The danger from GATS

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Linda Kaucher from the LSE has probably correctly chastised me for ignoring the importance of the ongoing negotiations for a GATS deal (General Agreement on Trade in Services). So I asked her to set out her case, and said I’d publish it. This is her response, and it is worrying. She’s right to draw it to my attention:

Let’s be clear that in the current financial turmoil, nothing in the UK deregulatory agenda has actually changed.

Everything is still ripe for irreversible commitment to an international trade framework that will legally ensure, for the benefit of transnational capital, against ‘backsliding’ away from the neoliberal trajectory.

The potency lies in the Trade in Services Agreement (the GATS), embedded within the WTO Doha trade talks. Signing up to the GATS Round will make financial deregulation irreversible. And Gordon Brown, with Peter Mandelson at hand, is the EU’s strongest proponent for the Doha trade talk, including the GATS, to be concluded.

In November, banks were being threatened with nationalisation if they did not lend. They haven’t lent and they haven’t been nationalised, but they may now be given more public money; and we are about to lose the Post Office to privatisation, in stages. Reregulation rhetoric has disappearing over the horizon, remaining only in the minds of liberal left columnists.

Why do these seemingly obscure and boring trade talks make a difference?

The General Agreement on Trade in Services (GATS) deregulates finance. It also prohibits any reversals of public service privatisations, or renationalising of any service that have been opened to overseas investment. As just about all the privatisations in the UK have simultaneously been thus liberalised, that is pretty all encompassing, and the finalising of the GATS negotiations means they become irreversible.

Trade talks planned for Dec 2008 were put off until the New Year. Meanwhile, Peter Mandelson announced the first tranche of selling off the Post Office, a move supported by the Conservative Party. Before any tendering process, Mandelson has made it clear that it will go to an overseas company. You should be starting to get the picture by now. This will ensure that it fits with ‘liberalisation’; the stuff of the GATS. Not only will a part -privatised Post Office lose any GATS public service protection/exemption, but it will also be on an irreversible privatisation pathway because of the international legal framework of the agreement.

The push for the GATS, which, like the WTO itself, was instigated in 1995, came from transnational capital, mainly Citicorp, AIG, and American Express. Whatever the arguments in trade agreements on agricultural and manufactured goods, services liberalisation is another world – deeper, more intrusive into countries regulatory processes, and favouring the rights of big business over democracy. It is meta regulation – controlling and overriding national regulatory processes, prohibiting, through mechanisms designed to cause economic pain, any regulation that limits the rights of transnational corporations to make money.

Global winds of discontent with neoliberalism, and socialisation demands, are a real danger to corporate power at this time. The freedom of corporations to make profits, which has been hitherto prioritised in free trade rhetoric, may be contrasted with freedoms to access basis resources, and to democratic control. But the corporate world is not sitting on its hands waiting for any such socialised shifts to happen. Corporate federations, with privileged lobbying access to governments, have long been the major force in pushing through common corporate agendas. With huge resources for public relations and for legal expertise, their main weapon to guard against such change is the legal framework of the trade agreements.

The push to get the GATS signed up is ongoing; the corporate world has everything to gain by pursuing it, and nothing to gain by abandoning it. But with global concern about ‘liberalisation’, this is now proceeding more covertly.

The services part of the Doha trade negotiations is mentioned less and less; even key NGO trade watchers in Geneva, led to believe that services are off the screen, have failed to notice that WTO services meetings are being held. Such is the power of spin. Controlling perceptions includes manufacturing ‘non existence’.

In the July Doha talks, with the world’s media focused on the Agreements on Agriculture and Non Agricultural Market Access (NAMA – manufactured goods), services talks went ahead quietly on the Saturday afternoon, midway. Yet the report of the meeting was withheld until the media, having broadcast the ‘Doha is dead’ message, had left Geneva. Even though services underpin all other forms of trade, and are of most significance to the richest countries of the world, including here, attention to this most important agreement was brilliantly deflected.

Whether this agreement, and the rest of the Doha deal will be finalised is an unknown. Countries may, in the current turmoil be reticent or question the liberalisation agenda; the disagreements on the other agreements are still contested. But three factors strongly increase the likelihood.

Firstly, GATS also includes temporary skilled labour migration, giving transnational corporations rights to move workers to developed countries to maximise cheap labour ‘comparative advantage’. This ‘reserve army of labour’, though, will inevitably undercut the domestic workforce – in fact it’s the capitalist dream.

While this labour movement aspect of GATS is not discussed here (but then neither is any other aspect), it is of great importance to developing countries. It is their ‘service export’ while in all other modes they are importing services. The EU, and within the EU, the UK, is the main destination for this. The US is not offering this, the EU is. This opening to the ‘movement of persons’ as it is called in WTO speak, has been pursued most strongly by India, but under the WTO Most Favoured Nation rule, the EU offer is to all 150 member countries. Special conditions for entry of unskilled temporary labour have been offered to Least Developed Countries, too.

It is possible that this ‘deal’ will be of enough importance to developing countries, especially in times of heightened economic hardship, to get the GATS signed up.

Secondly, while this GATS Round is considered to be part of the Doha ‘single undertaking’ when it is convenient for leverage, it can also be stand-alone. Because the GATS Round was initiated in 2000, and the actual Doha negotiations in 2001, GATS can be signed up singly if the other agreements are not settled. In fact it is possible that the talks, with little chance of overall agreement, will be a front for the GATS to be singly signed.

The third consideration is the way this is being spun. The Dec 18th statement from Pascal Lamy, head of the WTO, omits any mention of ‘services’. However, references to the necessary ‘other parts of the trade negotiations’, outside of Agriculture and manufactured goods, include the request and offers process – unique to ‘services’.

He also signals that for the next WTO Ministerial, and a top-level meeting is required to finalise, no publicity will be good publicity. Past experience, including the July experience, shows what is possible in this regard; the media can be led by the nose to report trade talks as unimportant and technical, and focused on goods, if reported at all.

Without a single BBC reporter understanding, or even trying to understand, any of this, such manufactured silence will not be difficult here. Current widespread perceptions that the talks are not going to amount to anything, as well as the complete invisibility of ‘services’, are indicative.

Watch for ‘competitive’ being used as the justification for signing up to the GATS, including to ‘justify’ bringing in cheap workers, even while there are huge job losses. ‘Competitive’ is fast becoming the most dangerous and chameleon-like word in the English language, used to mean whatever is needed in order to sell a lemon.

While Gordon Brown apparently exudes moral and prudent Presbyterianism, he is, like David Cameron, embedded in the spin industry. He was and is the main proponent of financial deregulation. The public works he is proposing now, rather than being Keynesian, will be through liberalised PFI; and ‘job creation’ will be subject to both EU free movement of labour as well as Peter Mandelson’s GATS labour offer to all of the WTO. Gordon Brown is the keenest EU supporter of a trade deal.

Alternative proposals and plans, whether Green, blue or pink, are misleading if they fail to take real account of the challenges in the structural relationship between the national, the EU, and the international trade framework. Such proposals, however well meaning, will not just be frustrated but legally prohibited through the structures described here.

We need to be informed on what is being pushed forward, vigilant in recognising the propaganda and bold in unmasking it, and active in opposing our own structural disempowerment.