WHAT THE GOVERNMENT’S ‘10 PRINCIPLES ON THE GATS NEGOTIATIONS’ REALLY MEAN

1. The Government will, first, adopt the same overall approach to the initial offer that guides New Zealand throughout all aspects of the WTO negotiations, that of advancing the national interest. This means that New Zealand will be guided by the overriding objective of securing tangible overall benefit. As such we will adopt a hard-nose negotiating approach. We will not be pursuing any unilateralist negotiating agenda but seeking reciprocal benefit.

Decoded this REALLY means:

The Government’s overall approach to services will be tied to its overall goal in the WTO negotiations, which centres on agriculture. Because advancing the national interest is dominated by the obsession with free trade in agriculture, rights to control our services will be sacrificed, if necessary, to advance that ever-elusive goal.

Seeking reciprocal benefits suggests the Government will be ‘requesting’ other countries to open up their services to market rules at least to the extent NZ has already done. This also suggests that NZ would be prepared to match what it has asked other countries to do, if it hasn’t done so already. That would include extreme ‘requests’, such as asking Europe to remove the protection for public services and utilities, and that countries commit their postal services and research in social sciences and humanities to free trade rules.

2. New Zealand is strongly committed to advancing improved terms and conditions for our services exporters. We will accord priority to achieving advances in sectors where our export interests are strongest and where we can enhance the service sector’s contribution to growth and innovation. New Zealand’s approach to its initial offer will take into account the need to advance those particular interests effectively.

Decoded this REALLY means:

This admits that the primary concern within the services negotiators is to improve the position of NZ’s services ‘exporters’– such as schools that rely on foreign fee paying students or construction companies that want easier access to overseas countries. Yet there is little, if any, evidence that NZ’s extensive GATS commitments have made any tangible difference to the ability of NZ firms to access overseas country’s ‘markets’.

But this consultation isn’t about what NZ wants other countries to do. We weren’t asked when the government put its ‘requests’ on the table in Geneva last June. It is about how much more of our services will be opened up to GATS rules. By saying the initial offer will take into account the need to advance those particular interests effectively they mean that some NZ services (eg environmental services) will be offered up to other countries transnational firms (eg. Vivendi) as a trade off for the entry of NZ firms into those countries’ markets (eg Transend helping to privatize poorer countries postal services).

3. The initial offer will be essentially conditional and revocable. That is to say, where the government may decide to propose commitments, these will be “initial” not only in the sense of their timing in the process, but also in terms of substance. New Zealand will reserve the right to modify or withdraw them in light of the subsequent developments in negotiations, particularly in light of the responsiveness of our trading partners to our requests both in the services sector itself and in light of the overall development of negotiations.

Decoded this REALLY means:

The secrecy of the process makes this ‘principle’ potentially meaningless. Assuming the Government does table an ‘offer’ it does not plan to let us see it, so we may not have enough detail to know if something been added or removed along the way. Nor is there any guarantee that the Government would tell us what they were doing. There has been no promise of another round of ‘consultation’, and if there was we have no reason to believe it would be any more genuine than this one. Indeed, as the horse-trading gets more intense later in the negotiations, there is likely to be more secrecy, not less.

Withdrawing proposals suggests the Government might remove services from the offer. But modify admits the possibility that it might add more sectors or agree to across the board commitments, such as locking in the current threshold of $50 million for requiring foreign direct investments to get approval from the Overseas Investment Commission. As a matter of political reality it would be much more difficult to take sectors off the table than to add them.

This seems much more likely because of the link to the agriculture negotiations. The EU is likely to play hard ball in its services demands in return for the slightest hint of concessions on agriculture - that’s what responsiveness of our trading partners to our requests . . . in light of the overall development of negotiations really means. Within the services negotiations, responsiveness of our trading partners to our requests . . . in the services sector itself may mean bringing more of our services under the GATS rules if other countries set make that the condition for opening up their ‘markets’ to NZ firms.

Most significantly, this only talks about removing or adding services during the negotiation stage. It fails to make clear that once the negotiations are over, the GATS makes it incredibly difficult to change or withdraw commitments that have been made.

4. The government does not intend to make any initial offers to change actual current policy settings (including for local government) and would be well within them. In other words, whatever decision is ultimately made as to the coverage of New Zealand’s initial offer, at most we would be offering to commit to, on a conditional basis, settings that reflect our settled policy in certain areas. There is sufficient negotiating coin in this respect.

Decoded this REALLY means:

The government is prepared to lock in - potentially forever - the extensive free market and deregulatory approaches that have been adopted since 1994.

Just think for a moment about the market failures that have emerged where the government has needed to have the room to re-regulate - electricity, telecom, education, health, construction, airways, railways and more . . . .

Now imagine that the National Government had already locked in the current regime back in 1994. This Labour Government is told that the GATS rules won’t allow it to deal with the market failures by adopting laws or regulations that limit access for foreign firms, give preference to local interests, restrict foreign investments, or pose ‘unnecessary barriers to trade’. It’s already found that problem with local content quotas in broadcasting.

Go a bit further and imagine a future government that doesn’t believe that market principles should govern our core services, and wants to give priority to the needs of local communities for reliable, affordable and accessible services, promoting local jobs, sustaining small businesses in our local communities, protecting the environment or honouring the Treaty and more. They are elected on that policy platform - and then they are told that the GATS stops them implementing those policies because this Labour Government has locked in the current free market regime.

The claim that the current level of deregulation provides sufficient negotiating coin shows how extensive those post-1994 changes have been and how much that gives the Government to negotiate with.

