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Newsletter Issue 1 Jan - Feb 2001 |
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‘Without the enormous pressure generated by the American financial services sector, particularly companies like American Express and Citicorp, there would have been no services agreement and therefore perhaps no Uruguay Round and no WTO.’ David Hartridge, Director, WTO Services Division. GATS 2000 – The end of democracy? Two years ago, activists thought they had killed the MAI – the corporate sponsored vampire of unfettered trade liberalisation had crumbled to dust when dragged into the light of day. However, a subtler, hungry successor – the General Agreement on Trade in Services (GATS) is now creeping out from under the wings of the WTO. Laura Wilkes investigates… Claire Short and Tony Blair’s new White Paper on Globalisation sets up a new spin in which neoliberal commercial colonialism has become the colonialism of concern. While they appear to acknowledge that ‘the market fundamentalism of the 1980s and early 1990s has been thoroughly discredited’, their not-so-radical view is that ‘effective governments and efficient markets are essential if developing countries are to reap the benefits of globalisation.’[1] There is an agreement which sets a new standard for this form of ‘development’. It is the General Agreement on Trade in Services (GATS), currently being negotiated behind closed doors in a country near you. Its principle movers are the CEOs of transnational corporations, without whose ‘enormous pressure’ it would not have been conceived. In its essence, GATS is intended to enforce the speedy liberalisation of hitherto public domains. In its push to broaden the definition of a service, and to get rid of ‘burdensome’ governmental regulations, it promises to cut down the remaining barriers between private finance and the public sector. It aims to engineer the global economy so that those who cannot pay are excluded from public services. Scaremongering? The provisions of GATS apply to not only such already partially globalised and generally private sectors as financial services and telecommunications, but also sectors which, in the UK at least, are at present seen essentially as public services, even where privatised: these sectors include power generation, water, public transport, and most worryingly, health and education. Although the definition of the services covered by the GATS excludes services provided under government authority and without a commercial purpose (Article I.3 of the GATS), the indication is that this provision will be interpreted very strictly – for example it has been suggested that courses offered by public institutions which require the payment of fees fall within the category of ‘commercial activity’ and are therefore covered by the agreement[2]. The World Development Movement suggests some possible consequences of this ban on discrimination: ‘a foreign commercial supplier intent on maximising profits must be treated the same as say, a domestic not-for-profit supplier commited to serving dispersed rural communities.’[3] And ‘governments cannot require foreign companies to hire or train local staff, involve local people in management or ownership, or transfer technology, unless specific exceptions have been made.’[4] Under such a regime, non-profitable but socially essential services which are currently government funded or subsidised, from rural public transport to care for destitute elderly people, will be eroded and could ultimately be deemed surplus to requirements. The bones of GATS arguably date from 1991, when the European Round Table of Industrialists (ERT) published their report outlining a global ‘framework for foreign direct investment.’[5] A similar vision was apparent in the 1995 North American Free Trade Agreement (NAFTA), which has since succeeded in reversing progress in labour rights and equity in Mexico as well as damaging manufacturing jobs in the US and Canada. NAFTA was the first agreement to allow corporations to sue governments, a rule taken to new heights by the Multilateral Agreement on Investment (MAI), which took up the banner of ‘investor rights’ from NAFTA, defining ‘investors’ as ‘collectivist legal entities’ – corporations rather than individuals. Discredited, the MAI was dropped in 1998. But the democratic stake that pierced its heart was obviously not made of the right wood: the MAI vampire retreated into the darkness of the corporate underworld, and has returned in the shape of GATS. GATS relies on is the axiom of least public interference – it assumes that the economically most efficient method of service provision (itself defined in narrow neo-liberal terms) is also the ‘best’ by any other measure. This agenda is not confined to GATS: in the UK, there is strong evidence that the government is softening up public services for gradual privatisation. New Labour inherited the Private Finance Initiative from the Conservatives and has since developed its own ‘PFI Taskforce’, one aim of which is to sell PFI to the public as the only way forward. For example, in 1997 Alan Milburn (now Health Secretary) was quoted in the Guardian saying ‘Where there is a limited amount of public sector capital available, as there is, it’s PFI or bust [emphasis added].’[6] Milburn also extended PFI to enable private consortiums to build 18 hospitals, which will be leased back to the NHS at an estimated cost of £18 billion[7]. In their 1998 report on job creation the European Round Table of Industrialists warned that education ‘is entrusted to people who appear to have no dialogue with, nor understanding of, industry and the path of progress.’[8] ‘The provision of education is a market opportunity and should be treated as such.’ One can only hope none of the report’s authors’ former schoolteachers had to read this. Outside the ERT’s corporate wet dreams, Education International has noted that the creeping privatisation of education worldwide has led to increasing ‘competition between educational establishments to seek new sources of finance’ as government funding drops. As they cut costs and attempt to increase income ‘by all available means’, universities ‘adopt the behaviour of commercial companies’, resulting in a culture of ‘conquest of foreign markets.’