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The Protest Campaign Against the GATS

Softening the Social Impact of Trade Liberalization

The extension of trade liberalization, and trade in services in particular, has gone hand in hand with contention over its social impact on national societies. When analysing the wave of mobilization against the GATS from its start in 2000 until it faded around 2007, it is not an easy task to trace its impact on decision making or outcomes. A main reason is that, in the framework of international negotiations, no particular institution or government can be held politically responsible or pressured for reversing decisions. While the WTO is merely a bureaucratic agency responsible for organizing negotiations, its 140 member governments do not feel responsible for the direction of the negotiations as a whole. In the EU, although it mainly implements a mandate granted by national governments, it is the European Commission which has been the main target of criticism: this follows from its exclusive competence to negotiate with trade partners and the neoliberal spirit of DG trade. As politicization has grown within the EU, the Commission had to respond to concerns expressed by a coalition of pro-regulation NGOs and political actors. However, responsiveness has been rather punctual and limited. Be that as it may, the long-standing commitment of the EU to a far-reaching agenda for services liberalization was never fundamentally questioned, as the rest of this chapter will show.

The failed summit of Seattle in 1999 where a broad group ofNGOs claimed that the WTO negotiations for trade liberalization represented a threat for social cohesion and democracy remains a key landmark for the history of the global justice movement. Against this background, members of the WTO nevertheless went ahead with a new round of talks labelled ‘GATS 2000’ in order to reinvigorate and expand the agreement signed in 1994. The possible effects of the GATS in some sectors of general interest were nevertheless a bone of contention even prior to the Seattle protest. As early as the mid-1990s, France and Canada, together with activists in the realm of culture, vigorously opposed the inclusion of cultural products (audiovisual services) in international trade negotiations. This was a way to resist the strong US commercial interest in the field—resulting from new technologies and digital convergence which made cross-border trade increasingly easy—and to what was perceived as Anglo-Saxon cultural hegemony.[1] The defence of the so-called cultural exception resulted in an overall carve-out of audiovisual services from the GATS. It also resulted in a counter-battle with the initiation (mainly by Canada and France) of a UNESCO (United Nations Educational, Scientific and Cultural Organization) convention on cultural diversity which was signed in 2005 (Kelsey 2008, pp. 148-153).

Following up on the protest in Seattle, a broad transnational coalition of think tanks and NGOs launched a campaign against the GATS with a petition called ‘Stop the GATS Attack Now!’. The petition received the support of approximately 500 organizations in more than 60 countries. In 2002-2005, water distribution became a focal point, rallying these many actors around a common cause. The debate became emotional when private companies were accused of skimming off profitable market segments while abandoning distribution in poor rural areas by cutting off distribution when customers failed to pay or by failing to ensure water quality, which led to the resurgence of deadly water-borne diseases (ibid., p. 133). The marketization of education was also a main concern. Activists addressed the WTO personnel directly with a letter to Heads of WTO delegations, the Chair of the negotiations on services, the Chair of the General Council and the Director General Supachai Panitchpakdi and, from 2005, Pascal Lamy.[2] Given the bureaucratic nature of an organization such as the WTO, the campaign triggered an unusual reaction from the WTO staff, who subsequently published a booklet with the title GATS—Facts and fiction,[3] addressing the concerns raised by the coalition and even citing and responding to quotes from individual activists and organizations. Beyond discursive engagement, however, the campaign produced no specific policy result.

