The WTO and public libraries - a Swedish perspective

An interview between BiS editor Lennart Wettmark and Canadian librarian
Fiona Hunt, followed by two responses from Swedish government officials,
and a response by Fiona Hunt.


WTO - a threat to public libraries

bis: You have in a speech on globalisation through WTO said that public
libraries could disappear now that services are next to be liberalised

FH: Yes, but before I begin, let me say that globalisation itself is not
necessarily a bad thing; it could be a good thing. And it is perhaps
inevitable. The WTO's globalisation agenda,however, is corporate-driven and
the rules are being written with the good of corporations, not the
well-being of the public, in mind.

The GATS (General Agreement on Trade and Services) introduces a whole new
field to international trade, namely services.
The GATS strives to deregulate all services across all borders world-wide
with the goal to commit each country to deregulate every service sector and
provide national treatment for foreign service-based companies. Services
include almost everything that is not a good or commodity: education,
health care, broadcasting, child care, social services, water treatment,
energy distribution, and a multitude of other things including libraries,
museums and archives.

The GATS is explicit in its goal of privatizing the last remaining vestiges
of the public sector. Public libraries would face the same threat of
extinction under the GATS that was predicted with the Multilateral
Agreement on Investment (MAI), a draft treaty that was abandoned in
December 1998 after France's withdrawal from the proceedings. The
difference is that the GATS already exists and is relatively unknown to the
public, making it an easier target for WTO negotiators.

The GATS is going ahead. All negotiations are secret and carried out behind
closed doors, with little or no information about the substance of the
talks feeding out to the public.

bis: "National Treatment" seems to be a key concept?

FH: Yes, the concept of national treatment is built into all WTO agreements
and is meant to create a level playing field for all companies doing
business in the same market so that there is no discrimination against
foreign companies. WTO-style national treatment goes one step further,
however. Not only must foreign corporations be treated the same as domestic
corporations, there is no way for governments to place performance
requirements on them

bis: In what way could this be a threat to public libraries in Sweden?

FH: Public libraries are in the public domain, supported by public taxes.
Imagine an information services company entering the Swedish market and
demanding the same subsidies and tax support that public libraries get. It
would be entitled to do so under national treatment rules, providing it can
prove itself to be the same kind of operation. The government's most likely
response would be to cut back on or eliminate public funding to libraries
so as to avoid similar claims in the future. Libraries could find
themselves forced to generate income to survive. The worst case scenario is
that, without public funding, libraries could disappear altogether. The
public would then be required to buy their information from information
companies or from libraries, if libraries could stay afloat by charging for
their services. Either way, the public would find itself paying for
information that was once in the public domain.

bis; Somehow this is very hard to imagine*

FH: Yes, it is, but the threat is very real.  One issue that could affect
the magnitude of the threat to libraries is how they are classified
according to the GATS. As it happens, libraries fall under the broad
classification of Division 96 Recreational, Cultural, and Sporting Services
under the UN classification of services. The UN classification is the one
generally used by countries when they make their commitments under the
GATS. You can go to:
http://gats-info.eu.int/gats-info/swtosvc.pl?&SECCODE=10.C to find the
countries that have made commitments under library services. You'll see
that the US and Japan have made almost total commitments, meaning that any
country's private library services could bid on contracts for local
libraries once the sector has been opened up to competition.

bis: Do you see other more specific indications that public libraries are
threatened, or is this more of general concerns?

FH: According to an article in the Vancouver Sun dated August 1999, there
are companies launching what they call information markets on the
Internet. Information markets are essentially Internet-based reference
desks, providing reference service to paying customers (Ott 1999). The
Information Market pairs up experts in various fields with people seeking
answers to e-mailed questions; once an answer has been received, the seeker
pays a fee, from which both the expert and the Information Market take a
cut. Should companies offering this type of service enter the US market,
they could, under national treatment guidelines, try to claim government
funding, describing themselves as library-like companies offering
library-like services. In addition, many libraries are experimenting with
fee for service arrangements to deal with already inadequate funding
levels; these schemes could open the door to competition with companies
offering the same kinds of services

bis: Which options does the Swedish government have, then?

