Letter to DTI about GATS1 March 2003
Thursday 13th March 2003
Dear Regional Director,
Re: General Agreement on Trade in Services
We, a joint representation from the World Development Movement (WDM), Friends of the Earth and People & Planet, are writing to you to express our deepest concerns regarding the implications of the General Agreement on Trade in Services (GATS) for regional, local and national government regulation of service provision, and to urge you to take action on this.
Friends of the Earth, People & Planet and WDM are concerned that GATS undermines effective environmental regulation, effective public service provision and the ability of governments to regulate investment in the interests of the poor both here and in the developing world.
GATS - created in 1995 in the World Trade Organisation (WTO) - comprises a set of international rules governing trade in services. These rules will apply to 'measures' implemented by both national and local government as well as non-governmental bodies with delegated authority. Unlike trade in goods, GATS will critically cover rules relating to the right of companies to set up operations (i.e. invest) in other countries. The range of service sectors in the UK and abroad that will be covered by GATS rules is currently being expanded as part of the broader round of talks taking place at the WTO.
GATS also requires the development of further overarching rules on 'domestic regulation' as part of the current talks. It therefore reaches further into national and local government policy-making than any previous trade agreement.
Our key concerns relating to GATS are as follows:
Uncertainty over public services
The Government says that GATS contains a specific carve-out for public services but the GATS Article in question only exempts services that are provided 'neither commercially nor in competition with other services'. In light of the major changes taking place in the UK public services sector (e.g. PFI, PPPs), this leaves a gaping hole of uncertainty as to whether or not they are exempted from GATS rules. The Government itself has recently admitted that this Article 'lacks clarity'.
Potential impacts on effective regulation and democracy at a local level
The current talks aim to further develop rules on 'domestic regulation'. These include technical standards applied to service operators. The UK Government is keen to establish what it calls a 'necessity test'. Under this, WTO Dispute Panels would be handed ultimate responsibility for judging the extremely subjective questions of whether regulations were 'legitimate', 'necessary' and the 'least burdensome' measure available. Such rules would directly challenge the crucial role that local and national governments play in regulating services, transferring ultimate decision-making power to a small group of trade lawyers in Geneva.
This poses particular threats with respect to local and regional planning systems. The summary of requests made to the EC/UK in the distribution services field includes:
- the relaxation of restrictions on store opening hours
- "providing opportunity for prior meetings between service suppliers and regulatory authorities/local councils"
The latter request could require a regional or local planning authority to consult with potential foreign distribution companies when drawing up Local Plans with respect to the location of distribution premises. Failure to do so could make the authority vulnerable to challenge under the WTO disputes procedure, under its "national treatment" restriction (designed to ensure that foreign service suppliers are treated no less favourably than domestic suppliers).
Locked-in policies
GATS rules make it extremely difficult, if not impossible for governments to withdraw commitments. The former Director of the WTO Services Division noted that GATS commitments are "effectively irreversible." This has major implications for democracy and the ability of regional and local government to use alternative policies to central government. It also forecloses many potential policy options which, while not necessary now, may become so in the future.
Liberalisation without end
The GATS includes a commitment to "successive rounds of negotiations, beginning not later than five years from the date of entry into force of the WTO Agreement and periodically thereafter, with a view to achieving a progressively higher level of liberalization" (Article XIX). This commitment places long-term deregulatory pressure on service provision, and renders the EC's recent promise to not make any further commitments in the Health, Education and Audiovisual sectors, somewhat irrelevant in the longer term.
Unequal negotiations
These are not equal negotiations. Despite the UK Government insisting that it would not make excessive sectoral 'requests' of developing countries, recently leaked Government documents have revealed that the EU has made liberalisation requests of 94 developing countries or countries defined as economies in transition. In contrast, requests have been made of the EU by just 29 countries, only one of which comes from a Least Developed Country.
Lack of Transparency
These leaked documents demonstrate that without access to these crucial details, public scrutiny is impossible and GATS will remain an unheard of issue within the public domain, despite its far-reaching consequences for citizens the world-over.
According to the European Commission, GATS is 'first and foremost an instrument for the benefit of big business.' Moreover, our three organisations believe that the wide-ranging coverage of GATS represents a fundamental attack on both democracy and basic rights. Furthermore, it is for this reason that we are calling for:
- The GATS negotiations to be halted
- An end to secret GATS talks in the name of 'trade confidentiality'
- A thorough and independent impact assessment of service liberalisation
Today is International Day of Action against GATS. Events are taking place the world over to demonstrate people's concerns about GATS. In the UK 11 Regional Government Offices are being visited and similar popular protests being conducted.
This day of action has been called because the most intense phase of negotiations is about to start. From April 2003 governments will be deciding which services will be covered by the GATS free trade rules; a process which will take place in complete secrecy.
We call on you to investigate what GATS could mean for service provision and regulation in your region and ask you to communicate any concerns to the DTI.
Thank you for your time.
Yours sincerely,
Friends of the Earth
People & Planet
World Development Movement