Between 2002 and 2005, the EU, and especially the Commission, had become a main target of the water campaign. It was accused by activists of speaking a double language, as leaked documents about the EU’s requests provided evidence that the Commission was promoting the interests of the large European companies by including water distribution in the talks, while holding a reassuring discourse on welfare services (Corporate Europe Observatory 2003). Pascal Lamy, who was then the EU Commissioner for trade (before he was appointed General Director of the WTO in 2005), diffused protest by ensuring that the GATS was offering sufficient ways to protect welfare services, and that the EU Commission would be vigilant on the issue. He argued that:

the GATS’ flexibility leaves WTO Members with considerable freedom to design their commitments: the GATS does not enter into the definition of public services, their mission, their organisation or the way they are financed. I’d like to keep it that way. That’s why I am not in favour of creating a carve-out for public services in the GATS: a carve-out would require 146 WTO members to agree on a definition of public services. Such a definition would necessarily be too limited for Europe which tends to have a rather more expansive view of the notion of public service than many other WTO Members do. (European Commission 2003b)

Contention led the EU Commission to step back, especially on the issue of water distribution. Several internal documents provide evidence that, in 2002, both the EU Commission and large corporations were concerned about the ‘water war’ campaign (Deckwirth 2006). For exam?ple, in 2003, the German company RWE (Thames Water) announced that it was no longer supporting the inclusion of water in GATS negotiations. In 2005, it even asked the Commission to withdraw its requests in the sector. In 2005, the revised EU position on the GATS abandoned the privatization of water for human use. Although Lamy’s successor, the Briton Peter Mandelson, held more neoliberal views on trade liberalization, he also had to be responsive to protest. When the EU made its revised offers and requests in the Doha negotiations round in 2005, he claimed that

The offer is also tailored in a way that ensures that public services within the EU are fully safeguarded and no commitments are proposed in the areas of education, health and audiovisual services. It has been prepared in close consultation with the European Parliament, the Member States and EU civil society. (European Commission 2005)

A major outcome of protest is that, while sewage and sanitation services fall under the GATS in the category of environmental services, water distribution has not been included in the WTO classification of water, and no member has ever made commitments in this domain. It is very difficult to assess the impact of the GATS on welfare services at the national level. A main reason for this is that the GATS, as argued by Arena (2015), is deeply ‘agnostic’ towards public or welfare services in the sense that it does not recognize a specific category of services with special societal goals. Therefore, it is up to the member countries to pay specific attention in their commitments. Table 5.1 shows that the EU as a whole has made commitments to liberalize its markets in 5 of the 11 sectors falling under the scope of GATS and which can be considered to have a general interest dimension, namely communications, education, environment, healthcare and social services and transport.

Table 5.1 shows that commitments from the EU to market opening in SGI sectors remained modest in certain respects—but not insignificant in others.

The countries listed have made further commitments in addition to that of the EU’s. It is mainly countries from Central and Eastern Europe (including Austria) and the Baltics, as well as—in a more limited number

Communication

All subsectors

EU, FI

Courier

AT, CZ, EE, ES, HR, LV, LT, PL, SI, SK,

Telecommunications

Education

AT, BG, CY, CZ, EE, EU, HR, FI, HU, LV, LT, PL, RO, SE, SK, SI

All subsectors

EE

Primary (private)

AT, BG, EE, EU, HU, LV, LT, PL, SK,

Secondary (private)

AT, BG, CZ, EE, EU, HR, LV, LT, PL, SK, SI

Higher

AT, BG, CZ, EE, EU, HR, HU, LV, LT, PL, SK, SI

Adult

Environment

All subsectors

AT, BG, CZ, EE, EU, HR, HU, LV, LT, PL, SK, SI

Sewage

AT, BG, CZ, EU, HR, HU, LV, SE, SK, SI

Refuse disposal

AT, BG, CZ, EU, FI, HR, HU, LV, SE, SK, SI

Sanitation

Healthcare and social

AT, BG, CZ, EU, HR, HU, LV, SE, SK, SI

services

All subsectors

EE, HU

Hospital

AT, EU, HR, LV, LT, PL, SI

Other human health services

AT, HR, SI

Social services

Transport

All subsectors

AT, BG, EU, HR, LV

Maritime

EE, EU, FI, HR, HU, LV, MT, SI

Water ways

CZ, EU, HU, LV, SK

Air

AT, BG, CZ, EE, EU, FI, HR, HU, LV, LT, PL, RO, SE, SK, SI

Rail

BG, CZ, EE, EU, HR, HU, SE, SK, SI

Road

AT, BG, CZ, EE, EU, FI, HR, HU, LV, RO, SE, SK, SI

Source: WTO database, www.i-tip.wto.org (7 January 2016)

