Generally, the Minister of Trade Pierre Pettigrew makes claims about the benefits Canadian business can expect to achieve through the GATS negotiations, benefits that cannot be backed up by the data on trade. The US enjoys an overwhelming advantage in services trade - exporting far more than it imports - and it stands to gain the most from increased liberalization under the GATS by expanding its markets in countries like Canada. Since it runs a surplus in services trade and an enormous deficit in trade in goods, the GATS negotiations are promoted in the US as a key way to fix their trade balance. Large US transnational services corporations have been the main driving force behind the GATS from the very beginning.
The key sectors that are the main targets for liberalization through the current negotiations - energy and water supply, higher education, audio visual services - are all areas where the US and the European Union are poised to make the greatest gains at the expense of countries like Canada. The Canadian position papers do not identify any significant barriers Canadian companies are actually facing getting access to foreign markets. Canada is proposing far reaching new disciplines on government regulation for all WTO members because small and medium-sized businesses have said foreign governments' regulations may pose problems for them. But because, according to the government's own statement, many of these firms are not actually engaged in international trade in services,"barriers to trade are 'potential' (in the sense that they may not have encountered them yet.)" Through its active promotion of an expanded GATS, Canada will be exposing our entire services sector to deregulatory and privatizing pressures, with little evidence the government can provide that these sacrifices will even benefit the narrow interests of Canadian exporters.
Health
There is a real contrast between what Canada says publicly about health care and the GATS and what is said in GATS meetings at WTO headquarters in Geneva. Negotiators have discussed in relation to health care the exemption in the GATS for services delivered under governmental authority should be interpreted "narrowly". They have said there are many possibilities for private involvement in both health care and social services, and these should result in new GATS commitments.
Canada's proposal for the GATS "Negotiating Guidelines and Procedures" says that the negotiations will not "cover those services specifically excluded by the GATS i.e. services supplied in the exercise of governmental authority." But this exclusion in the GATS is not much to rely on, as it only covers service sectors where there is no private sector competition at all, a real rarity in these days of mixed public/private systems. WTO staff have noted that most public services are now competing in some way with private sector providers.
Yet the Canadian government is making no commitment to fix flaws in the wording of the GATS that make all public services, including Canadian Medicare, vulnerable to a challenge. Canada has already made commitments of health insurance under the GATS, so Canada's health care system is already in jeopardy at the WTO.
Education
The federal government only says it is going to preserve Canadian authority in the area of "public" education - which begs the question of whether it is going to trade off "commercial" education, particularly in areas like training. The idea that Canada can make commitments under "commercial" education services without endangering the whole sector is a dangerous assumption. It reflects the kind of risks the Canada's international trade negotiators are willing to take with Canadian public programs. For example, if Canada makes unlimited commitments under commercial training, a WTO dispute panel could determine that the programs delivered by Canada's public community colleges are "like" the ones provided by foreign, commercial operators. Provincial governments would then have to give the same subsidies to both.
The Minister insists that Canada can seek to liberalize the education systems of other countries by opening their education "market" to Canadian exporters without having this rebound on the Canadian education system. However, other countries will be quick to note the arguments Canada makes about education being a tradable, commercial service, and might understandably apply those same arguments when they ask Canada to make education commitments under the GATS.
Energy
The federal government appears to be supporting the US in its efforts to have energy sectors like oil and gas fully incorporated into the services negotiations. The effect of covering energy under GATS "pro-competitive" rules would be to make Canadian consumers compete with consumers in the US for who gets to pay the highest prices for Canadian energy resources. The US GATS proposal suggests a country should have to give access to its energy grids to any corporation that can pay, even if these grids are publicly-owned. Corporations in North America would then be free to transport energy to wherever they can get the highest prices on the continent. Canadians could not be guaranteed they would have a secure, affordable supply of energy despite our extensive energy resources.
Privatization and the GATS
Minister Pettigrew claimed in his March 14 GATS news conference that nothing in the agreement forces a country to privatize. The GATS does oblige governments, however, to keep coming back to the table to make commitments in more sectors, so even if Canada does not trade off health care in this round of negotiations it will be under repeated pressures to do this in future rounds. The flexibility countries have to choose which sectors they want to liberalize is undercut over time by this overall obligation to continuously open up more sectors to foreign corporations.
The GATS says no government monopoly services can be created in areas where commitments have been made unless governments can negotiate this successfully with all other WTO members. And once a public service has been privatized in committed sectors, it is virtually impossible to go back. As David Hartridge, the head of the WTO services division, has said, the point of the GATS is to make liberalization "irreversible".
WTO staff have raised a whole series of examples of how, under GATS rules, government subsidies for public health and education institutions might be challenged as unfair unless they are made equally available to foreign corporations. In public statements, the Canadian government chooses to keep silent about the kind of potential challenges that are discussed at length behind closed doors in Geneva, and instead gives blanket assurances to Canadians that public services are safe under the GATS.
Deregulation and the GATS
Last year, the Canadian government has circulated one of the worst positions on domestic regulation and the GATS (Job No. 2198 in the WTO document classification) produced by any WTO country, and never repudiated this paper. Canada has advocated importing into the GATS exactly the deregulatory provisions in other WTO agreements that have produced the most controversial rulings ever made by WTO panels. If challenged, a government would have to prove, to the satisfaction of a WTO dispute panel, that their regulations were "necessary" and that there was nothing else they could have done that was "less trade restrictive."
The new statement on domestic regulation the government released on March 14, 2001 suggests many of the same things, but now calls the restrictions that would be placed on governmental regulatory authority "regulatory transparency and predictability." This term sounds inoffensive, and suggests that all that would be required is for governments to make their regulations clear.
There is much more at stake if the Canadian proposal is adopted at the GATS negotiations. The proposal suggests foreign services corporations should have access to a "process to seek changes to the regulatory environment", effectively giving foreign corporations the rights of citizens. It suggests "transparency" includes an obligation for regulators to demonstrate: that a problem or risk exists, that government intervention can be justified, that regulation is the best alternative, that the benefits of regulation outweigh the costs, that no "unnecessary" regulatory burden is imposed, that impacts on the economy are minimized, that information and administrative requirements are "limited to what is absolutely necessary and that they impose the least possible cost." These strict limitations on a government's capacity to regulate are part of the federal government's sweeping new 1999 Regulatory Policy. Canadians have already experienced what this approach means in practice through the problems associated with the Canadian Food Inspection Agency. Now the federal government is suggesting this radical, deregulatory project should be enshrined in international trade law by incorporating the same concepts into the GATS.
Canada's position on domestic regulation and the GATS makes a mockery of the Minister's claim that Canada will retain the right to regulate. Canada has taken a lead role in proposing ways for how governments' regulatory authority over services could be constrained through the GATS.
Environmental Protection and the GATS
Canada's environmental obligations are increasingly being reduced to a commercial objective - if we can sell clean technology overseas, the environment will benefit. However, as the Organization for Economic Cooperation and Development has pointed out, the major incentive for companies to switch to clean technologies is the implementation of environmental regulations. Yet environmental regulations over key areas like pesticide spraying, the construction of logging roads, and toxic waste disposal (all services covered by the GATS) would be vulnerable to attack under Canada's proposal for disciplines on government regulation.
The federal position on the GATS is available at:
http://strategis.ic.gc.ca/SSG/sk00002e.html.
