Posted by WTO Watch Qld on October 28, 2001 at 23:35:41:
QUOTE OF THE WEEK
If the claim that "governments do not represent the interests of citizens"
were true, then it is something that citizens need to correct at home. It
is not something that an intergovernmental body like WTO can deal with.
"WTO POLICY ISSUES FOR PARLIAMENTARIANS -- A GUIDE TO
CURRENT TRADE ISSUES FOR LEGISLATORS" (page 16 (folio 13))
http://www.wto.org/english/res_e/booksp_e/parliamentarians_e.pdf
1) COMING EVENTS
2) CALLS TO ACTION
3) AUSTRALIAN GATS PROPOSALS ON MARITIME AND ENVIRONMENTAL SERVICES
4) FOCUS ON GATS
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1) COMING EVENTS
Rally to "Stop the War".
3pm Sunday 4 November
King George Square
Speakers:
Reverend Val Graydon, Anglican Priest; Sam Watson, Socialist Alliance; Mandy McNulty, South Brisbane Immigration & Community Legal Service; Imam Yusuf Per, Muslim Community; Howard Guille, State Secretary National Tertiary Education Union; Richard Nielsen, Qld Greens; Dave Perry, Maritime Union of Australia (Qld).
Endorsed by: St Mary's Community, Merivale St South Brisbane; Hughie Williams, Branch Secretary TWU; National Tertiary Education Union (Qld); National Union of Students (Q); Maritime Union of Australia.
Contact the Refugee Action Collective for more details on 0409 877528.
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* Public Participation in Government Decision Making Course - 3-4
December at QUT Gardens Point Brisbane City campus. Described as the
new way to do government business, incorporating public participation in
government processes requires new understanding and skills. This four
day course addresses the emerging focus of government on engaging
communities in the development of policy and service delivery decision
making. For further information phone Dr Jon Bunker on 3864 5086, email
j.bunker@qut.edu.au or have a look at
https://olt.qut.edu.au/bee/cep292/.
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2) CALLS TO ACTION
Election Postcard on GE Food
GeneEthics posed 16 questions to the political parties on their GE and
sustainable agriculture policies and their commitment to deliver on those
policies after the federal election. On that basis, we recommend a vote:
20,000 postcards carrying this message will be available for distribution
from Wednesday 24th.
Please your send full postal details and phone number and say how many you
want.
Bob Phelps
Director
GeneEthics Network
340 Gore St, Fitzroy 3065 Australia
Tel: (03) 9416.2222 Fax: (03) 9416.0767 {Int Code (613)}
email: geneethics@acfonline.org.au (Bob Phelps)
WWW: http://www.geneethics.org
------------------------------
INVITATION TO COMMENT ON A DRAFT RISK ASSESSMENT AND RISK MANAGEMENT PLAN FOR
DEALINGS INVOLVING INTENTIONAL RELEASE OF GENETICALLY MODIFIED COTTON INTO THE
ENVIRONMENT
(Licence sought by Cotton Seed Distributors Ltd under the Gene Technology Act
2000)
Office of the Gene Technology Regulator
MDP 54, PO Box 100
WODEN ACT 2600
Phone: 1800 181 030
Fax: 02-6271 4202
Website: www.ogtr.gov.au
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3) AUSTRALIA'S GATS PROPOSALS ON MARITIME AND ENVIRONMENTAL SERVICES
From AFTINET bulletin 30 See www.AFTINET.org
Australian proposals on liberalisation of environment services and maritime services reveal no recognition of public goods or public interest issues
Bulletin 29 reported on the Australian proposals for trade in education services. The government has also proposed further liberalisation of both environmental services and maritime transport services at the WTO trade in services negotiations.
The environmental services paper argues for a very broad definition of environmental services to include pollution management, cleaner technology and resource management activities. It argues for the removal of what it defines as barriers to trade including arbitrary enforcement of environmental laws and planning restrictions, limits on foreign investment and limits on the foreign ownership of specific assets such as landfills and sewerage systems. These proposals would treat natural resources, water and sewage systems purely as traded goods without recognising them as essential public goods, which may require regulation in the public interest.
The maritime transport proposals would remove the right of governments to ensure that there is domestic shipping capacity by removing any restrictions on foreign investment and ownership of ships and any requirements that cargoes be carried by domestic ships or shared by domestic and foreign ships.
Both proposals can be found on the DFAT website
www.dfat.gov.au/trade/negotiations/services
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3) FOCUS ON GATS
July 2001
GATS, Public Services and Privatisation
by Sarah Sexton, The Corner House
This briefing was compiled by Sarah Sexton, The CornerHouse, drawing on the work and comments of the following to whom immense thanks are due: Meri Koivusalo, GASPP/STAKES; Allyson Pollock, University College London; David Price, University of Northumbria; Clare Joy and Petra Kjell, World Development Movement; Ellen Gould; Mike Rowson, MEDACT; Erik Wessilius, Adam Ma’anit and Olivier Hoedeman, Corporate Observatory Europe; Geof Rayner, UK Public Health Association; David Hall, Public Services International Research Unit; Caroline Lucas MEP; Kasturi Sen, University of Cambridge; Alexander Nunn, University of Manchester; and James Munro, HealthMatters.
