Sectoral Coverage – Construction and related services

Workshop on Scheduling Specific Commitments for Construction and related engineering services

and Energy-related services

Happy Valley Hotel, 18 October 2012mjelitto@sadc.int

Construction Services

• Accounts for about 5% of world GDP and 7% of employment• Links to many different markets and activities: mining,

petroleum and petrochemicals, power generation including renewable energy, manufacturing, water and utility distributions systems, sewer/waste, transportation, telecommunications, and public health, etc..

• High degree of backward linkages, using inputs from other industries (engineerting, architecture, transport etc).

• Similarly, an export contract for construction services often generates important revenues from the associated export of capital equipment, as well as from the subsequent maintenance, repair and replacement thereof.

Some peculiarities of the sector

• Reality of short-term commercial presence (untypical for other sectors)

• Most if not all construction purchased by government is excluded from the scope of the SADC Trade in Services Protocol

Sector Coverage• Traditional separation of construction projects into– structures, which comprise residential and non-

residential buildings. The latter category is subdivided in industrial buildings (refineries, manufacturing facilities etc.), commercial buildings (offices, stores, shopping malls, etc.) and other non-residential buildings (hospitals, universities, theatres, cinemas, etc.);

– civil engineering works and productive facilities, which include utility facilities (pipelines, power plants, etc.), transportation facilities (roads, bridges, ports, airports, etc.), and public works facilities (water and sewage systems, etc.).

Sector Coverage

A. General construction work for buildings (CPC 512)– This item includes construction work (including new work,

additions, alterations and renovation work) for all types of buildings, residential or non-residential, whether privately or publicly owned.

B. General construction work for civil engineering (CPC 513)– This item covers construction work for structures other than

buildings such as highways and streets, railways and airfield runways, bridges and tunnels, waterways and harbours, dams, pipelines, communication and power lines, mining and manufacturing plants, and stadia and sports grounds.

Sector Coverage (ctd)

C. Installation and assembly work (CPC 514, 516)— This item includes such activities as the assembly and erection of

prefabricated constructions, installation work for heating and air conditioning, water plumbing, gas fitting, electrical wiring, fire alarm construction, insulation, fencing and lift construction.

D. Building completion and finishing work (CPC 517)– This item covers special trade construction work for the completion and

finishing of buildings such as glazing, plastering, painting, floor and wall tiling, carpeting, carpentry, interior fitting and decoration, ornamentation fitting.

E. Other (CPC 511, 515, 518) – This item includes pre-erection work at construction sites, as well as

special trade construction work such as foundation work, water well drilling, roofing, concrete work, steel bending and erection, and masonry work. It also covers renting services related to equipment for construction or demolition of buildings or civil engineering works, with operator.

Explaining the classification

• General Construction work for buildings (CPC 512) and General Construction Work for Civil engineering (CPC 513) reflect the previously mentioned distinction between structures (residential and non-residential buildings) and civil engineering works.

• The two subsequent CPC subdivisions – "Installation and assembly work" (CPC 514, 516) and "Building completion and finishing work" (CPC 517) – instead cover distinct activities or phases of a given building project.

• Finally, the category "Other" (CPC 511, 515, 518) groups together building stages (pre-erection and site preparation work), special trade construction works such as foundation or masonry work, and particular means of supplying the service (renting services with operator).

Implications for making commitments?

• Some negotiating proposals in WTO have stressed that specific commitments should encompass all stages of the construction process ranging from "pre-erection work at construction sites" (CPC 511) to "building completion and finishing work" (CPC 517).

• Others stress the interrelation between the supply of construction services and the supply of architectural (CPC 8671), engineering (CPC 8672), integrated engineering (CPC 8673), urban planning and landscape architectural services (CPC 8674), and other related consulting services

• Trend for BOT and PPP projects where contractor becomes “design-builder” and also carries out management and consulting services, building operation, and long term maintenance.

Possibility to enter limitations?

• Swaziland has full commitments in M3 (commercial presence) for engineering and integrated engineering services

• Committed to admit “senior qualified chartered engineers” (engineering services) and “professional personnel with a higher university degree or professional training and who are not available in Swaziland” (for integrated engineering services only).

Possibility for limitations for core construction services

• Reservation of certain types of work for locals• Reservation of projects according to size • Joint venture/local partner requirements• Mandatory incorporation requirements• Mandatory subcontracting of – certain works or– a percentage of the value of the contract