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About the P&I Team Briefings Home | Responses | PFI Index | Policy Guide
GATS BRIEFING - March 2002


Why read this brief?

In spite of assurances that have been given UNISON Scotland remains concerned by the apparent threat that GATS poses to public services. We fear that GATS does give a green light to the privatisation of public services.

What is it?

GATS is the General Agreement on Trade in Services, the service element of the Geneva based World Trade Organisation (WTO). GATS was agreed under the Uruguay Round of multilateral trade negotiations and came into force in 1995. It sets out a framework of legally binding rules for the liberalisation of trade in services.

GATS covers:

  • the vast majority of services,
  • almost all major world markets,
  • all the different ways a service can be supplied to a foreign customer, eg:

  • cross border: by fax, phone, email, transport;
  • Commercial presence: service supplier crossing the border;
  • Consumption abroad: consumer crossing the border, eg tourism;
  • Movement of natural persons: the ability for nationals to work overseas for a temporary period.

  • issues of establishing commercial operations in foreign markets.

Interestingly GATS does not define "service".

How GATS works:

  • GATS allows companies to identify markets and over 160 services that are open to foreign service providers, known as Market Access;
  • It has a Most Favourable Nation clause which obliges members to give the most favourable treatment to any trading partner;
  • The National Treatment rule requires Members to treat foreign and domestic service suppliers equally.
  • A Disputes Resolution procedure through the WTO applies if a GATS member is breaking its obligations.

  • Once commitments on specific services have been undertaken they cannot be withdrawn without compensation for other members.
  • When a country joins GATS it does not mean it has made commitments to open all sectors for all measures affecting the supply of services. The strength of the commitment can vary.

  • Some services are not included in GATS as long as measures in these matters are not used to get round a member's obligations under GATS. This clause covers services supplied under "Government Authority"*, and some fiscal policy and taxation.

*There is controversy over what constitutes a service supplied under "Government Authority". As more public services are provided through the private sector, particularly hospital services, there are fears this means they will be liberalised under GATS.

Progress so far:

The GATS timetable began in early 2000. Two major liberalisation negotiations in telecommunications and financial services have been agreed. An agreement on maritime transport was postponed, whilst discussions have started on the impact of

trade in services of environmental measures. Negotiations begin again in March 2002, there is to be a stocktaking 5th Ministerial Conference in 2003, and the deadline for conclusion of negotiations is January 2005.

UK Government Position

The UK, through its membership of the WTO, has taken on the provisions of GATS. The Department of Trade and Industry (DTI) in consultation with the rest of government agrees the UK position and the European Commission acts as lead negotiator for EU member states in the WTO. The Department for International Development (DFID) should ensure the UK position properly reflects development considerations.

The DTI says fears are misplaced that GATS will force the privatisation of public services or will prevent Governments from regulating. DFID refutes claims that GATS threatens economic development and poverty reduction in developing countries. In March 2001 Secretary of State for International Development Clare Short said: "The efficiency of the service sector is a major determinant for development and therefore liberalisation of trade and investment in services should be a key element of policy reform".

Criticism of GATS:

Westminster MPs

There has been a clear lack of debate on GATS in the UK, and in January 2001 an Early Day Motion on GATS was signed by 262 MPs. It expressed concern over the lack of debate on GATS, and called on the Government to ensure that there is an independent, thorough impact assessment of the extension of GATS on the provision of key services both in the UK and internationally.

World Development Movement

The WDM released a report GATS: A Disservice to the Poor earlier this year. It concludes that the rationale for GATS appears to rest on "the remarkable and unproven assumption that service liberalisation benefits developing countries", and condemns the UK Government's position that negotiations should continue despite the absence of an assessment.

Developing Nations

In October 2001 ten developing countries (Cuba, Dominican Republic, Haiti, India, Kenya, Pakistan, Peru, Uganda, Venezuela and Zimbabwe) called for a proper assessment of GATS.

Public Services International

Public Services International (PSI) the federation for trade unions representing public sector workers (UNISON is an affiliate) has produced Great Expectations: The Future of Trade in Services. This argues agreements to promote the growth of international trade "jeopardises the central role of government in determining policies for the good of individual countries". It highlights concerns for health and education, and public services in developing countries. The PSI campaign calls for a full assessment of the impact of the GATS regime, and a moratorium to be imposed on GATS.

UNISON's Position

A GATS motion was carried at National Conference 2001, and UNISON's Scottish Council (February 2002) agreed a motion on GATS. UNISON has signed up to the international trade union campaign to stop the corporate globalisation agenda. We want to replace it with a society where social and environmental issues, and core labour standards based on the International Labour Organisation Conventions, are part of the global agenda. Despite Government assurances, UNISON Scotland is concerned that GATS poses a threat to public services. We want to secure a commitment from Government that they will not sign up to a treaty that requires the UK to liberalise any public services.

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