AT, Austria; HU, Hungary; BE, Belgium; IE. Ireland; BG, Bulgaria; IT, Italy; CY, Cyprus; LT, Lithuania; CZ, Czech Republic; LU, Luxembourg; DE, Germany; LV, Latvia; DK, Denmark; MT, Malta; EE, Estonia; NL, The Netherlands; EL, Greece; PL, Poland; ES, Spain; PT, Portugal; EU, EU, including all its Member States RO, Romania; FI, Finland; SE, Sweden; FR, France; SI, Slovenia; HR, Croatia; SK, Slovak Republic; UK, United Kingdom of sectors—Finland and Sweden. Commitments are most far-reaching in the most marketized sector, namely telecommunications and transport. But the liberalization of education and health (mainly hospitals and within social services, convalescent and rest houses, old people's homes) is clearly on the rise. Yet, these sectors still exhibit lower levels and numbers of commitments than other sectors such as business, distribution, finance or tourism. EU Member States made extensive use of all exemptions possibilities allowed by the GATS provisions,[4] thus leading to the conclusion that ‘in spite of the potentially far-reaching effects of GATS trade disciplines on public services, WTO members are afforded ample opportunities to tailor those effects to their need’ (Arena 2015, p. 46). All in all, the marketization through international trade has been a consistent endeavour of the EU but has globally remained cautious.[5]

Then, in 2006 and 2008 the Doha round stalled. This was mainly due to divergence between the ‘Quad’ (the EU, the USA, Japan and Canada), on the one hand, and the so-called BRICS countries (Brazil, Russia, India, China and South Africa) on the other. While the talks remained largely focussed on agricultural and industrial goods, governments proved reluctant to make commitments in the realm of services. Yet, the EU remained strongly committed to pushing services liberalization forward. Peter Mandelson’s strategy—branded ‘Global Europe’ from 2006 onwards—stresses that services liberalization is a main driver for increasing the EU’s competitiveness. As will be demonstrated in greater detail in the last section of this chapter, the EU continued to promote the same agenda after the failure of the Doha round, notably through bilateral free trade agreements and, since 2013, with a new WTO agreement on services known as TISA. To conclude, it appears that resistance to the global liberalization of welfare services through the GATS has slowed down the endeavours of the EU championed by the DG trade of the European Commission. This has been reflected in limited commitments in SGI sectors, although the legal situation, the exact nature and the schedule of some commitments remain unclear. Moreover, some commitments have not yet had major practical outcomes, but rather leave the door open to large-scale marketization if private providers choose to use GATS provisions, for example, in healthcare or education.

  • [1] This led France to withdraw unilaterally from the Multilateral Agreement on Investment negotiated among members of the OECD, aiming at liberalizing investment, and which raised similarconcerns over the domination of US investment in key sectors of general interest.
  • [2] ‘Stop the GATS power play against citizens of the world!’, Open letter by 148 NGOs, Geneva, 15June 2005 ; Civil society organizations sign letter protesting GATS negotiation rules, 1 June 2008.
  • [3] Available at www.wto.org, date accessed 5 August 2015.
  • [4] Exemption from the GATS disciplines can take multiple forms such as the non-application of themost favoured nation principle, the clause related to the ‘exercise of government authority’, ruleson government procurement, general and security exemptions, or limitations with regard to thesectoral scope or the modes of provision. Cf (Arena 2015).
  • [5] The fact that no dispute settlement as ever been triggered in this realm further accounts for the lowlevel of activity and/or conflict in this regard.
 
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