Freeing up services: Delayed, not canceled

Freeing up services: Delayed, not canceled

Yanuar Nugroho, Director, The Business Watch Indonesia,
Surakarta, yanuar-n@unisosdem.org

Rejoicing and lamentation greeted the collapse of the world
trade talks in Cancun last week. Those who lamented represented
the developed countries, which have had their pursuit of profit
slowed down. Those celebrating included representatives of
developing countries, which prematurely thought that it was a
victory of the poor world against large corporations.

The deadlock at the fifth Ministerial Meeting of the World
Trade Organization (WTO) may be just the start of an attack on
the brute force in our daily lives exercised by the power of
business. One sector is services.

When liberalization of services throughout the world was being
discussed in Cancun under the session on the General Agreement on
Trade in Services (GATS) the working committee at our legislature
was working around the clock to finish deliberations on the water
resources bill, which allows private companies to control water
resources for commercial purposes, despite mounting protests from
non-governmental organizations. The special committee had asked
for a plenary House session to pass the bill on Sept. 23.

The involvement of the World Bank is crucial to the progress
of the bill. Minister of Settlements and Regional Infrastructure
Soenarno confirmed on Friday speculation that the water resource
bill had something to do with the Water Resources Sector
Adjustment Loan (WATSAL), a US$300 loan from the World Bank.
Under this scheme, the bank disburses the loan in three stages:
The first $50 million was disbursed in June 1999 and the second
disbursement, amounting to $100 million, was made at the end of
2001.

The remaining $150 million will be disbursed once Indonesia
completes its water reform initiative, which includes the
enforcement of a water resource law that allows for privatization
of the water sector.

The issues of water liberalization and privatization are only
part of liberalization and privatization of services in general.
The draft of the Cancun Ministerial Text on services said, "We
reaffirm that the negotiations shall aim to achieve progressively
higher levels of liberalization with no a priori exclusion of any
service sector; and in accordance with GATS provisions, there
shall be due respect for the right of Members to regulate and to
introduce new regulations in pursuance of national policy
objectives." The draft remained without significant change until
the end of the conference.

What does this imply?

Water, electricity, health, education, telecommunications,
rubbish collection, transport policy, banks, investment,
insurance, radio, e-mail, setting up a massage parlor, tourism,
land -- these examples all fall within the category of service,
more particularly, GATS. The market? The world's population of 6
billion.

Global, free trade, not only in goods but also in services
seems to be a vast modern utopian project. It aims at bringing
all countries into the realms of industrial nations. Never before
has such an ambitious exercise been attempted. Many poor
countries have not been able to afford adequate investment in
their service sectors, such that multinational corporations, it
is said, will help them with both capital and expertise.

The European Commission admits that GATS is first and foremost
an instrument for the benefit of business. Established in 1995,
GATS is a follow-up of pressure of multinational companies, which
provide services.

Clearly, it has faith in the ability of "the market" to
provide essential services that benefit all society. Under GATS,
governments must submit to certain rules when handing over
services for privatization (the request-offer mechanism).

Countries are free to decide which sectors they will subject
to GATS rules, though the aim is for all to be privatized in the
end.

Among other objections, GATS enables multinational
corporations to acquire land (and even the natural resources on
and under it) and essential services in any country that signs
up. Many consider GATS to be the most evil and dangerous of all
interventions by the rich and powerful into the affairs of poor
countries.

Therefore, we clearly cannot expect anything from service
negotiations at Cancun. Its objective, the organizers say, was
"to take stock of progress in the negotiations, provide any
necessary political guidance and take decisions as necessary."

GATS established the negotiation guidelines and procedures in
March 2001. The guidelines are sensitive to public policy
concerns in important sectors such as health care, public
education and cultural industries.

But it also stresses the importance of liberalization in
general, and ensuring foreign service providers have effective
access to domestic markets -- as, predictably, it works in favor
of business interests mainly in the developed countries rather
than most poor people in the rest of the world, whose basic needs
are neglected.

While there were 150 proposals in Cancun in the sectors of
professional services, telecommunications, tourism, financial
services, distribution services, construction services, energy
services, maritime transport, postal/courier services and
environmental services -- there were no proposals on health
services and only four on education services, all of which dealt
with private education services, in particular nonacademic
education such as language training, vocational courses,
corporate training and educational testing services.

GATS and other WTO instruments seem to have hardly ever ruled
in favor of society, local economies, health or the environment
in preference to free trade market fundamentalism. But in
contrast the WTO does not believe in market fundamentalism when
it affects developed countries.

Thus, solutions for provision of services, particularly the
essential ones, are political choices, not technical imperatives
-- this is the arena of the struggle.

Services cover virtually all areas of human life that should
not be controlled by the logic of pure profit accumulation. When
investment is open to all investors, when financial services are
run by global banks, when the local language and culture cannot
be protected, when governments are forced to sell essential
services to multinational corporations, and when even the land
and its natural resources in a poor country can be appropriated
by the rich -- what is left?

The collapsed talks are merely a hiccup in the continuing vast
progress of capital accumulation in the privatization and
liberalization of services.

The writer also lectures at Sahid University, Surakarta, and
is a researcher with Uni Sosial Demokrat, Jakarta.