Thanks to: Ellen Gould <[EMAIL PROTECTED]> The Government of British Columbia, Canada, has published its analysis of the General Agreement on Trade in Services (GATS), including detailed analysis of how the GATS will limit publicly provided services, such as education and health care. If you are concerned about trade agreements that limit government authority and promote the privatization of public services, I urge you to read the document and do a key-word search for "health" or "education." I can send the document to you, if you are not able to get the document from BC Government website. (approximately 40k) http://www.ei.gov.bc.ca/Trade&Export/FTAA-WTO/governmentalauth.htm ......... ......... ......... ......... ......... GATS and Public Service Systems Discussion Paper 02 April 2001 International Branch Ministry of Employment and Investment Government of British Columbia PO Box 9327, Stn Prov Govt Victoria, B.C. Canada V8W 9N3 (250) 952-0707 Introduction and Overview This paper on the =93exercise of governmental authority=94 considers the extent and range of interpretation of an important exclusion in the General Agreement on Trade in Services (GATS). To the best of our knowledge, there are no other papers that discuss the meaning of this important exclusion in any detail. In the absence of more exhaustive interpretive materials, as well as a lack of decisions by trade panels on the meaning of the governmental authority exclusion, it is not possible to determine how broadly or narrowly this provision might be interpreted. Since the Canadian government has signed onto the GATS in 1995, it is important to understand how governments might be affected by its obligations. An important part of understanding the GATS is to have clarity about what types of measures governments can exclude from coverage of the agreement. The GATS is an important agreement since services represent anywhere from 60%-80% of the gross domestic product (GDP) of WTO member nations. The GATS also has a built-in agenda that requires on-going negotiations. Negotiations to broaden and deepen the GATS have been taking place since January 2000. There is no agreed-to completion date but typically such negotiations last for several years. There is no definition for "services" in the agreement. It has often been said that a service is anything that cannot be dropped on your foot. It is hard to imagine a good that is not connected to a series of services. Obviously, each good contains labour services but often also requires a series of services in order to allow for use/consumption of that good. For example, computers have to be transported, distributed, advertised, sold, have software installed, provide education on software use, repaired and guaranteed. All of these services are essential to bring a good to market and to ensure that the good is sold and consumed. Many services have a strong public policy dimension to them, including health care, education, water treatment, tobacco advertising, alcohol distribution, electricity distribution, information services, among others. Knowing the importance of some of these services to Canadians, the federal government has given assurances that it will not negotiate the inclusion of "public" health, education and social services. In an effort to enhance trade in services, and to otherwise open up services markets, the GATS contains rules which "discipline" or restrict government action (measures). The scope of the agreement is extraordinarily broad because it potentially covers everything that governments do which affect trade in services and, it potentially covers all levels of governments. Government measures include legislation and regulation as well as requirements, procedures, practices or other actions. WTO trade panels have recently ruled that government measures which cover goods, but which "affect" trade in services, are also covered by the GATS rules. WTO trade panels also ruled that measures designed to cover services, but which affect trade in goods, are covered by the General Agreement on Tariffs and Trade (GATT). This adds another layer of complexity for governments and their citizens when attempting to assess whether or not new measures will be trade consistent. The GATS is structured to include parallel but interrelated sets of rules. One set of rules is found in Part II "General Obligations and Disciplines". These rules apply to all service sectors unless they are explicitly excepted. This is known as the "top down" approach; and in principle, every service is covered unless explicitly exempted. Negotiations taking place at present are designed to =93deepen=94 the existing obligations in this part of the GATS, that is, to increase the number of rules which apply to government measures. Part III of the GATS contains an additional and more demanding set of rules that are "bottom-up", that is, these rules only apply to service sectors where governments make commitments. Negotiations are aimed at increasing the number of services that will be covered by this part of the GATS. Because the GATS already contains a top down set of rules in Part II, it is possible that such sensitive service sectors as health and education may already be covered by these rules. The federal government, as well as senior WTO services officials, have asserted that citizens and their governments need not be concerned that such vital services will be brought under WTO rules. They indicate that services provided "in the exercise of governmental authority" are excluded from the agreement. The GATS exclusion for services in the "exercise of governmental authority" is thus of critical importance. If health care, education or other critical and sensitive services are already covered by Part II GATS rules, then these rules could decrease government decision-making authority