Everything for Sale

By Julian Petley

domesday-book-peter-kennard.jpgPhotomontage from The Domesday Book
© Peter Kennard, Manchester University Press,1999

How the World Trade Organisation’s General Agreement on Trade in Services will affect the world – including film and broadcasting – in devastating ways

In October 2002, the government announced a consultation document entitled Liberalising Trade in Services: a New Consultation on the World Trade Organisation GATS Negotiations. Never heard of GATS? You're not alone. Thanks to virtually no discussion of it in parliament and, until recently, absolutely minimal media coverage, 88% of the British population are in the same state of blissful ignorance, according to The Observer. And yet this is a measure which could, if unchecked, not only further pauperise the poorest countries of the world, but also, in the ‘developing' and developed worlds alike, cause to be rendered illegal vast swathes of public provision and national/local government regulation, thanks to rules devised and enforced by an entirely unelected and unaccountable body – the World Trade Organisation (WTO).

During the 1980s, the increasing economic importance of the provision of services led the ever more powerful service companies of the industrialised countries to agitate for virtually unlimited market access on a global scale. Western governments and the European Commission needed no encouragement to help big business embark on this latest rapacious adventure, and together they set about designing – extremely secretively – an international agreement aimed at ‘liberalising' the global trade in services. The result, in 1995, was the General Agreement on Trade in Services (GATS), which is overseen by the WTO.

The service industries now account for about two thirds of economic activity in industrialised countries, half of economic activity in ‘developing' countries and over half the world's total economy. In all economies, service activities soak up 60% of all foreign direct investment, of which 90% is from developed countries. Service provision covers a truly vast spectrum of activity, from education to tourism, banking to rubbish collection, health care to communication. At the turn of the millennium, global trade in services was worth $1.35 trillion, but this still accounted for only about 20% of total global trade. Clearly, then, there's tremendous scope for expansion here, and the financial benefits to western service providers of seeing developing countries stripped of the ability to regulate or otherwise intervene in their own service sectors, especially where those services are provided by foreign multinationals, are all too glaringly obvious.

As with other WTO agreements, the purpose of GATS is ‘liberalisation', or de-regulation. Its basic aim is to increase global trade in services by removing ‘unnecessary' restrictions and governmental regulations that are deemed to be ‘barriers' to trade between countries. The Articles of the agreement, which are basically a list of ways in which governments should not ‘interfere' in the market, are seen by the WTO as essentially the first ever set of global, legally enforceable rules covering the international trade in services. As Renato Ruggiero, the former WTO Director General put it in 1998, the GATS extends the WTO's jurisdiction into "areas never before recognised as trade policy." And how.

The driving concept of GATS is that individual countries make ‘commitments' to open up particular parts of their economies to trade under GATS. Its key principles include:

• Most favoured nation (MFN). Each WTO member must treat the import of services from all other members no less favourably than for any other member.

• National treatment. Each member must treat foreign service suppliers no less favourably than its own service suppliers.

• Transparency. Members must make all regulations affecting trade in services known and accessible and administrative decisions open to appeal. In order to avoid what it euphemistically calls ‘disguised protectionism', regulations must not be ‘more burdensome than necessary to ensure the quality of the service'.

• Progressive liberalisation. Members shall enter into rounds of negotiations aimed at achieving progressively higher levels of trade liberalisation.

• The ratchet effect. Once a commitment has been made it will be virtually impossible to withdraw it.

• Market access. This rules out limits on the number of service suppliers in a sector, on the size of the market and on the type of legal entity allowed to provide a service.

The GATS process thus far has followed what is called a ‘request-offer' approach. That is, each country has ‘requested' from other countries the sectors it wants them to liberalise (the deadline for this was 30 June 2002) and then each country has ‘offered' the sectors it is willing to liberalise (deadline March 2003). After this the full negotiations start, first bilateral then multilateral, and these will last until the end of 2004. In effect, this will be a complex series of trade-offs, during the course of which, powerful countries will twist the arms of weaker ones and offer them all sorts of dubious ‘inducements' to trade away their services – including persuading ‘developing' countries to give GATS commitments in return for rich countries actually keeping promises which they made years ago in other areas.