FH: Well, if you read the draft Services document drafted at the Seattle
WTO Ministerial Conference, November 30 - December 4, 1999, you'll see
that it is dangerously ambiguous, leaving the door open for negotiators to
take whatever direction they like. WTO members must offer up sectors to be
committed. This constitutes the request-offer approach mentioned. Members
will commit sectors they are willing to open up to liberalization.
Decisions made during the negotiations will be applied to these committed
sectors only. However, some GATS clauses will be applied horizontally to
all sectors, even those sectors not committed in the request-offer process.
So, even though a WTO member may not commit its education sector, or health
services, or libraries, these sectors will still be subject to probably
some of the worst GATS clauses.

bis: This means that it would be impossible to have a national cultural
policy?

FH: In response to a WTO challenge, a country would need to prove that the
regulation under challenge was serving a legitimate objective.
Incidentally, in putting together a WTO-approved list of legitimate
objectives, safeguarding the public interest has already been rejected. So
have cultural diversity and environmental protection. Instead, a May 9,
2000 confidential paper suggested that legitimate objectives could include
economic efficiency, competition and economic development.
There is a clause in the GATS that exempts services supplied in the
exercise of governmental authority. However, public services operating in
competition with other service suppliers (like private schools) would not
qualify for this exemption. A library could be considered to be operating
in competition with other service suppliers by engaging in fee for service
arrangements.

bis: What do you think Swedish LIS workers should do then?

FH: Regardless of the rhetoric being used, the agenda is to liberalize all
sectors, if not immediately, then gradually over time. Article 19 of the
GATS talks about progressive liberalization and indeed, this document (see
the introductory paragraph) states that the aim is to achieve progressively
higher levels of liberalization of trade in services...

There are many things you can do to help stop this progression!:

This is the answer of the Swedish minister of cultural affairs:

In last issue of bis, WTO and GATS are described as a threat to the public
libraries. Is that correct? This is my answer:

Municipalities, county councils and the state have certain obligations
regarding libraries. Those obligations are stated in the Library Act
(1996:1596).  The regulations applied to libraries in the public sector are
also valid to library activities carried out by somebody else commissioned
by the municipality, the county council or the state. If for instance a
municipality chooses to outsource libraries, the municipality is still
responsible for the sphere of activities.

I have in various situations expressed strong criticism against plans of
outsourcing, such as the non-socialist proposal for bidding on all public
library activities in the city of Stockholm. As it has appeared there is no
big interest in this proposal, largely depending on the fact that the
Library Act doesn't allow public libraries to charge for book loans, which
makes it difficult for commercial actors to make money in this kind of
activity.

There are three other elements, which speak against the scenario described
in the bis article:

Firstly because each country in the GATS negotiations chooses in which
sector it want to make commitments of market access for foreign deliverers
of services. Secondly because the country keeps its own right to
nationally regulate the service sector for which commitment on access and
certain treatment of actors from other countries have been done.
Thirdly because it is the individual country itself which decides about
privatisation of a publicly provided service.

However, there are threats both to the cultural and the media sector. The
work of the ministers of cultural affairs is in EU very much about
resisting the interpretations of the Commission of the EU rules of
competition. We have the same vigilance concerning WTO/GATS, to which we
have formulated a common attitude: "During the forthcoming WTO negotiations
the Union will ensure, as in the Uruguay Round, that the Community and its
Member States maintain the possibility to preserve and develop their
capacity to define and implement their cultural and audiovisual policies
for the purpose of preserving their cultural diversity"

The Swedish government will act actively and very firmly against all
proposals which in any way could jeopardise Swedish library policy or
cultural policy. To us it is evident not to make any such commitments
during the ongoing negotiations on services.

Marita Ulvskog
Minister of Cultural Affairs

The answer from the minister of commerce

Dear Lennart,

in the article "WTO - a threat to public libraries" in bis issue 2001:3
aspects of GATS is discussed. The minister of culture Marita Ulvskog has
commented the Swedish policy regarding libraries and its link to GATS. I
will focus on some over all aspects of trade in services, GATS and the
Swedish position in the ongoing negotiations on liberalisation of the
international trade in services.

