Local
authorities in New Zealand have become increasingly aware that their powers are
affected by commitments to international free trade and investment agreements
made by central government.
In
New Zealand and overseas, many local and regional governments are challenging
the right of national governments to make commitments with which they have to
comply, but have no say in making - for example, by removing their right to prefer
local businesses and use rates to generate local jobs and income.
One
of the 28 agreements which the World Trade Organisation (WTO) oversees is the
General Agreement on Trade in Services (GATS).
According
to the European Commission, “GATS is not just something which exists between
governments. It is first and foremost
an instrument for the benefit of business.”
By
making specific GATS commitments, governments limit what current or future
governments can do in a particular service sector. At present the rules only
apply to services which a government has indicated it is prepared to open up to
foreign competition. A new round of GATS talks is currently underway and
governments are being pressured to extend their commitments to as many sectors
as possible. Governments are also being asked to accept ‘disciplines’ on the domestic regulation of
services, and bring services that are publicly owned and/or ‘procured’ by
government agencies under the rules.
Key
local government services are under threat. European Commission negotiators
want all water delivery services to be opened up to overseas corporations
through the GATS. New Zealand has had over a decade and a half of failed free
market experiments in a range of essential public services. GATS promises even
more of the ‘private profit before people’ formula. Expanding GATS will limit
the policy options available to current and future governments which want to
reverse market policies.
By
making specific GATS commitments governments limit what current or future
governments - including local and regional councils - can do in a particular
service sector. GATS has 3 basic rules:
1) a government can’t treat service suppliers
from one WTO country better than those from another
2)
it can’t give better treatment to its locals than it gives to foreign suppliers
in the services for which central government has made GATS commitments
3)
it can’t limit the access of foreign suppliers to its market in those services
by imposing limits on the total number of facilities or operations,
requirements for local content or local hiring.
GATS
also threatens to restrict local government’s ability to ensure access to
affordable, adequate basic services by prohibiting any restrictions and
internal government regulations in the area of service delivery that might be
considered “barriers to trade”. This means government regulatory measures that,
even indirectly or unintentionally affect the conditions of competition of
international service suppliers, could be challenged at the WTO. Enforceable
dispute mechanisms could see economic sanctions used against any government
judged to be in breach of GATS.
These
agreements could have a chilling effect on local or regional council
initiatives to plan new measures since violation of the GATS could leave them
open to WTO challenges.
To
many of the world’s transnational corporations (TNCs) these services are merely
a lucrative market which they want to control.
Non-commercial functions of public services designed to meet social,
environmental, Treaty of Waitangi or
cultural objectives are irrelevant to them and under GATS could be deemed
“barriers to trade”. GATS potentially
covers a range of local government activities, such as :
issuing
construction permits; zoning;
subsidizing low income housing projects; regulating casinos (gambling is a
service); liquor licensing; regulating size, location, and content of signs
(advertising is a service); pesticide spraying; regulating, building and/or
operating waste management sites; arts and recreation programmes; water supply;
garbage disposal; regulating store hours, size, location; instituting
architectural codes to protect tangata whenua and wahi tapu; operating and/or
regulating public transit, like bus companies, ports or airports; subsidising community economic development
initiatives that give preference to local hiring or purchasing
The
requirement not to discriminate in favour of local services suppliers will make
it hard for small local suppliers, providing local jobs, to compete with
overseas suppliers. If a council is
obliged not to limit access to the market for their services by imposing
numerical limitations on the size of the market, it won’t be able to set limits
on the number of waste disposal services or transport providers once those
services are included in GATS schedules.
GATS
is also a backdoor to more privatisation. TNCs are lobbying hard for access to
what governments currently spend on public services, through subsidies and
procurement. Through GATS they hope to
expand and lock in the opportunities opened up to them by the commercialisation
and privatisation in many countries.
Enforceable dispute mechanisms could see economic sanctions used against
any government judged to be in breach of GATS.
The
WTO denies that privatisation is on its agenda and says that services purchased
under government authority are excluded from GATS. But that does not apply to services that have any commercial
element or that are offered in competition with private suppliers. Once a government contracts out any part of
its public services (eg. water supply or accounting) or if private companies
supply services also provided by the government, whether voluntary or for
profit (eg. private waste disposal or recycling schemes operate alongside ones
operated by local authorities), then a WTO dispute panel could say these are no
longer government services and are subject to GATS.
New
Zealand has one of the most wide-ranging GATS commitments of any WTO
member. These include granting nearly
unlimited access to service suppliers in key sectors under local government
jurisdiction. In its free trade and investment agreement with Singapore it made
new bilateral commitments which cover dental services, ambulance services and
residential health facilities other than hospital services. These go further
than existing GATS commitments. A
document submitted by the New Zealand government to the WTO Council for Trade
in Services in June 2001 stated: “First and foremost, New Zealand will actively
encourage Members to explore ways in which existing commitments in all
services sectors, in terms of both market access and national treatment,
can be progressively liberalised.” This implies that the government is prepared
to extend its own commitments to all services - including all health, education
and water services.
Why
should local governments be bound by international agreements when they have
not been party to these negotiations in the first place, and when they
potentially constrain the policy options available to local and regional
councils to improve communities’ quality of life and support the local
economy?
In
October 2000, the Union of British Columbia Municipalities demanded that
Canada’s federal government consult more widely and comprehensively with all
citizens, especially local government, before contemplating its negotiating
position in WTO negotiations. They also
wanted local governments carved out from coverage by the GATS and opposed the
extension of the WTO Agreement on Government Procurement to cover local
authorities.
A
growing number of New Zealand local authorities and Local Government New
Zealand are now raising concerns about the impact of international trade and
investment agreements on the exercise of their powers, and about the lack of
debate on these issues. Some, like the
Christchurch City Council, have passed a number of resolutions and submissions
critical of the government’s continued push for free trade.
It’s
local body election time - ask your candidates where they stand on these
issues.
Raise
the issues at election meetings
Ask
candidates standing for local community boards and councils to take up this
issue in their election campaign
Demand
that your local candidates, if elected, will raise GATS as an issue of urgent
concern for your local council to consider
Support
council’s right to refuse to be bound by central government commitments which will undermine local body powers
Raise
the issues at election meetings
Find
out more about GATS and the impact on local government by contacting GATT
Watchdog, PO Box 1905, Christchurch, Ph (03) 3662803 Email: notoapec@clear.net.nz
PRODUCED
BY GATT WATCHDOG. P O BOX 1905, CHRISTCHURCH
TEL: (03) 366 2803 Fax: (03) 366 8025
Email: notoapec@clear.net.nz