For an institution that seeks to introduce a rule-based regime of global trade, ostensibly through civilised consensus between member states, the World Trade Organisation (WTO) provokes a fair degree of organised acrimony. The protests that routinely accompany WTO meetings are largely due to the unequal access of different groups to the negotiating process. Groups of people who do not belong to the economic mainstream are deemed to have their interests represented by the official delegates of their respective countries to the global trade body. On the other hand, a substantial volume of global trade, particularly in the services economy, today, is overwhelmingly dominated by gigantic transnational corporations, which constitute a systematic lobby with privileged access to the negotiating process. Consequently they are able to influence the agendas of WTO elites like the EU, the US, Canada and Japan.
There is of, course, no guarantee that equal access will produce equitable outcomes. On the other hand, the preponderant influence of oligarchic cartels is guaranteed to rig global trade policy in ways that threaten the already fragile livelihood environment of large numbers of people. The diehard supporters of the global order, like The Economist and the bulk of the mainstream Western press tend to focus all their attention on the theatrics of the protests against multilateral bodies. The reasons are obviously self-serving. Well-off Western protestors present an easy target for caricaturing the criticism against corporate-driven globalisation. By stressing on the idiosyncrasies of these globally-publicised agitators, including the alleged paradox of affluent first-worlders protesting on behalf of poor third-world natives, the need to examine in any detail the effects of the multilateral policy regime is dispensed with.
This trivialisation is necessary to sustain the fiction that predatory globalisation will bring universal benefits. Multilateral elites professing so much concern for the poverty-stricken cannot afford to dwell at any great length on the numerous protests their laboured magnanimity evokes among the natives of the underdeveloped world. Though they do not get their share of attention in the international media, there have been militant protests in several countries in Asia, Africa and Latin America against domestic policy changes, prescribed by donors and willingly accepted by client-regimes. These policy changes have been substantially along the lines envisaged under the WTO´s liberalisation of services agenda, which is merely an euphemism for handing over the supply of essential services, unhindered by regulation, to private corporations. Such protests have taken a combative turn as states attempt to quell popular agitations through armed force and clear the way for corporate control.
For South Asia, there are lessons to be learnt from recent developments in Africa and Latin America, where the consequences of the surrender of essential services to corporate interest have been drastic. Water has been one of the main targets of corporate attention and Africa has been at the receiving end of some cutthroat multi-lateral intervention. Both Mozambique and Tanzania have privatised water supply under threat from the International Monetary Fund (IMF). In 1999 Mozambique had to sell of 70 percent of its water services to European multinationals as a precondition for debt relief. Water utilities across Africa have been brought under the “full cost recovery” model, under which those who cannot pay their water bills are left out of the supply loop, besides also being evicted from their homes. Since 1994, in South Africa alone, over 10 million people have been denied water services and some 2 million have been ousted from their homes for non-payment of water dues. This failure to pay is not unusual since tariffs have increased dramatically ever since water was privatised. For instance, between 1994 and 1996, in the black townships of Fort Beaufort, service charges have increased by 600 percent. As a result of such extortionary rates the consumption of drinking water from unsafe sources has increased.
In Ghana, World Bank conditionalities for assistance required the sale of water services. Five multinationals, among them Vivend and Bi-water, whose annual turnovers exceed the GDP of Ghana, bid for providing water services. Interestingly, the proposed Private Sector Participation, gives the corporate participants the responsibility to only operate and manage the water systems without requiring them to extend services, a task that has been left to the public sector. Latin America too has seen its share of water-profiteering. In 1999, Bolivia privatised water supply and the resulting in a 200 percent hike in tariffs leading to an eight-month long agitation in Cochabamba, the country´s third largest city, that eventually forced the cancellation of the private contracts.
These are the compelling realities of liberalisation of services in many third world countries over the last few years to which South Asia needs to play close attention. But these awkward facts are unlikely to trouble trade negotiators when they convene this September in the Mexican tourist resort of Cancun for its fifth ministerial. Instead, insulated from the real world, they will attempt to introduce these failed measures on a more extensive scale by making it part of the global regimen of liberalised trade. Back in 1994, the WTO´s precursor, the General Agreement on Tariffs and Trade (GATT), had put in place a separate multilateral agreement, titled the General Agreement on Trade in Services (GATS). The agreement covers trade in 161 activities and like other international trade and investment agreements, is based on a complex set of rules. Since one of the major issues on the anvil at Cancun is the further liberalisation of trade in services, midwives, nurses, municipal refuse workers, tourist guides, teachers and other such service providers who normally play a negligible role in global commerce are likely to figure prominently on the agenda for negotiations.
Under GATS, trade in services is divided into four modes or categories. The first of these is “cross-border trade in services”, which covers the flow of services from the territory of one member-country into the territory of another member-country. These include subjects like banking or architectural services performed via telecommunication or mail channels. The rubric “consumption of services abroad” is the second category and covers those situations where a service consumer, for example a tourist or a medical patient goes to another member-country´s territory to obtain a service. The third category of trade in services is “commercial presence”. This concerns those situations where a service supplier of one member-state establishes a territorial presence, including through ownership or lease of premises, in another member-state’s territory to provide a service. The last and perhaps most contentious category is “movement of people” and deals with persons of one member-country entering the territory of another to supply services.
