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Corporate Europe Observer - Issue 9
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GATS: Undermining Public Services Worldwide

WTO negotiations on further liberalisation of trade in services, 'GATS 2000', have recently moved into a higher gear. The European Commission, headed by Trade Commissioner Lamy, is playing a particularly aggressive role in trying to expand GATS to as many sectors as possible, working closely with the European Services Forum to champion the interests of the European services industry. The Commission's GATS offensive, combined with its radical liberalisation of services within the EU Single Market, is fuelling debate within civil society groups and catalysing resistance to the risks posed to democracy and basic public services.

he collapse of the Seattle WTO Ministerial 18 months ago dealt a heavy blow to plans for furthering global trade and investment liberalisation. Despite this, February 2000 saw the WTO launch a kind of 'stealth round' which included negotiations over further liberalisation of trade in services. These negotiations, also called GATS 2000, moved up a gear at the end of March 2001. As a result of this new development, the debate in the public domain, over the WTO General Agreement on Trade in Services (GATS), is hotting up dramatically. GATS is increasingly being perceived as a threat to democracy and to basic public services such as health, education and water. Consequently, around 500 non-governmental organisations and trade unions have now signed on to a declaration to "Stop the GATS Attack". [1]

One of the hot issues in the GATS debate is the question of whether GATS really does pose a threat to public services or not. According to WTO Director General Mike Moore, the answer is simple: "GATS explicitly excludes services supplied by governments." To emphasise his point, he accuses those who hold a different opinion of "taking liberties with the truth" and "peddling lies and distortions". [2]

WTO Director-General Mike Moore

However, its clear that Mr. Moore himself was distorting the facts in his Guardian article by omitting to mention that the GATS agreement defines public services very narrowly. It is precisely this narrowly defined exception for 'governmental authority', in the first article of the GATS agreement, that is at the heart of the debate.

Fears for the impending 'GATS Attack' are now corroborated by a report on "GATS and Public Service Systems", issued by the Ministry of Employment and Investment of British Columbia (Canada). [3] This government report warns that the current GATS agreement may diminish governments' regulatory capability and undermine their existing public service systems.

The debate hinges around the extent of the 'governmental authority exclusion' in the GATS agreement, which defines public services ('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." The British Columbia government report correctly points out that at the end of the day, the 'governmental authority' exclusion may only protect a few public services, namely those services that are provided by completely non-commercial, absolute public monopolies.

Interestingly, the report shows that the governmental authority exclusion comes straight from the EU Treaty, and within the EU context has "failed to protect public services in dispute every time it has been tested." [4] There have been eight challenges taken to the European Court of Justice, and every one of them has been successful in challenging a service that governments were trying to say was still under its authority, using the Article 45 exemption.

The European Union's Privatisation Bias

This brings me to the point of the European Union's pro- privatisation agenda, which within the European context forms as big a threat to public services as the WTO GATS agreement. Under the flag of the 'single market programme' and more recently the 'Lisbon strategy' "making the EU the most competitive and dynamic knowledge-based economy in the world", the EU-wide privatisations in telecommunications, financial services, energy, postal services and public transport have been aggressively pushed forward. [5]

The European Commission's recent Communication on "Services of General Interest in Europe"  is quite revealing. [6] The Commission avoids the term 'public services' ("an ambiguous term"), replacing it consequently by 'services of general interest', which it defines as "market and non-market services which the public authorities class as being of general interest and subject to specific public service obligations."

This Communication limits the role of local and member state governments to defining which services are classified as services of general interest and what criteria they should fulfil in terms of services delivery. Public authorities may then "entrust certain operators of services with obligations of general interest and where necessary grant them special or exclusive rights and/or devise a funding mechanism for their provision", but in principle only "where market forces alone do not result in a satisfactory provision of services." [7]

The European Commission: Speaking on Whose Behalf?

