IV: Services —
The status of public services and Negotiating issues for the current
B.K. Zutshi — former Indian Ambassador to WTO
OF PUBLIC SERVICES
of the discussion:
GATS does not define "public services" per se, nor
does it contain any prescription as to how such services should
be provided, whether by private of public suppliers, or
Agreement excludes from its coverage all services provided in
the exercise of governmental authority, which are defined as
those supplied neither on a commercial basis nor in competition
with other suppliers.
was generally observed that the scope of this carve-out is not
clear, and that the terms involved are not defined. A number of
speakers called for an authoritative interpretation of this
provision by the Council for Trade in Services. Others wondered
about the legal status of the Preamble to the GATS, which
recognizes Members' right to regulate on the supply of services
to meet national policy objectives.
was noted that many of the concerns raised by civil society with
regard to public services under the GATS did not relate to the
Agreement as it stands at present, nor to what its implications
have been, but rather to what these could be in the future.
debate focused on health and education services, given the high
degree of government involvement in these sectors. Some argued
that public education should be outside the trade regime; others
observed that health and education services have been traded for
years, long before the GATS existed, and that the process had
neither been initiated nor accelerated by the Agreement.
was observed by some that private suppliers of health and
education services could be more efficient and provide a better
quality service than public suppliers, to the benefit of all
consumers; it was noted by others that this would be welcome
only if the private sector guaranteed the same levels of
quality, universal availability and employment as the public
sector, which was not the case in practice. It was further
remarked that it was up to individual Members to decide the
degree of private sector involvement in these sectors, that the
GATS played no role and that it was essential that such
flexibility be preserved. It was also felt that there was no
case for foreclosing the option of multilateral liberalization.
concern was raised by some speakers that developing countries
might be put under heavy pressure by trading partners to
liberalize their public services in the context of the current
round of services negotiations. It was remarked by others that
such pressures would be far stronger in a bilateral context than
in a multilateral one.
was the overall view that a rule-based system for international
trade is essential. While there are elements of it which could
be improved, "a" WTO was indispensable.
ISSUES IN THE CURRENT SERVICES ROUND
of the discussion:
Issues to be discussed under the so-called built-in agenda,
consisting essentially of rule-making areas that had been left
over from the Uruguay Round; and
access issues – in implementation of the concept of
"progressive liberalization" - as provided for under the
recently adopted Negotiating Guidelines and Procedures for
the built-in agenda, the main emphasis was on the negotiations
on an emergency safeguards mechanism in services and, even more
so, on the negotiations under Article VI:4 on Domestic
to Article VI:4, concerns were expressed that the necessity test
provided for under the relevant provisions could constrain
governments' ability to pursue essential policy objectives,
including those relating to environmental protection. Specific
concern revolved around the absence, in the exception clauses
under Article XIV, of a specific reference to measures
needed for the conversation of exhaustible natural resources.
(Such concerns had already been raised in the first session on
Friday). Why had the relevant provision from GATT not been
transferred into the GATS?
was explained that GATS negotiators did not apparently see the
need for such clause in services since, contrary to the GATT,
governments are not prevented under the GATS from operating
export prohibitions. Secondly, there are no legal provisions in
the Agreement that would prevent a government from operating
non-discriminatory restrictions, or even a ban, on the use of
any given resources.
was also pointed out that some participants' interpretation of
the necessity test may be mistaken since the test related only
to the relationship between a measure and the intended objective
(social, environmental and whatever else), but did affect
Members' ability to set such objectives within their
jurisdiction. Moreover, negotiations under Article VI:4 had
an important other element, that of transparency, which could
not reasonably be put into question.
the ongoing services round, certain doubts were expressed
whether the GATS will ever turn into a catalyst for effective
trade liberalization. These doubts were rooted in the sectoral
nature of the Agreement, the need for regulator's close
involvement, and the tendency to prefer bilateral or regional
approaches over the multilateral route.
while some current trends seems to justify such a sceptical
assessment, I personally feel that Governments have to resist
them and protect the stability and integrity of a rules-based
would be very unfortunate, not least for the weaker
participants, should we not succeed in making these services
negotiations a success – across sectors, modes and, most
importantly, across all participating countries.