- 1. What is GATS?
- 2. Why services?
- 3. What types of services (…)
- 4. What are the modes of (…)
- 5. What are the general (…)
- 6. What is the connection (…)
- 7. How are the water sectors
- 8. How are the power sectors
- 9. What other claims do (…)
- 10. How is GATS-WTO linked (…)
- 11. How have the GATS negotiat
- 12. What’s in store for (…)
In December 2005, the highest policy making
body of the World Trade Organization (WTO)
meets for the sixth time, this time in Hong Kong,
in another attempt to hammer out neoliberal
trade rules as outlined in the Doha Development
Agenda. It can be recalled that two years ago,
intense protest brought on the collapse of the
2003 5th Ministerial in Cancun, in the face of the
developed nations insistence on maintaining
their protectionist policies (e.g., heavily
subsidizing their agricultural sectors) while
demanding that developing nations abandon
theirs. This blocked trade liberalization from
progressing any further, but in 2004, the WTO
General Council conveniently mounted what has
been called an “institutional coup” and breathed
new life into the stalled liberalization process.
The “July Framework” carries over North
governments and corporations’ unfinished
business from the failed Cancun talks, which
clearly privilege the European Union and the
United States over the majority of poor,
developing WTO members.
The July package also involves the General
Agreement on Trade in Services (GATS) as
services negotiations are now pursued
alongside DDA negotiations on other concerns.
This “single undertaking” approach accords
even greater negotiating leverage to the EU and
the US, as they can, for instance, choose to hold
out on agricultural concessions, should the
developing countries prove intransigent and
steadfast in the area of trade in services.
For people’s organizations and progressive
movements, this may be the only principled
stance that governments of developing countries
should take vis-à-vis GATS, a far-reaching
instrument of corporate globalization and a
practically irreversible process that threatens the
freedoms, the very survival and future of South
peoples across the globe.
The information in this primer aims to give a
brief background, basic information and updates
on GATS that we hope would be useful as a
resource material in JS-APMDD campaigning to
stop water and power privatization in the region.
1. What is GATS?
GATS, a legally binding set of rules covering
international trade in services, is one of more
than 20 international agreements enforced by
the WTO among its 148 members.
GATS differs from other WTO agreements, in
that its mandate not only aims to reduce barriers
on the trading of goods but also to open up
countries’ service sectors comprehensively to
global trade and competition. With “services”
pertaining to anything outside of manufactured
goods, raw materials and farm products, the
scope of GATS is far-ranging and
unprecedented. It establishes the trade rules
governing cross-border trade in services for
WTO member countries that are supposed to
make it easier for services and service providers
to move from one country to another.
In truth, there is more than just the acceleration
of services liberalization in GATS. Contrary to
how it is packaged, GATS is not the trade
agreement that it is but one-sided investment
tool that gives global corporations increasingly
unhampered access to markets and human
services, and grants them as much if not even
greater rights than citizens to exploit such
access. The WTO and the European Commission have said as much, respectively
flaunting GATS as the first multilateral
agreement on investments and principally as an
instrument of business.
World Exports and Imports of Commercial Services1
(In Bn Euros and % of World Total)
Figures not available here. See Jubilee South website.
1 Table taken from Eurostat News Release 117/2001, 8 November 2001, “The EU Figures for the Doha Conference”. Data
source: IMF. Figures excluding intra-EU transactions. Commercial services excluding government services.
2 Intra-EU transactions are excluded. Intra-EU-15 trade in commercial services was worth 710.8 bn EUR in 2000.
Including this trade, the EU-15’s share of world exports in 2000 was about 42%, and about 41% for imports.
3 Including repairs on goods & expenditures of foreign governments & international organisations in the USA,
excluding postal & courier services.
4 Not by ranking order. Figures for Canada and China are given for comparative purposes only.
GATS emerged at the close of the 1986-1994
Uruguay Round of negotiations, upon the urging
of the developed countries to set up an
international trading regime similar to the
General Agreement on Tariffs and Trade
(GATT) governing manufactured goods, but this
time, dealing with trade in services. It then came
under the auspices of the newly formed WTO in
1995 and has, since 2000 been the subject of
negotiations or “rounds” among members aimed
at establishing cross-border trade regulations
that would progressively remove all obstacles to
competition in the services sector.
