Transcript from You and Yours, BBC Radio 4, 12.04 – 1.00pm, Wednesday 17th October 2001
Participants: Liz Barclay (You and Yours) Winifred Robinson (You and Yours) William Yates (You and Yours) Barry Coates (World Development Movement) Nick Cohen (journalist on The Observer, and author of ‘Cruel Britannia’) Lord Newby (Liberal Democrat peer and Treasury spokesperson) Alex Nunn (Manchester University, and Association of University Teachers researcher) Ruth Rikowski (South Bank University, and Information for Social Change) Christopher Roberts (Chairman of the Committee on Liberalisation of Trade in Services, London)
You and Yours: Basic services like health care and education could be privatised and run by foreign multi-national firms, under a revised trade agreement being negotiated by the members of the World Trade Organisation. At least, that’s what anti-globalisation campaigners and public sector workers would have us believe. Free trade across borders has been seen by many as a key strategy in promoting economic prosperity. Historically, it has been products and goods which have been the focus of those determined to put an end to tariff and trade barriers. But now the so-called GATS agreement aims to do the same for the service sector. Some claim essential services could be forced to liberalise. If they did so, regulation of those services would effectively transfer from the British government to the World Trade Organisation, as Will Yates reports.
“I commit myself to be the Director General of all the contracting parties.” (Voiceover)
William Yates: When Renato Ruggiero became the first Director General of the World Trade Organisation 6 years ago, its brief, in the WTO’s own words, was to “help trade flow, smoothly, freely, fairly and predictably.” To that end, the WTO has two key tools at its disposable. The General Agreement on Trade and Tariffs (or GATT), and the General Agreement on Trade in Services (GATS). But neither has met with universal approval.
(Shouts from a recording of a demonstration/protest in the background)
“On the second day running there was mayhem on the streets of Seattle. Riot police fought a series of running battles with demonstrators.” (Voiceover by news reader)
William Yates: The riots at the WTO’s ministerial meeting in Seattle 2 years ago, and subsequent protests have given graphic evidence of the depth of feeling against what critics see as the organisations blind devotion to free trade. The focus of those protests has been the effect trade agreements have on the economies of Third World countries. Suggestion being that free and fair trade are effectively incompatible. But according to Barry Coates from the World Development Movement the effects of GATS will strike much closer to home.
Barry Coates: Services cover this incredibly broad range of things that we all depend on, for our health care, education, water supply, through to transport and communications, through to tourism and entertainment. And these services are going to be governed in future by a set of rules that are now being negotiated at the World Trade Organisation. And the kind of rules that, that they are developing are not well known to members of the public, or parliamentarians or others, but they could have sweeping impacts on the way that these services are organised and delivered. And particularly on the power of governments to be able to regulate those services in the public interest.
William Yates: Under GATS, governments are required to ensure that regulations on foreign companies are no more burdensome than necessary. The definition of what is ‘necessary’ will be defined and determined by the WTO.
Barry Coates: Services tend to be very highly regulated by governments because there are often issues of public interest. What this agreement does, it imposes a model of a kind of liberalisation which is hugely contentious not only in Britain as we see with the regulation of governance over the railways, over water supplies, over the underground in London. Em – and over air traffic controls. These kind of services are enormously contentious and what this GATS agreement does is, it locks in a certain kind of delivery of these that is primarily governed according to the unregulated rules of the market. And that’s not necessarily in the public interest.
William Yates: Concern about the effect GATS will have on public services in this country is growing. Earlier this year, 260 MPs signed an early day motion, calling on the government:
“To ensure that there is an independent and thorough assessment of the likely impact of the extension of GATS on the provision of key services both in the UK and internationally.” (Voiceover)
William Yates: A number of local authorities and public service unions have expressed similar fears:
“We look to the creation of the WTO, okay? Now, there are a variety of legal frameworks, developed within the WTO…” (Voiceover – anonymous)
William Yates: Alex Nunn lectures in politics at Manchester University and he is also a Consultant Researcher for the Association of University Teachers.
