Why the World Trade Organization Is a Threat to Libraries

By Fiona Hunt

American Libraries, September 2001

Publicly funded libraries around the world could face extinction under a World Trade Organization (WTO) treaty known as the General Agreement on Trade in Services (GATS). The GATS strives to liberalize all service sectors in all member nations over time. The threat to libraries comes specifically through the WTO principle of national treatment - the right of foreign companies to be treated the same as, or better than, domestic companies.

Despite the failure of the WTO talks in Seattle in 1999 (AL, Jan. 2000, p. 34), the GATS is moving ahead briskly, with meetings taking place regularly throughout 2000 and 2001. WTO members hope to further these negotiations at the upcoming November 9-13 meeting in Doha, Qatar, but will proceed without it should Doha agenda issues remain unresolved. The pace of the GATS negotiations makes it especially necessary for us to become aware of what is taking place behind closed doors at these international discussions.

What do multinational corporations have to do with the future of libraries? The WTO sees services as the next big area for the expansion of international trade through the GATS, with tremendous potential for profit making. Services include almost everything that is not a commodity - including libraries, museums, and archives. Article 19 of the GATS states that the aim is "to achieve progressively higher levels of liberalization of trade in services."

Libraries as export

In 1999 the Canadian government sent a questionnaire to public libraries asking them to identify areas where libraries might have "export" interests. Rather than protecting taxpayer-supported public services within Canadian borders, the government chose to focus on potential profits to be made from exporting Canadian public services. Support for the GATS is being solicited using exports as the carrot, conveniently ignoring the other side of the coin - namely, the threat of privatization of services currently in the public sector.

One of the greatest concerns among anti-WTO activists is that the GATS could deny governments the right to regulate in their citizens' interest. The GATS Working Party on Domestic Regulation is currently drafting a set of rules that would enable members to challenge each other's domestic regulations. Disputed rules would have to pass a "necessity test," meaning that the government imposing the regulation would have to prove that the rule is not unnecessarily trade-restrictive and that it could not have implemented anything less trade-restrictive. Such challenges would be heard by the WTO Dispute Settlement Panel - which has proven itself to be highly trade-friendly, ruling consistently against government measures that protect air quality, endangered species, and food safety as "unnecessary barriers to trade."

In answer to a 1996 challenge by the U.S. of the European Union's eight-year-old ban on the sale of domestic and imported beef treated with bovine growth hormone, the WTO Dispute Settlement Panel ruled that the EU must nonetheless begin importing hormone-treated beef by May 1999. When the EU refused to comply - because of BGH's suspected (but not proven) link to cancer, as well as to premature pubescence in girls - the U.S. requested that sanctions be applied. The EU currently pays over $116.8 million in trade sanctions. The right to choose had been superseded in favor of the "right" to trade.

In response to a challenge from another WTO member, a country would need to prove that a disputed domestic regulation (e.g., a clean-air statute) served a legitimate objective as defined by the WTO. Already rejected as legitimate objectives are "safeguarding the public interest," "cultural diversity," and "environmental protection."

Thinking commercially

The GATS excludes "services provided in the exercise of governmental authority" and defines government services as "those supplied neither on a commercial basis nor in competition with other suppliers." Given this definition, it is difficult to determine exactly what would qualify as a government service under the GATS. For instance, it may not matter that a service is being supplied for a sector of the market that might not otherwise receive access to that service. Public schools could therefore be considered to be in competition with other suppliers (i.e., private schools), presumably making them ineligible for the government-service exemption. Similarly, libraries could be considered to be operating in competition with other service suppliers by engaging in fee-for-service arrangements.

A foreign company providing the same or similar services as libraries in a particular market could potentially claim the same treatment as libraries in that market under the national treatment guidelines of the GATS. In other words, multinational corporations could claim subsidies - tax dollars - received by libraries. Under GATS guidelines, the government would be forced to give similar subsidies (funding) to foreign corporations seen by the WTO as offering the same services as libraries, or to cut off the libraries' funding altogether in order to treat both service providers equally. Such a challenge could force a nation's publicly funded libraries into the profit-making sector to survive.

