PSI-EPSU team met with Pascal Lamy, the Eur Union Trade Commissioner, to discuss our concerns GATS negotiations on February 17, 2003.

A PSI-EPSU team of eight elected and appointed officers met with Pascal Lamy, the European Union Trade Commissioner, to discuss our concerns about the current GATS negotiations on February 17, 2003. The General Agreement on Trade in Services (GATS) is a trade treaty managed by the World Trade Organisation (WTO). PSI has three joint publications on the GATS, with Education International (EI). These are on the PSI website in all PSI languages. PSI-EPSU have also signed the Stop the Gats Attack! Campaign Statement.

The meeting with Lamy was not aimed at confrontation but was rather oriented to outlining our concerns. PSI-EPSU's main concerns about the GATS fell into the five areas. In each case, the PSI-EPSU concern is outlined in the first paragraph of the item. Pascal Lamy's response is the second paragraph. Any further paragraphs reflect further discussion at the meeting. Because we simply ran out of time, we need to go back to him on some of the unfinished business and we have agreed to exchange further correspondence. For that reason, as well as for PSI-EPSU's own internal purposes, we have not generally editorialised on most of the matters reported below.

1. PSI-EPSU: The protections which Article I 3 of the GATS text purport to give to public services involve key terms that are not defined. In a WTO dispute between member states, this could result in a WTO ruling that opens public services to private, including multinational, companies. GATS does not require privatisation but it adds pressure on governments to privatise.

Pascal Lamy: He believes that any attempt to define public services is risky for Europe. The EU has the highest standard of public services in the world and it is very likely that any consensus definition of public services at the WTO would produce much lower standards and the EU may then find its services under GATS attacks. Even if such a definition was attempted, it should not occur until after the EU has finished its current attempt to agree on the principles governing what it calls ‘services of general interest' (which he thinks should be called ‘services of public interest'). He believes that there has been no challenge to governments' right to define public services as they see fit and that this is not, therefore, a real threat to any government's public services.

Time did not permit us to go into the much more complex and disputed area of when (if at all) a mixed public-private system comes under another member state's challenge. We will go back to him on this issue. Lamy made it clear that he sees the EC offering no further effective liberalisation in EU public services. He argues that the offers which will be made in postal services and waste (water) management are not new offers They reflect earlier commitments and liberalisation of services that is more limited than what the EU has offered at present.

2. PSI-EPSU: The threat to the ability of a government to regulate in security. Governments can continue to regulate but they may find that a challenge from (an)other member state(s) results in their legitimate regulation being ruled to be more burdensome to trade than is necessary; they will be required to change/drop the regulation or else face retributive action from the complaining state(s). We are aware, too, that many sub-national levels of government have been expressing their concern at both their own non-involvement in the request-offer process and on the potential impact on the many services which such governments provide.

Pascal Lamy: He disputes our view here. He argues that the only area where a challenge could occur is where a government effectively tries to regulate in a manner which undermines a commitment already made and involving discrimination and that no such challenges have been made. He agrees that, in theory, such a challenge could be made but that that leads to an unproductive ‘If...If...If...' that has no history to date. He accepts that some national governments may not have consulted their sub-national levels of government but he says that he has no mandate to deal with such levels of government: his mandate comes from member state governments. Arguments over such internal matters must be the subject of internal debate/protest.

3. PSI-EPSU: The current round of GATS negotiations is being conducted in virtual secrecy in most member states. Governments had until June 2002 to ask other members to liberalise specified services or to change specific regulations/laws/policies; they have until the end of March 2003 to respond; then a period of negotiation will continue until the end of 2004. None of this has been or is being done publicly (at least unless provoked by leaked information) and not even the WTO has information on these matters. As noted above, many parliaments are not consulted nor are other levels of government whose services may be affected. Many organisations have contributed comments to the EC on the Consultation document: it would be useful to know how their comments will be handled and what responses they will receive; nor what impact they will have on the Commission's position, which still appears to be based on its pre-Seattle mandate.

Pascal Lamy: He acknowledged the validity of this argument. He says his own policy is to increase transparency. He is committed to releasing the full set of EU offers which are finalised on March 31. He intends to consult both member states and the European Parliament before the offers are confirmed (although ‘consultation' with the latter was not seen as negotiating agreement). He is not prepared to release the detail of other governments' requests to the EC because he says that he does not want to cause reactions from governments which do not have the EU commitment to transparency and democracy. He agrees that our criticism that his contention that original requests and offers could not be released because they were negotiating documents is correct: they were not negotiating documents. He says that no other government is matching the EU commitment to such openness (with the possible exception of Canada).

He did not acknowledge the EPSU-PSI claim that the EC was forced into its own limited transparency by civil society leaks in 2002 and that it had shown no willingness to open up before then. Commissioner Lamy further added that Member States are free to decide on how they wish to consult as this comes under the subsidiarity principle.