Alex Nunn: The problem is that the GATS agreement redefines public services – higher education, as one of those, as a product which is then to be bought and sold on a world market, rather than a public service which is for the benefit of the public. And the problem with that is that it offers the possibility of higher education according to the ability to pay. There are problems associated with academic freedom, with commercial sponsors controlling research, and that is already happening. For instance, there is a high profile case in Canada with an academic whose had a job offer withdrawn because a piece of research he did offended the department’s commercial sponsor.
William Yates: Many also fear for the future of our libraries, which this government has identified as vital to its ideal of easy access to lifelong learning. Ruth Rikowski lectures in knowledge management at South Bank University, in London. She is worried that big business will be given free reign to run our libraries as profit-making enterprises. And she believes that would harm the very people the library service was set up to help.
Ruth Rikowski: At the end of the day, a few years down the line, people will probably be paying to go into their public library service, or there will be a subscription. Maybe they will go into their library free but then they will have to pay to do searches on the Internet for information, or perhaps it will be both. I suspect it will be both in the end, because private companies are out to make, need to make money. So they need to maximise their profits, and poor people, unemployed, pensioners, children are going to be the ones that suffer particularly.
William Yates: And Barry Coates from the World Development Movement believes that scenario would be mirrored across the service sector. The market will dictate the level of service and the current providers will be unable to intervene on the publics’ behalf.
Barry Coates: What we’ll see is local authorities and others who are afraid of putting in place proper regulation in the public interest; because they think they might get challenged under GATS and get taken to the World Trade Organisation. And essentially lead to a situation as the American economist J.K. Galbraith has said, of ‘private affluence existing alongside public squalor’.
Liz Barclay: Barry Coates from the World Development Movement, ending that report. Lord Newby is a Liberal Democrat peer and Treasury spokesperson, Nick Cohen writes for The Observer and Christopher Roberts is Chairman of the Committee on Liberalisation of Trade in Services, in the City of London. Private affluence existing alongside public squalor. Public services are run for the benefit of the open market, rather than for the safeguard of the public interest. Is that a realistic view of the future of our public services, or overly pessimistic? Christopher Roberts.
Christopher Roberts: It’s certainly not only overly pessimistic, but actually untrue. Er, the General Agreement on Trade in Services, er, should help to strengthen services around the world, give governments and public authorities the opportunity to use all the latest skills and methods in developing public services. And I think we all stand to gain, by liberalising trade in services, just as over many years we have all gained by liberalising trade in goods.
Liz Barclay: Nick Cohen, your response?
Nick Cohen: Well, we already have our private affluence and public squalor. What this is going to do is just remove yet further our, our democratic rights, and once you’ve signed up to GATS and once you’ve said a service. And they define services incredibly broadly. Food, water, hospitals, education, the necessities of life, suddenly somehow become services, like er, you know, restaurants or hairdressing – you can’t get out of it. And then the World Trade Organisation, which is unelected, which meets in secret, which only listens to big business, will decide what regulations are, are too burdensome for business. And you will have no democratic choice to get rid of it. So if Wal-Mart wants to open massive stores on the green belt, er, it is quite conceivable that no elected politician will be able to stop them.
Liz Barclay: So, there is basic disagreement right from the start. Lord Newby.
Lord Newby: I think Nick’s being a bit pessimistic. I don’t think the existing GATS would allow you to do all of those things at all. Em, I do have concerns about GATS, er, and the way it might develop for a number of reasons. But they are not to do with the existing degree of private affluence and public squalor. That’s happened for a whole raft of reasons that are nothing to do with GATS. The problem in my view with GATS, is that, em, it is very heavily weighted towards an American-style legalistic system of regulation. And once you do that, you open the possibility of unintended consequences. This has already happened in my own experience, in trade, on the banana issue, and I think that that’s the real fear. Not that there is anything currently in GATS or anything that’s currently happened, that justifies some of the wilder accusations.