GATS was previously tackled on a separate
track from the other WTO concerns, but in
November 2001, during the 4th Ministerial
Conference in Doha, Qatar, it was integrated
with other WTO treaties into a “single
undertaking”, euphemistically called the Doha
Development Agenda. This means that GATS
issues will no longer be tackled independent of
the other issues that the WTO is mandated to
enforce upon its members. (All WTO Members,
currently some 140 economies at present, are
also Members of the GATS.)
2. Why services?
By the 90s, the services sector was promising to
be a profitable investment area. From 57
percent in 1990, the contribution of the service
sector to world gross domestic product grew to
64 percent in 2000 (World Bank). Of various
services sectors, the water, health and
education services are registering the biggest
potential for profit. According to the International
Consortium of Investigative Journalists: “...water
companies are chasing a business with potential
annual revenues estimated at anywhere from
US$400 billion to US$3.” The market base of the
most globally active water firms (all French)
have in fact multiplied from 51 million to 300
million over a 12-year period, with business
operations reaching across 56 countries. On
education and health care, global expenditures
have reportedly gone beyond US$2 trillion and
US$3.5 trillion, respectively. (Barlow) The table
below shows the US, Japan, Canada and the
EU countries dominating global trade in
services.
3. What types of services are covered by GATS?
GATS covers 12 broad categories: services to
business; communications; construction and
engineering; distribution; education;
environment; financial services; health and
social services; tourism; sports, culture and
entertainment; and transport. Anything else not
covered by these sectors comes under the
classification “others”. One hundred sixty subcategories
go even deeper into the sectors,
covering a whole range that includes postal
services to scientific research, architecture,
publishing and rubbish collection.
An important aspect of the bilateral request-offer
processes that have been undertaken during
trade rounds is the Schedule of Specific
Commitments. “Each WTO Member is required
to have a Schedule of Specific Commitments
which identifies the services for which the
Member guarantees market access and national
treatment and any limitations that may be
attached. The Schedule may also be used to
assume additional commitments regarding, for
example, the implementation of specified
standards or regulatory principles....”
The schedule of commitments are organized
into “sectoral” and “horizontal” sections:
– Horizontal Section: contains entries that
apply across all sectors subsequently listed
in the schedule; often refers to a particular
mode of supply, notably commercial
presence and the presence of natural
persons.
– Sector-Specific Sections: contain entries
that apply only to the particular service.
(Culled from the General Agreement on Trade in
Services [GATS]: objectives, coverage and
disciplines. Posted at the WTO website)
4. What are the modes of supplying services?
“Requests” or commitments are made with
respect to each of four different modes of
supplying services.
– a. Cross-border supply is defined
to cover flows of services from the
territory of one Member into the
territory of another Member (e.g.
banking or architectural services
transmitted via telecommunications
or mail);
– b. Consumption abroad
refers to situations where a
service consumer (e.g.
tourist or patient) moves
into another Member’s
territory to obtain a service;
– c. Commercial presence implies
that a service supplier of one Member
establishes a territorial presence in another
Member’s territory to provide a service (e.g.
domestic subsidiaries of foreign insurance
companies or hotel chains); establishing a
presence includes ownership or lease of
premises.
– d. Presence of natural persons consists of
persons of one Member entering the territory of
another Member to supply a service (e.g.
accountants, doctors or teachers).
(Culled from the General Agreement on Trade in
Services [GATS]: objectives, coverage and
disciplines. Posted at the WTO website)
Mode 4 deserves special attention for Asia
Pacific because of its implications on the huge,
largely unskilled numbers of overseas workers
who have been forced to find jobs abroad
because their own countries have failed to
provide decent employment. An increasingly
large number of these workers are women.
