Intervenor: Vol. 26, no. 2-3, April - August 2001

General Agreement on Trade in Services (GATS)

The World Trade Organization (WTO) is stumbling toward a ministerial meeting in Doha, Qatar, in November, but negotiations of the current trade law on services (the General Agreement on Trade in Services, or GATS) have been proceeding since 1999. CELA has made these negotiations a priority for study as they may influence many vital public services which affect the environment and human health. With the Canadian Centre for Policy Alternatives, we have collaborated in hiring Scott Sinclair, whose analysis of the services chapter has gone world-wide, and has significantly raised the level of debate globally. Building on Scott's comprehensive review of the GATS, researchers across Canada are deepening our knowledge of its impacts on specific sectors of services. CELA is participating in these studies.

The objective of the GATS in the WTO is to produce rules that limit governments (i.e., federal, provincial, municipal) from both providing services and regulating them. It covers all laws that affect services, and is a very complex agreement.

It contains some rules that apply to all service sectors of all WTO member countries. These include transparency (e.g., letting other countries know what national laws apply to services) and the most-favoured-nation rule (i.e., treating all member countries the same). It contains other rules (e.g., opening up more services to foreign service companies) which only apply to services which countries specify in lists called Schedules. These rules include national treatment (i.e., treating foreign providers equally with national ones) and market access.

GATS covers all the various methods for supplying services, including:

  • Cross-border supply (supplying a service across a border, such as advertising by mail, telephone, TV, or the Internet);
  • Consumption abroad (when people go to another country for a service, like students, or tourists);
  • Commercial presence (corporate investment or setting up an office in a foreign country)Presence of natural persons (staff of foreign companies working in another country); and
  • Countries can also list which of these methods of supplying services they choose to open up under the GATS. So governments have options regarding how much they open services to foreign service companies.

The GATS also seeks to limit regulations applying to services so that they are "not more burdensome than necessary to ensure the quality of the service," opening the door for WTO trade panels to replace local officials in deciding on qualifications and requirements for service providers (professionals) and standards of performance. Examples of such important rules include Ontario regulations on constructing water and sewage systems and on testing, sampling and reporting of water quality. Some of these were passed after Walkerton. They remind us how essential such standards may be for public and environmental protection. In our view, they should not be subject to review by unaccountable, remote trade officials with no knowledge of local conditions and service needs.

Although the GATS contains an exemption for government services, it will protect very few services, since it only applies to those that are neither supplied on a commercial basis nor in competition with private suppliers. Few government services will satisfy these tests, given that fees for services are common (e.g., health care, tuition, daycare, water delivery). There is no distinction in the GATS between public and private, for profit and non-profit services; all are covered and treated the same.

Corporations consider that government monopolies and subsidies are barriers to trade and they want both the right to provide services (for profit) that are now provided by governments and have access to the government money now spent on them. These are the fundamental goals of current GATS negotiations.

In cooperation with the Canadian Union of Public Employees (CUPE), CELA is currently studying the likely environmental impacts of GATS rules affecting water and sewage services, transportation, and waste disposal. We are focusing on municipal impacts, since local governments deliver many of these essential environmental services; in fact, they provide 50% of the total market for these services in Canada. The problems of downloading and budget cuts are already making municipalities vulnerable to the push for privatization of services. The GATS adds another layer of potential problems for maintaining public high-quality services.

In 1994, Ottawa committed Canada to extend GATS rules over various pieces of the mesh that support public environmental services, including:

  • integrated engineering and project management services for water supply and sanitation works;
  • general construction work for civil engineering (thirteen categories of engineering services in total);
  • waste ("refuse") disposal services;
  • engineering services for transportation infrastructure;
  • nature and landscape protection services;
  • cleaning services of exhaust gases;
  • noise abatement services; and
  • other environmental services (a rather large category).

We intend to look at specific impacts of these GATS commitments on large and small municipalities. Since the GATS calls for continuing moves towards more liberalization of services we want to identify what types of services Canada should keep off the table in current negotiations and what strategies we need for the protection of high quality public services. The research will be completed in the early fall of 2001.

Michelle Swenarchuk is a lawyer at CELA