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Selwyn Johnston



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GATS - Explained

GATS - Privatising ALL Services


Australian Department of Foreign Affairs and Trade - GATS

World Trade in Services - Australia


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Most media, elected officials and public servants, let alone the general public, are unaware of GATS, or of its implications. 

GATS targets elected governments… Local, State and Federal. It seeks to privatise all public services, everywhere. But several countries are demanding that a wide-ranging assessment of the impact of a free market in services be carried out. Non-government organisations (NGO's) and trade unions, such as the Australian Nurses' Federation, are demanding that services in the public interest be clearly exempt from GATS. 

In Australia, Medicare, public hospitals, parks and wildlife services, the ABC, public education, financial regulation, telecommunications, the transport industry… including roads, and Council procurement systems are at risk. 

All taxpayer support will be called a "subsidy" to be equally available to all commercial and public suppliers. 

All treaties are signed in Australia without debate in parliament or the media. This is called fast tracking. We have already signed 80 of 160 service area codes, including dentistry and health insurance, but much worse is to come! This will also include Medicare, environment and shipping regulation. 


The 1986-94 Uruguay Round of GATT, the widest-ranging multilateral trade agreement ever negotiated, covered for the first time not only services but also agriculture, investments and intellectual property rights, such as patents, trademarks and copyright. 

The 28 agreements, which now come under the WTO, fall into six broad categories: 

  1. Multilateral Agreement on Trade in Goods

  2. General Agreement on Trade in Services (GATS)

  3. Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPs)

  4. Understanding on Rules and Procedures Governing the Settlement   of Disputes (DSU)

  5. Trade Policy Review Mechanism (TPRM)

  6. Plurilateral Trade Agreements

The WTO administers and implements these various agreements, acts as a forum for multilateral trade negotiations, resolves trade disputes, oversees national trade policies and cooperates with other international institutions involved in global economic policy-making.

The WTO's legislative and judicial power to challenge the laws, policies and programmes of countries that do not conform to all its agreements, particularly if they are regarded as too "trade restrictive", sets the WTO apart from other international agreements. 

GATS Main Obligations  

Trade in services used to be considered ancillary to manufacturing and trade in goods. In the mid-1980s, however, many Western governments, faced with worldwide recession, inflation and unemployment, decided that removing obstacles to international trade in services, particularly national regulations, could increase the momentum to export services.

The US thus pushed for the provisions of the agreements governing trade in goods to be transposed into the area of services as a whole (although financial services were of prime interest), a move which "could easily have sunk the Uruguay Round and crippled the GATT", according to WTO Director-General Mike Moore. Many countries reluctantly agreed to GATS only if they could choose which of their services were covered by the 'Agreement'. The US took care, however, to include clauses mandating further liberalisation in future. 

Two GATS obligations apply directly and automatically to all WTO members for all services: most-favoured-nation treatment and transparency. 

Most-favoured-nation (MFN) treatment (Article II) does not mean one country is preferred over another - it means the 
opposite. Favour one… favour all. Treat all countries the same.

If a WTO member country grants favourable treatment to another country, even a non-WTO member, regarding the import of a service, it must grant all other WTO signatories the same treatment. If a country allows any foreign competition in a service sector, it must allow service providers from all WTO member countries to compete to supply that service. 

A country could list any exemptions to this MFN principle by 1995, but exemptions were to be reviewed after five years and could not last more than 10 years anyway. 

The WTO interprets this MFN obligation as prohibiting not only de jure discrimination (discrimination specifically set out in regulations) but also de facto discrimination (discrimination resulting from regulations or measures not formally discriminatory).

Transparency (Article III) requires governments to publish all relevant laws and regulations governing all service sectors. 
By 1997, governments had set up enquiry points for foreign companies and governments to obtain this information.

Once a government has committed itself under GATS to opening a service sector to foreign competition, it must not keep money from being transferred out of the country to pay for the relevant services (Article XI), except when the country is experiencing serious balance-of-payment difficulties (Article XII). Such exceptions must be temporary and justified by an International Monetary Fund assessment of the country's financial situation.

