Global Policy Forum

Ultimate control of significant parts of the UK services economy, including essential public services such as health and education, have been signed over to unelected trade lawyers at the World Trade Organisation (WTO) without any public or parliamentary debate. This is the conclusion of the first ever study of the UK's commitments under the General Agreement on Trade in Services (GATS) a far-reaching, controversial, but little understood free trade agreement currently being negotiated at the WTO in Geneva.

Among the sectors that the report reveals have already been partially or wholly signed up to GATS are: health services, private education, rail maintenance, environmental (sewage and sanitation), retail, financial and banking services.

The report, written by international trade campaigners the World Development Movement (WDM), is published exactly one month before the end of a DTI consultation on which services the UK will offer for further liberalisation in trade negotiations starting next April. Sectors currently being targeted in GATS negotiations for further opening to the free market include: postal services, broadcasting and communications, care homes, health care and education.

Peter Hardstaff, Head of Policy at the World Development Movement today said: "The extent of private provision and ability of the government to regulate the market in these areas is currently the subject of fierce public and parliamentary debate in the UK. GATS negotiations could bypass these debates by binding the UK to a set of effectively irreversible liberalisation rules at the WTO."

GATS rules govern the extent and nature of the involvement of foreign companies in the delivery of services and places strict limits on the ability of governments to regulate the market in service sectors.

Among the possible implications for UK public services or public interest legislation are: Bringing rail maintenance and repair services back under some form of public ownership would breach the UK's existing GATS commitments. Planning regulations effecting the expansion of large retail outlets could be ruled an ‘unnecessary barrier to trade' and overly 'burdensome' on business.

Generally GATS rules could limit the ability of government to provide public services and regulate in the public interest by banning laws or regulations to:
· Stipulate a not-for-profit service provider.
· Limit private sector involvement in a service sector or enforce a public monopoly.
· Discriminate in awarding subsidies to public bodies.
· Discriminate in favour of UK companies over those from another country.

The report raises concerns that the government's 'modernisation' agenda for public services could remove their protection from GATS rules provided by a public services exemption clause, leaving them unprotected against large foreign corporations. It singles out the creation of Foundation Hospitals and increasing private sector involvement in education as particularly worrying.

Peter Hardstaff said: "The Government has made little attempt to inform the public or parliamentarians about the GATS agreement and has failed to produce research on the UK's existing commitments and the potential impact of future commitments."

"Since the UK signed up to GATS in 1994 it has not produced a single document fully explaining either what the UK is committed to or the implications of its commitments. We have been forced to do the government's work for it. The DTI is currently consulting on what further service sectors, including public services, we should open up to the free market rules of this agreement. Their consultation is partial, biased and inaccurate. Yet the decisions made on the basis of this will be effectively irreversible. Far from starting negotiations with a clean slate the UK has already made substantial commitments under GATS. The Government is preparing to hand over much much more without any real debate, by-passing MPs and without properly explaining the agreement or its effects to the public."

Notes for editors:
Britain signed up to the General Agreement on Trade in Services (GATS) in 1994. Accelerated negotiations to extend the agreement are taking place at the World Trade Organisation. The agreement applies to all levels of government - local, regional and national, covering 160 service sectors. It extends the free trade principles of the WTO from trade in goods to services. The EC's website describes GATS as "first and foremost an instrument for the benefit of business." The WTO Secretariat has described GATS commitments as "effectively irreversible".

Article 1.3 of GATS excludes from its scope "services supplied in the exercise of governmental authority. " These are defined as "services supplied neither on a commercial basis nor in competition with one or more service suppliers." The WTO Secretariat has said: "The co-existence of private and public hospitals may raise questions, however concerning their competitive relationship and applicability of the GATS: in particular can public hospitals nevertheless be deemed to fall under Article 1.3?"

WDM has been campaigning on the threat posed by GATS to international development for the past three years. Over this period it has become increasingly aware of the impact the agreement could have on domestic public services. WDM has joined growing voices in the UK calling for greater transparency and assessment of GATS. These include motions passed by many major trade unions and the TUC, an Early Day Motion signed last year by 262 MPs and motions passed in 19 local authorities.

WDM's report, Serving (Up) The Nation: A guide to the UK's commitments under the WTO General Agreement on Trade in Services (130pp) is available in both hard copy and electronically on request from Monday 2 December. WDM has also produced a guide for organisations wishing to submit responses to the DTI GATS consultation.

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