maritime transport. In some sectors certain parts have been bound and some have been left out. However, all the commitments submitted by Egypt did not entail new liberalisations. It was only a consolidation and binding of pre-existing situations. Binding existing situations is very important because it provides the stability and predictability of market access conditions which encourage foreign investors and private sector operators from abroad to participate in the Egyptian market. You can always give more than you have committed yourself to, but your schedule represents the minimum treatment you guarantee to Foreign Service suppliers. Egypt continues to liberalise, but not necessarily at the WTO altar because the WTO negotiations have been lagging. The Doha round has been facing serious delays because of lack of progress in the agricultural negotiations and the non- agricultural market access negotiations. That is holding back everything else including services. We have had initial offers submitted in 2003 and revised offers in 2005, and since then there has not been anything. Egypt's reform effort is very serious but there needs to be a more strategic look at the services sector, in its totality. What specifically do you think is needed? You need either new institutions or to revisit existing institutions. If you have institutions representing the private sector and industries, it is not a usual thing that those institutions would be reporting to the government. This creates a conflict of interest. It is very difficult to have an effective private sector institution if it is under government control. The same goes for consumer protection organisations. This is one of the most critical institutional aspects that should be looked at; the institutions that ensure that the interests of the public is being pursued. Another institutional aspect is to make sure we have independent regulatory bodies for the different sectors. Telecommunications is a success story of policy and regulatory reforms. Those institutions will have a continuing role to play. They will ensure that the policies and regulations will continue to be adjusted to pursue the objectives and they will also ensure the enforcement of the regulations. There is also the question of allocation of resources regarding infrastructure development. These are issues that need to be looked at by the government. None of this can happen without the participation of the political leadership. It is the political leadership that would produce the vision and pursue it and would decide on the objectives which would guide the institutions afterwards and introduce institutional reform and allocate resources. Without the participation of the political leadership that is not going to go very far. You may have stories of success at a sectoral level, but to use the services sector as an engine for economic and social development you need to take a comprehensive look to ensure the coherence of the vision, the soundness of the objectives and to ensure that institutional reforms would be introduced and to ensure the proper allocation of resources to develop infrastructure according to the priorities set by those objectives. Within the WTO, what are the requests Egypt has been making of other countries? Egypt has been making requests in the area of supply of services through movement of persons, such as consultants or professionals. Which of Egypt's services sectors do you feel is the most narrow? Professional services need to be opened. In some professional sectors we have a nationality requirement whereby you have to be an Egyptian to practise, like accountants and lawyer. Even if you studied in Egypt, you cannot be a lawyer. These issues need to be revisited. Under the Egyptian law you are either a lawyer and you are allowed to do everything or you are not a lawyer and you do nothing. In other regulatory models, the legal profession is sliced up to specialisations, a form of limited licensing. I would recommend that we take a serious look at these models.