General Obligation | What does it mean for WTO members? | ||
---|---|---|---|
Most Favored Nation (MFN) Treatment (Part II, General Obligations and Disciplines, Article II) | Treat the foreign service suppliers of other member- countries equally and consistently. | ||
Transparency in regulations (Part II, General Obligations and Disciplines, Article III) | Promptly inform other members of relevant measures which affect the application and operation GATS; immediately inform the Council for Trade in Services of t any new, or any changes to existing, laws, regulations or administrative guidelines which affect trade in services. | ||
Objective, reasonable, and impartially administered regulations (Article VI Domestic Regulation) |
In sectors where specific commitments are undertaken, ensure that measures affecting trade in services are carried out in a reasonable, objective and impartial manner. | ||
Administrative review and appeals procedures (Article VI Domestic Regulation) | Maintain or institute judicial, arbitral or administrative tribunals or procedures to address and/or review decisions affecting trade in services. | ||
Disciplines on the operation of monopolies and exclusive suppliers (Article VIII Monopolies and Exclusive Service Suppliers) |
Ensure that any monopoly supplier of a service in its territory does not violate the MFN, specific market access of national treatment obligations. If a member’s monopoly supplier competes in supply of a service, it should ensure that the monopoly supplier does not abuse its position in its territory and acts in a manner consistent with MFN, specific market access of national treatment. | ||
Specific Obligations | What does it mean for WTO members? | ||
Market access (Part III Specific commitments Article XVI) | Applies in areas where commitments have been made, but subject to “limitations” (the laws, rules and regulations that may be counter to MFN, national treatment and market access principles of GATS). These include limitations on the number of service suppliers, outputs, operations, natural persons to be hired or value of transactions, whether in the form of quotas, monopolies, exclusive service suppliers or the requirements of an economic needs test, the total quantity of service outputs (quantitative restrictions) . Members cannot require specific types of legal entity or joint venture through which a supplier may supply a service nor limit foreign capital participation or the total value of individual or aggregate foreign investment. | National treatment (Article XVII National Treatment) | In the sectors where it has specific commitments, each Member shall grant the services and service suppliers of other Members treatment no less favorable than that it accords to its own services and service suppliers. The treatment of domestic and foreign services and suppliers should be identical, meaning that conditions of competition should be the same for the services or service suppliers of all Members. National laws should not be changed to favor the member’s own service industry. |
Source: 1) General Agreement on Trade in Services; 2) The General Agreement on Trade in Services (GATS): objectives, coverage and disciplines. Posted at the WTO website; 3) GATS Primer, Understanding the General Agreement on Trade in Services. Friends of the Earth International, November 2002.
Although GATS does not specify the level of
skills of workers, countries have made
commitments only for the highly skilled (e.g.,
technical experts, managers, business
executives etc.), who will be amply remunerated,
and are not as vulnerable as less-skilled
migrants desperate for employment. Gross
violations of their human rights are welldocumented.
As it pertains only to temporary employment
(ranging from several weeks to a maximum of
five years), GATS cannot claim to be an
enabling instrument for providing employment
across borders, as supporters have claimed. It
can only benefit big business and their home
countries, whose expatriate executives and
technical specialists are already enjoying highly
paid jobs in multinational subsidiaries around the
world.
There are possibilities that developed countries
may attempt to squeeze out more from the
developing countries in exchange for
concessions under Mode 4. But as Walden Bello
has pointed out, accepting the liberalization of
services in return for Mode 4 concessions that
liberalize only professional labor is a very bad
exchange indeed. If anything, this will only
worsen the brain drain of developing countries,
and not bring relief to their unemployment
problems since the EU and the US will likely
liberalize entry only for the most highly skilled
professional workers.
5. What are the general and specific GATS obligations and disciplines for WTO members?
General obligations are applied across-theboard,
on all service sectors, regardless whether
commitments have been made by WTO
members. Specific obligations, on the other
hand, refer to specific sectors which membercountries
have listed in their Schedule of
Commitments.
6. What is the connection between GATS and privatization?
GATS adds to the creation of conditions and of
enabling environments to surrender to the
private sector its responsibility of providing a
service. This could take various forms, from
divestments or actual transfers of public assets
to concessions or contract agreements. GATS
skinned to the core is nothing more than the
drive to pressure governments, especially those
of the majority of LDCs, to relinquish their
publicly entrusted mandates in determining
investments in services and surrender this to
private big business.”
Article I (Section 3, b) disingenuously excludes
services "supplied in the exercise of
governmental authority" and “not supplied on a
commercial basis, in competition with one or
more service suppliers”. This is one of the
arguments that supporters cite when asserting
that GATS does not threaten public services.
