The ultimate downfall of the corporate globalizers may be that they know
Not satisfied with imposing pull-down agreements on the trade in goods,
Big Business is looking to do the same thing for services through the
General Agreement on Trade in Services (GATS). Services includes such
economic sectors as finance (banking, insurance, pensions), healthcare,
telecommunications, construction, travel and tourism, the professions,
education and training, express delivery, energy and environmental services.
GATS is part of the World Trade Organization (WTO), and now undergoing
renegotiation to become more encompassing.
The Wall Street banks and the other service multinationals first want
to ensure that countries do not discriminate against foreign service providers.
The United States does not let foreign airlines service domestic routes,
for example. Such restrictions to protect domestic firms are prevalent
in developing countries, and an impediment to the expansionary dreams
of the rich country multinationals.
But the multinationals want much more than non-discrimination. Their
real goal is to use the language of non-discrimination (they talk about
"market access" and "national treatment" for foreign companies) in order
to force deregulation and privatization.
A key priority for the service companies is to place a burden on all
countries to show that their regulations are the "least trade restrictive"
means to achieve a legitimate purpose.
What does this mean? In case after case, the European Union has suggested
that the U.S. federalist system -- with overlapping regulatory powers
between the states and federal government -- is an impediment to trade.
The argument goes like this: American companies with a bigger presence
in the United States can more easily manage to deal with separate regulatory
agencies in each state. Foreign companies with a smaller presence cannot
negotiate this terrain as easily. Thus, goes the EU argument, regulation
should be done at the federal level.
Do we really want to sacrifice important state-level consumer and civil
rights protections -- for example, interest rate caps, limits on corporate
discriminatory practices like redlining, restrictions on predatory lending
-- because they are inconvenient for European companies? Of course, the
real point is not that they are inconvenient for Europeans, but for business.
The U.S. companies hope to use GATS to eliminate U.S. regulations -- just
like the European corporations want to get rid of rules in the EU.
There are relatively weak GATS rules in place now, but ongoing negotiations
between nations under corporate influence to tighten them and apply them
to more and more services raise serious concerns.
What might a strengthened GATS mean for the United States? It's too early
to say with certainty, but based on a careful analysis of existing proposals,
Professor Patricia Arnold of the University of Wisconsin-Milwaukee has
raised a set of disturbing questions:
- Will GATS weaken efforts to regulate financial markets in the aftermath
of the financial and accounting scandals? Already foreign companies
are complaining about the reach of the modest Sarbanes-Oxley accounting
reform bill, which would require foreign, as well as U.S. CEOs, if they
sell stock on the New York Stock Exchange, to attest personally to the
validity of their companies' financial statements.
- If Wall Street gets its way and achieves a partial privatization of
Social Security, will GATS make it impossible ever to bring the program
back fully into the public sector? GATS requires countries to pay compensatory
damage if they grant new public rights over the supply of a service,
she notes, making privatization a one-way street.
- Would GATS limit efforts to regulate the health insurance sector?
The insurance industry argues that service agreements should prohibit
restrictions on the types of insurance products allowed on the market.
Might this mean a ban on legal requirements that health insurance policies
must cover certain medical conditions?
Some will argue these are Chicken Little sky-is-falling concerns. But
if the NAFTA-WTO experience shows anything, it is that corporate lawyers
will grab onto any crevice in trade rules to hoist corporate interests
above the public interest.
Consider the "Chapter 11" investment protections in NAFTA. In a case
closely paralleling what might occur in other countries with a GATS agreement,
UPS is suing the Canadian postal service for offering express delivery
service. The postal service is subsidized for mail delivery, and that
subsidy unfairly advantages Canada Post over UPS in the express delivery
market, UPS claims.
If Canada Post want to compete in the market, they should set up drop-off
boxes separate from mail boxes, employ delivery and sorting staff separate
from the people who handle the mail, and handle delivery packages at separate
facilities from the mail, UPS argues. Since Canada Post had the temerity
not to pursue this economic irrationality, UPS is asking for hundreds
of millions of dollars in compensation.
This is actually happening, and other companies are filing lawsuits in
each others' countries against safety regulations, court verdicts and
other expressions of domestic sovereignty.
Enough cases like this -- and a more dominant GATS will make sure there are
many more -- may eventually produce a backlash that will bring down the whole
WTO-NAFTA edifice. But the damage inflicted in the meantime is too severe. Better
instead to prevent new agreements that diminish our living standards and roll
back existing ones. For more information on how to stop the GATS, contact Global
Trade Watch at www.tradewatch.org.