Freeing up services: Delayed, not canceled

Wednesday, 24 September 2003 Leave a comment Go to comments

OPINION & EDITORIAL – The Jakarta Post, 24 September 2003

Yanuar Nugroho

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 is the Executive Director of the Business Watch Indonesia, lectures at Sahid University, Surakarta, and is a researcher with Uni Sosial Demokrat, Jakarta.

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