"Services are omnipresent in today’s economy, generating almost 70% of GNP and jobs and offering considerable potential for growth and job-creation," reads the Explanatory Memorandum of the proposal for a "Directive of the European Parliament and of the Council on Services in the Internal Market" of 13 January 2004. According to the ambitious objective of the Lisbon European Council, a progressive liberalisation of the services sector shall make "the EU the most competitive knowledge-based economy in the world by 2010"! The global counterpart to the aims of the Union is the General Agreement on Trade in Services/GATS 2000. Negotiations on this agreement shall be finalised at the WTO level by the end of 2005. Together with national policies and the pressure exerted by international service providers, the general picture is that the respective stakeholders in practically all industrialised countries pin major hopes on a further liberalisation of the economy, i.e. on the deregulation of services after that of trade. However, affected by this "trend" are also third-world countries.
GATS and other liberalisation efforts are today (or rather "would be", since the public knows much too little about them) actually very trendy among major parts of the population of industrialised countries (at least at first glance)! Competition is "cool", rules are "out". And many a service has become cheaper indeed (e.g. telephone). Whether this status will survive an expected market cleansing, remains to be seen.
It is therefore very surprising that GATS, i.e. as the "big bang" of liberalisation, has hardly been discussed in public and that negotiations were conducted clandestinely! Could it be that the picture of liberalisation (competition on the market) has another, less brilliant side? Particularly when this trend – and pressure – also seizes the services of general interest now more strongly than before!
As to the information policy on GATS, the Federal Chamber of Labour (AK) and the Austrian Federal Economic Chamber (WKÖ) have to be mentioned in a positive way, although they naturally represent different viewpoints. A real expert in liberalisation is the GATS-critical network ATTAC, which can also make a valuable contribution to the formation of opinion.
After all, GATS could – after the integration of private companies in water management (already implemented in 1994 by Austria on its own) – soon provide for more "liberality" in the field of water supply, or could have an adverse effect on public utilities with regard to communal service provision!
Martin Säckl, lobbyist of the Austrian Gas and Water Association (ÖVGW) in Brussels, also shares this view. He expects the EU Commission to present a proposal for a directive on the liberalisation of the drinking water market already within the next two years. This proposal could be adopted within 18 months and would have to be integrated into national law within the following two years.
But first of all the facts which, according to the WKÖ and expert François-Charles Laprevote (EU Commission, Directorate-General for Trade), are decisive for a correct assessment of GATS:
The service sector of the Austrian economy rose between 1960 and 2000 from 42 to 66%. Internationally, Austria ranks 13th in trade in services.
The "production factor knowledge" will increase in importance.
GATS applies to less than one third of Austrian trade in services.
With the positive list approach, GATS is a more flexible agreement than GATT. Every member makes only those liberalisation commitments that it wishes to.
With the Austrian EU membership and the Nice Agreement, extensive competences in trade policy were transferred to the EU.
GATS is not a privatisation or deregulation agreement. National regulation applies both to domestic and foreign bidders.
The expansion of liberalisation obligations planned by GATS (EU offer): Legal services, Postal and delivery services, Sea transport, Airport services, Environmental services
GATS plans no obligation regarding service of general interest! Thus, the following sectors are not included in the EU offer: Health services, Audio-visual services, Education, Local passenger transport, Drinking water supply.
Should the EU want to include services of general interest in a later offer, this requires an unanimous decision of member states!
Further information at: http://portal.wko.at/ and http://www.austriaperspektiv.at/veranstaltungenalt.htm
Taken altogether, GATS would give, according to the Austrian Economic Chamber, domestic enterprises the possibility to open new markets. The only crunch for the stakeholder seems to be "Mode 4" (a person crosses the border for the purpose of making a service offer), which is principally part of the sensitive issue of migration.
For deputy representative of ATTAC Austria Cornelia Staritz, too, GATS is a sharp instrument for opening new markets – however, without considering the need of many people for affordable (fundamental) services. Staritz denies that GATS does not cover services of general interest (in contrast to the WKÖ)!
The expert refers in this connection to GATS Article 1, which provides for exceptions for services, which are only offered by one provider/supplier without commercial aspects. The economist at the Institute of Economics of the Vienna University of Economics and Business Administration: "The problem is that in communal services, too, this cannot be guaranteed!