Such claims, however, are clearly misleading
and utterly deceitful. Since many public services
today are supplied commercially and in
competition with one or more service providers,
they cannot escape the thrust of GATS to
eventually bare the services markets to full
international competition.
Leaked documents on the EU’s final requests
from 109 member-countries have exposed the
truth behind the EC’s denial that GATS would
inevitably compel countries to privatize publicly
services. This only confirms what supporters,
like the lobby group International Financial
Services of London have plainly acknowledged,
that the very act of "opening service markets to
foreign providers is self-evidently inconsistent
with retaining public monopolies." (Hillary)
7. How are the water sectors of countries brought under GATS rules?
Environmental services have been
reclassified, upon the EU’s
recommendation, to include “water for
human use and waste water management”
as a sub-sector. This officially subjects
water resources and attendant services for
its management and distribution under the
GATS regime.
Special attention must be given to the EU
water agenda considering that membercountries
control the largest global
interests in water as top exporters of water
and sanitation services. It is thus hardly startling
why the EU, speaking as one bloc in the WTO,
seeks water sector liberalization commitments
from 72 WTO member countries, mostly LDCs.
Estimates have pegged Vivendi (now Veolia)
and Suez’s control of all private water services
at a hefty 70 percent. Vivendi boasts of 110
million customers in 100 countries, while Suez
has 125 million in 130 countries. Another
European multinational is the German utilities
conglomerate RWE, which has partnered with
Thames Water of the UK.
Relatively smaller competitors in the global
water industry belong to EU countries as well:
SAUR (French), Anglian Water and United
Utilities (British), Cascal (a joint venture of UK’s
BiWater and the Dutch group Nuon), Aguas de
Barcelona (Spain) and International Water (a
partnership of Bechtel of the US and Italian
utilities group, Edison).
EC officials have even been holding
consultations with water companies on possible
obstacles to the expansion of their businesses
abroad. The EC’s Trade Directorate was also
known to have told company representatives in
a 2002 meeting: "’One of the main objectives of
the EU in the new round of negotiations is to
achieve real and meaningful market access for
European service providers for their export of
environmental services. Therefore, we very
much appreciate your input in order to
sufficiently focus our negotiating efforts in the
area of environmental services.’” Other EC
officials have said as much: “’The EC agenda is
to seek better access for European service
exporters in foreign markets.’" (Hillary, Save the
Children UK 2003)
Equally appalling and revealing of WTO’s
“development agenda” is the way the EU is
targeting water liberalization even in countries
where public water facilities are providing clean,
adequate and affordable water, and operating in
a participatory, transparent and accountable
manner. One example is the publicly owned and
managed municipal water facility in of Porto
Alegre, which sources and provides water to
almost a hundred percent of its population and
at rates that are among the lowest in Brazil.
This is only one of the many pitfalls of GATS: its
all-encompassing reach and hold that does not
distinguish whether a service is publicly owned
and provided, or partners with private entities,
and does not recognize alternative forms of
service delivery that challenge free market
assumptions. It simply ignores why many
Northern nations, for instance, implicitly
recognize certain services, such as those over a
resource as basic as water, as imbued with
public interest and have chosen to keep these
above any private business interest and in
government hands.
8. How are the power sectors of countries brought under GATS rules?
Along with the privatization of water sectors, the
drive for so-called power sector reform has also
become a marked priority of lending institutions.
Privatization of all, or critical sectors (e.g.,
transmission) has been made a conditionality of
loans extended to South countries.
GATS expediently provides the enabling
environment in this respect with its broad
coverage of the energy sector and its push to
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dismantle what little protection is left among
South countries against the encroachments of
big business. Privatized power or water regimes
have been known to prioritize “high-value”
industrial users over “commercially unviable” or
loss-making sections such as slum communities
and far-flung areas. This will surely have a
significant impact on the estimated 1.6 billion
people today who are without access to power —
a resource that in today’s world, has also
become as critical to development as water.
