On guard: The MAI rides again

Patricia Ranald

Trading away essential services?

The World Trade Organisation negotiations

What if our government signed a legally binding international agreement, which prevented regulation of essential services like electricity or water to ensure equitable access and prices, and forced governments to open up the funding of public services like health and education to transnational corporations?

What if the negotiations for such an agreement took place behind closed doors, and it was legally binding on all levels of government without any legislation being passed in the Australian parliament?

Impossible? Unfortunately not.

The Australian government is taking part in negotiations on the WTO Trade in Services Agreement in the World Trade Organisation (WTO) which could have these results in Australia, and be even more devastating for developing countries.

Why, you might ask, would governments want to sign away their own powers? They are under pressure from global corporations, which see essential services like health, education and water as huge profitable markets. Many governments like our federal government also support privatisation and deregulation as part of their political ideology, but know it has little popular support. By transferring the decision to an international body they can pass the political responsibility on to the WTO.

This is a real threat to democracy at national, state and local levels. Decisions about essential services should be made democratically at the local and national level, not secretly signed away in trade agreements.

What is GATS?

The Australian government and other member governments of the WTO signed the General Agreement on Trade in Services (GATS) in 1994. It applies to all services, from banking to transport and telecommunications, to health, education and prisons. GATS aims to promote international trade in services, and to remove barriers to such trade.

Although some GATS rules apply to all services, many only apply to those services which each government agrees to list in the agreement. However, GATS commits governments to increase over time the range of services included in the agreement, without any review of its impacts.

The GATS Agreement was signed with little public debate in Australia. Signing of a trade agreement is a Cabinet decision. WTO agreements are briefly tabled in parliament and examined by a parliamentary committee, which can only make recommendations to Cabinet.

Like other WTO Agreements, GATS rules are legally binding on governments, and can be enforced through the WTO dispute system. Governments can complain about the laws of other governments to a panel of trade law experts, which meets behind closed doors, and the winner can ban or tax the exports of the loser.

What changes are proposed to GATS?

Governments are being asked to increase the range of services which they agree to be covered in the GATS, and to make changes to the rules of GATS which could reduce their right to regulate services, and to provide and fund public services.

GATS has some rules which recognise the right of government to regulate services and to provide and fund public services. These rules are there because governments recognised that many services need to be regulated or provided by government to ensure equitable access to them.

There are two proposals which could reduce the right of governments to regulate and fund public services:

1) A proposal to reduce the right of government to regulate, by declaring that regulation in areas like qualifications, licensing requirements, and technical standards must be "least trade restrictive". This means that other governments could challenge such regulation under the WTO disputes process, and the obligation would be to show that the regulation is not a barrier to trade. The disputes are heard by experts in trade law. Public interest and environmental considerations are given little weight.

2) A proposal to apply "national treatment" and "equal access" rules to government funding of services. This would define the funding of public services like health, education or water as unfair "subsidies" to public services. Transnational corporations could then argue for equal access to these funds through compulsory competitive tendering, leading to privatisation.

Australian government position

In spite of submissions from many community organisations, the Australian government has supported a "least trade restrictive" WTO test in the GATS, which could reduce national rights to regulate services.

The government is also supporting a proposal which would enable water services to be included in the GATS.

The Australian general proposals are on accountancy, architecture, construction, education, environmental services, engineering, finance, law, maritime transport and telecommunications. These proposals are available at the Department of Foreign Affairs and Trade.

In the next stage of negotiations, governments will make more detailed negotiating requests to other governments by June 30, 2002. Responses are due by March 30, 2003.

Leaked European document confirms GATS agenda

In April a European Commission document containing the GATS requests from the European Union to Australia was leaked onto the internet. It demands that Australia remove the Foreign Investment Review Board powers to review foreign investment on the basis of national interest considerations, labelling such a review as 'discriminatory'.

The document also requests Australia to:

  • treat postal services purely as traded goods and open them to competition by private foreign companies. This would threaten the current policy of public ownership and regulation of basic postal services (like the 45c standard letter charge) to ensure that they remain affordable all Australians, especially those living in rural and regional areas;
  • remove the requirement of majority Australian ownership of shares in Telstra;
  • treat water services purely as traded goods which would threaten most state governments' policies of public ownership and price regulation of water services to ensure they remain accessible and affordable to all Australians.

The document is available at: GATSwatch.org.

What can we do about it?

We need to maximise the pressure on our government before March 30 next year, when its responses are due.

AFTINET is a national network of over 50 community organisations and many more individuals which supports fair regulation of trade consistent with human rights, labour rights and protection of the environment. Join AFTINET to get regular bulletins which monitor these issues. Give a donation to help with the campaign. See AFTINET for subscription forms and sample letters to national, state and local government and more detailed information about the effects of GATS in specific areas. There is also a useful ABC Radio National Background Briefing Transcript on GATS from 23 June 2002.

Use the AFTINET sample letters to demand:

  • the government should make all GATS negotiating requests and responses public, and ensure that they are publicly debated before it makes commitments;
  • no reductions in the ability of governments to regulate services;
  • clear exclusion of public services, cultural services and water services from the GATS agreement;
  • GATS and other trade agreements to be debated and ratified by parliament, not by Cabinet.

Patricia Ranald is Principal Policy Officer for the Public Interest Advocacy Centre in Sydney, the Convenor of the Australian Fair Trade and Investment Network (AFTINET), and a contributor to the Evatt Foundation's new book Globalisation: Australian Impacts (UNSW Press).


Also on the Evatt site

Suggested citation
Ranald, Patricia, 'On guard: The MAI rides again', Evatt Journal, Vol. 2, No. 3, August 2002.<https://evatt.org.au/news/guard-mai-rides-again.html>