Sweden was a driving part during the negotiations, which led to GATS - the
first agreement regulating the international trade in services. While
through GATS getting an agreement which gives Swedish companies access to
the service market of other countries, some basic principles of the right
of countries to regulate its own service market was established. GATS
openly states that publicly provided services - such as our system of
education and health care - are not included in the agreement. The full
right of the countries to regulate on their own and introduce new
regulations in the field of services is established in the agreement.

The commitments that the member countries of WTO have done in GATS are done
by positive listing. That means that the countries by themselves decide
which commitments they want to do - in which sectors and to what extent
they will open a certain service market to participants from other
countries. The fact that one country has made a certain commitment does not
force another country to do the corresponding commitment. Consequently,
there is nothing in GATS which urges a country to open a certain sector. It
is the governments of the countries, which negotiate in WTO, not companies.
I also want to stress that GATS only is about international trade in
services. The concept Liberalisation, which is about international trade,
is separated from Privatisation.  Privatisation within different sectors is
done from political decisions in the specific countries and can not be
forced upon by GATS.

The principals in GATS, which I have referred to above, are very important
to the government and we will safeguard them in the ongoing negotiations on
further liberalisation of the international trade in services. Sweden is
not going to do the kind of commitments which could have an influence on
the policy we want to persue in the field of trade in services, including
that of the public sector in Sweden and for instance our public libraries.

Since Sweden is a relatively small country, it is
  important that we can export our products and services to other
countries.
Services constitute two thirds of the production in Sweden today. Through
export, jobs are created in Sweden and growth is promoted. In order to
increase the opportunities of our companies to export to other countries
the government is encouraging liberalisation of the international trade,
including trade in services. The Swedish market of services is already
today relatively open, which provide the Swedish consumers a broad supply
of services to reasonable prices.

On the WTO website (www.wto.org) there is an abundance of material on GATS.
There you can find the text of the agreement, see what commitments the
different countries have done and read the minutes from the meetings of
WTO. On the site of Foreign Department (www.utrikes.regeringen.se) you will
find information on different trade policy issues. Kommerskollgium also
have good material (www.kommers.se) which explains different aspects of
GATS

Yours sincerely

Leif Pagrotsky

------------

Fiona's response:

I applaude the Swedish government's active interest in the General
Agreement on Trade in Services (GATS) negotiations and its commitment to
protecting public services in the face of the potential threat posed by
the GATS.

I wish to point out several issues worthy of the government's attention in
its vigilance against this WTO agreement.

Specific Commitments by Member Country:

Let me begin by supplying the URL for the WTO web page which lists all the
commitments made to date by the WTO member states:
http://www.wto.org/english/tratop_e/serv_e/22-specm_e.htm
Clicking on the link next to Sweden will allow readers of bis to see which
sectors Sweden has committed and to what extent. As this document is a
legal text, some assistance with the technical language will likely be
necessary. For help reading this document, go to
http://www.wto.org/english/tratop_e/serv_e/guide1_e.htm#Commitments.

In the list of Specific Commitments, libraries would fall under #10:
Recreation, Cultural, and Sporting services. As you will see, there is no
mention of libraries in Sweden's current commitments. It is essential to
remember, however, that while commitments are listed for each sector
specifically, there are over-arching limitations that will be applied to
all sectors regardless of a member's positive listing. These are called
"horizontal limitations". The WTO web site says that "horizontal
limitations often refer to a particular mode of supply, notably commercial
presence and the presence of natural persons."
(http://www.wto.org/english/tratop_e/serv_e/gatsqa_e.htm) Wherever a
horizontal limitation is applicable, it will be applied to the service
whether the member has committed that service or not.

Exemption for Government Services

While it is true that Sweden is a progressive nation with a protective
stance where public services are concerned, there may be ways in which the
GATS could influence your public libraries without the government's
intending it to.

This potential threat can be found in Article I.3 of the agreement.