If the EU has special interests vis-à-vis the water
sector, it is the US government and its power
firms that are greedily eyeing the profits to be
made from the acceleration of energy
deregulation under GATS. Up until its eventual
collapse, the giant energy corporation Enron,
with its strong links to the Bush administration,
used to be a lead player in the influential lobby
groups behind GATS-WTO. Large investment
banks like Goldman Sachs, Morgan Stanley,
Merrill Lynch and UBS, commercial banks like
Bank of America and other US-based energy
conglomerates have now filled Enron’s place.
(Public Citizen, March 2003; Enron: Clarke,
2001.)
Enron’s fall led some US states to seek reregulation
or delay the implementation of
deregulation. No such action will be possible
under GATS rules, which is probably why the
majority of US states have remained wary of
GATS. GATS doublespeak recognizes “...the
right of developing countries to regulate and
handle the supply of energy services in their
territories in order to meet their domestic policy
objectives” , but these would all be eroded by
the GATS overarching principles of MFN, market
access and national treatment.
Just like water services, MFN treatment allows,
without restriction, the entry of big business into
all the sub-sectors of national electricity
industries. National treatment privileges them
even further by granting them the same
privileges enjoyed by local power companies.
Finally, pushing privatization, market access
principles target the dismantling of integrated
public monopolies, i.e., national power
corporations, including those still effectively
providing affordable electricity to households
and communities.
9. What other claims do GATS proponents make?
GATS defenders lay great store by the treaty’s
preamble “...recognizing the right of Members to
regulate”. In truth, this does not stand up to
specific, legally enforceable obligations laid out
under the GATS rules on MFN and market
access, and the incursions and restrictions on
government regulation with regards service
suppliers.
The myth of transparency and accountability.
Services negotiations have been conducted with
secrecy over the past rounds. As it were, the
WTO and the North governments that dominate
it already exercise great legally enforceable
powers over the rest of the developing world.
“...[T]he operations of the WTO show that it has
become the most powerful, secretive and antidemocratic
body on earth, rapidly assuming the
mantle of a global government and actively
seeking to broaden its powers and reach.”
(Barlow, 2001) Yet GATS endows it further with
even greater power through negotiations
processes that have proven, despite claims to
the contrary, patently unjust, undemocratic and
significantly lacking in transparency and
mechanisms for accountability.
The myth of flexibility. Article XIX (Section 2)
declares “...due respect for national policy
objectives and the level of development of
individual Members....” and that there shall be
“...appropriate flexibility for individual developing
country Members for opening fewer sectors,
liberalizing fewer type of transactions,
progressively extending market access in line
with their development situation....” Negotiating
guidelines/procedures are also to be established
for each round, based on assessments of trade
in services.
Why then has the former WTO director of the
Trade in Services division, David Hartridge,
described the terms of GATS as practically
irreversible? This is because other provisions
effectively work to “lock-in” service sectors
committed to GATS. For example, GATS
stipulates only the removal of obstacles to
market access, and provides nothing on reviving
past or introducing new conditions for
investments. Through Article XXI, punitive
measures are also to be applied against
wayward members seeking modification of their
commitments through Article XXI. This means
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that even before the modification is actually
implemented, the Member will already have to
make compensatory adjustments to potentially
affected Members.
The judicious choice of foreign direct
investments, subject to national laws and
performance standards, could indeed advance
development efforts of poor and developing
countries. But whatever gains are expected from
allowing foreign investments, fall flat in the face
of GATS provisions that erode the very
measures intended to make foreign direct
investments work for country development
goals. Article XVI bans members from setting
conditions on the type of legal entity, e.g., joint
ventures, or putting limitations on foreign capital
partaking.
