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A HUMAN RIGHTS GATSATSTROPE

"GATS could, quite simply, be globalization's last frontier: the end of the very concept of not-for-profit public services."
Maude Barlow, Council of Canadians, in The Ecologist, February 2001.

GATS? What Is That?
GATS, the General Agreement on Trade in Services, is yet another little-known but extremely important treaty being quietly negotiated by governments around the world. One of more than twenty trade agreements administered and enforced by the WTO, GATS will open up the world's public services to private corporations. Services including education, healthcare, water, energy, social services, postal services, publishing, broadcasting, libraries, environmental protection and public transport will all be laid open to corporate takeover. If all continues according to plan, GATS will go into effect at the end of 2002, greatly impacting governments' abilities to provide for basic human rights and the public good.

The GATS covers all services, except for those supplied “in the exercise of governmental authority.” But this exception is vaguely and ambiguously worded, so that even if the government is involved in a particular service or service sector, for example healthcare, compliance is still required if there is competition between the public service supplier and private sector companies. In many countries, services are provided by a combination of public and private suppliers, so GATS will apply quite widely.

GATS Obligations
The GATS imposes many requirements that will be familiar to those who have campaigned against other trade and/or investment treaties. Members are obliged to open their doors and welcome all foreign services and service suppliers equally under what is called “most-favoured nation” treatment. Countries must specify and bind themselves to “market access” commitments relating to the degree of access they will provide to foreign services and suppliers. And finally, they must agree to “national treatment” conditions that require them to provide the same or better treatment to foreign services and suppliers as they do to domestic ones.

WTO members may list limitations to the degree of market access or national treatment they will provide. However, once this is done, they can no longer impose future limitations that are more stringent than what they have already specified. Furthermore, the GATS requires countries to “progressively liberalize” their commitments in subsequent rounds of negotiations, leaving the way open for further reductions in the restrictions that can be imposed on foreign services and service suppliers. Ultimately, it will be difficult for governments to provide public services on a not-for-profit basis.

The GATS breaks trade in services into four categories:

• cross-border service supply, i.e. the provision of electricity services by a Mexican electric utility company to the neighboring town in California;
  
• cross-border service consumption, i.e. tourism or financial services used by a citizen of Argentina in the United States;
  
• the establishment of “commercial presence” in another country, i.e. Shell invests in an oil refinery project in Nigeria by creating Shell Nigeria as a separate subsidiary corporation under Nigerian law; and
  
• exchange of staff, i.e. a US or European law firm sends a lawyer to Singapore to provide legal advice on contract negotiations on behalf of their Singaporean client.
  

Human Rights Exceptions?
The GATS does not include any clear regulatory measures that would allow countries to violate GATS obligations in order to promote human rights. Members may adopt or enforce regulatory measures that may violate their GATS commitments if such measures are “necessary to protect public morals or to maintain public order”; “necessary to protect human, animal or plant life or health”; or necessary on the grounds of personal privacy.

However, these exceptions may prove unwieldy and ineffective in asserting the human rights concerns of affected local communities over and above the rights of foreign investors. For example, the “public order” exception may be invoked “only where a genuine and sufficiently serious threat is posed to one of the fundamental interests of society.” The protection of human rights, in light of the Universal Declaration of Human Rights and international law, could be among the “fundamental interests” that any given society or state must uphold. However, this definition would likely be challenged by other WTO members before the body's dispute settlement panel.

Governments might also make use of the protection of human life or health exceptions, considering that the right to life is one of the most fundamental human rights. Or they might choose to impose regulatory measures in order protect their citizenry's rights to individual privacy. However, all of these exceptions would have be determined “necessary”, and past WTO appellate body decisions have interpreted this as being equivalent to the least trade restrictive alternative measure.

Foreign Investments under the GATS
Human rights problems are most likely to crop up under the “commercial presence” category of trade in services, which essentially refers to foreign investments. Once a member makes commitments on market access and national treatment with respect to “commercial presence”, “related transfers of capital into its territory” are also required.

Although many developing country governments lack the human, financial, technical and logistical resources to adequately control and regulate the activities of large transnational corporations (TNCs) investing in various projects in their countries, retaining regulatory flexibility with respect to foreign investments is crucial. The same goes for governments in developed countries. In many documented instances, TNC investments in natural resource extraction and development projects have led to massive human rights abuses committed by TNC subsidiaries and their local political and security allies against the local host communities.

For example, FoE Nigeria is campaigning against the continued presence of Shell and other northern oil corporations in their country. TNC oil operations in Nigeria have resulted in deaths, injuries, cultural fragmentation, and economic, physical and social displacement among the local communities. FoE groups in Indonesia and the Philippines are campaigning with their partner communities against the intrusion of mining TNCs onto the ancestral lands and territories of indigenous communities. Large-scale commercial mining as conducted by TNCs, whether in developing or developed countries, has often led to community displacement and increased economic marginalization.

Corporate threats to public services will also intensify under the GATS, cementing anti-human rights trends already in place due to IMF-imposed structural adjustment programmes. Citizens in many Latin American countries are currently threatened by the entry of private healthcare corporations from the United States, and developing countries are the target of water companies eager to privatize what has always been a public good (see article this issue). More than 40 countries have already agreed to open up their education sectors under the GATS, and the outcome will be the replacement of universal public education systems by schools for those who can afford to pay.

Under the GATS, examples like these will only increase, and the recourse of member governments to human rights and environmental abuses will be limited. One important way that a country can maintain maximum regulatory flexibility when it comes to foreign investment is by indicating that it makes no (or “unbound”) commitments with respect to the services and service sectors that it believes are vital to its national interests and the protection of its people's human rights.

Human Rights over Foreign Investments
GATS commitments and obligations might be used by governments to justify measures that prioritize foreign investments over human rights. Many governments, especially those of developing countries, see foreign investments, especially by TNCs, in a positive light. As with any human economic activity, however, foreign investments need to be regulated and channeled to ensure that only investments that will benefit the people and local communities – in terms of economic equity, political empowerment, environmental sustainability, and recognition of resource rights – are allowed.

The GATS threatens to limit this governmental ability to regulate investments. In so doing, it indirectly removes the ability of local communities to determine their own destinies and the direction and pace of their development. NGOs must continue to campaign for a moratorium on the GATS negotiations, and instead call for international agreements that would strengthen public service provisions through international law. Most importantly, we must call for a multilateral recognition of the primacy of human rights concerns over foreign investor rights.

Vice Yu, Friends of the Earth International