[A-List] UK corporate state: GATS preparations

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

Trade pact 'may force councils to privatise services'
By Philip Thornton, Economics Correspondent
The Independent, 02 December 2002

Councils would be forced to privatise huge swaths of public services under
plans to liberalise world trade, local authority leaders have warned.

They are worried that a global deal to open up markets could "enforce a
strongly deregulatory interpretation in favour of business interests",
according to a memorandum passed to The Independent.

The leak came as a protest group claimed that a range of public services,
from hospitals to rail maintenance, could be thrown open to global
competition if the Government signed up to the package being negotiated
through the World Trade Organisation (WTO).

It also threatens to fuel an increasingly acrimonious debate over the role
of the private sector in public services via schemes such as the private
finance initiative.

But the Department of Trade and Industry insisted that the Government had
complete freedom to protect core health and education services from
competition.

The councils raised their concerns in a letter sent by the Local Government
Association to local authority chief executives. Although the pact contains
an exemption for government authority services, the letter warns that "given
that most services have been subject to competitive tending" they may fall
outside the exemption.

It claimed that the pact - known as the General Agreement on Trade in
Services (Gats) - appeared to argue against "trade restrictive" regulation.
"There is considerable anxiety these tough criteria are very much open to
interpretation and that the WTO dispute settlement process could be used to
enforce a strongly deregulatory interpretation in favour of business
interests," it said.

The memo is likely to form the basis of councils' response to a DTI
consultation paper on services negotiations published in the summer. The
association said a meeting with Whitehall officials has failed to "entirely
allay their concerns".

The World Development Movement (WDM) said that control over the ownership of
essential public services was being put in the hands of "unelected trade
lawyers".

It warned that bringing rail maintenance back into public ownership - a key
demand of some rail safety campaigners - would breach Gats, and that
proposals to create "foundation" hospitals outside the NHS could remove them
from the protection offered to government authority services.

The WDM said the proposals came amid a fierce debate over private provision
of services and the ability of the Government to regulate them. "Gats could
bypass these debates by binding the UK to a set of effectively irreversible
liberalisation rules at the WTO," said Peter Hardstaff, the WDM's head of
policy.

A DTI spokeswoman said that while Gats would clearly apply to private-sector
hospitals and schools, "the greater role seen by the Government for the
independent sector in the NHS in no way changes the nature of the NHS as a
strictly publicly financed and universal healthcare system".

Negotiations on a worldwide services agreement were secured by Western
governments at trade talks in Qatar last year in exchange for pledges to
reform European Union and United States agriculture subsidies and abolish
patents on drugs to fight Aids and TB.

Christopher Roberts, a former head of trade for the DTI who now works for
the law firm Covington & Burling, said the rules covered areas such as
private care homes and language schools. "I think this is something of a
non-issue linked to domestic campaigns on privatisation. I wish the WDM
would worry about real issues such as agriculture that really affect the
developing world."