THE CORNER HOUSE
PO BOX 3137
STATION ROAD
STURMINSTER NEWTON
DORSET DT10 1YJ UK EMAIL WEBSITE http://cornerhouse.icaap.org Services first came under the rules of the world trading system in 1995 when the WTO came into effect.16 The ambitious and ambiguous General Agreement on Trade in Services (GATS) sets out rules governing international trade in practically all services.17 It does not define what it means by a service, instead offering a classification list of 160 of them based on a United Nations system which, according to Canadian researcher and activist Scott Sinclair, "reads like a catalogue of occupations and human needs".18 The classification makes no distinction between public (or voluntary) services and those provided on a for-profit basis. Because distribution is a service, moreover, GATS also encompasses goods. As the EU says, "Goods cannot walk, they need to be distributed and transported".19 Because the main way of governing services has traditionally been via complex national rules and regulations, GATS is also "fiendishly complex".20 Like the GATT agreement before it covering trade in goods, GATS encourages trade across national borders in services by requiring a WTO member country to treat all countries the same (most-favoured nation) and to treat foreign companies as if they were domestic (national treatment). But GATS differs from the agreement governing international trade in goods in several critical ways. At present, some of its rules and requirements do not apply to all services, but only to those sectors which each country has indicated it is prepared to open up to foreign competition. Moreover, whereas trade in goods involves simply transporting products from one country to another (cross-border trade), trade in services is more varied because services are not so tangible or physical. Airlines, telephone companies, banks and accountants all provide their services in different ways. Thus GATS lists another three ways (or "modes") in which services can be supplied besides cross-border supply – movement of consumers, foreign commercial presence and movement of persons – because "the supply of many services is possible only through the simultaneous physical presence of both producer and consumer".21 Some services can be supplied in several ways, others not. A business adviser, for instance, can supply her services to a client in another country by mail, by the client visiting her, through an office in the client’s country or by visiting the client. To be a tourist, someone has to go to another country to consume tourism-related services, as does an "exported" street cleaner to carry out "environmental services". A government thus provides the WTO with a "schedule of specific commitments" listing which services and the ways of supplying that service it is prepared to open up to competition under GATS .22 The majority of the WTO’s 141 member countries have so far committed themselves to liberalising just a small part of their services.(ED: Australia has made commitments in some 86 sectors) Most commitments have been made in tourism, hotels and restaurants, computer-related services and value-added telecommunications. The least number of concessions have been made in river transportation, basic telecommunications, recreational and cultural services, education and postal services. A country can alter a commitment but has to wait three years after it has listed it before it can do so. The country also has to negotiate a substitute commitment as compensation in a way which satisfies all other WTO members. The WTO Secretariat admits that country commitments undertaken in GATS "have the effect of protecting liberalization policies, regardless of their underlying rationale, from slippages and reversals".23 The former WTO Services Division Director, David Hartridge, said that GATS "can and will speed up the process of liberalisation and reform, and make it irreversible".24 India’s former ambassador to GATT, Bhagirath Lal Das, stresses that liberalisation under GATS is different from a country undertaking liberalisation on its own without making a binding commitment to the WTO: "The developing countries have lost the flexibility of modifying their policy in the light of future experience . . . even if it is assumed that they benefit by importing services."25 The power of GATS, as with all WTO agreements, is that its rules can be enforced by trade sanctions (see Box 1). GATS does allow countries to protect human, animal and plant life or health (Article XIV) through measures which might otherwise contravene the Agreement, but its preamble, according to the US Alliance for Democracy, "has a caveat large enough to drive a truck through".26 WTO dispute panels have interpreted exemptions and exclusions narrowly and forcefully in favour of trade in GATT disputes and have usually ruled against environmental protection measures.27 These rulings "show that GATS can be used to challenge an almost unlimited range of government regulatory measures that, even indirectly or unintentionally, affect the conditions of competition of international service suppliers".28 The GATS standard for "national treatment", for instance, extends well beyond conventional notions of non-discrimination between domestic and foreign companies. It applies to any measure from any level of government – national, provincial, state, regional, municipal or local – that alters the conditions of competition in any way that might disadvantage a foreign service or supplier. The WTO’s Council for Trade in Services (the permanent body responsible for GATS) has discussed restrictions on large-scale retail outlets, shop opening hours, zoning and planning laws, controls on land use, building regulations, building permits, registration of contractors and professionals, regulation of professional fees, environmental regulations, worker health and safety regulations, local content and employment policies, urban planning rules and environmental protection policies. Even legislation to ensure that a country benefits from