The Guardian January 23, 2001


Are you being served?

Dave Timms of the World Development Movement in Britain analyses the 
General Agreement on Trade in Services

One year ago, trade unionists, indigenous peoples and campaigners 
celebrated the collapse of trade negotiations at the World Trade 
Organisation (WTO) in Seattle. The agenda had been overloaded past breaking 
point and the talks, which were aimed at launching a new round of trade 
agreements, dissolved. The waves from these momentous events have continued 
to spread throughout the world.

If, as Francis Fukuyama arrogantly proclaimed, the fall of the Berlin Wall 
marked the "end of history", then Seattle was the sound of history starting 
up again.

Squabbling among rich countries (mainly the EU versus the US), poor 
countries standing their ground on government procurement and investment 
measures, plus the utter incompetence of conference organisation, combined 
in the heady hothouse atmosphere of tear gas and protest as the talks 
imploded.

The past 12 months have seen frantic political activity between the US and 
the EU to ensure that Seattle isn't repeated at subsequent WTO ministerial 
meetings.

After Seattle, (British) Industry Secretary Stephen Byers said: "The WTO 
will not be able to continue in its present form.

"There has to be a fundamental and radical change in order to meet the 
needs and aspirations of all 134 members."

This has not happened. In fact, the government has been pushing full steam 
ahead for new negotiations.

The existing WTO agreements have continued. The reform agenda has been 
mostly ignored.

Over 1,000 non-governmental organisations around the world have signed a 
statement calling for the WTO to "shrink" its remit or have civil society 
"sink" it.

Opposition to specific WTO agreements and to the general corporate 
direction of globalisation has solidified.

Protests in Prague, Washington and, most recently in Nice, are famous 
because they happened under the media spotlight.

But there have been plenty in poor countries, where protests tend to be 
under the banner of anti-privatisation and deregulation of specific sectors 
rather than the general issue of globalisation.

Research by the World Development Movement has shown that, in the 10 months 
following Seattle, there were at least 50 separate episodes of civil unrest 
in 11 different poor countries, all directed against IMF and World Bank 
liberalisation policies.

In Seattle, the combination of protests and resistance from developing 
counties stopped a new round being launched and new agreements being 
negotiated.

The WTO did not, however, grind to a halt. The dispute process  the 
Supreme Court of free trade  has continued to rumble on.

But what is more worrying is the General Agreement on Trade in Services 
(GATS) which was left unaffected at Seattle.

GATS hadn't attracted as much public attention. It was part of the built-in 
agenda that countries signed at the birth of the WTO in 1994.

After Seattle, new agreements on government procurement and investment are 
still some way off.

For those seriously interested in extending the liberalisation of the world 
economy, GATS has become the only game in town.

GATS is far more than just another acronym in the alphabet soup of 
international trade deals.

It is a highly complex trade agreement, but it does a very simple job.

GATS has been described as the "Heineken" of trade deals  taking the free 
market into areas that other trade deals have failed to reach.

It threatens public access to essential services and reduces government's 
ability to intervene in large sections of its economy.

GATS will reduce the ability of democratically elected governments to 
regulate the power of unaccountable multinational corporations.

The scope of GATS is breathtaking  worldwide trade in services was worth 
over $1,000 billion last year.

GATS identifies 160 service sectors, from tourism to transport and from 
catering to construction  someone summed it up as "services are anything 
that you can't drop on your foot".

But the vagueness of the agreement has resulted in some surprising things 
being defined as services.

After being heavily lobbied by multinationals, the US brought a case 
against the EU over its support for small Caribbean banana producers, 
claiming that it was unfair.

The WTO ruled in favour of the US and sanctions were placed on the EU 
covering a range of products, including Roquefort cheese and Scottish 
cashmere.

This case was brought under GATS.

GATS is a service agreement yet it covers bananas because bananas have to 
be distributed and distribution is a service covered under GATS!

From the British perspective, the threat to our comparatively highly 
regulated service sector is beginning to be exposed.

Substantial concerns exist about the impact on the British education and 
health sector, which have been describes as "ripe for liberalisation" by 
one EU GATS negotiator.

For poor countries, GATS could be a disaster. The effect of privatisation 
of basic utilities in developing countries has been well documented.

If multinationals are seeking to make a profit out of water, health and 
education, those without purchasing power are likely to lose out.

Water privatisation in Puerto Rico resulted in poor communities going 
without water while US military bases and tourist resorts enjoyed unlimited 
supply.

Developing countries are very wary of further liberalisation of services.

GATS was sold to them on the grounds that they could liberalise at their 
own pace.

Of course, in practice, it is a little different. As part of this year's 
GATS negotiations, proposals have been put forward to change the 
negotiating structure of GATS to ensure that more service sectors are 
included at a faster pace.

Governments will "request" sectors from other countries in exchange for 
"offering" their own  for instance, the EU is likely to ask Thailand and 
Philippines to further liberalise their tourism sectors.

This happens within a framework that commits WTO members to "achieve a 
progressively higher level of liberalisation" in their service sectors.

It is unsurprising that corporations have been the driving force behind 
this agreement.

But the blatant manner in which this is acknowledged is shocking.

The EU website describes GATS as "not just something that exists between 
governments. It is, first and foremost, an instrument for the benefit of 
business".

If we ever had any doubts, WTO services division director David Hartridge 
makes it crystal clear when he admits that, "without the enormous pressure 
generated by the US financial services sector, particularly companies like 
American Express and Citicorp, there would have been no services 
agreement".

The service industry is big business and heavily dominated by Western 
multinationals.

US health corporations are reaching saturation in their home market and are 
eyeing the massive state-run European health sector.

At the same time, European utility corporations are having their attempts 
to expand into developing countries' markets frustrated by tight 
regulations and state ownership.

Following their creation out of privatisation of British utilities, a new 
breed of service corporation has quickly taken advantage of the opening-up 
of utilities markets in poor countries.

Anglian Water supplies water in Chile, National Grid delivers electricity 
in Zambia and Thames Water has contracts in Indonesia, Thailand and 
Malaysia.

Even though GATS will have a huge impact on people and parliaments around 
the world, the signing of this agreement at the end of 1994 passed almost 
unnoticed.

GATS applies to all levels of government  central, regional and local.

Significantly, government commitments under GATS are effectively 
irreversible.

Once a sector has been liberalised, future governments, however democratic, 
will find it virtually impossible to reverse the decision.

Certainly, the WTO secretariat does not appear to give much weight to the 
possibility of reversal, with senior officials describing liberalisation 
under GATS as "irreversible".

Decisions on how to organise service delivery are effectively being removed 
from the political arena.

Unless we act now, citizens in years to come may no longer have the 
democratic right to decide how public services are delivered and private 
service corporations are regulated.

* * *
Morning Star Britain's daily paper of the left.

Back to index page