Several points are unclear, however. Would a library be considered to be in competition with a corporation only if it is providing exactly the same service, or would overlapping areas also constitute competition? For instance, would the GATS consider a for-profit market-research corporation to be in competition with a public library's reference department? Secondly, a public library provides a basic level of access to information to all sectors of society, regardless of income. A fee-based information service provider does not. Can the two entities really be considered in competition with each other when their markets and mandates are so different?

Also at issue is the place of professional standards when it comes to the temporary employment of someone in a foreign market - a type of trade the WTO calls the "presence of natural persons." A legally binding obligation has already been drafted in the field of accountancy to achieve what GATS negotiators refer to as "harmonization." It is easy to see that such a trend could result in the degradation of professional standards; requiring that your employees and colleagues hold a master's degree from an ALA-accredited program might eventually constitute a non-tariff barrier to trade.

The GATS and the Doha agenda

The next phase of GATS negotiations is intended to empower member states to make requests of each other to liberalize more service sectors. WTO Director-General Mike Moore said in a July 30 statement encouraging the start of a new round of negotiations at Doha, "There is no other way in which we can sustain the momentum of the negotiations on agriculture and services."

But there is no clear indication that an agenda will emerge; developed nations are eager to push forward while developing nations are taking a more cautious stance. However, failure to agree on a Doha agenda will not necessarily stop the GATS negotiations. Some member states - most notably the U.S. - feel that the only way to keep up the pace and make real progress with the GATS is to conduct the negotiations separately from the larger WTO agenda.

To date all proceedings have taken place behind closed doors, with no public consultation and little information seeping out - with one notable exception. Most likely concerned by the threat of increased public outcry against the GATS, the WTO recently published a GATS fact sheet (www.wto.org/english/thewto_e/whatis_e/tif_e/agrm5_e.htm) designed to educate the public about the GATS and dispel fears concerning the most demonized elements of the agreement. More interesting however, is "Separating WTO Fact and Fiction" by GATS researcher Ellen Gould (www.canadians.org/campaigns/campaigns-tradepub-gats-fact_fiction-1.html), which compares the WTO's GATS fact sheet with contradictory information from its own Web-posted documents, as well as with case studies revealing WTO actions that have set precedent for future rulings and interpretations.

Clearly, there is some nervousness at the WTO about the level of public interest in its activities; security at each meeting since Seattle has become progressively more aggressive, with excessive force being used against protestors, culminating in the July 20 death of protestor Carlo Giuliani at the G-8 summit in Genoa.

Short of getting the GATS scrapped entirely, the key is to protect or exclude those sectors that member-nations do not want liberalized. However, the services document drafted at the 1999 Seattle WTO Ministerial and the more recent March 2001 draft state, "No service sector or mode of supply shall be excluded a priori" from negotiations. This means all sectors are open to liberalization.

Educating locally

Will all public library services be privatized? Will we find ourselves paying out of pocket for services that used to be subsidized by our tax dollars? Although realization of this scenario is not imminent, the long-term threat is real.

What can librarians do? They can start where they usually do - by reading up on the facts, forming an opinion, and voicing it. Also, they can disseminate information to their service populations:

Fiona Hunt is Information Literacy Librarian at Zayed University Library, Abu Dhabi, United Arab Emirates.



Letter to the Editor of American Libraries

From the ALA Washington Office

Re: Why the World Trade Organization is a Threat to Libraries, American Libraries, September 2001, p. 32-33


Although Fiona Hunt was partially correct in her article written for the September 2001 issue of the Library Journal, we believe that her argument falters when she critiques the World Trade Organization General Agreement on Trade in Services (GATS). In addition to all the domestic policy concerns that are confronting libraries these days, we must add a growing list of international issues -- including trade negotiations.

Ms. Hunt argues that GATS threatens to treat libraries as government subsidized commercial enterprises. This is highly unlikely. To see why, we just need to look at the exact language of GATS. It represents the worst in bureaucratic legalese, which is the reason for the existing confusion on the subject.