foreign investment – minimum number of local jobs or content, for instance – could be considered trade restrictive.29 No government measure or practice, whatever its aim, is beyond GATS scrutiny if it might affect trade in services. Countries could thus use GATS to "frustrate government policies, practices and programs that allegedly adversely affect foreign commercial interests in services".30 David Hartridge, WTO’s former director of services, described GATS as "the first multilateral agreement to provide legally enforceable rights to trade in all services" and "the world’s first multilateral agreement on investment, since it covers . . . every possible means of supplying a service, including the right to set up a commercial presence in the export market."31 According to the EU, GATS "aims to end arbitrary regulatory intervention, and assure predictability of laws, to generate growth in trade and investment".32 Unsurprisingly, critics call GATS "the MAI in disguise". According to them, rules and disciplines with effects similar to those of the abandonded Multilateral Agreement on Investment are being incorporated in the WTO through the back door.33 The former WTO Director-General, Renato Ruggiero, acknowledged in 1998 that GATS extended into "areas never before recognised as trade policy" and warned that "neither governments nor industries have yet appreciated the full scope of these guarantees or the full value of existing commitments".34 Researcher Scott Sinclair says that GATS "is designed to facilitate international business by constraining democratic governance".35 Indeed, the WTO expressly states that the Agreement will help its members overcome "domestic resistance to change" and that it will facilitate "more ambitious reforms . . . than would be attainable on a national basis alone".36 GATS Main Obligations Trade in services used to be considered ancillary to manufacturing and trade in goods. In the mid-1980s, however, many Western governments, faced with worldwide recession, inflation and unemployment, decided that removing obstacles to inter-national trade in services, particularly national regulations, could increase the momentum to export services. The US thus pushed for the provisions of the agreements governing trade in goods to be transposed into the area of services as a whole (although financial services were of prime interest), a move which "could easily have sunk the Uruguay Round and crippled the GATT", according to current WTO Director-General Mike Moore. Many countries reluctantly agreed to GATS only if they could choose which of their services were covered by the Agreement. The US took care, however, to include clauses mandating further liberalisation in future. All Services Two GATS obligations apply directly and automatically to all WTO members for all services – most-favoured-nation treatment and transparency. • Most-favoured-nation (MFN) treatment (Article II) does not mean one country is preferred over another – it means the opposite. Favour one, favour all. Treat all countries the same. If a WTO member country grants favourable treatment to another country (even a non-WTO member) regarding the import of a service, it must grant all other WTO signatories the same treatment. If a country allows any foreign competition in a service sector, it must allow service providers from all WTO member countries to compete to supply that service. A country could list any exemptions to this MFN principle by 1995, but exemptions were to be reviewed after five years and could not last more than 10 years anyway. The WTO interprets this MFN obligation as prohibiting not only de jure discrimination (discrimination specifically set out in regulations) but also de facto discrimination (discrimination resulting from regulations or measures not formally discriminatory). • Transparency (Article III) requires governments to publish all relevant laws and regulations governing all service sectors. By 1997, governments should have set up enquiry points for foreign companies and governments to obtain this inform-ation. Specified Services The other two GATS obligations, market access and national treatment, apply only to those services which a country lists in its Schedule of Specific Commitments. • Market access (Article XVI) allows foreign companies to provide cross-border services in a country. But a country can restrict such access by limiting the number of suppliers, operations or employees in a specific sector; the value of transactions or assets; the legal form of the supplier (for instance, limiting it to a branch or joint venture); or the participation of foreign capital. • National treatment (Article XVII) means that once foreign companies have been permitted to enter a country, they must be treated in the same way as domestic ones. The WTO explains that "the key requirement is to abstain from measures which are liable to modify, in law or in fact, the conditions of competition in favour of a Member’s own service industry". Thus the test for non-discrimination is whether any measure puts a foreign supplier at a disadvantage. Modes of Supply The Schedule of Specific Commitments also identifies which of four different ways (or "modes") of supplying services are covered. • Cross-border supply (Article I.2a). Services can be supplied from one country to another: international telephone calls; Internet services; telemedicine; a purchase of laboratory services from another country; a purchase of medicines or advice on the Internet. Only the service itself crosses the border. • Consumption abroad (Article I.2b). Individuals or companies can go to another country to use a service there. Tourism is a prime example. This mode encompasses travel to another country to obtain a medical treatment that is better, faster or cheaper than that available domestically. • Commercial presence (Article I.2c). A company can set up subsidiaries, branches, joint ventures or representative offices or can lease premises in another country to provide services there. For instance, banks can set