4. PSI-EPSU: The impact of all of this on developing countries. These are often forced by the World Bank, the IMF and Northern governments in their ‘aid' programmes to liberalise, privatise and deregulate their public services. They then come under WTO pressure from these governments to make GATS commitments in these services. Apart from the moral inequity, because GATS is effectively irreversible, this results in developing countries being forced to privatise their services and never being able to revisit these decisions and create the kind of public services which people in Europe have been able to develop over the last 150 years.

Pascal Lamy: He substantially agrees with the analysis about the IFI pressures on developing countries. He says that he personally deplores the pressure being put by IFIs and some EU member states on developing countries on trade policy without reference to the WTO agenda. He agrees that the issues of trade policy coherence is a real problem but that the EU is not itself a member of the IFIs. He accepts that the EU and others are pressuring developing countries but that, in the end, it's their decision whether to liberalise or not and that, anyway, for many of them, the only way top develop their services is to open their service markets. He agrees with our criticism that it is effectively an irreversible process and that this deprives these countries of the ability which Northern countries had to develop their public services under the cover of protection: but, history is history and the trend to the market seems to be inevitable. We can not wait 30-50 years till some of the developing countries have organised their own public services. Potentially, this is the most conflictual as it is here that you have the disequilibrium of power. He accepts that some liberalisation hasn't worked out for consumers but these things must now be negotiated at the WTO. He argued that the technical assistance and training being provided at the WTO helps to even some of this out.

We did not get a chance to go into the question of whether technical assistance is being used to help the South or to ‘prepare' them for the new issues (a claim some of them make). We did get into a discussion on whether assessment should have been done before the GATS negotiations started but he responded by saying that the EU has itself done such an assessment.

5. PSI-EPSU: The temporary movement of workers from one country to another to provide services. This is one of the forms of trade covered by GATS (called ‘Mode IV'). While there can be advantages to developing countries (from a financial and skills development perspective), it can also lead to brain drain of key professionals such as teachers, nurses, etc. These workers often have no worker/union rights in the host country and no rights to the money they are forced to pay into retirement, insurance and other schemes before they go home again. Several governments have tabled position papers on this issue, which raise some legitimate concerns which PSI supports, especially on the rights and protections for those workers when they are in the host country. In addition, one has to consider the impact on the local (host country) labour market in cases where the host country refuses to pay/give its own workers sufficient wages/conditions to retain them in the sector concerned: this often creates the vacuum which then sucks a revolving pool of temporary immigrant workers who can effectively maintain the depressed state of the host labour market.

Pascal Lamy: He was very insistent that all migrant workers entering EU labour markets (including under GATS Mode IV) must have the full rights of all other EU residents. Where an EU member state collective agreement exists, it must be applied. He saw no exceptions to this. He personally believes that the EU must make substantial generous offers in Mode IV since it one of the few areas where developing countries are making requests: he accepts that this may not be a view shared by some EU member states. He disputed the notion that the EU had to accept some responsibility about ‘brain drain' effects: on the contrary, he stated that it is the South which is demanding access to Northern labour markets and is not up to the EU to ask them if they know what they are doing. He did not answer our question on any role for the EU in encouraging ethical recruitment policies by member states. He indicated that, although there are general economic needs tests applied to all sectors in the current Mode IV regime for the EU, he is thinking that these should each be reviewed and, where there seems no need for these they should be removed; in any case, where ENTs remain, they should have clear criteria so that developing countries know what they have to satisfy.

On these latter two points (brain drain and ethical recruitment) and the issue of Northern governments creating the vacuum which sucks in people from the South (because low wages in, for example, the health services creates nurse vacancies which the South seeks to fill), he argued that: these affects result more from permanent migration (not covered by GATS) and that the sectors where this is likely to be a problem are not currently covered by EU Mode IV commitments. However, he did acknowledge that Mode IV requests being received from developing countries could mean that the EU has to consider these issues. He also agreed that there are problems with people who are being falsely presented by MNEs as ‘dependent contractors' and that it might be useful to consider the role of ILO Convention 94 in dealing with contracted/sub-contracted temporary labour.

On all of these issues, PSI is campaigning:
-#To get more people to access this GATS information.
-#To get public services taken out of the GATS negotiations in one way or another - preferably by providing clearer definitions of the relevant terms ('on a commercial basis' and ‘in competition with other service providers'.).
-#To have a full assessment of the impact of all these issues on developing countries before GATS negotiations proceed further.
-#To amend the GATS such that the particular problems of developing countries can be addressed.
-#To get host countries to respect ethical recruitment policies to stop the brain drain in Mode IV trade.
-#To get more protection for workers involved in Mode IV movements.

PSI does this by sending out information on developments or campaign needs to affiliates as often as, by attending meetings/conferences where we can address these issues and by working closely with others (especially the NGOs in the ‘Our World is not for sale' and the ‘Stop the GATS Attack!' coalitions).

There were a few other unrelated questions on the likely outcome of Cancún and on the question of core labour standards but these drew predictable EU responses.

  • Joint EPSU-PSI delegation with EU Trade Commissioner Pascal Lamy
  • Trade Commissioner Lamy outlines GATS position on public services