Services are often described as things you can buy and sell but
can’t drop on your foot – i.e. not a tangible commodity. The list of services
which are covered by this agreement include:
·
Business services
·
Communication services
·
Construction and engineering services
·
Distribution services
·
Educational services
·
Environmental services
·
Financial services
·
Health related and social services
·
Tourism and travel related services
·
Recreational, cultural and sporting services
·
Transport services
(see the attached list for a more detailed breakdown)
At present the agreement only applies to those services which a
government has agreed to have covered.
To get access for one country’s suppliers of those services to the
services markets in other countries.
To prevent governments from discriminating in favour of their
domestic services suppliers and against foreign suppliers of those services.
To prevent governments from giving services suppliers from some
foreign countries better treatment than those from other foreign countries
To prevent governments from structuring their services markets in
ways that reduce access for foreign service suppliers.
The
services agreement is especially important for the big transnational
enterprises operating in all these sectors. The major push has come from the US
and EU, plus the more ideologically driven free trade countries.
It
was an outcome of the Uruguay Round of GATT negotiations and came into effect
in January 1995. However, the agreement built in another round of negotiations
to extend its scope. That began in January this year and the initial proposals
for extending it are expected to be tabled by the end of the year. Like all
such negotiations, they take place in secret.
The agreement is administered by the World Trade Organization. The
WTO has a special Council on Trade in Services whose job is to oversee the
operation of the agreement and expand its scope.
All
WTO members, which covers almost all countries in the world. China will join
shortly, as will a number of South Pacific countries.
It
applies to anything a government does that can be defined as a ‘measure’ – i.e.
policies, laws, regulations, administrative practices, subsidies and grants,
licensing requirements, national interest tests, quality controls and
standards, etc. The reason for adopting these measures is irrelevant. If they
breach the agreement they are not allowed.
All
levels from central to local government, including states in federal systems
such as Australia.
The
agreement effectively sets the boundaries on what policies a government can
adopt on these services. If a government is found to have breached the
agreement, a dispute panel can authorise a country whose service suppliers have
lost out to impose serious financial sanctions.
All
such agreements are required to be consistent with the WTO. That means they can
only go further than GATS; they can’t wind parts of it back. Hence, the
Singapore Agreement made more commitments than New Zealand has made at the WTO,
although they only apply to Singapore. CER also makes more extensive
commitments in relation to Australia.
B. THE BASICS OF THE AGREEMENT
It
covers four ways of supplying services, which are pretty comprehensive:
1.
Supply across the border: for example, allowing
people to access foreign-supplied medical advice, offshore financial services,
distance education services, entertainment services, etc, especially through
the internet.
2.
Consumption abroad: citizens physically moving
offshore to consume services, such as tourism, education, health services,
rather than being required to use local services or limits on offshore travel
and expenditure for balance of payments reasons.
3.
Establishing a commercial presence: allowing a foreign service
provider to set up a local business, such as a retail chain or cleaning company
franchise, banks and insurance companies, schools and universities, waste
disposal companies, media corporations, bus and rail companies.
4.
Movement of personnel: supply of a service by
specialist personnel travelling to the country, such as consultants,
professionals, specialist teachers or researchers, entertainers, specialist
tourism operators (note: this doesn’t apply to ordinary workers in the services
sector)
Some
rules apply across the board.
The
most important of these is the rule that says you can’t treat the service
suppliers from one WTO member better than the rest. (That’s known as ‘Most
Favoured Nation’ treatment.)
Other
rules only apply to particular services a country has agreed to have covered by
the agreement, which are set out in each country’s schedule.
These are far more intrusive because they require
non-discrimination between domestic and foreign service suppliers (this is
called ‘national treatment’). They also prohibit a number of measures
which would limit foreign access to domestic services markets (known as
‘market access’ restrictions). These are:
·
Limits on the number of service suppliers through
numerical quotas, monopolies, licensing exclusive suppliers or applying an
economic needs test; (eg. television broadcasters or universities)
·
Limits on the total value of service transactions or
assets, through numerical quotas or applying an economic needs test;
(eg. banks)
·
Limits on the total number of service operations or
quantity of services provided, through numerical quotas or applying an
economic needs test; (eg. medical schools and medical students)
·
Limits on the total number of people who can be employed in
a particular sector or by a supplier, through numerical quotas or applying an
economic needs test; (eg licensed health providers)
·
Measures which restrict or require certain types of legal entity or joint
venture as the means for supplying the service (eg. fishing companies);
·
Limits on the level of foreign capital involved in
a particular services enterprise or in total for a sector (eg. media
ownership).