up operations in another country, and US health care companies can set up hospitals or clinics in European countries. • The presence of natural persons (Article I.2d). Individuals from one country can be admitted temporarily to another country to provide services there, for instance, fashion models, doctors or nurses. GATS does not apply, however, to people seeking permanent employment or to conditions for obtaining citizenship, permanent residence or permanent employment. Of all four ways of supplying a service, WTO member countries have made the least number of commitments in this mode. Once a government has committed itself under GATS to opening a service sector to foreign competition, it must not keep money from being transferred out of the country to pay for the relevant services (Article XI), except when the country is experiencing serious balance-of-payment difficulties (Article XII). Such exceptions must be temporary and justified by an International Monetary Fund assessment of the country’s financial situation. GATS thus provides almost guaranteed conditions for foreign exporters and importers of services and investors in any sector which a country has listed in its Schedule. GATS 2000 GATS is innovative, complex and without legal precedent. Few of its provisions have been tested or clarified by challenges brought to the WTO dispute panel. Little information exists on the impact of GATS so far in facilitating trade in services, or on the economic benefits countries have accrued from services liberalisation, let alone their social and environmental effects. There is little baseline data upon which to make comparisons. The WTO Secretariat recognises this lack of data upon which to base an assessment of trade in services, while the UK government says it has yet to work out how such statistics can even be collected.37 Nonetheless, WTO representatives have begun to negotiate to extend the scope of GATS. When the Agreement was signed in 1995, some countries considered it to be incomplete.38 A clause (Article XIX) was therefore included mandating "successive rounds of negotiations . . . aimed at achieving a progressively higher level of liberalization" – in practice, privatisation and deregulation. It specifies that the first "successive round" of negotiation should begin within five years of GATS coming into effect, that is, by the year 2000. As Canadian trade and investment researcher Ellen Gould points out, "under the GATS, liberalization could just keep on going and going, presumably until negotiators run out of sectors to open up to foreign competition and ownership".39 The WTO Secretariat describes Article XIX as "a guarantee that the present GATS package is only the first fruit of a continuing enterprise."40 Other clauses provide for further rules to be developed for domestic regulation, government procurement of services, subsidies and emergency safeguards (see Boxes 4 and 5). When he was European Commission Vice President, Leon Brittan made clear that "the aim [of GATS 2000 negotiations] must be . . . to conclude an ambitious package of additional liberalisation by developing as well as developed countries, in politically difficult as well as in other sectors".41 The EU Commissioner for Trade, Pascal Lamy, has argued that "if we want to improve our own access to foreign markets, then we can’t keep our protected areas out of the sunlight. We have to be open about negotiating them all if we are going to have the material for a big deal."42 The US, European Union, Japan and Canada (known as the Quadrilateral or "Quad" governments) are pushing hard to: – increase the services and ways of supplying services that WTO member countries agree to open up to foreign competition (market access); – re-classify services to get around some countries’ reluctance to open them up to foreign competition;43 – insert new rules and restrictions that apply to all members, services, sectors of services and ways in which services are supplied, irrespective of whether countries have agreed to open such services to competition;44 – place new constraints on domestic regulation (see Box 4). They are seeking more access to Southern markets, to each other’s public services, and further deregulation of services already in private hands but publicly-regulated, such as media, publishing, telecommunications, energy, transport, financial and postal services. Northern countries are interested in service liberalisation in Southern countries in construction and engineering; distribution; education; environmental, health and social services; and recreational and cultural services. These revisions, if they are agreed upon, could mean that the voluntary nature of GATS – under which a country decides which services to list as open to foreign competition – would in effect be meaningless. It could be irrelevant whether a country offers up its services or not if other rules apply to all services. Guarantees, such as those from the UK’s Department of Trade and Industry that "the UK government has no intention whatsoever of offering to privatise public health care or education under the GATS 2000 negotiations", would have little force.45 Following the GATS "built-in agenda" mandating successive rounds of negotiations, talks opened on 25 February 2000 in Geneva, home to WTO headquarters. The United States would like these negotiations to be completed as soon as possible, and suggested the end of the year 2002 as a deadline. Other countries, however, want the negotiations to be open-ended, or integrated within a broader and comprehensive revision of all the WTO agreements.46 Despite the requirement for "transparency" in GATS (see Box 3), the renegotiations are taking place between government representatives behind closed doors (but in close consultation with international corporate lobbyists). Few of the results of discussions are made publicly available by the WTO or individual countries. It is next to impossible for citizens’ organisations to find out the current state of negotiations while access to many