At first, GATS appeared to be an issue primarily for those concerned with the ravages of globalisation, and specifically with the developed world's conglomerates effectively re-colonising the ‘developing' one. Now, however, as the ‘offers’ of western countries are gradually being dragged into the light by the efforts of assiduous NGOs such as the World Development Movement (WDM), we can see that our own services are under threat too. Nowhere is this a more serious threat than in the UK, in which, thanks to successive government policies, the private sector already plays a key role in the provision of public services; it therefore becomes much more difficult than in other EU countries to ‘ring fence' them from GATS-inspired demands that they should be fully opened up to competition, since they've already been effectively ‘liberalised'. It's also particularly alarming that, in this country, GATS negotiations are in the hands of the high priests of neo-liberal fundamentalism, the Department of Trade and Industry (DTI).

Thus we now discover that, with almost no public debate at all, the UK has already made commitments in certain areas of health, retail distribution, education, tourism, the environment, business services, telecommunications, and financial services, although precisely what these are the DTI chooses not to reveal. There are, however, other parts of the education, health and the environment sectors in which, apparently, no commitments have yet been made, and none has been given thus far in the energy, postal and audio-visual communications sectors. On the other hand, numerous requests have already been received and more are likely to follow. In particular, the audio-visual communications sector looks extremely vulnerable.

Here, on the one hand, the DTI's hands are to some extent tied by the ‘Television Without Frontiers’ Directive and the European Convention on Transfrontier Television, both of which are designed to carve out a protected space for European productions on European television stations, although the former was fatally weakened at birth by British efforts essentially to exempt Murdoch's Sky from its requirements. Britain is also a member of the Media Plus programme, which helps in particular to support European film industries. However, there is still plenty of scope for GATS to wreak havoc with our broadcasting system.

In this sector, again, competition with the main public service provider, the BBC, already exists: regulated in the case of Channels 3, 4 and 5, and largely unregulated – thanks to the complicity of successive governments – in the case of BSkyB.  Furthermore, the current Communications Bill has made all too clear the government's absolute determination to ‘liberalise' current media ownership rules, even in the face of concerted opposition from across the political spectrum, and, in the words of the consultation document, ‘to overhaul and simplify the legal framework for the media industry'. So, even if the Government were defeated over its proposals to open up large parts of British television to non-EU ownership, it could simply reintroduce them by the back door under the GATS rules.

However, the government may feel rather less smug when voters realise that these rules could effectively abolish the BBC and render totally illegal the public service obligations of Channels 3, 4 and 5. How so? Well, the consultation document reveals that, in the audio-visual sector, the government has received requests to ‘remove discriminatory subsidies', words which could have been written by Murdoch himself – or, more likely, his sinister henchman and tireless lobbyist in Westminster and Brussels, Irwin Stelzer – as part of News International's shrill and seemingly indefatigable propaganda campaign against the BBC licence fee.Furthermore, the aforementioned requirement that all types of regulation should be the ‘least burdensome' could easily be brought into play by a Channel 3, 4, or 5 owned by, say, Disney or AOL which felt itself unduly constrained by the public service broadcasting requirements laid upon it by OFCOM, especially if it felt that these were limiting its profitability in the new hyper-competitive environment promised by the Communications Bill. Why should a vast multinational company bother with what OFCOM says when it knows that its next stop will be the WTO, the ne plus ultra of deregulation?

GATS represents capitalism's ultimate wet dream: the commodification of absolutely everything on the planet, including its water supplies. Alarmist nonsense? Maybe, maybe not, but thanks to the shroud of secrecy surrounding GATS it's really quite impossible to judge. However, the very fact that this messianic project has been hatched in the dark clearly suggests that its creators realise that what they regard as a free market utopia is likely to be perceived as hell on earth by most of the rest of the world's population – once it discovers what's in store, that is. Thus the most urgent task of the moment is to flush the terms of these shady and thoroughly sinister deals out into the open before they can be concluded, and to persuade enough of the world's ‘developing' countries to recognise the whole GATS process for the act of legalised piracy that it is, and to withdraw from it forthwith, thus causing it effectively to collapse.

Julian Petley is Chair of the Campaign for Press and Broadcasting Freedom and lectures in Media and Communications at Brunel University.

For a comprehensive guide to GATS visit the World Development Movement website: www.wdm.org.uk