Socialist Worker

Why Clare Short is wrong on GATS deal

by Charlie Kimber
Issue No. 1833

THE BRITISH government is playing a key role in devising a new world trade agreement that will clear the way for multinationals to grasp even more control. The General Agreement on Trade in Services (Gats) will act as a weapon in the privatisers' armoury.

Gats is part of the agreements of the World Trade Organisation (WTO). In its latest form it threatens to prise open public services. It could lead to governments having to let companies bid for services like health and education, and answer to the discipline of the WTO if contracts do not go to the lowest bidder.

The Gats negotiation process is now at a key stage. It has been driven by the US, Britain, the European Union, Canada and Japan. New Labour last week finished 'consultation' on Gats. All the signs are that business and bankers were the only people it really listened to.

International development secretary Clare Short is in favour of Gats. She says it is 'absolutely false' that the agreement will force privatisation of the public sector. 'Nobody', she claims, 'has proposed any free trade in public services.'

She adds that those who claim that Gats will lead to privatisation are 'conspiracy theorists'. Short's backing for Gats fits with her idea that more trade and partnership with multinationals are the way to help the poor. But the 1980s and 90s, a period of almost unparalleled growth in world trade and corporate power, saw a huge rise in inequality.

In sub-Saharan Africa the number of people living on less than $1 a day rose by a third. In South Asia it rose by 50 million. Gats will not benefit the 1.2 billion people worldwide who do not have drinkable water or the 125 million who do not go to school.

They will get more water privatisation (a move that has raised Ghanaian water prices by a third) and more charges for schooling. Western multinationals will benefit.

Nobody seriously expects a Malian or Bangladeshi company to bid successfully to run British schools or hospitals. But, at the right price, BUPA or Thames Water would love to get their hands on those services in Mali or Bangladesh. Many campaigners argue that services in the US and Europe are a primary target of the corporations which lobby for Gats.

The draft agreement excludes opening up government services that are not 'in competition with private sector suppliers'. That seems to back up Short's claim that there will not be enforced privatisation. And Article 1.3 of GATS excludes 'services supplied in the exercise of governmental authority neither on a commercial basis nor in competition with one or more service suppliers'.

But then nearly every public service in Britain now competes in some way with private operators. Royal Mail competes with DHL couriers. The NHS competes with BUPA. Your local secondary school 'competes' with Eton College. The US government is particularly keen to see British higher education opened up to the private sector.

It is easy to imagine a future of top-up fees, elite colleges sometimes run by US firms, and underfunded colleges for the majority of students. How far Gats goes will depend on how much resistance there is from workers, and on power relations between countries and within the WTO.

Leaked minutes of meetings at the British Department for Trade and Industry (DTI) showed the government was giving major firms privileged access in developing a Gats strategy. The minutes record the DTI civil servant responsible for negotiating GATS admitting that the case for liberalisation of services was 'vulnerable when the anti-Gats campaigners asked for proof of where the economic benefits of liberalisation lay'.

Most trade unions are against Gats. Union leaders including Dave Prentis (Unison), Billy Hayes (CWU), Bill Morris (TGWU), Paul Mackney (Natfhe), Jeremy Dear (NUJ), Eamonn O'Kane (NASUWT), Ed Sweeney (Unifi) and Sally Hunt (AUT) recently sent a letter to the Guardian.

It argued, 'The fundamental approach of Gats poses a threat to quality public services,' and demanded that the government pulls out of negotiations until there has been proper democratic debate. Trade unionists and anti-capitalists should be joining in demands for Gats to be halted now.

If Gats is passed, how can we fight back against it? IT IS a huge error-or a deliberate lie-to think that GATS will help ordinary people. But it is also wrong to think that Gats is separate from a wider process or that if it is passed then there is nothing we can do about privatisation. Governments do not need GATS to go ahead with privatisation. New Labour has already opened up the NHS to the private sector.

Many catering, portering and domestic services are already contracted out. Now ministers plan primary care trusts and foundation hospitals that have their own financial freedoms and privately run diagnostic and treatment centres. The government also wants private suppliers to take over 'failing hospitals'. However, Gats will entrench and develop such moves. The British government could always stand up to the WTO and other bodies. They refuse to because they believe in the central message of being 'business friendly' and 'pro-competition'.

Powerful countries already brush aside WTO rules when they are inconvenient. George Bush defied WTO rules to impose tariffs on steel imports to the US. This will take years to settle, and the US will hope to bribe and bully other countries to do its bidding.

It is no answer to call for more power for national states as a counterweight to bodies like the WTO or huge multinationals. As John Pilger has written, 'For all the vivid examples of modern corporate power, such as the annual income of Motorola being equal to the annual income of Nigeria's 118 million people, it is folly to believe that big business on its own is shaping the new world order. This allows the argument against globalisation to be depoliticised, reducing it to single issues of 'ethical trading' and 'codes of conduct', and inviting its co-option. Above all, it misses the point that state power in the West is accelerating.'

Struggles in Bolivia, South Africa, Europe and elsewhere have defeated multinationals or stopped governments selling off services. They show workers can fight privatisation. Beating Gats is part of a wider struggle to put people before profit and replace the system we live under with one where workers democratically decide issues of production and trade.

Facts on Gats 1

How was it set up and what is happening now?

THE GENERAL Agreement on Trade in Services was drawn up at the World Trade Organisation in 1994. Article 19 from this treaty commits governments to 'achieving a progressively higher level of liberalisation and increasing the general level of specific commitments undertaken by members'.

GATS covers 160 sectors including schools, hospitals, rubbish collection and libraries. Negotiations are now under way to extend the agreement. By 31 March this year all the 140 countries in the WTO will have to state which of their own services they are prepared to have covered by new GATS rules.

The WTO ministerial summit (similar to the 1999 Seattle meeting) at Cancun in Mexico in September will then hold major talks about the scope and power of GATS rules. The entire process is supposed to finish by 2005. Last April the draft of what changes the European Union (EU) wanted in other countries' laws was leaked to GATS campaigners and the press. This was a 1,000-page wish list of the rules and regulations that EU corporations want eliminated.

The draft showed plans for further private sector involvement in key services including water, electricity, postal services and telecommunications worldwide. The EU was also specifically demanding the elimination of laws allowing developing countries to regulate foreign investment. These include Malaysian laws which scrutinise foreign takeovers of local firms, and rules in Mexico and Chile which restrict foreign ownership of land.

Facts on Gats 2

Why are vital services being targeted?

THE SERVICE sector is vast. According to the European Commission, 'This sector accounts for two thirds of the EU's economy and jobs, almost a quarter of the EU's total exports and a half of all foreign investment flowing from the EU to other parts of the world.' The World Bank calculates that privately backed service infrastructure developments (water, sewage, transport, telecoms, energy) rose from $15.6 billion a year in 1990 to $120 billion a year in 1997.

About 15 percent of this was direct investment by multinational corporations. Businesses want to grab more profits from services. But at present much of the sector is controlled or regulated by governments. In Europe most health and education services are run by the state. It would be a hugely juicy market if it was opened up entirely to business.


World Development Movement

Globalise Resistance

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Article information

Sat 11 Jan 2003, 00:00 GMT
Issue No. 1833
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