over these sectors. Similarly, where more stringent GATS provisions apply, it is important for governments to have complete confidence in the scope of any specific commitments they make in sensitive sectors. A major objective of the GATS is to facilitate international trade in services by ensuring an increasing number of service sectors are opened up to prospective service providers - whether these providers are public or private, for-profit or non-profit. While there is an on-going debate about whether services are best delivered publicly or privately, most British Columbians would agree that decision-making authority over these issues should continue to rest with their respective federal, provincial, municipal, regional or first nations governments. The federal government has recognized, in a variety of fora, that it sees a need to protect "publicly" delivered health and education services and believes that this objective can be accomplished through the use of the existing language relating to the exercise of governmental authority. To date much of the discussion has focused on the need to protect those services which are =93publicly=94 delivered. An alternative perspective characterizes the issue as requiring the protection of government decision-making authority in sensitive service sectors. What would happen, for example, if governments wanted to move into new areas of social service delivery, such as child care, and regulate in a manner that would increase the use of public and/or non-profit forms of child care? What would happen if a government decided to alter the delivery of health care and regulate in such a manner as to increase the use of public and/or non-profit service delivery? The government of BC wants to ensure that British Columbians can decide for themselves how present and future governments will deliver services and will be able to have their views implemented even in changing circumstances. This paper is designed to raise important issues for discussion. It does not necessarily reflect the position of the government. Indeed, one of the purposes of the paper is to encourage discussion and increase public awareness on these important issues. We have also included on our Web Site the views of Michael Moore, the director general of the World Trade Organisation, as he expressed them in an article published recently in The Globe and Mail and would suggest that readers consider his view as well to gain a greater appreciation of different perspectives. Finally, the Government of British Columbia welcomes your views on these important issues. Please contact us with your perspectives, questions and comments. Summary The General Agreement on Trade in Services (GATS) contains an exclusion that, at first, appears to broadly protect public service systems and the authority of member governments to regulate such systems. However, this exclusion for "services provided in the exercise of governmental authority" is defined very narrowly. As a result, the GATS appears to bring many public service systems -- and their regulation -- within the sphere of WTO authority. The scope of the GATS is very broad. Under the agreement, most government measures "affecting" services with an international component are subject to the GATS rules, in certain instances, even if such measures are non-discriminatory and have little or no impact on international trade. As a result of the agreement's broad coverage and narrow exclusion, GATS obligations that apply 'across-the-board' (including most favoured nation treatment and transparency) already apply to most public services and their regulation. More restrictive GATS obligations (e.g. national treatment, market access) also apply to many public services and to government regulatory measures in sectors where member governments have made specific commitments. In Europe, a "similar" exclusion in the EC Treaty has failed to protect the services in dispute every time it has been tested. A close examination of statements made by WTO officials and bodies tends to confirm and reinforce concerns that GATS obligations already apply to many public service systems. In Canada, as in most other WTO countries, "public services" are rarely delivered exclusively by government. Instead, vital public services are delivered to the population through a mixed system that is funded and regulated by governments at the federal, provincial and local levels. Health, education, and other social service systems, for example, consist of a complex, continually shifting mix of governmental and private funding and governmental, private not-for-profit and private for-profit delivery. An effective exclusion for "public services" must therefore be broad enough to protect governments' ability to deliver services through the mix that they deem appropriate and to preserve their regulatory authority over all aspects of these mixed systems. There has been very little public discourse on the narrowness of the governmental authority exclusion, and a detailed analysis of its significance on governments' regulatory authority is warranted. In light of the negotiations now underway in Geneva to broaden and deepen the GATS, some governments may consider such an assessment to be an urgent priority. The governmental authority exclusion appears likely to become a priority issue during GATS re-negotiations where governments will seek to ensure that the exclusion is strengthened and that its protection of public service systems is rendered both fully effective and permanent. ......... snip ......... ......... snip ......... The complete document is at: http://www.ei.gov.bc.ca/Trade&Export/FTAA-WTO/governmentalauth.htm .......................................... Bob Olsen, Toronto [EMAIL PROTECTED] "If voting worked, they'd make it illegal" ..........................................
