What are ‘services’?
Services are sometimes described as ‘things that you cannot drop on your foot’. They include public services such as healthcare, health insurance, water and sanitation services and education.
The European Union (EU) has some of the world’s largest multinational service companies, in sectors such as finance, telecommunications, energy and water. These companies have played a central role in putting together the EU’s trade bids to open up service sectors around the world, allowing companies to sell their services in new countries. Their high level lobbying seems to be paying off, but it is unclear whether marginalised communities will benefit as well.
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What is GATS?
The General Agreement on Trade in Services (GATS) is a major trade deal on services. All member countries are required to identify the services they are willing to open up to foreign companies. The deal began in 1995 and negotiations are ongoing. The idea is to take the agreement further and further over time, to include more sectors and to get individual countries to agree to open up further to outside competition.
A powerful disputes panel can be used to enforce agreements once signed, giving real teeth to any agreements made.
What are the key concerns about the GATS agreement?
Although governments have the option of excluding any specific service from being opened up, they are under international pressure not to exclude any service which is already ‘provided on a commercial basis’. Important public services including water and electricity supplies are usually paid for by consumers so could be seen as falling into this category, as could health and education services. Some wealthier countries would like to develop these as export industries.
- Health services – In many countries public hospitals already face competition from private hospitals, but losing wealthy patients to foreign hospitals and health services as a result of GATS would undermine the public sector even further. The most experienced staff and influential elites may be drawn away, leaving a fragmented health system of public hospitals to serve the poorest sections of society such as rural communities. The opening up of health services is also a factor in the rise of health tourism.
- Health workers – Critics are also concerned that GATS has the potential to aggravate the shortage of health workers. The deal has the potential to free up the geographical movement of service-sector workers further still.
- Water – Safe, clean and accessible water is essential for public health. Under GATS many countries are agreeing to reduce government involvement in their public water services and to open up water provision to investment by private companies. But this carries great risks. Under GATS it is possible for companies to challenge regional and local water regulations as ‘barriers’ to trade, reducing the power of governments to regulate this essential service. Meanwhile there have been examples of privatisation leading to rapidly rising prices, water supplies being cut off and public protests.
Last modified: 13/01/2011
