Ei-iE

WTO members warned of perils of including public services in GATS

published 29 October 2008 updated 29 October 2008

Experts are warning members of the World Trade Organization of the risks they face if they include public services like education in trade and investment agreements.

At a session at this year’s WTO Public Forum organized by Education International and Public Services International, panelists agreed that regulations and measures aimed at developing and expanding access to education, health, and other services could be at risk if the commercial rules of the WTO’s General Agreement on Trade in Services (GATS) are applied.

“Because there are so many unanswered questions about how GATS could affect education, it’s essential that countries adopt a precautionary approach and not make any commitments on educational or other public services,” argued EI’s trade consultant, David Robinson.

Roberto Bosch, services negotiator with the Argentinean mission to the WTO, agreed that nations need to be extremely cautious about what sectors they cover, citing the case of water services in his country.

Bosch explained that following a wave of failed privatization in the 1990s, Argentina has recently restored public control over water and sewage systems. According to Bosch, if Argentina had made commitments on water services, it is likely this action would have run afoul of GATS rules.

“It is therefore extremely important for us that we not schedule GATS commitments in public sectors and that we remain very cautious about how far to liberalize trade in services,” Bosch stated.

Robert Stumberg, professor of law at Georgetown University in Washington D.C., argued that negotiations aimed at developing new restrictions on domestic regulation could have serious consequences for public services. According to recent proposals, these new rules would require governments to ensure that measures they require service providers to meet with respect to licensing, qualifications requirements, and technical standards are not “disguised barriers to trade” and are “objective” and “relevant”.

Stumberg gave various examples from the United States of how regulations in the public interest would be called into question and adversely affected if restrictions containing these terms were adopted.

This concern was echoed by Robinson who noted that in the education sector many regulations concerning the curriculum are subjective in nature and may not stand up to a strict test of “objectivity”.

Similarly, Robinson suggested, educational requirements are not always directly “relevant” to the provision of a service.

“In many countries, students in vocational training programs are also required to complete general education courses that are not, strictly speaking, directly relevant to the occupation for which they are studying. In these cases, couldn’t offshore private education providers claim that such rules are really disguised barriers to trade because they aren’t really necessary?” asked Robinson.

Myriam Van der Stichele, senior researcher at the Amsterdam-based Centre for Research on Multinational Companies, argued that in the wake of the current credit crisis, commitments on financial services should not be made at the Doha negotiations at the WTO, especially until the right regulations are in place and the role of the public sector is reviewed and strengthened.

“Recent events in the world’s financial markets show us very clearly the problems that can arise from financial liberalization. Yet the developed countries are still pressing developing countries in the Doha GATS negotiations to open up their financial markets,” Van der Stichele noted.

She suggested that financial services have a public function, and should not be treated only as a commercial sector.

“The current financial crisis in the United States makes the public interest aspect of the financial sector clear,” she said. “The American government is now spending billions of dollars for bailouts of financial institutions. In this way, financial liberalization can also lead to the weakening of public services, as bailouts divert government funds from public services.”