The fact that such a pro-privatisation biased European Commission is speaking on behalf of the EU member states in the GATS negotiations doesn't bode well for public services in the European Union member states. Trade Commissioner Lamy recently tried to soothe worries over the GATS threat to public services by pledging that "in areas linked to state provision, such as energy, postal services, education, culture and health, we are looking to preserve our legislative prerogatives, our cultural and social identity and our high standards of consumer safety and protection." [8]

Taking into account the fact that the European Commission is currently engaged in privatising energy and postal services, Lamy's pledge sounds pretty empty, and it begs the question which (if any) public services are genuinely protected by the EU. Lamy's claims that public services will be protected have even less credibility in view of the fact that he also pledged to "push forward the EU's [meaning the EU-based transnational corporations'] offensive interests in services" and that the EU proposes the GATS 2000 agenda to be "comprehensive and without a priori exceptions". For example, the current EU priorities list for GATS 2000 features market access negotiations on environmental services (including water supply and municipal waste collection) and transport services (including public transport). Again the question arises - which public services are being protected here by the European Commission?

First and Foremost for the Benefit of Business

In preparing for the GATS 2000 negotiations, the European Commission closely cooperated with the European services industry, represented by the European Services Forum (ESF). The ESF was founded in 1998 on the initiative of former Trade Commissioner Brittan with the explicit aim of obtaining business guidance for determining the EU negotiating positions for GATS 2000. [9] The European Commission's special GATS web site leaves little doubt about its one-sided approach: "The GATS is not just something that exists between Governments. It is first and foremost an instrument for the benefit of business." [10]

The European Services Forum certainly has privileged access to DG Trade officials. For example, DG Trade has created a special e- mail list server (the Services Information System) through which it distributes draft EU negotiating proposals for the GATS negotiations to solicit business comments and suggestions.

To give just one example of the close cooperation between DG Trade and the European Services Forum, I quote a few lines from a letter that DG trade top official Robert Madelin sent to ESF chairman Andrew Buxton in January 2000. In his letter, Madelin asked Buxton to provide the Commission with more information on corporate priorities for libe ralisation of "construction, education, environmental, health and social services, and audiovisual services", and to indicate which barriers "are most disturbing". [11]

Stop the Attack on Public Services

Public services in Europe are being threatened from two sides. On the one hand there are the WTO General Agreement on Trade in Services and plans to extend the scope of this agreement through the GATS 2000 negotiations. On the other hand you have the existing internal market legislation of the European Union, the EU's 'Lisbon strategy', including liberalisation of energy and postal services, and the European Commission's bias towards corporate interests. The conclusion seems simple: groups in Europe campaigning to safeguard high- quality public services should not restrict themselves to campaigns against the WTO GATS agreement and the current GATS 2000 negotiations, but should also address the pro- privatisation policies of the European Union and the disproportionate corporate influence on EU policies.


Corporate Europe Observatory and Transnational Institute (both signatories of the 'Stop the GATS Attack' statement) have recently launched the GATSWatch website. This is intended as a tool for GATS campaigners, providing easy access to information on GATS critique, on the negotiating process and on the corporate push behind GATS.



1: Stop the GATS Attack, International Sign-On Statement, Spring 2001.    | Back to Text |

2: Mike Moore, Liberalisation? Don't reject it just yet, Guardian, Monday February 26, 2001.     | Back to Text |

3: GATS and Public Service Systems, Discussion Paper, Ministry of Employment and Investment, Government of British Columbia, Canada, April 2, 2001.     | Back to Text |

4: Article 45 (55 old version) of the EC Treaty.   | Back to Text |

5: Presidency Conclusions, Lisbon European Council, 23 and 24 March 2000.   | Back to Text |

6: Communication from the Commission: Services of General Interest in Europe, Brussels, 20 September 2000, COM(2000)580 final.    | Back to Text |

7. Ibid.  | Back to Text |

8: Pascal Lamy, Speech to ESF Conference The GATS 2000 Negotiations; New Opportunities for Trade Liberalisation for all Services Sectors, Brussels, 27 November 2000.  | Back to Text |

9: Lord Brittan, who negotiated the 1997 WTO Financial Services Agreement on behalf of the EU, has since become vice-chairman of UBS Warburg bank and recently was appointed chairman of the LOTIS High Level Group, a high-level pressure group representing the interests of the UK financial services industry.  | Back to Text |

10: Opening World Markets for Services - Towards GATS 2000, European Commission web site.    | Back to Text |

11: Robert Madelin, letter to Andrew Buxton, 24 January 2000.   | Back to Text |

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