The European Union's attempt to get concessions from individual member countries of WTO on the service sector has only served to reinforce apprehensions about the negative impact that GATS would have on developing countries. Secret documents leaked to the British press reveal the long list of commitments the EU is planning to elicit from its trading partners in the current round of GATS talks. The exhaustive list structured on a countrywise basis - with individual country lists running into pages – seeks commitments on critical sectors which have traditionally been public monopolies, such as health, education and water for human consumption. It does not matter to the EU that access to some of the sectors on which it is seeking active international private participation is considered a fundamental human right. In fact these are the areas, whose operations have hitherto been governed by the objective of social benefit rather than any private profit. For example, in India, the EU is seeking market access to water collection, purification and distribution under the nebulous category of "environmental services". The following example illustrates what lies ahead in the future if the EU is successful in securing these commitments. The experience of Bolivia is instructive in this regard: when the government privatised water supply, prices for consumers rose by 200 per cent, and even collecting rainwater without a permit was considered illegal. Basically, what it also implies is that if these basic services are privatised than those without purchasing power are likely to lose out. Water privatisation in Puerto Rico has shown poor communities have gone without water while US military bases and tourists resorts enjoy an unlimited supply. In Chile, privatisation has severely squeezed public hospitals resources and effectiveness. It is common knowledge that rural areas throughout Latin America do not receive any health care once they are privatised. A UNDP report reveals that in the two years when the Zimbabwean government cut health spending by one third, maternal deaths through childbirth doubled in Harare.
http://www.guardian.co.uk/international/story/0,3604,685650,00.html
http://www.gatswatch.org/leakannounce.html
If anything, the leaked documents suggest that the negotiating stance
of the EU is likely to unabashedly put the interests of big business over
the national concerns of developing countries when it comes to providing
services. Under the garb of WTO, EU is primarily seeking to dismantle
barriers created through government regulation, public ownership and organised
labour that come in the way of big capital.
All this should not really come as surprise, however, since, the EC itself
openly admits in its "info-point" posted at its website that
GATS is first and foremost an instrument for the benefit of business,
and the EU is keen to help business in advancing and developing liberalisation
under the regime.
In other words, the tension between an expansionary corporate business
agenda and the democratic principles and priorities of governments to
deliver access to certain basic entitlements comes out sharply in the
views expressed in leaked documents. Prising open the service sector becomes
imperative under the neo-liberal agenda since it is slated to be the fastest
growing sector. Indeed in the last decade and a half, world trade in the
services tripled generating $1.2 trillion by 2000. To illustrate the importance
of service sector for the EU countries, because this sector accounts for
two- thirds of its economy as well as jobs. Besides this sector in its
ever- increasing role in the economy is responsible for about a quarter
of EU's total exports. Let alone the fact that EU region itself is the
biggest services exporter in the world.
Commercially the opportunities are abundant in these sectors, which are
public sector monopolies. Global expenditures every year on water services
exceed $ 1 trillion, on education exceed $ 2 trillion per year and on
Healthcare exceed $ 3.5 Trillion. These are areas in which Europe has
comparative advantage. For example EU states stand to gain if water is
privatised because three of the biggest MNC's dealing with distribution
and supply of water are French.
The wide coverage of the EU's list of demands clearly underscores the
commitment of European governments to advancing the interests of transnational
big business by expanding their reach into hitherto inaccessible sectors
of the global economy. Prior to the GATS, governments could retain autonomous
control over the production and distribution of basic services within
their territories by defining them as "priority" areas linked
to national well-being and by restricting the interpretation of "tradable"
services to cross-border supplies, for example, services provided through
international mail or telephone. Both these methodological tropes are
circumvented in the GATS.
The GATS defines trade in a service simply as any "provision"
of the service. This definition has been deliberately adopted since through
it, a basic service automatically becomes a "tradable" service
and is subject to the general obligations listed under GATS – rules
that apply to all services - even if it is not offered up for specific
commitments by a member country. One such obligation is that governments
should impose licensing requirements and standard checks in a manner such
that they are "no more burdensome than necessary to ensure the quality
of the service" (Article VI.4). Additionally, the GATS recognises
services provided "by a service supplier of one Member through commercial
presence in the territory of any other Member" as a relevant mode
of supply to which its restrictions will apply. In other words, the GATS
opens up the theoretical/ideological/ political space for the participation
of transnational corporations in the market-oriented production and distribution
of basic services in developing countries where the livelihoods of millions
of citizens hinge upon the free availability of these services.
http://www.oneworld.org/wdm/cambriefs/Wto/Inwhoseservice.htm
http://www.consumersinternational.org/trade/trade_brief/services.html
http://www.policyalternatives.ca/publications/gatssummary.html
One of the major arguments put forward by the proponents of service sector
liberalisation is: it leads to lower costs. However, both in United States
and EU states the experience shows that where there has been liberalisation
and deregulation of banking and other services- the cost of retail banking
services has gone up.
The record of developed countries in these very sectors where they have
adopted privatisation is hardly encouraging. With an annual spending of
over $ 1 trillion, healthcare is the largest sector of the US economy.
But despite this, over 44 million people, which is, one in six, do not
have any form of health cover. And if we examine the British model of
public –private partnership in its National Health Services (NHS),
it has now become evident that instead of increasing the efficiency of
service delivery it has only enabled private companies to use the medical
infrastructure for profit without spending a single penny.