Some services sectors have
their own special annexes.
These are the ones which weren’t finalised when the first
negotiations were completed, and cover areas like financial services and
telecommunications.
HOW
DO YOU FIND OUT IF A COUNTRY HAS AGREED TO HAVE A PARTICULAR SERVICE COVERED?
Each
government’s schedule of its commitments can be found on the WTO website. These
are quite difficult to interpret. They indicate which services are covered. But
they also say whether the government has retained are any restrictions within
those services on national treatment or market access and in relation to any of
the four ‘modes of supply’. The New Zealand government made amongst the most
extensive commitments of any.
The
agreement is meant to be a one-way street – governments are required to remove
their existing restrictions over time, not add to them. Although it is possible
to withdraw a commitment, the government would have to open up another service
area to an equivalent value. New Zealand hasn’t left many to trade off in that
way. No government has tried to do this yet.
In theory ‘services supplied in the exercise of government
authority’ are excluded. But only if those services (a) don’t have a commercial
element and (b) are not provided in competition with another supplier. There
are very few public services that meet those conditions today.
That’s
a matter of some dispute. The NZ officials currently say it doesn’t, but other
governments, and WTO and OECD officials, say it does.
HOW
DOES IT BALANCE OTHER PUBLIC POLICY CONSIDERATIONS LIKE SOCIAL WELLBEING,
PROMOTING NATIONAL CULTURE AND IDENTITY, REGIONAL DEVELOPMENT TREATY OF
WAITANGI, OR OTHER INTERNATIONAL OBLIGATIONS?
It doesn’t. These are irrelevant. Basically, if a measure is
intended to serve one of these purposes, but it breaches the agreement, it can
lead to sanctions. There are a very few exceptions which relate to national
security, preventing exhaustion of natural resources and protecting human,
animal or plant life and health, but even there a very restrictive approach is
taken.
There is no general recognition of indigenous peoples and
indigenous rights in the agreement. New Zealand didn’t have a general opt-out
for Treaty-related measures. But it did reserve the right to give ‘Maori
individuals or commercial entities special treatment’.
A
government that believes its service suppliers have suffered because of a
breach by the NZ government could try to solve it by discussions. If that
failed, they could lodge a complaint. This would be heard by a panel of trade
experts whose only concern is whether this Agreement has been breached; they
are not interested in the reasons or justification. If a foreign government
succeeds in its complaint and the NZ government doesn’t back down, it can face
retaliatory sanctions to the amount of the alleged loss. These can be imposed
in any services sector, or even non-services, such as agriculture.
PART C: MOBILISATION AGAINST THE GATS
WHAT IS HAPPENING WITH THE NEW GATS
NEGOTIATIONS?
Negotiations
to extend the GATS are now well underway in Geneva. These are moving secretly,
and most documents released by New Zealand government officials have any
information relating to these negotiations deleted. Despite claims that
progress is slow, governments are supposed to put their new offers on the table
by the end of this year.
WHAT ARE THE MAIN ISSUES?
The
transnational services exporters and their governments (mainly US and EU) are
trying to expand the agreement as far as possible, especially in growth areas
of information technology, and public services which are being privatised or
opened to competition (postal, transport, health, education, broadcasting,
etc). Poorer countries are very concerned about the effects of existing and
future commitments on them. Proposals on the table include:
·
applying
the agreement to all services except those opted out, rather than only the
services that are opted in;
·
extending
the list of services that might be covered and regrouping them in ways that
ensure the widest possible coverage;
·
getting
governments to extend their existing commitments substantially;
·
make
it clear that subsidies are covered;
·
restricting
the kind of domestic regulations governments can use;
·
extending
non-discrimination to government procurement or purchase of services (as now
applies with Singapore for contracts over $125,000)
WHAT ARE OTHER UNIONS DOING?
