[A-List] UK corporate state: GATS preparations

["Michael Keaney" <michael.keaney@xxxxxx>]

Trade deal could be a threat to public ownership
MICHAEL SETTLE
The Herald, 2 December 2002

A LITTLE-publicised international trade agreement could shortly bind the
government to introducing more privatisation into Britain's public services,
a report claims today.

Already the UK's commitment under the general agreement on trade in services
(Gats) has meant officials at the World Trade Organisation - which sets and
polices rules on international trade - have effective control over
significant parts of how UK services such as rail maintenance, banking, and
retail, are run.

Negotiations in Geneva are set to extend Gats's scope to the more
contentious areas of health and education as well as postal services,
broadcasting, and communications.

The change to liberalise markets under Gats has happened without any public
or parliamentary debate, claims the report by the World Development Movement
(WMD), an international campaign with a base in Edinburgh, aimed at tackling
the underlying causes of poverty.

Given the fraught debate in parliament over public-private partnerships in
schools and hospitals, the issue of more liberalisation within the public
sector is bound to become a major bone of contention.

Peter Hardstaff, the WMD's head of policy, said: "The extent of private
provision and ability of the government to regulate the market in these
areas is the subject of fierce public and parliamentary debate in the UK.

"Gats negotiations could bypass these debates by binding the UK to a set of
effectively irreversible liberalisation rules at the WTO."

Gats's rules govern the extent and nature of the involvement of foreign
companies in the delivery of services and place strict limits on the ability
of governments to regulate the market in service sectors.

Among the possible implications for UK public services is that the UK's
existing Gats commitments blocks any notion of bringing the railways back
under public ownership. In addition, any bid to stop the expansion of large
stores under planning rules could be deemed an "unnecessary barrier to
trade" and overly "burdensome" on business.

Generally, Gats rules could limit the ability of ministers to provide public
services and regulate them in the public interest by banning laws or
regulations to:

* stipulate a not-for-profit service provider;

* limit private sector involvement in a service sector or enforce a public
monopoly;

* discriminate in awarding subsidies to public bodies;

* discriminate in favour of UK companies over those from another country.

The WMD report raises concerns that the government's "modernisation" agenda
for public services could remove their protection from Gats rules provided
by a public services exemption clause, leaving them unprotected against
large foreign corporations. It singles out the creation of foundation
hospitals and increasing private sector involvement in education as
particularly worrying.

Mr Hardstaff added: "Since the UK signed up to Gats in 1994 it has not
produced a single document fully explaining what the UK is committed to or
the implications of its commitments.

"We have been forced to do the government's work for it."

The department of trade and industry is consulting on what further service
sectors, including public services, the UK should open up to the free market
rules of Gats.

Negotiations on further trade liberalisation are due to start next April.