In fact contrary to what is being sought in developing countries some
of the developed countries are being forced to rethink about privatisation
in their service sector. A case in point is the UK rail system. Following
a series of fatal rail accidents in the last few years, a consensus is
emerging in United Kingdom that the railways, which was privatised eight
years ago should be brought back into the domain of public service. More
interestingly, the Conservatives, which oversaw the privatisation of U
K railways, are now admitting to have brought on the error of fragmentation
by putting the whole system in charge of 25 different companies. Leading
to an unwieldy system, that has ultimately made it difficult for proper
monitoring and coordination of UK railways.
http://news.bbc.co.uk/hi/English/uk_politics/newsid_982000/982037.stm
http//www.twnside.org.sg/title/extend.htm
Politically, it suits the establishment at Brussels to demand greater
accessibility in the services sector. This is because there is much consternation
among the WTO members over the farm subsidies that EU provides through
its common programme on agriculture as it discriminates against their
farmers. And therefore as a quid pro quo for dismantling its farm subsidies,
if the EU is able to garner further concessions in the service sector
it will be able to deal with domestic political compulsions on the farm
front.
In other words the EU is using services as a bargaining device to stall
major demands regarding agricultural trade liberalisation. The message
is clear, that the developing countries will be granted a legitimate level
playing field only if they grant further concessions to the developed
world. Charlotte Denny and Larry Eliot in their article "Bananas
for banking" in the Guardian newspaper detail the price Brussels
is asking for dismantling the current system of farming subsidies. And
the price is – European business should have free access to part
of the world trading system that has hitherto been jealously guarded.
http://www.guardian.co.uk/Archive/Article/0,4273,4395617,00.html
http://www.wdm.org.uk/presrel/current/EUleaks.htm
More disturbingly, the leaked EU papers are a pointer to how even safety
valves provided within the WTO treaty can be abused and violated to suit
and serve the first world countries’ pursuit of profit. Indeed,
the ‘exemption lists’ containing list of services, which national
governments can keep out of the purview of GATS, has been turned on its
head by the EU wish list. The EU list exhorting non- EU countries to open
up uncommitted sectors is replete with terms such as " eliminate
this approval", " eliminate this restriction", "remove
these limitations", "open to competition".
In such a context the defence of GATS proponents that the Agreement is
flexible enough to allow governments, to a great extent, to determine
the level of obligations they will assume, falls flat. This despite the
fact there is a growing number of signatories to the Agreement –
currently 140 countries are members.
WTO officials on many occasions have made the claim that public services
such as health care are exempt from the GATS. However Article 1.3 (c)
governmental authority is defines as "any service, which is supplied
neither on a commercial basis, nor in competition with one or more service
suppliers". This explanation makes it difficult for governments to
exempt their public services from the purview of GATS because many government
have privatised at least some of their public services. For example developing
countries that have privatised their healthcare under structural adjustment
policies imposed by World Bank and IMF conditionalities would be unable
to exempt healthcare from further liberalised. Indeed, it is a widely
acknowledged fact GATS treaty is complicated and therefore its impact
will depend on its interpretation.
The critical point on which national governments could get it wrong is
that while individual nations might be operating on the assumption that
only the "commercial" aspects of a service sector can be affected
through the negotiations at GATS, the truth is that the very notion of
public service itself is under threat.
The move for prising open services like health, water and education is
also reflective of the lopsided agenda of WTO in pushing for those areas
that are of interest to developed countries while ignoring areas where
developing countries have a stake. And even within this imbalance, one
can find enclaves of protection so far as their internal interests are
concerned. For instance under the garb of protecting cultural diversity
the EU has effectively won an "exemption" for broadcasting and
film trade (audiovisual programme).
http://www.wto.org/english/tratop_e/serv_e/gatsfacts1004_e.pdf
http://
www.guardian.co.uk/archive/article/0,4273,4396343,00.html
http://
www.milkbar.com.au/globalhistory/wtobrief.html
Interestingly, the leaked proposals show how regional trading blocks act
in contradiction to very idea of the free trading system that the WTO
purports to establish. The list drawn up by the EU apart from notifying
developing countries like India, Indonesia includes first world countries
like Canada and Australia. Here, it clearly shows that European companies
who are giants in service sectors like providing water will not stop at
earning profits from among its comrades in the first world.
In an analytical paper, titled "the EC's GATS position a bad bargain
for Canada", Ellen Gould details how a broad range of Canadian policies
at every level of government would have to be eliminated or changed to
accommodate the Commission.
http://www.canadians.org/publications/analysis-gats-request.pdf
http://www.gatswatch.org/news/AFTINET240402.html
There is no doubt that in the light of the leaked EU commitment list,
the arguments forwarded by the critics of WTO gain more prominence. It
may yet be true that developing countries may be committing their service
sectors in undue haste, neglecting the longer-run dimensions of the process.
Pointing to grave lacunae, we may ask along with the critics as to why
there is no emergency safeguard in the GATS to allow governments to temporarily
reverse commitments that have produced catastrophic consequences? As to
why countries can only withdraw a commitment "after three years have
elapsed from the date on which that commitment entered into force? Will
reversing a commitment appear ever to be possible? For even after the
elapse of the three-year period, a government wanting to reverse a commitment
must give at least three months notice of its intention followed up by
substitute commitments. Again the question is will the opposing government
be satisfied when they can take recourse to GATS arbitration process by
arguing that substitute commitments are not acceptable?
These questions (in the light of the EU leaks) highlight the need for
national governments to be cautious while going in for future negotiations
(at the post–Doha development round) while at the same time making
a case for democratic movements across the world to be vigilant against
their respective governments giving up their power to decide national
priorities.