As the pre-WTO experience of Africa and Latin America suggest, the liberalisation of essential services under WTO mandate is a sensitive matter for developing countries. Critics fear that the GATS will allow global service delivery corporations to engage in smash and grab operations in the arena of public services once the push for privatisation gains momentum. The ramifications of this are grave especially for South Asia whose large populations and a feckless elite, always on the lookout for easy commissions, makes it a soft target for global conglomerates. These are countries with between a third and a half of the population living below the poverty line and are therefore will not to be able to afford privatised services. It is imperative therefore to debate the issue as South Asian economies take a decisive step towards finalising the opening up of different services sectors for negotiations. This is all the more important, given the place this sector occupies in the national economies.
India will be a particularly appealing target given the size of it market. In India, the services sector accounted for 49 percent of the GDP in 2001-02. The world trade in services amounted to USD 1.440 trillion in 2001, of which India´s share was about 1.4 percent. India has received requests from several countries, whose businesses are interested in providing services, especially by establishing their units on Indian soil. The Trade Policy Division of the Department of Commerce is tightlipped about the issue, restricting itself to the terse, laconic and therefore suspicious comment that “India has been asked to take commitments with regard to transparency in domestic regulations, simplify procedures, eliminate differential treatment of foreign service suppliers and facilitate the movement of natural persons under Mode 4” (ie movement of people). The Trade Policy Division goes on to say that, “The categories of professionals on which commitments have been sought include intra-corporate transferees, contractual service suppliers and specialists (tradespersons, associate professionals, professionals and managers)”.
It is interesting to note that that the requests that have been made to India actually target full market access in the areas of health, social services, education and environment. It is also clear that the groups that will benefit from the policy, if it comes into force, will be the same class of white collar professionals that has been free riding on economic liberalisation for the last decade and more. And it appears that government of India´s concerns are restricted exclusively to safeguarding the interests of this section.
On 5 June, in preparation for the Cancun ministerial, New Delhi’s Cabinet Committee on the WTO met to approve a Commerce Ministry plan for the upcoming negotiations. Although there have been conflicting reports about what exactly was decided at the meeting, on 27 June, speaking at an informal meeting of trade ministers in Egypt, Commerce and Industry Minister, Arun Jaitley stated that India’s “main area of interest” at Cancun would be liberalising the “Mode 4” category of the GATS – “movement of natural persons”. According to Jaitley, India has little to gain in pushing for liberalisation in modes two and three, but helping Indian nationals travel to service markets abroad and, to a lesser extent, increasing India´s service exports are critical for the country’s further integration into the global economy.
Going by past experience, with the government having been consistently secretive about WTO negotiations, Jaitley’s posturing may ultimately be just that. If so, such a cavalier attitude is not going to yield any tangible benefit once heavy bargaining begins at the negotiating table. This is where the belief that official delegations represent the interests of ordinary citizens comes a cropper. If the Indian delegation to Cancun presents its case without adequate preparation and effective co-ordination with other countries similarly affected, there is every likelihood that the interests of the vast majority of the people will be sold short. In fact, there is ground for suspicion, given Jaitley´s emphasis on Mode 4 negotiations, that in the interest of securing the free movement of the professional class to the hard currency zones, the official delegation may hand over far too many concessions in the essential services sector to plundering corporates, domestic or foreign .
In the countries of South Asia, water, health, transportation, education and food security are essential services which have traditionally been provided by the state. By their very nature, such services need to be subject to democratic public control. But democratic control requires transparency in official processes and its corollary, the free flow of information. Both these are so patently absent that on 10 June, in a joint letter to the Prime Minister’s Office, many social organisation were compelled to point out the shortcomings in decision-making process adopted by the Cabinet Committee as well as the Department of Commerce. A key issue raised in the letter was the lack of transparency, specifically, the failure to disclose all the liberalisation requests the government has received. These organisations have demanded that copies of such documents should be made available to all state governments and union territories, and that citizens must have adequate opportunity to examine and comment on the requests.
These are not extraordinary demands. They are well within existing constitutional provisions. New Delhi’s approach to the GATS negotiations can be read as a contravention of the constitutional commitment to federalism, specifically in fact undermining the 73rd and 74th amendment acts, which envisage decentralisation of decision-making. This has prompted concerned citizen’s groups to demand that government of India´s possible offers under GATS should be debated in parliament, as well as in state assemblies and at the panchayat and municipal level. There is also concern over the data deficit and the absence of research on the fallout of services liberalisation, which also has been emphasised in the joint letter to the prime minister.
At Cancun, trade ministers are expected to give much-needed political direction to the ongoing Doha round of trade liberalisation talks, and taking stock of the GATS negotiations is an important part of the agenda. Given the importance of the services sector in meeting the needs of people whose interests are rarely ever represented either nationally or internationally, there is a compelling need to democratise the internal process of formulating trade perspectives. Decisions affecting ordinary people cannot be taken at tourist resorts solely by coteries serving the ‘native’ elite.