Philippine laws, for example, that require 60
percent equity of Filipino companies in projects
with foreign-investor participation will most likely
be targeted by GATS-WTO as a barrier to free
trade and market access. Guarding against the
incursions of European retail chains like Tesco
and Carrefour, Thailand drafted a Retail
Business Act, but was compelled to abandon
this after the EU submitted in 2002 its GATS
requests for full commitment in the sector. (Joy
and Hardstaff, World Development Movement,
2003)
The bilateral nature of the request-offer
negotiations adds another layer of pressure on
developing countries whose trade
representatives are reported to have singly gone
into bilateral trade negotiations against several
trade specialists from North governments. As
the Bangladeshi ambassador to the WTO noted:
“’When you go into a bilateral format of the
negotiations, you are vulnerable... Because
against a major developed country, you simply
cannot withstand the level of scrutiny. And you
do not have the strength in numbers that you get
in the multilateral process...Within a multilateral
context, in the WTO, sometimes developed
countries are unable to get their way with us. But
when you come to the bilateral mode, we find
that where they are unable to persuade us to
agree to something multilaterally, they apply
pressure bilaterally to get it done.’” (As cited by
Joy and Hardstaff)
As of May 2005, however, only Australia,
Bahrain, Brazil, Canada, the EC, Hong Kong,
Iceland, Korea, New Zealand, Singapore,
Suriname, Taiwan, and the US have put revised
offers forward. This slow progress in GATS
offers is reportedly being met by continuous
attempts to change the negotiations process,
that is, abandon pretense at flexibility and set
minimum benchmarks for all WTO members to
follow. Proposals include, among others,
ensuring ---
– “...commitments for all sectors
[particularly] in Mode 3 (commercial
presence). This includes the right to
establish new and acquire existing
companies... and to ensure appropriate
commitments in cross-border supply
(Modes 1 and 2)“[the removal] for the
mentioned modes of services delivery,
discrimination between domestic and
foreign suppliers regarding the
application of laws and regulations
(national treatment) and to remove nondiscriminatory
limitations such as
monopolies, numerical quotas or
economic needs tests....”
(Strickner, Institute for Agriculture and Trade
Policy, 2005)
10. How is GATS-WTO linked to the priorities and thrusts of international financial institutions?
“The interlinkages between the different aspects
of economic policy require that the international
institutions with responsibilities in each of these
areas follow consistent and mutually supportive
policies. The World Trade Organization should
therefore pursue and develop cooperation with
the international organizations responsible for
monetary and financial matters....,” so the WTO has declared. In the same declaration, it invites
the Director-General of the WTO to “...review
with the Managing Director of the International
Monetary Fund and the President of the World
Bank, the implications of the WTO’s
responsibilities for its cooperation with the
Bretton Woods institutions, as well as the forms
such cooperation might take, with a view to
achieving greater coherence in global economic
policymaking”. (Declaration on the Contribution
of the World Trade Organization to Achieving
Greater Coherence in Global Economic
Policymaking)
As far back as the Bretton Woods conference in
1944, there was already recognition that in
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addition to the IMF and the International Bank
for Reconstruction and Development (the World
Bank), there had to be another mechanism for
globally overseeing liberalized trade. The WTO
and the world’s dominant financial and lending
institutions continue to work for so-called
“harmonization” or the convergence of policies
and actions. Concretely, the WTO’s
privatization-enabling trade regimes and the IFIs’
drive to privatize public services have been
greater coherence over the last few years. In
fact, the expanded reach accorded by services
transactions under GATS has increased socalled
“harmonization” and further enlarged
areas of interaction, complementation and
coordination.
“The structural adjustment programs and other
liberalization reforms as conditions on loans by
the IMF and World Bank have, and continue to
be, a major method of supporting WTO trade
liberalization objectives.” From 1981 to the close
of the Uruguay Round in 1994, 75 countries
were the recipient of 238 loans supporting the
liberalization of trade or foreign exchange policy.
(Rowden)
With the World Bank’s approval of the Private
Sector Development Strategy in 2002, service
donor and lending agencies have been
prioritizing the increased involvement of the
private sector in services provision. Loan
conditionalities have also been made contingent
on borrowing countries’ ability to ensure
business climates that are attractive to private
investors.
“Privatization frontiers” is how the
Bank’s private sector investment arm,
the International Finance Corporation,
describes the water sector, among
other social services targeted for
greater private sector participation. In
2002, the Bank released the Water
Resources Sector Strategy (WRSS), its
new agenda for increasing levels of
private sector involvement in the water
sector, from sourcing to management
and distribution. Large dam projects,
various types of urban and rural water
privatization arrangements, cost
recovery schemes, etc., have gained
resurgence from the WRSS.
