How TiSA strolls off with our services

23 August 2015
Article

While TTIP is currently attracting the most attention, more trade agreements are looming. In July, world leaders holed themselves up in back rooms to discuss TiSA, an extensive service agreement intended to put (public) services, like the water supply, in the hands of the international market.

 

Photo credit Photo by Cornelia Reetz

(The article was updated on 6th October 2015)
TiSA, the Trade in Services Agreement, moved into the thirteen round of negotiations. It is by far the most extensive agreement of the array of current trade and investment treaties, including CETA, TTP and TTIP. Fifty, mainly high income, countries took part in the secret talks, which were held in Geneva from 6 July until 10 July. Also present were the US and the EU, the latter negotiating on behalf of 28 of its member states. Together, these countries are worth two thirds of the global GDP, and more than two thirds of the global trade in services.

How to protect trade secrets

The TiSA negotiations,  under way since 2012, took place behind closed doors. Whether these talks will lead to a service agreement or not, the TiSA papers containing the stances of our governments will not be released until five years after the negotiations, according to Wikileaks. The whistleblowers organisation recently published seventeen classified documents offering a look into the scope of the agreement. The documents reveal the plans that are currently under construction for airline, telecom and financial services. Equally, news website the New Republic reported that TiSA might enable banks to exchange data from EU-customers with companies in other TiSA-countries, such as the US, where privacy regulations are less strict.                                            

Research done by Public Services International (PSI) shows that TiSA’s original text excludes only those services performed under government authority. These services are considered non-commercial as they do not compete with other providers of services. In practice, however, public amenities such as health care, social services, education, postal, waste and water services are often financed and delivered by a mixed system  that is either wholly or partially funded by governments.  These semi-public services do not fall under TiSA’s narrow definition, and henceforth could be privatised at the drop of a hat. This could come at the expense of public access to education, healthcare or water services, all human rights.

Fear of water privatisation

The services agreement TiSA could mean that market reforms, such as the privatisation of water companies, would become impossible to undo. In the TNI report ‘Our public Water Future’, the authors emphasise that in the past fifteen years, 235 cities and villages have cancelled privatisations in order to remunicipalise their water services.  Communities have taken these actions for a number of reasons, such as preventing the decline of services and because of insufficient investments, conflicts on operational costs, skyrocketing water prices, problems of monitoring private management and the lack of financial transparency.

Similar to the trade agreements between the EU and Canada (CETA) and the EU and the US (TTIP), TiSA is likely to have a ‘list it or lose it’-structure. Participating countries will have to declare and justify not wanting to outsource water services to the market. If water is not on this negative list, the government will be forced to give both national companies as well as multinational businesses a similar treatment.

The documents leaked during the CETA-negotiations proved that the EU was advocating the liberalisation of water services. After the leak there was an intensification of public pressure, and ultimately water landed on the negative list, thereby escaping privatisation. According to Public Services International (PSI), the federation of trade unions, TiSA will make it impossible for governments to reverse privatisation or decrease the influence of the private sector. Governments will only be able to choose to maintain privatised services as they are or to extend liberalisation.

Beyond the GATS-agreement

Countries negotiating TiSA, including the Netherlands, refer to themselves as the ‘Really Good Friends of Services’, and they are the strongest advocates of the liberalisation of services in the World Trade Organisation (WTO). Yet, as far back as 1995 the WTO had already created an elaborate services agreement, namely the General Agreement on Trade in Services (GATS). According to the Really Good Friends and lobby groups [1], GATS does not take things quite far enough. Research by PSI shows that, thus far, TiSA has three characteristic that go beyond the GATS-treaty:

(1) While GATS allows countries to handpick the service sectors to be liberalised, because of TiSA governments would have to leave all or most of their services to international markets. According to the network Our World Is Not For Sale, the Really Good Friends want for participating governments to outsource at least 90 percent of their services to trade and industry.

(2) Additionally, new clauses such as the ‘standstill’ and ‘ratchet’ provisions would make it impossible to cancel current and future liberalisations.

(3) On top of this, the GATS provision, which states that countries are allowed to pull back from a commercial agreement, would be removed from TiSA. These additions would mean a government that signs TiSA can no longer revoke privatisations.

The ‘fair and equitable treatment’ clause

There are two examples to illustrate the conflicting interests between foreign companies and public services. In 2014, the British service company United Utilities sued the Estonian government, because the latter would not allow for a raise of water prices. Basing themselves on the ‘fair and equitable treatment’ clause, the company demanded to be reimbursed for a sum of 90 million euros, a number which represented the predicted profits up until the year 2020. It is thanks to a trade agreement between the Netherlands and Estonia, that United Utilities – which has a letterbox company in the Netherlands – can demand compensation from Estonia.

Recently, the Investment Tribunal ICSID judged that Argentina owes the French water- and energy multinational SUEZ over 360 million euros. Because of price rises, enormous debts and a lack of investments, the Argentinian government had decided to expel SUEZ and to reclaim control of the Buenos Aires water services. The ISDS-clause in the investment agreement between Argentina and France means that the government – and, ultimately, the Argentine tax payer – will have to pay for the mismanagement of a French multinational.

At the cost of the common good                 

When the TiSA talks began in 2012, the governments and lobby groups involved hoped for the agreement to be settled in 2014. Due to conflicting interests, it seems that negotiations won’t be finished until 2016. Because of a lack of transparency, analyses have been limited to the leaked documents and a number of independent investigations. It is unsure whether water and other essential services will be liberalised under the authority of TiSA.

Also, it remains to be seen whether the ISDS clause will be a part of the services agreement. What is clear, however, is that already in previous trade agreements the foreign investor was strongly protected. If the services agreement is going to include new clauses such as the ‘standstill’ and ‘ratchet’ provisions, it will only increase the power of investors as it will be impossible for governments to cancel current and future liberalisations. For this reason TiSA may very well tarnish the quality, affordability and accessibility of services that are supposed to be universally guaranteed

Public debate triggers withdrawal

If a proper public debate takes place though, it is possible for governments to realise the financial strains put on society by such trade agreements. Recently Uruguay announced that it would abandon the TiSA negotiations. With 117 votes against 22, the vast majority of the governing leftist coalition Frente Amplio voted against continued participation in the talks.

When the government of Uruguay entered the negotiations in the beginning of 2015, unions and civil society started to team up to campaign against TiSA. After intensified public pressure, the government studied the agreement for four months and requested each Ministry to provide an analysis on TiSA's possible consequences. The unions and civil society made extensive use of Wikileaks' leaked texts and analyses to inform the politicians and parliamentarians about the agreement's potentially negative impacts. The ministries of health, education, labor and industry realized that TiSA would go against the country's public interest.

According to PSI, the ruling coalition stated that it would be ''inconvenient'' for Uruguay to go on with the negotiations, ''taking into account our vision of an integral development of the nation''. This was the first time that a government openly discussed the socio-economic implications of TiSA. Uruguay has hereby set the example of what a government is capable of when it takes public opinion and societal concerns into account.

 

[1] Public Services International writes that after the stagnation of the service-negotiations in the WTO, the American ‘Coalition of Service Industries’ suggested a continuation of negotiations outside of the WTOframework.