GATS, thus provides almost guaranteed conditions for foreign exporters and importers of services and investors in any sector which a country has listed in its Schedule. 

Following the GATS "built-in agenda" mandating successive rounds of negotiations, talks opened on 25 February 2000 in Geneva, home to WTO headquarters. The United States would like these negotiations to be completed as soon as possible, and suggested the end of the year 2002 as a deadline. Other countries, however, want the negotiations to be open-ended, or integrated within a broader and comprehensive revision of all the WTO agreements.

Despite the requirement for "transparency" in GATS, the renegotiations are taking place between government representatives behind closed doors (but in close consultation with international corporate lobbyists). The WTO or individual countries make few of the results of discussions publicly available. It is next to impossible for citizens' organisations to find out the current state of negotiations while access to many background documents is restricted. 

Thus even negotiations on apparently technical issues such as reclassification of services are evading public accountability and public and parliamentary debate.

A 'Working Party on Domestic Regulation' - one of the three sub-groups of the Council for Trade in Services (the body within the WTO that oversees GATS), has been drawn up to discuss "reform" of domestic regulation. This involves drafting a "necessity test", a legal formula that could be used "to assess the level of trade-restrictiveness of a measure".

If proposals for this test were adopted, a government challenged by another through the WTO would first have to show that a disputed regulation met a "legitimate objective" - and the WTO would determine what counted as "legitimate".

Then, to clarify "burdensome" and "restrictive" as applied to the means of achieving that objective, the Working Party has considered importing into Article VI.4 the definition of "least burdensome" from a GATS Annex on Telecommunications: "pro-competitive".

The European Union has gone further and identified "anti-competitive practices", including cross subsidising by monopoly providers of network infrastructure and services. It argues that this practice restricts competing suppliers from being able to provide services in a market. Instead, it maintains that charges for each part of a service should be at: "cost-oriented rates that are transparent, reasonable, having regard to economic feasibility, and sufficiently unbundled so that the supplier need not pay for network components or facilities that it does not require for the service to be provided".

Governments that currently use non-market mechanisms, such as risk pooling, social insurance funds, block contracts and cross subsidising, to deliver public services to as much of their population as possible could find such practices challenged as anti-competitive.

The European Union has also suggested that a measure should not be considered trade-restrictive if it is "proportionate" to the objective pursued. But what might be considered proportionate, reasonable or rational would be a matter of judgement, reflecting the values of those with decision-making power.

Worse, Article VI.4 could be interpreted as applying to all services, not just to those, which a country has offered to liberalise. The other clauses in Article VI clearly apply only to those services listed in a country's schedule of commitments. The WTO Secretariat believes the different phrasing of Article VI.4 is "intentional".

If these proposals were adopted, all domestic regulations would have to be "pro-competitive", even if no foreign firm was involved. A WTO disputes panel could require countries to unbundle a public monopoly such as health care and substitute competing service providers or competing health care insurers. Health systems researchers Allyson Pollock and David Price point out that these proposals "would transform the WTO from a body combating protectionism to a global agent of privatisation".

"The WTO's strategy is shifting from persuasion to the development of new global regulations which will over-ride national sovereignty in domestic policy and impose unprecedented market reform obligations on all the processes of service delivery and throughout all service sectors".

In essence, the aim of GATS is to regulate governments, not corporations. 

Compared to markets in goods, those in services and access to them are more constrained by government interventions. The power of a GATS article on domestic regulation clause is that many governments may censor themselves by not instituting legislation or public policy objectives which could be interpreted as being against WTO rules. There has been no challenge to any domestic regulation under GATS as yet, but as the WTO Secretariat itself acknowledges, "cases may arise in the future".

GATS sets in place a legal framework which governments could use in future to challenge other countries' domestic regulations. The WTO stresses that governments can still regulate under GATS!

However, discussions about domestic regulation, raises the question… HOW?

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To download GATS documents click HERE


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In secret, governments are negotiating the end to all non-profit public services. By December 2003, 130 plus governments are expected to quietly sign an agreement called GATS, General Agreement on Trade in Services, which will lay all government services open for international tender, and no doubt international labour. That is, foreign, lower paid nurses, teachers, water technicians, postal and transport workers.

