How GATS could affect your life

1 January 2003

French version

Austere, bespectacled, rail-thin European trade commissioner Pascal Lamy hardly looks the part of the 1930s gangland movie bad guy. And yet he's got a hold of your future and is doing all he can to hand it over to the transnational corporations. The vehicle for Lamy's villainy is an obscure trade agreement called GATS, or the General Agreement on Trade in Services.

The agreement itself may be a less-than-riveting read, but its significance is relatively easy to grasp. All human activities are to become, in the fullness of time, profit-oriented commodities that can be invested in and traded. And GATS will make this irreversible. GATS is not a finished treaty but an open-ended framework agreement that mandates "successive rounds of negotiations". The goal of these negotiations is to "achieve progressively higher" levels of liberalisation. What's not opened up today will be dealt with tomorrow until, presumably, all services are opened to all comers by all countries in all "modes" of delivery.

Twelve broad categories are covered by GATS.

These are: services to business; communications; construction and engineering; distribution; education; environment; financial services; health and social services; tourism; sports, culture and entertainment; transport; and, in case anything is not covered by the preceding 11, "other". Energy, previously considered a good, comes under "other".

A total of 160 sub-categories cover everything from postal services to scientific research, architecture, publishing and rubbish collection. Sometimes when I'm giving a talk on GATS I read out this list of categories at breakneck speed and ask if anyone in the audience is not worried about how the agreement will affect their lives.

The truth is, "public service" is an alien concept in GATS-world. GATS' only goal is to encourage more trade. Article I of GATS starts with a proclamation that the agreement does not apply to "services supplied in the exercise of governmental authority". This sounds great, except that this exemption is immediately followed by a qualifier: such governmental services must be supplied "neither on a commercial basis nor in competition with one or more service suppliers".

Bought any postage stamps lately? Or tube or train tickets? Seen a private school or clinic anywhere in your neighbourhood? Maybe in North Korea or Cuba there might just be public services that aren't delivered on a commercial basis or in competition with other suppliers, but not anywhere else.

Article VI, 4 is equally alarming. It would give GATS powers to interfere, via the WTO's Dispute Resolution Body (DRB), with government efforts to pass "measures" ("laws, regulations, rules, procedures, decisions, administrative actions or any other forms") that are deemed to constitute "unnecessary barriers to trade in services" or which are considered "more burdensome than necessary to ensure the quality of a service". GATS will develop "disciplines" to keep regulation under strict control and will apply a "necessity test" through which outsiders will determine what's necessary and what's not.

The GATS Working Party on Domestic Regulation, which is responsible for developing these "disciplines", recently targeted "unreasonable environmental and safety standards" in the area of maritime transport. That was three weeks before the Prestige disaster. Subsidies "may have distortive effects on trade in services" so they too will be subject to "disciplines". No one can predict what this may mean for domestic service suppliers that receive preferential treatment from their governments.

Since last year's WTO ministerial meeting in Doha, the GATS negotiations have entered an accelerated phase. In conditions of strict secrecy, all WTO member governments "requested" their counterparts opened up their service sectors to foreign competition. The request phase ended on June 30, 2002. The GATS negotiations are now, until March 31, 2003, in the "offers" phase. Based on the requests received, countries are replying to each other and announcing which service sectors they are prepared to open to foreign suppliers. Once a service is opened to one foreign supplier, it must be opened to all of them.

Thanks to leaks, we know what sectors the EU has asked 29 of its major trading partners to open to EU service suppliers. Among its more prominent demands are the total privatisation of postal services, and the liberalisation of large chunks of environmental services, energy, transport and scientific research.

Would you like to know what services the EU is "offering" in your name? Or what services its trading partners, especially the governments of poorer countries, are "offering" to the EU? So would we all, but we've not been so lucky with leaks in this regard.

Commissioner Lamy says it's "traditional" not to disclose negotiating positions, and that our partners want them kept secret. It's traditional in some societies to stone women, electrocute criminals or mutilate the genitalia of small girls. That doesn't make these practices right.

Anti-GATS activists will be delivering "presents for Lamy" from all over Europe on December 11. They'll be decorated with lobbying materials local groups have produced against GATS, and will be accompanied to Lamy's office by MEPs who have signed a call for transparency of the GATS negotiations. Public sector workers will also be represented. In the UK, the World Development Movement has produced some outstanding resources about GATS. Visit the WDM's website to find out more.

Copyright 2003 Red Pepper

About the authors

Susan George

Susan George is one of TNI's most renowned fellows for her long-term and ground-breaking analysis of global issues. "How to win the Class War - The Lugano Report II" is the newest of her sixteen widely translated books. She describes her work in a cogent way that has come to define TNI: "The job of the responsible social scientist is first to uncover these forces [of wealth, power and control], to write about them clearly, without jargon... and take an advocacy position in favour of the disadvantaged, the underdogs, the victims of injustice."

Recent publications from Trade & Investment

Central and Eastern European countries at the crossroads

Central and Eastern European (CEE) countries find themselves at a crossroad regarding their investment protection policies with the US. This briefing provides evidence that shows that including investment arbitration in the Transatlantic Trade and Investment Partnership (TTIP) will worsen the capacity for CEE governments to regulate.

TTIP Why the Rest of the World should Beware

Why should human rights, environmental and consumer advocate organizations all over the world that are working toward a world different from the corporate-led neoliberal dogma, pay special attention to TTIP?

Lawyers subverting the public interest

In response to growing public criticism of international investment law, a new lobby group has emerged, EFILA, seeking to influence European officials. This briefing exposes how EFILA represents an attempt by the arbitration industry to fend off much-needed reforms in order to protect a highly lucrative business.

International Investment Agreements Under Scrutiny

Citizens and policy makers around the world are increasingly questioning the trade agreement system, especially the investor-state dispute settlement mechanism (ISDS) that enables foreign investors to bypass the legal system of host states and sue governments before private tribunals for any policy, democratically passed law, or judgment of a court that adversely affects them.