background documents is restricted.47 Thus even negotiations on apparently technical issues such as reclassification of services are evading public accountability and public and parliamentary debate. Article VI of GATS covers domestic regulation. Its aim is to encompass any regulation that affects services but which is not covered by other GATS obligations. Its fourth clause aims to ensure that "qualification requirements and procedures, technical standards and licensing requirements do not constitute unnecessary barriers to trade in services". Although undefined in GATS, "technical standards" could encompass most types of government control. The WTO Agreement on Technical Barriers to Trade, for instance, defines them as: "product characteristics or their related processes and production methods, including the applicable administrative provisions, with which compliance is mandatory". In the context of services, "technical standards" could apply to the processes and methods of producing services, including administration. This could encompass their funding and delivery, including reimbursement under mandatory (public or private) insurance schemes. A wide swathe of government regulations concerning environmental protection, consumer protection and industrial policy would seem to be covered by this fourth clause: legislation accrediting professionals as competent to practise; awarding licences to television or radio stations; giving university status to academic institutions; licensing hospitals; and granting waste disposal permits. So that these national requirements and standards do not constitute an "unnecessary barrier" to trade in services, Article VI.4 states that they should be "not more burdensome than necessary" and should not restrict the supply of the service. But what does "burdensome" mean? How would restriction be determined? In case of a dispute between countries, the clause does not provide a clear legal formula that a WTO dispute panel could refer to. A Working Party on Domestic Regulation – one of the three sub-groups of the Council for Trade in Services (the body within the WTO that oversees GATS) – has been drawn up to discuss "reform" of domestic regulation. This involves drafting a "necessity test" – a legal formula which could be used "to assess the level of trade-restrictiveness of a measure". If proposals for this test are adopted, a government challenged by another through the WTO would first have to show that a disputed regulation met a "legitimate objective" – and the WTO would determine what counted as "legitimate". Then, to clarify "burdensome" and "restrictive" as applied to the means of achieving that objective, the Working Party has considered importing into Article VI.4 the definition of "least burdensome" from a GATS Annex on Telecommunications: "pro-competitive". The European Union has gone further and identified "anti-competitive practices", including cross-subsidising by monopoly providers of network infrastructure and services. It argues that this practice restricts competing suppliers from being able to provide services in a market. Instead, it maintains that charges for each part of a service should be at: "cost-oriented rates that are transparent, reasonable, having regard to economic feasibility, and sufficiently unbundled so that the supplier need not pay for network components or facilities that it does not require for the service to be provided". Governments that currently use non-market mechanisms, such as risk pooling, social insurance funds, block contracts and cross-subsidising, to deliver public services to as much of their population as possible could find such practices challenged as anti-competitive (see p.19). The European Union has also suggested that a measure should not be considered trade-restrictive if it is "proportionate" to the objective pursued. But what might be considered proportionate, reasonable or rational would be a matter of judgement, reflecting the values of those with decision-making power. Worse, Article VI.4 could be interpreted as applying to all services, not just to those which a country has offered to liberalise. The other clauses in Article VI clearly apply only to those services listed in a country’s schedule of commitments. The WTO Secretariat believes the different phrasing of Article VI.4 is "intentional". If these proposals were adopted, all domestic regulations would have to be "pro-competitive", even if no foreign firm was involved. A WTO disputes panel could require countries to unbundle a public monopoly such as health care and substitute competing service providers or competing health care insurers. Health systems researchers Allyson Pollock and David Price point out that these proposals "would transform the WTO from a body combating protectionism to a global agent of privatisation". "The WTO’s strategy is shifting from persuasion to the development of new global regulations which will over-ride national sovereignty in domestic policy and impose unprecedented market reform obligations on all the processes of service delivery and throughout all service sectors". In essence, the aim of GATS is to regulate governments, not corporations. Compared to markets in goods, those in services and access to them are more constrained by government interventions. The power of a GATS article on domestic regulation clause is that many governments may censor themselves by not instituting legislation or public policy objectives which could be interpreted as being against WTO rules. There has been no challenge to any domestic regulation under GATS as yet, but at the WTO Secretariat itself acknowledges, "cases may arise in the future". GATS sets in place a legal framework which governments could use in future to challenge other countries’ domestic regulations. The WTO stresses that governments can still regulate under GATS. Discussions about domestic regulation, however, raise the question: how? Sources: Pollock, A.M. and Price, D., "Rewriting the Regulations", The Lancet, 356, 9 Dec. 1999, pp.1995-2000; "Opening