DOHA, Qatar-On the
last day of the Doha meeting of the World
Trade Organization, some NGOs remained
concerned about pressure on developing
countries to liberalize their service sectors.
At the Uruguay Round, the General Agreement
on Trade in Services (GATS) was pushed
through even though several developing
countries were not amenable to the inclusion
of services in the final agreement. Under
this agreement countries may unilaterally
liberalize their services markets; although,
ostensibly, they are not obligated to do
so.
The
structure of GATS allows countries to open up markets
to foreign investment gradually, and they may choose
which sectors or sub-sectors they want to liberalize.
For instance, within the financial services sector
a country may choose to open up banking, but keep the
insurance sector closed. Banking and insurance are
private services while education and health services,
especially in developing countries, are usually public
services. NGOs and some developing countries have expressed
concern that though developed countries and proponents
of GATS assert that liberalizing the services sector
can only benefit consumers; prices will rise in both
public and private sectors.
"The issue is that small countries often
don't have the resources or the ability to withstand
the push to privatize," said Giampiero Alhadeff,
Secretary General of Solidar, an alliance of nongovernmental
organizations focusing on trade unions. "It's
all very well to say that the GATS agreement gives
you the choice to say which services can and cannot
be privatized, but in reality the push to privatize
is difficult to withstand, especially if you don't
have the resources to supply services to your people."
Proponents of the agreement on services say that
it will increase efficiency in local markets and
benefit consumers. Moreover, they say, services
is the fastest growing sector in the world and
opening up markets is the only way developing countries
will be able to compete in a global economy.
"Services is the fastest growing sector in
the world economy," said Christopher Roberts,
Senior Policy Analyst at Covington and Burling
in the United States. "Opening up this sector
will bring trade benefits, more so than anything
else, to the developing world."
The problem, according
to Tetteh Hormeku of the Third World Network
is that developed countries
are pushing to liberalize the services sector while
developing countries still do not have the capacity
to compete domestically in this sector. "Areas
that have been chosen for sectoral negotiations
have been in areas like telecommunications and
information technology where more developing countries
have a disadvantage," he said. Furthermore "provisions
in GATS to assist developing countries to build
their own service centers have been ignored."
Public services
such as water, electricity, education and health
are the biggest areas of concern. "Our
chief concerns are in these areas and we want it
to be specifically clear that governments can say
no to the opening of trade in services in these
areas," said Rodney Bickerstaffe former Secretary
General of Unison, the United Kingdom's largest
trade union. "We don't want entrepreneurs
to pick and choose where they enter to the inclusion
on something like health."
Industrial concern
are not as worried about this factor, because,
they say, the process of liberalization
is a slow one and essential public services will
not be threatened by GATS. "When a certain
concern must necessarily be provided by the government,
like printing of money and macro-economic decisions,
it cannot be opened up," said T.K Bhaumick
from the Confederation of Indian Industry. "Opening
up the services market, even slowly, means that
there will be increased efficiency which maximizes
consumer welfare. Imports always act as a stimulant
to the domestic sector-both private and public."
Chakravarti Raghavan,
who was present at the Doha meeting, said in
an article on GATS that purportedly "as
a benefit of services liberalization...there is
evidence of [resultant] lower prices. However there
is equally compelling evidence in the US, and many
developing countries that the cost of the basics
in terms of cost have actually gone up in most
markets."
Hormeku agrees with this concern citing the example
of Ghana, where a Canadian rubbish collection company
pushed all local competitors out by entering the
market with extremely low prices. As soon as they
acquired a monopoly, he said, they raised prices
to the detriment of consumers.
Another concern
for developing countries is in the area of what
is known as "modes of supply." This
defines four ways that services can be provided
internationally, the last of which refers to labor
or "individuals traveling to different countries
provide services."
"Developed countries do not want to discuss
this last section even though it is their laws
that restrict movement of people across borders," said
another NGO representative. "Their laws and
standards are higher than developing countries
and people from the poorer countries are not given
the same competitive advantage, even though developed
countries say they are."
Delegates from
developing countries also expressed their desire
to see this part of GATS resolved,
though this meeting will not make any real changes. "We're
keen to have freedom of movement of natural persons," said
Bhaumick. "There is a qualification constraint,
a recognition constraint, an immigration constraint.
This mode of supply should be liberalized."
According to Alhadeff
this is not an issue of international agreements,
but rather of domestic
policies and concerns. "I think that a lot
of the northern rich countries have a public view
and a private view on this issue," he said. "They're
very scared of losing votes and we've just seen
in Australia a right wing Prime Minister come back
from nowhere to win an election on the basis of
what I would call a racist campaign. Migration
has brought tremendous riches to Europe and what
I'm seeing a hearing a willingness and understanding
that we need to create the means to allow much
more migration into Europe."
Article 15 of the revised draft Ministerial Declaration,
expected to be finalized Tuesday evening, calls
on Members to continue work on GATS through the
Council for Trade in Services. Delegates speculated
that the next Ministerial would have a stronger
focus on services.
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