These three institutions are clearly moving
towards coordinating not just global trade but
global finance as well. In April 2001, the World
Bank released the document Leveraging Trade
for Development, in which it offered new lending
instruments meant to assist borrowers in
meeting WTO requirements and prepare for
participation in multilateral, regional and bilateral
trade agreements. (Rowden, 2001) Then in
2003, a historic first transpired at the General
Council: the meeting of the heads of the World
Bank, IMF and the WTO. It was further
suggested by the WTO secretariat that
governments accord these bodies observer
status at the highest level of negotiations, the
Trade Negotiating Committee and its various
negotiating bodies, a status that not even the
UN bodies have been granted.
“Members should ask themselves why these
institutions rather than the UNDP and, in
particular UNDP’s regional offices, are not
proposed for such status instead—since the
round is supposed to be about development.”
(Geneva Update, Trade Information Project,
Institute for Agriculture and Trade Policy, May
20, 2003)
11. How have the GATS negotiations progressed thus far?
Five years from the adoption of GATS by the
WTO, talks and negotiations were initiated by
the WTO in February 2000. The critical requestoffer
phase of the GATS negotiations opened in
mid-2002 with WTO members submitting
“requests”, or more accurately, commitments
that bind targeted service sectors to
liberalization.
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Originally, the GATS round aimed for conclusion
in January 2005, but due to deep disagreements
on various issues between developed and
developing countries, the 5th Ministerial in
Cancun collapsed. One of the main points of
contention was the issue of agricultural
subsidies, on which the EU and the US have
consistently been stonewalling.
Developing countries have repeatedly
been calling for reductions on North
governments’ more than US$300
billion worth of export subsidies and
domestic support, which place
agricultural producers in South
countries at a gross disadvantage and
have progressively damaged local
production. Again ignored in Cancun,
developing countries coalesced into
the G-20, along with Brazil, India,
South Africa and China, whose large
agricultural sectors and markets are
critical to the North. Then in 2004, in
an effort to get liberalization moving
forward, the WTO General Council
came up with the July Framework — a
negotiations framework entailing a
broader reach services and even
deeper commitments on the evercontentious
areas of Services,
Agriculture and Non-Agricultural
Market Access. The temporarily
stalled process towards full
liberalization had been restarted
because G20 lead countries, Brazil
and India had been drawn into the
informal grouping known as the Five
Interested Parties (FIPs) or the G5,
together with the US, EU and
Australia. Supposedly representing
almost a hundred developing
countries, Brazil and India played right
into the hands of the G5 initiators.
Predictably, the developed countries’
agenda, such as pushing for more
market offers on services
liberalization and maintaining high
subsidies for their agricultural
producers, remain high on the
agenda. The framework for nonagricultural
market access (NAMA)
will flood Southern markets with TNC
products as industrial and manufacturing tariffs
are steadily eliminated.
12. What’s in store for developing countries at the 6th WTO Ministerial Conference in Hong Kong?
WTO cluster meetings have been going on to
target the “satisfactory” conclusion of the Doha
Round in Hong Kong. With regards GATS, this
means full access to a global
market in services. Members
should, by that time, show how
they have progressed vis-à-vis the
offers made or the commitments
sought since the Doha Ministerial.
Some statements by EC officials
that GATS has been “the most
disappointing area” of the Doha
Development Agenda’s progress
already provide indication that the
developed countries are bound to
step up the pressure on services
commitments from developing
countries.
Meanwhile, the “single undertaking”
approach has rendered the
negotiating positions of developing
countries even more fragile and
vulnerable to the pressure tactics of
North governments. “By formally
tying the services negotiations to
negotiations in other areas, the
Framework allows the EU and the
US, in particular, to hold the
negotiations in agriculture hostage
to the services negotiations and
vice versa, by conditioning their
‘concessions’ in one area
dependent on their gains in the
other.” (Focus on the Global South,
2005)
The precedent set by having the
WTO General Council issue the
July Framework, forebodes other
perils for developing countries in
the road to Hong Kong. Deviously,
the decision-making core of the
WTO has swung to the General
Council from the Ministerial
Conference. The possibility is real
that the Hong Kong Ministerial
Conference would be reduced into a stocktaking
exercise, while critical decision-making
processes on major issues are passed on to the
level of the more exclusive General Council of
the WTO. ###
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