When most people think about trade, they conjure up images of ships laden with sacks of coffee and steel beams ferrying between nations, and trade agreements focusing on cutting tariffs and quotas on trade in goods. In reality however, today’s “trade agreements,” such as the 1994 North American Free Trade Agreement (NAFTA) and the 1995 World Trade Organization (WTO), have little to do with trade. Instead they focus on granting foreign companies new rights and privileges within the boundaries of other countries, on constraining federal, state and local regulatory policies and on commodifying public services and common resources, such as water, into new tradable units for profit.
A leak this week of European negotiating demands in WTO service sector negotiations that have been quietly underway since 2000 in Geneva provided a harsh wake-up call to the world about what is really at stake in these global “commercial” negotiations.
Up for grabs at the negotiating table is worldwide privatization and deregulation of public energy and water utilities, postal services, higher education and state alcohol distribution controls; a new right for foreign firms to obtain U.S. Small Business Administration loans; elimination of a list of specific U.S. state laws about land use, professional licensing and consumer protections, and extreme deregulation of private-sector service industries such as insurance, banking, mutual funds and securities.
The national consumer group Public Citizen joined the Polaris Institute of Canada and civil society groups around the globe in a coordinated release of the secret documents. Europe’s demands of the United States and 108 other WTO signatories provide the “smoking gun” evidence, after months of speculation and concern, about how these secretive WTO negotiations threaten essential public services upon which people worldwide rely daily.
The negotiations are to expand the scope of General Agreement on Trade in Services (GATS,) one of the 21 pacts enforced by the WTO. The “GATS-2000″ talks are promoted by the United States and European nations on behalf of multinational service sector conglomerates.
Think of GATS as a Trojan Horse – appealingly dubbed a “trade agreement” – which in reality contains a massive attack on the most basic functions of local and state government. You might ask what the GATS provision creating a new right for corporations to establish a “commercial presence” within another country has to do with cross-border trade. The answer: nothing. Actually, the terms create a right for a foreign firm to set up subsidiaries in other countries or acquire local companies under terms more favorable than provided domestic competitors. For instance, once a service sector is covered under GATS, governments may not limit the number or size of service providers, meaning that applying zoning rules on beach front development or limits on concessions in national parks to foreign firms would be forbidden. This is why many people consider GATS to be a backdoor attempt to revive the Multilateral Agreement on Investment (MAI), a radical investment pact that was killed by public opposition in 1998.
The GATS not only promotes privatization of public services, but it makes it extremely difficult for countries, states and local governments to reverse privatization experiments that fail. Under GATS, if cities seek to bring a privately operated utility back into the public realm, they only can do so if the U.S. government agrees to compensate all WTO countries for lost business opportunities of their companies. Thus, if the United States agrees to Europe’s GATS-2000 demands to subject water to GATS disciplines, then Atlanta, for instance, which just reversed a disastrous water privatization involving a French company, could do so only if compensation was offered not just to that company but to all WTO signatory countries. Another GATS threat revealed in the secret European document is a demand to include retail electricity services under GATS, which would mean that privatization nightmares like California’s energy deregulation would be nearly impossible to fix.
GATS also sets strict constraints on government regulation in the services sector – even when those policies treat domestic and foreign services the same. GATS allows federal, state and local regulations to be challenged as barriers to trade if they are not designed in the least trade restrictive manner. For instance, Europe has charged that the rather modest Sarbanes-Oxley corporate accountability legislation inspired by the recent corporate crime wave violates these GATS limits on domestic service sector regulations. Also, because GATS is geared toward market access for foreign competitors, the agreement is hostile to regulation in general and in particular to the diversity of domestic regulations in the U.S. that vary from state to state, yet state and municipal officials are excluded from these closed-door negotiations.
The leaked EU documents have prompted civil society groups worldwide to call for a moratorium on the “GATS-2000″ talks and for a public process involving state and local officials. The clock is ticking as all WTO member nations, including the United States, are expected to respond to the European demands within weeks, starting March 31, 2003. At a congressional hearing this week, U.S. Trade Representative Robert Zoellick dodged congressional inquiries about when or if the public and Congress would have an opportunity to vet the U.S. “GATS-2000″ commitments. Zoellick recently submitted similar service sector commitments without public consultation in the regional NAFTA-expansion talks known as the Free Trade Area of the America (FTAA). Only growing public and congressional pressure is likely to stop the Bush administration from trading away our basic public services and governments’ basic public interest regulatory powers. (Lori Wallach is the director of Public Citizen’s Global Trade Watch).
Read also the article down of the same page, Feb. 25, 2003, ‘Wall Street Journal’: Leading the News, EU Asks U.S. to Revise Rules for Service Sector, Host of Regulations at Issue As Bush Seeks Freer Trade; Alarm Likely at Local Level, by Neil King Jr.