The GATS rules apply to trade in services, rather than goods. " 'Services'
includes any service in any sector except services supplied in the
exercise of governmental authority" (Article I.3.b). The document then
goes on to define services supplied in the exercise of governmental
authority as "any service which is supplied neither on a commercial basis,
nor in competition with one or more service suppliers." (Article I.3.c)

The latter clause (Article I.3.c) constitutes the potential danger to
libraries, because of its ambiguity. It would appear 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 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 that libraries could be protected by the
governmental services exemption clause (Article I.3.b), it is equally true
that this protection could be negated by the clause which follows (ie.
Article I.3.c - the exemption does not apply to services "supplied on a
commercial basis" 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 I.3 would result in the second interpretation suggested above.

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, North American libraries have unwittingly opened themselves up to
the potential of a challenge from the private sector under the GATS.
Furthermore, public 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.

I am writing from a North American perspective. It is possible that
Swedish libraries are better protected from potential GATS challenges.
Nevertheless, I feel there is a need for caution, given the ambiguous
nature of Article I.3, and the absolute power exercised by the WTO's
Dispute Settlement Body should a challenge involving libraries be brought
to its attention. I urge readers of bis and the people who make up
Sweden's government to look at Steve Shrybman's exhaustive report on the
GATS, prepared for the Canadian Library Association and other interested
parties (http://www.cla.ca/resources/gats.pdf). This report is based on
the scenario in Canada, and on Canada's commitments to date under the
GATS. Even so, it is an excellent guide to the potential effects of the
GATS on public services and may alert Swedish citizens to some possible
scenarios not yet considered.

As Shrybman suggests,

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)

Professional Standards

Another area in which the GATS could exert influence is that of
professional accreditation and standards. Article VI paragraph 4 on
Domestic Regulation states the following:

With a view to ensuring that measures relating to qualification
requirements and procedures, technical standards and licensing
requirements do not constitute unnecessary barriers to trade in services,
the Council for Trade in Services shall, through appropriate bodies it may
establish, develop any necessary disciplines. Such disciplines shall aim
to ensure that such requirements are, inter alia:

(a)     based on objective and transparent criteria,
        such as competence and the ability to supply
        the service;

(b)     not more burdensome than necessary to ensure
        the quality of the service;

(c)     in the case of licensing procedures, not in
        themselves a restriction on the supply of the service.

The important phrases in this part of the agreement are "unnecessary
barriers to trade in services" and (a), (b) and (c) above. Keep in mind
that "services" here include the "presence of natural persons" which
essentially means foreign workers within a member state. The purpose of
Article VI paragraph 4 is to ensure that standards for the various
professions are not too high, so that trade in "natural persons" can take
place. This could translate into a WTO ruling that Sweden's standards of
accreditation for librarians constitute an "unnecessary barrier to trade
in services" and that they are "more burdensome than necessary to ensure
the quality of the service". Hence, a foreign librarian without the
Swedish equivalent in training could be considered, according to (a) above
to have adequate "competence and ability to supply the service" regardless
of the standard set by Sweden for this profession.

Government Regulation

Marita Ulvskog, Swedish Minister of Cultural Affairs and Leif Pagrotsky,
Minister of Commerce, have both commented that the governments of WTO
members maintain the right to regulate in their own interests. They
believe this is a safeguard against the GATS' potentially harmful effects.
Hopefully, they are correct.

However, in their analysis of the GATS' effects on Canadian government
policy, Ellen Gould and Murray Dobbin point out that:

Canada has not fared well when its interpretation of WTO agreements has
been challenged at the WTO. Of the 81 decisions made in total by WTO
panels and the Appellate Body, 11 have involved cases against Canada and
Canada has lost all but one. Canadian regulations on drug patents,
magazines, the Auto Pact, and dairy market boards are just some of the
Canadian policies that have been challenged at the WTO and that Canada has
been forced to change due to losing these cases. (7)

Conclusion

As you can see, the GATS poses a serious threat to public services,
certainly in North America. I sincerely hope that Sweden may be less
susceptible to this same threat. I urge the Swedish government to take
another look at the GATS in light of the points I have raised above, to
ensure that your public services, including libraries, remain viable.

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>

2.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>

3.ibid.

4.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

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

6.Shrybman, p. ix

7.Gould, Ellen and Murray Dobbin. #6