Services at the WTO

There are three major areas covered by World Trade Organisation agreements – agricultural goods, industrial and other non-agricultural goods, and services. Services are covered by an agreement called the “General Agreement on Trade in Services”, or “GATS.”

What is GATS?

The term “services” covers a huge range of sectors, including health care, education, retail stores, transport, communications, broadcasting, entertainment, tourism. These sectors not only comprise over half of the economy of most developing countries but are vitally important in terms of social wellbeing, culture and the environment. GATS is binding on local authorities as well as central government.

GATS is about making sure corporations can access new opportunities to make profits by supplying services in new markets. Its aim is to ensure a progressive opening up and deregulation of the services sectors of member countries. It does this by limiting governments’ rights to keep out private competition, and by limiting the ways that governments can regulate service companies.

For example, if a country has made full commitments in regard to hospital services, it must allow foreign companies to establish and run hospitals for profit. GATS places limitations on the powers of the government to control the operation of such foreign-owned hospitals. They cannot be forced to provide emergency services, for example, or to take patients who can’t afford to pay. This could have serious repercussions in poor countries, since the foreign-owned hospitals are likely to drain the public system of its qualified staff and cherry pick patients that can afford to pay. It could also cause a crisis in health care provision if the corporation decides to shut up shop and leave on short notice.

Oxfam on GATS

  • GATS needs to be rebalanced, so that developing countries have the right to prioritise the provision of services to all their people, especially the poor, above the interests of rich countries and transnational corporations.
  • GATS must not be allowed to damage the vital public services of poor countries. The only effective way of ensuring this is to change the agreement so that public services are excluded from liberalisation commitments.
  • GATS should also be amended to make it clear that governments can limit liberalisation in areas deemed essential to national development and poverty reduction.

However, what is happening in the negotiations is precisely the opposite of what is needed for development. The European Union and other rich countries are seeking fresh markets for their multinationals and they are pushing to change the system of GATS negotiations in their favour. Until now, there has been flexibility for each country to decide for itself which sectors to liberalise. But the EU wants to replace this system with one that sets targets, or “benchmarks” for liberalisation. This is a radical change which would effectively put pressure on poor countries to make more and more commitments.

In return, the EU is hinting that perhaps it might consider allowing more immigration for workers from poor countries. In the absence of some very concrete promises on this, it is hard to imagine European governments being able to resist their domestic anti-immigration lobbies and provide any major new opportunities, particularly for the poorest countries.

What has all this got to do with New Zealand?

Everything, unfortunately. New Zealand is backing the EU in its demands. It is hard to understand why New Zealand would be taking this position, since the EU is using their extreme demands for GATS as a means to deflect attention from their shameful refusal to stop dumping cheap food and agriculture in other countries. The EU is one of the worst offenders when it comes to unfair trade, handing out gargantuan subsidies to its farmers, causing misery to millions of people in rural areas all over the developing world, as well as depriving New Zealand farmers of opportunities.

Oxfam thinks it time that the New Zealand government sided with those working for fairer trade rules, instead of siding with those who want to add to the injustices.