Again, note that this is carefully phrased to refer only to the initial offer, not to any modifications that might come later.

5. The government will continue to ensure that the initial offer will in no way override our present GATS reservation regarding the treatment of Maori persons or individuals.

Decoded this REALLY means:

Whatever Maori might demand in the current ‘consultation’, the Government will not remove the primacy of the GATS rules over the Treaty of Waitangi - the demand made by the Maori Congress and others back in 1994 in relation to the whole WTO negotiations.

It plans to stick with the minimalist wording of the current ‘reservation’. That wording makes no reference to the Treaty of Waitangi. It gives no recognition to the status of iwi and hapu, just to Maori ‘individuals and groups’. And it only allows preference to those Maori if they are engaging in a ‘commercial or industrial undertaking’, and not for reasons that are non-commercial, such as measures to promote te reo or kaitiakitanga, as intrinsic goods.

Significantly, the Government did adopt broader wording that referred to the Treaty in the Singapore free trade and investment agreement. It copped a lot of flack for doing so – despite that fact that the National Government had proposed a similar a ‘reservation’ during the negotiations on the now-defunct Multilateral Agreement on Investment in the late 1990s. It sounds like Labour doesn’t plan to open itself to similar attacks this time round.

6. The government will make no initial offer that would limit the government’s right to provide, fund or regulate public services such as health or education.

Decoded this REALLY means:

The Government is trying to mislead us. The previous National Government has already made commitments that limit the right to regulate in a number of public services sectors, including education and broadcasting. These limits arise through GATS rules that guarantee ‘market access’ and ‘national treatment’ (non discrimination) to overseas firms.

In addition, the GATS rules impose constraints on domestic regulation of professional qualifications, licensing and setting of technical standards. These apply to both the central and local government levels. Negotiations are underway to impose more serious ‘disciplines’ on the kind of domestic regulations that the government can use. These may end up applying to all services sectors. They would govern almost all New Zealand’s ‘public services’, because the exclusion of ‘services provided in the exercise of governmental authority’ from the GATS rules does not apply if they are either offered in competition with other providers or have a commercial element to them. The New Zealand Government is apparently supportive of these negotiations. Yet the negotiating document does not ask for any input on this, only on the ‘offer’.

There is a similar issue in relation to funding. The government does have the right to fund services as it wants, for now - but negotiations are underway for ‘disciplines’ on subsidies that could see some kinds of subsidies prohibited.

The more important question is who gets the right to access New Zealand subsidies and grants. According to the GATS, foreign transnationals have the guaranteed ongoing right to receive the same taxpayer subsidies as New Zealand’s own services providers do, in sectors such as education which the government has already brought under GATS rules. Ultimately, the more private, and foreign, providers involved in delivering public services, the more vulnerable quality public services will become.

7. The government will make no initial offer involving privatization of public services or of public entities, or which would affect the Kiwi-share arrangements.

Decoded this REALLY means:

This talks about future privatizations. But the government suggested in ‘principle 4’ that it was prepared to lock in the existing privatization of key services. This would make it extremely difficult to re-nationalize where there is market failure or because we want to pursue other priorities. The government has already had to step in to rescue Air New Zealand and the railways. It is perfectly possible that other key privatizations might also fail, especially where the overseas owners have left the infrastructure in a state of collapse.

Of course, selling assets is only one form of privatization. Opening up to competition, especially with aggressive foreign firms, is another way of forcing government agencies to act like private sector businesses. The recent embrace of public private partnerships is likely to bring public services under the GATS through many different entry points. While New Zealand is starting with PPPs in roading it is quite possible it will follow the UK path and bring private funders and managers in to run public health and education facilities. Commitments in subsectors as diverse as construction, asset management, human resource management, data processing, cleaning and catering would then guarantee foreign transnationals the right to deliver core elements of our public services.

8. New Zealand’s initial offer will not require a lowering of any of New Zealand’s quality standards in any area.

Decoded this REALLY means:

New sectoral commitments could bring some further services under the GATS rules, including services that deal with professional qualifications, licensing and technical standards. The Government’s claim that the existing ‘disciplines’ on domestic regulation and those now being negotiated do not require qualifications and standards to be lowered is highly debatable. These disciplines aim to reduce the choice of quality standards that can be adopted, especially if they were seen as indirect discrimination against foreign firms. What is necessary for ‘quality’ is a highly subjective decision.

9. An initial offer will not involve any change to New Zealand’s immigration regime?

Decoded this REALLY means:

The Government has preserved the right to control its immigration rules, but only where these rules don’t nullify their GATS promises that specialist personnel from foreign firms can come in under special arrangements. If more extensive commitments are made on the right of skilled personnel to enter New Zealand, they could push local workers out of jobs, one of the effects which immigration rules are designed to control.

10. New Zealand’s initial offer will take full account of the actual state of negotiations, particularly in light of the responsiveness of our trading partners to New Zealand’s own interests. This will, among other things, mean that we take into account the fact that this will be the first step in a process that is set to run until 2005. It will also mean that the government will judge where to pitch New Zealand’s offer taking into account what others are doing overall in the negotiations.

What this REALLY means:

. . . is contradictory. If the government’s initial offer is meant to take account of the actual state of negotiations, that means the negotiations are already underway and that other countries are already indicating what they are prepared to offer in response to NZ’s requests. Presumably NZ is also doing the same.

The plan to take into account what others are doing overall in the negotiations presumably refers to the positions that other governments are taking in the agriculture negotiations - which comes back to the prospect of this Government trading off the control of our services for the holy grail of free trade in agriculture.