In the first place, the agreement exempts from coverage "a service supplied in the exercise of government authority." On the face of it, that would seem to spare public libraries. The problem comes about because the agreement removes from the exemption services "supplied on a commercial basis" and "in competition with one or more service suppliers." The purpose of this clause is to deal with countries that have nationalized banks and telecommunication companies. What it clearly does not do is extend GATS coverage to normal government services like police, education, libraries, and roads—all of which have commercial analogs (private schools, private security services, and the like). But, these government functions are not, in the words of the agreement, "supplied on a commercial basis." Their services are not for sale.

Beyond the specific case of GATS, however, Fiona Hunt's warnings that libraries need to inform themselves about the WTO, and other existing and upcoming trade agreements, and to participate in the debate are absolutely on target. Three forces are driving this: the rise in economic importance of international trade, the growth of information and information services as a major component of international trade, and the global information infrastructure that allows information flows to transcend national borders. Putting these trends all together, it is not hard to see how trade policy could easily impact the ability of libraries to obtain and provide access to information resources.

Many information policy areas that libraries care deeply about could be greatly impacted depending on how the negotiations proceed. We are concerned about the effects of these proposals, for instance, on intellectual property, privacy, access to government information, content controls, and the Digital Divide - both domestically and internationally. Steven Shryban presented an excellent paper on the impact of trade agreements on intellectual property last year in Jerusalem. The paper is on the IFLA website at (www.ifla.org/IV/ifla66/papers/176-148e.htm).

We in the Washington Office are carefully watching the developments in several areas of international negotiations - the WTO, as well as the deliberations involving the Free Trade Agreement of the Americas (FTAA), the Hague Conference on Private International Law, and the World Intellectual Property Organization. We are in regular discussions with US officials in the Office of the U.S. Trade Representative, the Department of Commerce, the State Department, the Federal Trade Commission, and the Patents and Trademark Office - all of whom are active in these important negotiations.

Rick Weingarten has been appointed by the Department of Congress to the Experts Committee on Electronic Commerce for the Free Trade Area of the Americas agreement. We have also formally requested of the Department of State that ALA be part of the US Delegation to the Hague Conference on Private International Law, and we have attended meetings of the WTO, World Intellectual Property Organization (WIPO), and the Hague Conference as Non-Government Organization (NGO) expert observers.


Thank you.


Emily Sheketoff, Executive Director, ALA Washington Office

Dr. Rick Weingarten, Director, ALA's Office for Information Technology Policy

Miriam Nisbet, Legislative Counsel, ALA's Office of Government Relations



Hunt's Response to the ALA Washington Office letter, unpublished by American Libraries

I am alarmed and disappointed by the apparent complacency demonstrated in the ALA office's response to my article "Why the World Trade Organization is a Threat to Libraries" (AL, Sept 2001) which appeared in the December 2001 issue of AL. I urge the ALA to take a closer look at the implications for libraries embodied by the WTO's General Agreement on Trade in Services (GATS).

The ALA office correctly points out the ambiguous nature of the clauses in the GATS concerning exemption of government services and identifies these clauses as confusing.

They fail, however, to address the exact nature of the confusion and to recognize its potential impact on libraries.

The GATS states that " 'services' includes any service in any sector except services supplied in the exercise of governmental authority" (Article 1.3.b). The document then goes on to define services "supplied in the exercise of government authority" as "any service which is supplied neither on a commercial basis, nor in competition with one or more service suppliers." (Article 1.3.c)

As noted in my September article, the latter clause constitutes the potential danger to libraries - precisely because of its ambiguity. It appears to mean that "if a service is provided on a non-commercial basis but in competition with other suppliers or on a commercial basis but without competition, it is not a service supplied in exercise of governmental authority." (1)

As Steven Shrybman, a Canadian lawyer noted for his work on the GATS and other WTO agreements points out, the wording of these clauses means that their interpretation is open for speculation. (2) Should a foreign service provider bring forth a challenge against a library, the interpretation of these clauses would rest with the WTO's Dispute Settlement Body (DSP), and this body alone. If the WTO chose to follow its own precedent, set over the course of numerous past dispute resolutions, the clauses in question could be interpreted such that any evidence of a library's provision of service (fee-based or not) that could compete with another service provider in the market could be considered in violation of the GATS rules. (3) Libraries' public role would not be taken into account.