For example, we do pay for public transport – there you also have a commercial aspect. In addition, the "GATS catalogue of demands" of the EU clearly claims the complete liberalisation of the water supply of 72 third-world countries (many of the international water groups do come from Europe). In return, the EU is prompted to open the sectors education, public health, etc. This clearly shows: GATS applies to all services!"
A further proof would also be GATS Article 19, which obliges all countries to "achieve a progressively higher level of liberalisation". This approach would not only be undemocratic and impede the necessary regulation of services, but would also largely exclude important "learning effects" after failed liberalisations (e.g. the reversal of the privatisation of the British rail network, which would have been much more difficult under GATS).
On the contrary, a "damaged" WTO partner would have to be offered other corresponding markets. In this context, it should also be considered that the (legally enforceable) WTO law prevails over EU and national law – a fact, which does not even apply to UN law!
The more problematic issue in this context is the fact that EU member countries cannot individually negotiate with the WTO any more – and that unanimity regarding liberalised services among EU member states – according to the Nice Agreement – is only required any more in the domains "culture", "education", "water supply and wastewater treatment".
ATTAC criticises: If the EU Constitution comes into force, it can be expected that those sensitive domains will cease to be subject to unanimity and become topics of the GATS negotiation rounds! By the way, the recently published study of the Federal Chamber of Labour on GATS and water supply also shares this apprehension.
In connection with the control of the sensitive areas, François-Charles Laprevote came up with an interesting comment in the framework of the discussion evening of the Austrian Economic Chamber. He said these areas required strong governmental quality and competition supervision (which would obviously have to be paid by the consumer). But is GATS not actually supposed to reduce regulative barriers?
Apart from the creation of new business fields in the industrialised nations (and the abolition of many economically absolutely useful "cross-financings"), GATS should still primarily aim at the Third World – even if many a corporate group has lately rather cold-shouldered unsafe world areas.
ATTAC’s main points of criticism:
- GATS only aims at finding new markets for multinational groups
- Further restrictions on democratic scopes of action for communes, national parliaments, but also the EU, by the required "progressively higher level" of liberalisation
- Public services should not focus on profit, but on targets of communal economy
- Negative effects on third-world countries; they should rather receive development aid
- Undemocratic approach in GATS negotiations (regarding the public as well as national parliaments; as to that, too many sectors were ceded to the Commission within the EU)
Therefore the claims: - Stop the GATS negotiations (see www.stoppgats.at)
- Stop liberalisation AND privatisation of public services
Being part of the WTO, GATS is also closely related with the World Bank and the International Monetary Fund. Staritz: "Developing countries have known liberalisation claims – as we experience them today in Europe – since the beginning of the 1980ies. At that time, the WTO and the World Bank demanded ‘structural adjustment programs’ in the course of the so-called ‘debt crisis’, which were to be complied with to receive new loans or to be able to convert debts. Conditions were nearly always liberalisation and privatisation – including services of general interest. The problem: the average income per person there is often only approx. 2 US Dollars per day. Rising fees became a problem for the poor, only rich town districts were targets of investment. Since then, opposition has risen."
The Federal Chamber of Labour (AK), ATTAC, and other NPOs thus reject GATS 2000. But what about the participation of the private sector in services of general interest? For the Vienna AK and ATTAC, liberalisation and privatisation are inseparable! Staritz: "It is often said that GATS is not a privatisation agreement, yet there are strong references! As soon as a public bidder is no monopolist any more, it has only two possibilities left: it competes with private companies (technical term: ‘organisational privatisation’), has to make profits and can thus forget about objectives of communal economy.
The differences between the performance of a public and a private enterprise are thus blurred for the citizen. Or, the public bidder decides to continue to act on the basis of communal economy. What is then left for it is the supply of the ‘poor’, or the servicing of economically unattractive locations. As to the GATS discussion, a fundamental decision has to be made by a society with regard to its objectives. We have to choose (if we are allowed to) between ‘individual struggling’ and a certain ‘collective security’!"
(Source: aqua press Int. 3/2004, Mag. Christof Hahn)