A
network of services specialists in various countries, including unionists, is
monitoring the current negotiations through a closed list-serve. Public
Services International has prepared some good analysis of the impact of GATS on
public services (see: www.world-psi.org). Education International has also become
active, in collaboration with PSI. The ACTU is beginning to focus on the
issues, especially in the financial sector and education unions.
WHAT ABOUT BROADER CAMPAIGNS?
The
international ‘Shrink or Sink’ campaign against the WTO is demanding the
withdrawal of all public services from GATS (see attached). There are some
active sector specific campaigns, e.g. against the privatisation of water
services. Health professionals in the EU have become very concerned and put
pressure on the European Parliament (see the attached article from the Lancet). Several Canadian local
authorities have passed resolutions opposing GATS for limiting their autonomy
and socio-economic development options.
SERVICES SECTORAL
CLASSIFICATION LIST
1. BUSINESS SERVICES
A. Professional Services
B. Computer and Related Services
C. Research and Development Services
D. Real Estate Services
E.
Rental/Leasing Services without Operators
F. Other Business Services
2. COMMUNICATION SERVICES
A. Postal services
B. Courier services
C. Telecommunication services
D.
Audiovisual services
E. Other
3.
CONSTRUCTION AND RELATED ENGINEERING SERVICES
A.
General construction work for buildings
B.
General construction work for civil engineering
C. Installation and assembly work
D. Building completion and finishing work
E. Other
4.
DISTRIBUTION SERVICES
A. Commission agents' services
B. Wholesale trade services
C. Retailing services
D. Franchising
E. Other
5.
EDUCATIONAL SERVICES
A. Primary education services
B. Secondary education services
C. Higher education services
D. Adult education
E. Other education services
6.
ENVIRONMENTAL SERVICES
A.
Sewage services
B. Refuse disposal services
C. Sanitation and similar services
D. Other
7.
FINANCIAL SERVICES
A. All insurance and insurance-related services
B.
Banking and other financial services
8. HEALTH RELATED AND SOCIAL SERVICES
A. Hospital services
C.
Social Services
D. Other
9. TOURISM AND TRAVEL RELATED SERVICES
A.
Hotels and restaurants
B.
Travel agencies and tour operators services
C.
Tourist guides services
D. Other
10. RECREATIONAL, CULTURAL AND SPORTING SERVICES
A.
Entertainment services
B. News
agency services
C.
Libraries, archives, museums and other
cultural services
D.
Sporting and other recreational services
E. Other
11. TRANSPORT SERVICES
A.
Maritime Transport Services
B.
Internal Waterways Transport
C.
Air Transport Services
D.
Space Transport
E.
Rail Transport Services
F.
Road Transport Services
G.
Pipeline Transport
H.
Services auxiliary to all modes of transport
12.
OTHER SERVICES NOT INCLUDED ELSEWHERE
FURTHER INFORMATION
CAN BE FOUND ON THE FOLLOWING WEBSITES:
The WTO Website: www.wto.org
Schedules of each government’s commitments can be found in the
services aspect of the website.
Research papers prepared by the WTO secretariat which promote
extension of GATS coverage in the following sectors are also available on the
website:
·
Distribution Services - S/C/W/37
·
Construction and Related Engineering Services - S/C/W/38
·
Postal and Courier Services - S/C/W/39
·
Audiovisual Services - S/C/W/40
·
Legal Services - S/C/W/43
·
Architectural and Engineering Services - S/C/W/44
·
Computer and Related Services - S/C/W/45
·
Environmental Services - S/C/W/46
·
Advertising Services - S/C/W/47
·
Education Services - S/C/W/49
·
Health and Social Services - S/C/W/50
·
Tourism Services - S/C/W/51
·
Energy Services - S/C/W/52
·
Air Transport Services - S/C/W/59
·
Land Transport Services Part I - Generalities and Road Transport -
S/C/W/60
·
Land Transport Services Part II - Rail Transport Services -
S/C/W/61
·
Maritime Transport Services - S/C/W/62
·
Financial Services - S/C/W/72
·
Accountancy Services - S/C/W/73
·
Telecommunications - S/C/W/74
·
Presence of Natural Persons (mode 4) - S/C/W/75
Public Services
International Website: www.world-psi.org
Education International Website: www.eiie.org
Canadian Centre for Policy Alternatives: www.policyalternatives.ca