The kinds of disputes that could arise:

Many public libraries offer services for which the public must pay; one example, already cited in my September article, is a fee-based business or market research service attached to a library's reference department. Any foreign service provider offering a similar market/business research service could challenge the library as being in competition with the company, and having an unfair advantage due to libraries' publicly funded status. Further, public libraries' provision of free online/Internet services could be challenged by private sector companies charging for these same services.

The crux of the issue lies in the DSB's interpretation of the wording in the GATS. While it is true, as the ALA office points out, that libraries could be protected by the governmental services exemption clause (Article 1.3.b), it is equally true that this protection could be negated by the clause which follows (ie. Article 1.3.c - the exemption does not apply to services "supplied on a commercial basis" and/or "in competition with one or more service suppliers."). All will depend on the DSB's interpretation of this wording.

One interpretation in the above case might view the public role of the library as a whole, despite the commercial or competitive nature of any of its parts, and might overturn the challenge, ruling that libraries provide services "in the exercise of government authority." On the other hand, the DSB could just as easily rule that if any aspect of the service being provided is operating commercially and/or in competition with another provider, the GATS rules apply. The problem is that we simply do not know how the clauses in question would be interpreted in the event of a challenge.

According to Ellen Gould, GATS researcher for the Transnational Institute in Paris, and Murray Dobbin, "at the October 14, 1998 meeting of the Council for Trade in Services, the body responsible for services at the WTO, it was agreed that: 'exceptions provided in Article I:3 of the Agreement [the exemption for governmental services] needed to be interpreted narrowly.'"(4) A narrow interpretation of Article 1.3 would result in the second interpretation suggested above.

I doubt very much that there is a WTO plot to "get" libraries. The goal of the GATS, explicitly stated in the preamble of the agreement, is simple: "the early achievement of progressively higher levels of liberalization of trade in services through successive rounds of multilateral negotiations." (5) By introducing fee-for-service arrangements in their efforts to survive the funding challenges of our times, libraries have unwittingly opened themselves up to the potential of a challenge from the private sector under the GATS. Furthermore, libraries' provision of equitable access to the Internet, in competition with private sector providers of the same service, could also bring libraries into the GATS' line of fire.

As Shrybman suggests in his exhaustive report on the GATS, prepared for the Canadian Library Association and other interested parties,

"The most effective way to guard against the corrosive influence of this regime would be to establish that public sector libraries are entirely exempt from the GATS disciplines as services delivered 'in the exercise of government authority' under Article 1:3 of the text. Should this effort fail, it would then be critical to ensure that measures concerning public sector libraries remain free from National Treatment, Market Access and other GATS commitments that would be invoked if commitments are made that affect the services provided by this public sector." (6)

Once again, I urge the ALA to take another look at this matter and to oppose the GATS publicly as IFLA, the Canadian Library Association, and many other library-related bodies have done.

References

  1. Krajewski, Markus. Research Paper, Written for Center for International Environmental Law (CIEL). Section III, Para 3. <http://www.gatswatch.org/docs/markus.html>

  1. Shrybman, Steven. An Assessment of the Impact of the General Agreement on Trade in Services on Policy, Programs and Law Concerning Public Sector Libraries. Prepared for the Canadian Library Association, Canadian Association of University Teachers, Canadian Association of Research Libraries, Ontario Library Association, Saskatchewan Library Association, Manitoba Library Association, Industry Canada, British Columbia Library Association, Library Association of Alberta, National Library of Canada by Steven Shrybman, of Sack Goldblatt Mitchell, Ottawa. p. iv < http://www.cla.ca/resources/gats.pdf>

  1. ibid.

  1. Gould, Ellen and Murray Dobbin. What is at Stake for Local Governments at the WTO? <http://www.canadians.org/campaigns/campaigns-tradepub-gats-backgrounder.html> #2, Para 2

  1. General Agreement on Trade in Services: Preamble. Para 3. <http://www.wto.org>

  1. Shrybman, p. ix