World Markets for Services: A Guide to the GATS: Which Sectors are Covered by GATS?", website: http://gats-into.eu.int/; Sinclair, S., GATS: How the World Trade Organization’s New "Services" Negotiations Threaten Democracy, Canadian Centre for Policy Alternatives, Ottawa, 2000; WTO Secretariat, "International Regulatory Initiatives in Services", S/C/W/97, 1 March 1999. Notes and References 16. The GATS text is available at www.wto.org/english/tratop_e/serv_e/gatsintr_e.htm. See also WTO Secretariat, Trade in Services Division, An Introduction to the GATS, October 1999, website: www.wto.org/english/tratop_e/serv_e/gsintr_e.doc. For a range of articles and documents on GATS, see: www.xs4all.nl~ceo/gatswatch/gatswatch/html. A WTO Council for Trade in Services is responsible for the workings of the GATS Agreement. It currently has three sub-groups: a Committee on Specific Commitments, a Working Party on Domestic Regulation and a Working Party on GATS Rules (emergency safeguards, subsidies, government procurement). 17. Air transport services are largely excluded from GATS, but a mandated renegotiation of the air transport Annex at least once every five years is expected to define these services more concisely so as to restrict exclusions. "The WTO approach . . . will means a death sentence for airlines in developing countries" says one international air transport official. See Williams, F., "WTO Seeks to Spread its Wing Over Air Services", Financial Times, 29 September 2000, p.13. 18. Sinclair, S., GATS: How the World Trade Organization’s New "Services" Negotiations Threaten Democracy, Canadian Centre for Policy Alternatives, Ottawa, September 2000, pp.24, 68, website: http://www.policyalternatives.ca; email: ccpa@policyalternatives.ca. One effect of not defining services is that more (as yet unthought of) services can be incorporated in future. GATS does define, however, "sector", "measures", "supply" and "person". A WTO guide to GATS identifies 11 broad service sectors, each divided into several sub-sectors: * Business (professional including legal, accounting, auditing, bookkeeping, architectural, real estate, engineering, medical and dental, veterinary, computer, management consultancy, advertising); *Communication (telecommunications, postal, courier, audio-visual, radio, television, film, video, satellite); * Construction and related engineering services; * Distribution (retail, wholesale, franchising); * Educational; * Environmental (water delivery, refuse disposal, sewage, sanitation); * Financial (insurance, reinsurance, underwriting, banking, provision of financial information, asset management); * Health-related and social; * Tourism and travel-related (travel agencies, tour operators, hotels, restaurants, catering, tourist guides); * Recreational, cultural and sporting (entertainment, news agency); * Transport (sea, water, air, space, rail, road, pipeline); and * Other (including energy). Most WTO members used the WTO/UN classification system as the basis for scheduling commitments, but not the US. For the EU’s interpretation of these services, see "Opening World Markets for Services: A Guide to the GATS: Which Sectors Are Covered by GATS?", website: http://gats-into.eu.int/gats-info/guide.pl?MENU=ccc, accessed 1 November 2000. 19. "Opening World Markets", op. cit. 12. The International Chamber of Commerce stresses that manufacturing industries are infused with services from beginning to end: research and development, inventory management and control, transport, marketing, advertising, insurance, and "backroom" functions, such as accounting and legal services. Likewise, agriculture requires research and development, finance, insurance, storage, transport, distribution, marketing, and a host of technical services. See website: http://www.iccwbo.org/ 20. The WTO Secretariat states that "the fact that the GATS rules are still necessarily untested, and that the services schedules are much more complex than those for goods, adds to the difficulty of assessing exactly what rights and obligations WTO members have assumed under the services package". See WTO Secretariat, op. cit. 16. 21. WTO, "The GATS: Objectives, Coverage and Disciplines", website: www.wto.org/english/tratop_e/serv_e/gatsqa_e.htmThe "supply" of a service includes its delivery, production, distribution, marketing and sale. 22. The WTO website lists each country’s Schedules of Specific Commitments: http://www.wto.org/english//tratop_e/serv_e/22-specm_e.htm. The GATS text itself (see ref. 16) explains how to read a schedule. More accessible is the EU’s information point on world trade in services which enables commitments to be viewed by country or by service sector, website: http://gats-info.eu.int. The WTO Secretariat has identified over 1,400 errors and inconsistencies made by governments in scheduling their commitments. Such errors would become more significant if the agreement was expanded. See Gould, E. and Joy, C., In Whose Service? The Threat Posed by the General Agreement on Trade in Services to Economic Development in the South, World Development Movement, London, December 2000, p.16, website: www.wdm.org.uk. Canada believed it had protected from GATS its 1965 national trade agreement (Auto Pact) to encourage domestic car manufacturing, but the WTO ruled otherwise in May 2000. See Sinclair, S., op. cit. 18, pp.42-43. More than 70 WTO members, mainly Northern countries familiar with the system, have listed many exemptions to the Most-Favoured Nation clause. But in a US challenge arguing that the EU’s preferential banana import arrangement with Caribbean countries discriminated against US "service providers" involved in banana distribution, a WTO dispute panel ruled that the EU’s arrangement contravened GATS – the EU had forgotten to list it as an exception to the MFN clause. See Sinclair, S., op. cit. 18, pp.48-49. 23. WTO Secretariat, "Recent Developments in Services Trade", 9 February 1999, S/C/W/94, website: http://docsonline.wto.org, quoted in Gould, E., "The 2001 GATS Negotiations: The Political Challenge Ahead", The Alliance for Democracy, March 2001, website: www.thealliancefordemocracy.org/campaigns/2000. 