Liz Barclay: But we have the…
Nick Cohen: [Interrupting]… Okay, I’ve been accused of being ‘wild’ and over pessimistic. I’ll give you a concrete example, very quickly. Er, the California State government decided to ban a petrol addictive which it thought was dangerous. The Canadian company that made it sued under GATS: said it was ‘a burdensome regulation’. And so it forced the Californians, instead of just banning an additive, to require all petrol stations in California to dig up their storage tanks and re-seal at enormous costs to small businesses and the taxpayer, but of course was of benefit to the company. You know, these things are already happening.
Liz Barclay: Christopher Roberts, can I just bring you in here. ‘Unintended consequences’, I mean, we’ve rather signed up to an agreement and are now beholden to those lawyers that are now arguing legal definitions, rather than the elected representatives arguing public interest.
Christopher Roberts: Yes, well, first of all the GATS agreement is about liberalising trade. It’s not about regulation at all. That is a different question and the GATS agreement does not prevent governments from carrying on with regulation as they wish, under the normal democratic process. As to the question of democracy; I mean, the GATS agreement, like the wider World Trade Organisation, has set up a range of rules which governments have freely entered into, and when disputes arise they are disputes about whether those rules are being adhered to. And that is like the sort of case which arises in a court of law and not surprisingly is a quasi-judicial procedure. It’s democratic.
Nick Cohen: Well, it’s not democratic. Courts of law, for a start, meet in public. The World Trade Organisation GATS panels don’t.
Christopher Roberts: I would actually, I would personally accept the view that it would be better for greater transparency in the process of dispute settlement in the WTO. The, the opponents for that, curiously, are the developing countries.
Nick Cohen: But once your service has been opened up to GATS, and of course in Britain there is already private health and private schools, you then come back to the question of regulation, which er, er, my friend from the City tried to dodge. The GATS rules say very clearly that regulation will not be allowed if it is more burdensome than necessary. And who decides what a burden is? Whether planning laws, or health and safety laws, or environmental laws are a burden? The WTO: not your elected politician.
Liz Barclay: Lord Newby, that is a worry, surely.
Lord Newby: I think that is a worry, but I think Nick is exaggerating the scope of GATS at the moment. My understanding is that services provided by government, em, by the public sector, the GATS agreement as it currently stands are not covered. I can clearly see that once you start privatising public services, you then run into difficulties. But I think, em that’s as much as a problem about whether you should be privatising public services in the first place.
Nick Cohen: No, it is whether the market is opened up. And it is already is, in everything – even in prisons in this country.
Lord Newby: Nick, I’m not disputing the…
Nick Cohen: [Interrupting]… Just a second: can I just throw a quote at you from Dean O’Hare, who’s the President of one of the world’s biggest insurance companies (American, of course)? He says: “We believe…” (he is talking about GATS) “we can make progress and negotiations to allow the opportunity for US business, that’s private health care, to expand into the foreign health care market.” And the previous head of the WTO said: “The world has not taken on board just how important and how big this is.”
Christopher Roberts: Yes. I mean, Dean O’Hare can speak for himself, and it seems to me quite reasonable for service industries around the world to look for opportunities to develop their business in their own interest as well as those of the countries where they invest and develop. And from the UK point of view, it is hugely in our interest, with two thirds of our economy accounted for by services, to develop international trade in this area. Hugely important for our employment and for wealth creation here. So that’s not something lightly to be thrown away.
Liz Barclay: Give me an example of what you are talking about.
Christopher Roberts: The fact is that, er, financial services, for example, accounts for a million jobs here in the City of London. And we have a huge international business in financial services, and the sort of skills and knowledge which British banks and insurance companies bring to other countries around the world strengthens their economy. It’s good for us – sure. But it is good for these other countries as well.
Liz Barclay: Nick, there must be positives to this as well. I mean if we are in a situation where, for instance, skills are transferable across national borders, and you don’t have to, perhaps, retrain to be a doctor in this country, because we already know that their qualifications and technical standards are of such a standard that you can operate. Then surely that has got to be a good thing?