Public services are next in line for the WTO's corporate battering ram.

Global corporations have been so successful in persuading governments worldwide that their agendas are the same… that the pursuit of corporate profit and the good of society are one and the same, that their access to many areas of public life has already been attained. Quality of service and democratic access has not necessarily improved.

Services are the fastest growing sector in international trade, and employs 72% of Australians. Services offer rich pickings for canny corporations. And of all public services, health, education and water are shaping up to be the most lucrative. Global expenditures on water services now exceed $1 trillion every year; on education, they exceed $2 trillion; and on health care, they exceed $3.5 trillion.

The USA might suggest a model for the dismantling of public services which GATS will unleash all over the world. In fact, much of the GATS policies and the World Trade Organisation policies are designed to increase USA mega corporation domination of world markets.

In America, health care has already become a huge business, with giant health care corporations registered on the New York Stock Exchange. Rick Scott, the president of Colombia, the world's largest for-profit hospital corporation, is clear that health care is a business, no different to any widget manufacturer.

He has publicly vowed to destroy every public hospital in North America… doctors, he says, are not 'good corporate citizens'. Americans spend twice as much on Health as a percent of their bloated GNP, yet over service the rich, and cannot really care for 40 million of their own increasingly large poor segment of society.

Meanwhile, investment houses like Merrill Lynch are already predicting that public education will be globally privatised over the next decade the way public health has been. They say there is an untold amount of profit to be made when this happens. 

The European Union recently announced that every publicly run school in Europe must be twinned with a corporation by the end of the decade. The conquest of foreign market and support of big business has now become a key common strategy among universities around the world. So much for academic freedom!

Many parts of the 'Third World' have been forced to dismantle their public infrastructures in recent decades under International Monetary Fund imposed structural adjustment programs. In order to be eligible for debt relief, for example, dozens of 'developing' countries have been forced to abandon public social programs over the last 20 years. 

Millions of people in over 100 countries are now without basic social services and have a lower standard of living than 20 years ago. 

The World Bank is now forcing the same countries to privatise their water services and is openly working with corporate water giants like Vivendi and Suez Lyonnaise des Eaux, to establish their 'rights' to profiteer in the Third World. Protesting Bolivian people have been shot protesting water charges that cost a third of their wages.

Now, through the GATS negotiations, these corporations want binding and irreversible rules guaranteeing them access to government service contracts everywhere in the world... and they are succeeding. 

Already, over 40 countries, including all of Europe, have listed education within the realm of the GATS, opening up their public education sectors to foreign-based corporate competition. 

Almost 100 countries have done the same with health care. As the new talks progress, it will be very hard for any country to swim against the tide…even if they try.

Disturbingly, GATS also includes authority over 'environmental services' and natural resource protection. Our parks, wildlife, river systems, and forests could all become contested areas, as global transnational 'environmental service' corporations demand the competitive model.

Frighteningly, there can be no local restrictions on quality of graduates and service standards; this would be seen as a "barrier to free trade". 

How will 72% of Australian workers in health, education, environment, childcare, transport, tourist, broadcast, social work, dentist, teaching, and office staff feel should cheap foreign labour enter the Australian work force? It has already happened with the 'Emerald Affair'. 

Why did we allow Australian public assets like our refugee/prison facilities, to be owned and operated by the multinational USA corporation, Wackenhut?

Remember Beazley and Howard wanted Australia to sign the MAI Treaty… later shown not to be Australia's best interests! 

Well... GATS is the rebirth of the MAI, but with more clout! 

Perhaps some of the $800 billion that has come into Australia in the last decade to buy our Australian industries, property and taxpayer-owned assets, the profits of which leave Australia untaxed, has influenced Canberra. 

Ask your elitist, self-serving, snout-in-the-trough party politicians why they remain silent on the GATS issue! 

I can only ask:

Have YOU had a gutful yet?

Are YOU hurting enough to do something about it?


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To download GATS documents click HERE


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Written and Authorised by Selwyn Johnston, Cairns FNQ 4870