24. Hartridge, D., "Opening Markets for Banking Worldwide: The WTO General Agreement on Trade in Services", speech to international banking seminar, 8 January 1997, London, UK, quoted in Gould, E., "The WTO General Agreement on Trade in Services: Separating WTO FACT from FICTION", Council of Canadians, website: www.canadians.org, received May 2001. 25. Lal Das, B., "Negotiations in Agriculture and Services in the WTO: Suggestions for Modalities/Guidelines", paper presented at "Current Developments in the WTO: Perspective of Developing Countries", Third World Network seminar, Geneva, 14-15 September 2000. Many of the deregulatory and privatisation aspects of GATS are similar to the structural adjustment measures imposed on developing countries by the IMF and World Bank. 26. Caplan, R., GATS Handbook, Alliance for Democracy, Waltham, Massachusetts, website: http://www.thealliancefor 27. For example, a WTO dispute panel decided in 1996 that a US ban of gasoline imports from Brazil and Venezuela because they did not meet its Clean Air Act standards contravened GATT rules. In September 2000, however, a WTO dispute panel upheld a French ban on imports of "white" asbestos, challenged by Canada – the first time that a trade-restrictive measure has been exempted from WTO rules on health grounds. In March 2001, moreover, the WTO’s appeals body ruled that a product’s health risk was a legitimate factor in determining whether it was "like" another product. See Waskow, D. and Yu, V.B., A Disservice to the Earth: The Environmental Impact of the WTO General Agreement on Trade in Services (GATS), Friends of the Earth US, Washington, June 2001, website: http://www.foeeurope.org/trade/wto/wto.htm 28. Sinclair, S., op. cit. 18, p.1. GATS Articles XIV and XIV bis provide for general exceptions and more specific national security exceptions. The Article XIV exemption for measures "necessary to protect human, animal or plant life or health", is borrowed from GATT (Article XX), but leaves out an additional GATT exemption for measures "relating to the conservation of exhaustible natural resources", an omission from GATS which could be interpreted as intentional. Article XIII provides exceptions for government procurement from most-favoured nation, market access and national treatment principles, but not transparency. 29. For details of laws in countries of the South which could be threatened by GATS rules of national treatment and market access, see Gould, E. and Joy, C., op. cit. 22, pp.10-12. 30. Sinclair, S., op. cit. 18, pp.1, 6, 40. The term "measure" is a broad one. It covers any law, regulation, rule, procedure, decision or administrative action taken by central, regional or local governments and authorities and non-governmental bodies exercising powers delegated to them by these governments and authorities. GATS could therefore restrict the ability of governments to use subsidies and grants; nationality requirements; labour standards; residency requirements; licensing standards and qualifications; registration agreements; performance measurements; technology transfer provisions; local content or employment provisions; economic quotas or needs tests; licensing or training requirements; restrictions on ownership of property or land; limitations on access to markets; environmental and consumer protection measures; and some tax measures. See also p.X on domestic regulation. 31. Hartridge, D., op. cit. 24. 32. "Opening World Markets", op. cit. 5. 33. The Multilateral Agreement on Investment (MAI) was negotiated among the 29 industrial country members of the Organization for Economic Cooperation and Development (OECD) from 1995 until 1998, when negotiations were abandoned because of widespread citizen opposition. As many features of the GATS renegotiations resemble aspects of the MAI, the issues raised by GATS are similar to those underlying the MAI: loss of sovereignty on the part of nation-states; loss of governments’ ability to protect the social security system and national culture; and doubts about the future of public services in a context of trade and investment liberalisation. Rules on investment may also be negotiated elsewhere, for instance, the TRIMS agreement. See Khor, M., "The WTO and the Proposed Multilateral Investment Agreement: Implications for Developing Countries and Proposed Positions", Third World Network, Penang, (undated); MAIgalomania, Corporate Europe Observatory, Amsterdam, February 1998; License to Loot: The MAI and How to Stop It, Friends of the Earth, Washington, 1998; Clarke, T. and Barlow, M., MAI: The Multilateral Agreement on Investment and the Threat to Canadian Sovereignty, Stoddart Publishing, Toronto, 1997. 34. Ruggiero, R., "Towards GATS 2000–A European Strategy", address to the Conference on Trade in services, organised by the European Commission, 2 June 1998, Brussels, cited in Gould, E. and Joy, C., op. cit. 22, p.4. 35. Sinclair, S., op. cit. 18. 36. WTO, op. cit. 21. 37. "There is not a single empirical study analysing on a comprehensive basis – across countries, sectors and modes – the effects on services trade attributable to scheduled commitments". See WTO Secretariat, op. cit. 23. Such statistics were also missing from the Uruguay Round. See Raghavan, C., Recolonisation: GATT, the Uruguay Round and the Third World, Zed Books, London, 1990. 38. At the conclusion of the Uruguay Round, it was agreed that negotiations had to continue immediately on a number of service sectors: financial, maritime transport and basic telecommunications services and on the movement of natural persons supplying services. These led to various Annexes. The Annex on Financial Services, which came into force in January 1999, removed many obstacles for financial services corporations wanting to enter "emerging markets". It is predicted to liberalise over 90 per cent of the world market in insurance, banking and brokerage services. See Corporate Europe Observer, no 4, July 1999, "Special WTO Edition", website: http://www.xs4all.nl/~ceo/observer4/index.html, accessed 24 February 2001. The Annex on telecommunications established the right for any service supplier to have access to and make use of public telecommunication networks and services (telephone, telegraph, telex and data transmission, but not radio or television) on reasonable and non-discriminatory terms. 