Dutch GATS Platform Calls on the EU Member States

Dutch GATS Platform Calls on the EU Member States
Stop Unsustainable Liberalisation of Trade and Investment in Services!
GATS Platform Press Release 7 December 2005

Basic services such as education, health care and water are essential elements in a balanced economic and social development. Universal access to such services is crucial for reaching the Millennium Development Goals. Introduction of market forces in the services sector, in connection with principles of full cost recovery as imposed by the international financial institutions, conflict with principles of universal access to basic services for everyone. Liberalisation, privatisation and commercialisation tend to favour investment in services for the richer segments of the population.
There is increasing recognition that services liberalisation without flanking regulation yields unsatisfactory results and may even undermine the economic and social cohesion in a country. In developing countries, regulatory frameworks are often insufficiently developed. Therefore, they must in no way be pressured by the WTO member states, nor by the international financial institutions - such as IMF and World Bank - to liberalise and privatise services sectors.

Services and the Doha Development Round

Services constitute an important growth market, also in developing countries: they make up roughly half of developing countries' national income. International stipulations regarding the trade in services are concluded within the WTO General Agreement on Trade in Services (GATS). Trade blocks like the EU and the US are exerting strong pressure on developing countries to open up their services industries to a far greater extent than they deem acceptable, in exchange for crucial concessions in agriculture. Many developing countries are reluctant to enter into new GATS commitments, as they are experiencing difficulties assessing the effects of binding services liberalisation under the GATS.

Don't exert pressure to liberalise public services - The EU should withdraw all requests to developing countries to liberalise essential services such as water, health care, education, energy and financial services. (Cross) subsidisation benefiting the poor and marginalised must not be hampered by the GATS agreement. It is essential that the EU take a critical stance on cost recovery principles to ensure that these do not become effectively irreversible under GATS.

No benchmarking - Basic services such as education, health care and water are essential if the Millennium Development Goals are to be met. The EU member states must resist the introduction of benchmarks in the GATS negotiations at the WTO Ministerial Conference in Hong Kong, obliging developing countries to commit to a set degree of liberalisation. A formula approach in GATS leaves too little scope to cater to the different development levels and needs of poor countries.

Assess the impact of deregulation and liberalisation - An assessment of the effects and outcomes of liberalisation of services which have already been deregulated and/or committed under the GATS is essential, before developing countries can be required to enter into new commitments. Such an assessment should take place under the auspices of the Council for Trade in Services of the WTO. Impact analyses by national governments and independent research by NGOs may serve as input for a formal debate.

Guarantee the right to regulate - The rules of the GATS and other agreements must not be used to hamper member states' right to introduce new regulations if national policy aims so require. When a developing country introduces a new regulatory framework, the WTO member states should always take into account the development stage of the services sector in the country concerned, as well as the need to set rules to reach internationally accepted levels of social protection and labour and environmental standards. A coherent regulatory framework is essential to counterbalance any adverse effects of liberalisation.

Include emergency safeguard measures in the GATS - Any new GATS agreement must incorporate emergency safeguard measures, ensuring that countries retain full rights to reverse liberalisation of service sectors should undesirable or unforeseen side effects occur (for example, in health or social development). In Hong Kong, a clear framework for concluding the ESM negotiations must be established.

No necessity test - In the current negotiations on domestic regulation (art. VI.4), national standards and other measures should not be subject to a 'necessity test'. Developing countries should be entitled to the necessary technical assistance from the richer WTO member states to - based on mutual agreement - strengthen their institutional infrastructure to adequately regulate their services industries. The EU member states should insist the EU take into account sustainable impact assessments when making liberalisation requests.

Protect migrant rights - The GATS mode 4 negotiations on temporary labour migration treat migrants as tradable commodities and put the interests of transnational corporations at centre-stage. Corporate interest leads Western governments to exclusively promote migration of high-skilled personnel in the GATS. Meanwhile, the developed countries show little or no inclination to allow temporary admission of low-skilled workers or to set transparent standards for visa and employment permits ensuring the protection of the human rights of migrants. Migrants must not be treated as a factor of production and migrant policy should not be determined at the WTO.

Stop capital flight - When entering into new GATS commitments, the issues surrounding capital flight should be specifically dealt with. The current stipulations of the GATS agreement underscore the free movement of capital. But when multinational companies can engage in profit repatriation without any obligation to reinvest in the countries where these profits were realised, a balanced economic development in (poor) countries is undermined. Therefore, GATS article XI must be reviewed.

Transparency - The EU member states should urge for more transparency in the negotiating process and ensure equal access to information for all stakeholders. The GATS negotiations should not only result in more regulatory transparency, but also aim for increased transparency with regard to the operations of foreign companies. Current proposals to enhance transparency in domestic regulation should not widen the influence of foreign companies in the decision-making process on domestic policy.

The Dutch GATS Platform is part of an (inter)national coalition of civil society organisations taking a critical stance on global services liberalisation.

GATS Platform organisations include: Attac Netherlands, Corporate Europe Observatory (CEO), Dutch Student Union (LSVb), Friends of the Earth Netherlands, Centre for Research on Multinational Corporations (SOMO), Transnational Institute (TNI), Wemos, World Information Service on Energy (WISE), X-Y Solidarity Fund

The GATS Platform secretariat is hosted by the Transnational Institute
Website: www.gats.nl
Email: secretariaat@gats.nl