[9] GATS looks set to make this the norm. The combination of haste, ambiguity and overriding prioritisation of the needs of business provide many reasons for concern over the effects that GATS may have on service sectors, not least health and education. The structural adjustment programmes (SAPs) forced on some indebted countries by the IMF as a pre-condition for soft loans provide an important set of case studies. Among the SAPs’ most frequent demands are government cuts in spending and subsidy in health, education and food; devaluation of local currencies; ‘containment’ of wages; repeal of job protection laws; economic deregulation and removal of restrictions on foreign investors; in short, a removal of most of the means by which the Western hemisphere has ensured its economic supremacy. Similar conditions will be enforced under commitment to GATS. In his report on the effects of financial liberalisation on healthcare, Dr. K. Balasubramaniam notes that one effect of SAPs is that ‘concepts of social justice and equity in healthcare services have almost disappeared’, ‘Public health budget is no longer seen as a productive investment for human development and economic growth, but as an unnecessary financial burden on governments which should be avoided.’[10] Dr. Balasubramanian points to the fallacious reasoning of globalisation’s advocates, who base their arguments entirely on the concept of ‘level playing fields’, assuming the competition on equal terms of all nation states. As this is starkly untrue, market liberalisation programmes such as GATS ‘offer enormous benefits to major traders’, since they are able to ‘dump’ services in developing countries: ‘initially quoting very competitive prices which local firms cannot quote’ they ‘force domestic service providers out of business’. The beneficiaries of deregulation and the shift to commercial control are the transnational corporations who are enabled to buy into previously closed service markets, particularly the public sector: a big prize, for example it currently accounts for around 40% of GDP in the UK. To capture a share of this ‘market’, TNCs are mounting a concerted campaign to open up more provision to the private sector. In health care, industry lobbyists argue that ‘public ownership of health care has made it difficult for US private sector health care providers to market in foreign countries.’[11] Charlene Barshefsky, US chief trade delegate who chaired the Seattle round, similarly dribbles in anticipation, 'commercial opportunities exist along the entire spectrum of health and social services.’[12] Happily for the corporations, the US ‘took the initiative’ at the Uruguay Round ‘to transpose the provisions of the GATT [the General Agreement on Tariffs and Trade – forerunner of the WTO]’ from ‘trade in commodities’ to ‘the area of services as a whole.’[13] Working in this international forum allowed provisions which would be unthinkable at national level, where policy making has to preserve a semblance of accountability. Education International, which was present at the negotiations in Seattle, commented ‘the issue of GATS was not the subject of major disagreement between the government delegations.’[14] In other words, TNC-friendly governments have tabled a few token objections and carried on with the meat of the negotiations, presumably planning to go back to their electorate and say ‘our hands are tied – we have to privatise because we’re signed up to this international agreement’. The author knows of no provisions for the expression of civil society’s position on GATS 2000. As with the MAI, negotiations proceed without public consultation, and the lengthy input of industry lobbyists is ‘treated in strict confidence.’[15] A characteristic of all multilateral trade agreements, this secrecy ‘very often results in the main players concerned, including entire populations, being faced with a fait accompli, in which they have had no say.’[16] In the absence of democratic exploration or discussion of alternatives, liberalisation is again presented as an inevitable corollary of globalisation, the path of progress. While it is still possible for governments to negotiate exemptions from specific GATS rules, the model of GATT suggests any exceptions from the rules will be merely tokens. For example, the ‘General Exceptions Article (XX)[17] ‘allows members to break…GATT rules…to protect human, animal or plant life or health’ or for ‘the conservation of exhaustible natural resources.’ But dispute panels interpreting these rules do so very narrowly, to the extent that ‘every challenge brought against US environment laws so far has resulted in rulings that the law in question is not protected by Article XX.’ Corporate profit is more valuable than human life and health, and corporate law – the law of the bottom line – overrules democratic parliamentary law. The UK Government’s White Paper on Globalisation shows just how much Tony Blair has taught Claire Short about US-EU neoliberalism in so little time. But Short can say what she likes about the new ideals of globalising development; until the democracy-eroding tenents of corporate law are undermined, globalisation still means neoliberalism, which still means backstage negotiations such as GATS, kept out of the public view and in the grip of the transnationals whose interests they are designed to serve. There is only one way to stop this. Negotiations are going on now and governments have demonstrated their pussilanimity in the face of TNC pressure on any number of occasions, but they are still vulnerable to embarrassment. As with the MAI, GATS needs to be dragged into the sunlight of popular scrutiny, crippled by the garlic of protest and staked through the heart with a resounding democratic NO! Campaign contacts: • World Development Movement, 25 Beehive Place, London SW9 7QR tel: 0207 737 6251 is running a campaign, ‘Stop the GATSastrophe!’ www.wdm.org.uk/campaign/GATS.htm • Education International, 5 bd du Roi Albert II, 1210 Brussels, Belgium, tel: +33 2 224 0611) regular information on GATS2000 negotiations at www.ei-ie.org • People and Planet, 51 Union Street, Oxford OX4 1JP tel: 01865 245 78 jess@peopleandplanet.org |
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| Footnotes [1] White Paper on Globalisation, Nov. 2000 , HMSO, Ch2 para 51 [2] Education International website www.ei-ie.org/action/english/Globalisation/etrseattle.htm [3] World Development Movement Nov2000 media briefing: GATS national treatment rules [4] ibid. [5] Jérôme Monod, Pehr Gyllenhammar and Wisse Dekker September 1991 Reshaping Europe: A Report from the European Round Table of Industrialists, ERT, Brussels cited in George Monbiot Captive State Macmillan 2000 p308 [6] Guardian 4/7/97 [7] Observer 3/12/00 [8] European Round Table of Industrialists, Job Creation and Competitiveness through Innovation, Nov 1998, quoted in Monbiot, p 331 [9] as note 2 [10] Dr. K Balasubramaniam, Globalisation and Liberalisation of Healthcare Services: WTO and the General Agreement on Trade in Services www.pha2000.org/issue-_bala1.htm [11] US Coalition of Service Industries, http://www.uscsi.org [12] ibid. [13] as note 2 [14] ibid. [15] Peter Mandelson, then Minister for Trade, 1998, in a paper presented to UK Industry, cited in World Development Movement GATS briefing for MPs, p7 [16] as note 2 [17] The World Trade Organization (WTO) and its Multilateral Trade Agreements Keith Ferguson, www.peacecenter.com/issues/global/gl_wto3.html |
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