39. Gould, E., "The Next MAI", Fall 1999, Council of Canadians, website: www.canadians.org, accessed 25 October 2000. The WTO Secretariat stated in 1999: "The GATS rules are not quite complete, and are largely untested. The process of filling the gaps will require several more years of negotiations . . . Among the most important elements in the GATS package is the promise that successive rounds of negotiations will be undertaken to continue opening up world trade in services". See WTO Secretariat, op. cit. 16. 40. WTO Secretariat, op. cit. 16. Former WTO Services Director David Hartridge said, "It [GATS] has a built-in commitment to continuous liberalization through periodic negotiations, a far more solid commitment than the old GATT ever had." See Hartridge, D., op. cit. 24. 41. Brittan, L., "European Objectives For Services Worldwide: How the WTO Can Help", speech, 2 June 1998, Brussels, website: http://gats-info.eu.int/gats-info/gnews.pl?NEWS=ccc, accessed 1 November 2000. 42. Speech to the US Council for International Business, New York, 8 June 2000, website: http://europa.eu.int/comm/trade/speeches_articles/spla23_en.htm 43. Negotiators aim to reclassify services by: - narrowing the description of service sub-sectors in which governments have made the least number of commitments (such as health, education and social services) and broadening that of those in which members have made the greatest number; - disaggregating services to make it easier for countries to demand or to offer access to a particular sub-sector; - clustering related services together so that a country’s specific commitment applies to the whole group rather than just one sector; - reclassifying new services so that they are encompassed by existing commitments. Hospital management, for instance, could be reclassified under business services and thereby hived off from health-related service sectors in which WTO members have not made many commitments. Or health information systems could be classified under "computer and related services" instead of "health-related and social services". Or ancillary services such as catering, laundry and cleaning could be classified not under health services but elsewhere. The EC has proposed that water supply should be considered part of an environmental services "cluster", while the US has argued that all energy-related services should be treated as a cluster. These reclassifications would affect the interpretation of existing commitments as well as future commitments. Canadian researcher Scott Sinclair regards service reclassification, a seemingly simple technical procedure, as a means "to expand GATS coverage by stealth". See Sinclair, S., op. cit. 18, pp.67-71; Gould, E., op. cit. 24. 44. Some commitments could be negotiated which would apply to all members, sectors and/or modes of supply, for instance, each government could make a minimum level of commitments in each sector; countries could include under GATS a specified percentage of their services by GDP; governments could reduce limitations in their schedules by a fixed percentage; or members could eliminate certain measures such as residency requirements in certain sectors or modes. 45. UK Department of Trade and Industry, "GATS 2000, Health and Education Services", briefing note, 2 December 1999, cited in Pollock, A.M. and Price, D., "Rewriting the Regulations: How the World Trade Organisation Could Accelerate Privatisation in Health-Care Systems", The Lancet, Vol. 356, 9 December 2000, p.1996. See also website: http://www.dti.gov.uk/worldtrade/service.htm 46. Many governments might prefer to be able to make concessions in one agreement, for instance, the Agreement on Agriculture, in return for concessions in another agreement, such as the TRIPs agreement, instead of renegotiating an agreement such as GATS on its own. The world’s three leading service industry organisations (the US Coalition of Service Industries, the European Services Forum and the Japan Services Network) called on their governments in May 2001 to launch a new round of WTO renegotiations on the grounds that substantial agreement on services would most likely be achieved in the context of a wider and broad-based WTO round. The Council of Trade in Services finally agreed guidelines and procedures in March 2001 for the rest of the GATS 2000 negotiations, having agreed to various requests from developing countries. But no completion dates were set. Countries now enter the more detailed "request-offer" phase: countries request each other to liberalise a particular service under GATS and respond with offers of their own. Southern countries will more often be the "requestee" rather than the "requester". Bilateral trade-offs are then extended on a most-favoured nation basis to all WTO members. The US and European Communities have already submitted their initial negotiating proposals for specific service sectors; see website: www.wto.org/ddf/ep/. See also Raghavan, C., "Revised GATS Guidelines Attempt to Mollify Developing World", Third World Economics, no 254, 1-15 April 2001, pp.2-4. 47. The WTO has made some original WTO documents public on its website: http://docsonoline.wto.org, and, because of criticism, has started to post many of its new documents. For a range of articles and documents on GATS, including WTO documents not made public, see: www.xs4all.nl~ceo/gatswatch/gatswatch/html; and Gould, E., op. cit. 24. =============================================================== Terrie Templeton WTO Watch Qld gumbus@powerup.com.au
General Agreement on Trade in Services (GATS)
Regulating Governments, Not Corporations
democracy.org/, accessed 24 February 2001.