Nick Cohen: Well, of course. I wouldn’t deny that there will be benefits for British companies, particularly in the City, where the real pressure for this is coming from. Leon Brittain has gone from being trade commissioner to lobbying for the City. I wouldn’t deny it. Of course there are. But what we are being asked to do, in effect, is sacrifice across Europe, our social democratic health and welfare systems for trade opportunities in the Third World. Now, whether that will be good for the Third World or not is a very, very difficult problem to decide. It will be good in some cases, but the only Third World countries that really got out of poverty in the Far East, Japan and the Tiger economies, have done so by protecting their industries and not by opening them up to free trade.
Lord Newby: I must just take issue with him. How can he say that GATS is going to sacrifice our social and democratic traditions in health and education? I mean, there is no slight, I don’t think there is the single beginnings of an example of where that has begun to happen in Europe. And I don’t see how, under GATS rules as they currently stand, or are as they are envisaged, they are going to sacrifice the ability of European governments to have high levels of health and education provided by the state on the broadly similar basis as we’ve known it in the past.
Nick Cohen: I’ll just actually, er quoting, er, Pascal Lamy, the er, European Trade Commissioner, who succeeded Brittain, who was saying that, you know, these are areas ripe for liberalisation – health and education.
Christopher Roberts: At the moment, no country in the WTO has asked for any concession from any of its trading partners in the health area. That is a simple fact, as of now. Countries around the world are not looking to liberalise their health services.
Liz Barclay: But that is not to say that that might not happen. In this country we are quite far down the privatisation route. I mean, I suspect there was a time when nobody would have thought we would have privatised our telecommunications and our transport, for instance. Or, our water. So the day, it, it must be possible that the day will come.
Christopher Roberts: In theory, in theory yes, but it hasn’t happened yet. But to go back to the essential point, that, under GATS, governments retain their complete power to regulate.
Nick Cohen: That all sounds very reasonable, em, but, er, let’s take the case of bananas which er, his Lordship knows about. We had (Britain and France had) small Caribbean islands, populations descended from slaves our ancestors took there. We had an agreement to buy bananas from them to stop them falling into poverty. An American multinational which doesn’t even grow bananas in America, but pays money to both Republicans and Democrats, took us to the WTO. Suddenly decided that bananas were a service. As I said, it’s an imperial definition. They’ve lost their trade concessions. Now there is a public interest far, far above the trade interest in this. There’s a public interest in honouring agreements, but also in stopping those islands from becoming centres for drugs dealing, which will flood Europe and America with drugs. But the WTO said: “Oh! It’s a restriction on trade!” – and there it goes. You cannot let business determine what the public and the national interest is. There are higher interests. There are greater considerations, to be borne in mind. And that’s why we have elected politicians.
Liz Barclay: Christopher Roberts?
Christopher Roberts: No, I wouldn’t accept that the Americans dominate the scene. I think that, that underestimates the negotiating skills both of the EU negotiators and those from the developing countries. I spent two days in Geneva last week, talking to a range of developing countries, all of whom were very interested in the GATS; who have their objectives in areas like, like tourism and movement of persons.
Liz Barclay: Lord Newby, we’ve got no agreement round this table at all, it seems to me. How on earth are ordinary consumers supposed to understand how this will effect them?
Lord Newby: Well, I think the fact that we find it difficult to know how it is going to effect them, er, demonstrates the problem. The organisations that we are talking about, have become, em, almost like a sort of Byzantine court, in terms of er, rules upon rules, which are extremely difficult to be penetrated. And I think that, I agree with Nick that there needs to be a greater public input into the whole thing and I agree that the rules, the way that the rules need to be implemented need to be simplified. And I think that the British government and the EU governments, er, and the developing world governments, need to be very, very vigilant about future moves, and shouldn’t be rushing, er, to get to the next stage of implementation of rules.
Liz Barclay: Lord Newby, Treasury Spokesperson, Nick Cohen from The Observer and Christopher Roberts, Chairman of the Committee on Liberalisation of Trade in Services. Thank you all for joining us.
20th October 2001