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Information for Social Change

Information for Social Change

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ISC 14. GATS, Higher Education and Public Libraries

Anneliese Dodds

The General Agreement on Trade in Services (GATS) began in 1994 and initially covered a small range of services. Part of these talks comprised a commitment to expanding the coverage of the Agreement in years to come. Following the Seattle fiasco, the World Trade Organisation (WTO) is now describing a successful outcome of the talks (set to end in 2002) as essential for the perceived viability of its vision of globalised free trade.

The next round of talks for the GATS is due to be held in Qatar in November. The date of this ministerial meeting may be altered given the terrorist attacks in the US; at time of writing information on this was not available. Should it go ahead, a restricted number of WTO-acceptable “NGOs” will be allowed to send at most one representative to Qatar. The WTO’s appellation “NGO” also covers business lobby groups; the number of civil society groups representing poorer countries are outnumbered by lobby groups for business in a ratio of about 6 to 1. Such limited representation seems bizarre for a meeting whose results may irreversibly determine the global future of social policy.

Should the meeting be postponed however, it is unlikely that work on firming up the GATS commitments will be halted for any long period of time. It is crucial that the aftermath of the horrific US attacks should not be allowed to act as a veil for the WTO’s activities, which will in all eventuality continue their former course.

This article attempts to analyse the GATS in terms of its possible impact upon UK Higher Education (HE) and, to a lesser extent, the public library system. These effects appear minor compared to the possible threats to other sectors of UK education, to other UK public services, and to poor countries’ social policies. However, concentration on Higher Education and public libraries allows a useful case study whilst also placing the GATS within the web of broadly neo-liberal measures developing in the sectors over the past twenty years.

WTO countries have already submitted proposals concerning the sectors they wish to see liberalised, and a “stocktaking” process for these has just finished. The European Commission (EC) has negotiated for the UK in the WTO since it was delegated fast-track authority for most service sectors in December 2000. Until the election of Leon Brittan as Trade Commissioner, EC policy was mainly directed towards protection of European Union (EU) services and industries. Pascal Lamy, the new Trade Commissioner, has however continued in Brittan’s footsteps towards a big-business oriented trade policy. As the European Commission website states, “The GATS is not just something that exists between Governments. It is first and foremost an instrument for the benefit of business.” 1

The main thrust of EU negotiating proposals concern water and industry, whilst the US ‘prioritises’ the energy and HE sectors. The current GATS round is seen by many business lobby groups as a way of expanding into new, including “politically difficult” sectors; as the US Coalition of Service Industries states, the WTO must “fully embrace important new sectors in the liberalisation effort. These new sectors…include …existing ones that have not received sufficient attention, like education and health.” 2

Inclusion of a sector in WTO structures can have many effects. The US Proposal concerning HE, Adult Education and Training 3 specifies a number of obstacles to free trade that it wishes a new Agreement to proscribe. These include: the “lack of an opportunity for foreign suppliers...to qualify as degree granting institutions”, “measures requiring the use of a local partner”, “denial of permission for private sector suppliers…to enter into and exit from joint ventures with local or non-local partners on a voluntary basis” and “minimum requirements for local hiring are (sic) disproportionately high, causing uneconomic operations”. It has also been mooted that a key US negotiating proposal is to remove “discrimination” in educational services between those supplied electronically and those not.

These exemplary “obstacles” demonstrate a major problem with the WTO apparatus. Qualitative rather than quantitative language is used, which is easily manipulated. What constitutes “disproportionately high”? And whose agreement constitutes the “voluntary” agreement of, say, a publicly funded medical research laboratory to co-operate with a drugs company in a “joint venture”? Such measures coupled with the general terms of the GATS cover a wide range of regulations currently overseen by our government or by institutions to which it has delegated its authority such as the Human Fertilization and Embryology Authority. They would also cover any regulations governing, for instance, investment ceilings, professional qualifications, and the translation of foreign degrees, as well as “the existence of government monopolies and high subsidisation of local institutions.” 4

It has been maintained, for example by Mike Moore, the Director General of the WTO, that “GATS explicitly excludes services supplied by governments. True, governments can agree to allow foreign suppliers to provide private healthcare or education. But that is not the same as privatising public services.” 5 This statement is based on Article 1.3 of the GATS; that it covers “any tradable service…(except only) those supplied in the exercise of governmental authority…(i.e.) supplied neither on a commercial basis, nor in competition with one or more service suppliers”.

In the UK, private University education (in the form of the University of Buckingham) coexists with public, and with tuition fees being charged it is difficult to maintain that HE is not supplied on a commercial basis (should differential top-up fees be introduced the situation would be even more clear-cut). The charges used by many libraries for particular services (book recall, hiring of music and videos, use of the Internet, etc) may also open this sector to the GATS regulations.

The specific US proposal concerning HE, Adult Education and Training will not, according to the office of the US Trade Representative, result in an eclipse of public education: “private education and training will continue to supplement, not displace, public education systems”. But this is no more of an adequate guarantee than Article 1.3. Firstly, assuming (a not incontestable assumption) that the public/private mix in HE would not change from the current US ratio after 2002, it is debatable whether a move towards a US-style funding system would benefit the UK’s HE system. The culture of philanthropic giving to educational institutions in the US is largely absent in the UK; 6 so a major shortfall would result in Government cutbacks, even given increased private funding to the US level. The only major HE institutions in the US which can afford a “needs-neutral” admissions policy are Harvard and Princeton; hardly a system based on equality of opportunity. Secondly, it is obvious that some public tertiary education and training, and library services, would still be required in the most liberalised of sectors to mop up those not seen as profitable enough by private providers; such a situation is evident in some poorer areas of the US and is hardly an attractive possibility for those forced to learn and work in such threadbare situations.

It is then maintained by defenders of the GATS that a government can exclude any sector from WTO rules. This is an unlikely option for the EU for two reasons. Firstly, most of the EU’s services are liberalised save agriculture, education and health. For commercial and political reasons it may be easier to “trade” HE in particular for access to other countries’ markets for EU businesses. As Pascal Lamy stated, “If we want to improve our own access to foreign markets then we can’t keep our protected sectors out of the sunlight. We have to be open in negotiating them all if we are going to have the material for a big deal. In the US and the EU, that means some pain in some sectors but gain in many others, and I think we both know that we are going to have to bite the bullet to get what we want”. 7 Even should there be a delay in the Qatar ministerial meeting, the EU has already begun bilateral negotiations with the US along these lines. 8

Secondly, the norm is inclusion, not exclusion; hence there is a built-in pro-liberalisation bias to the WTO system (progressive liberalisation year-on-year being in any case one of the GATS’ explicit goals). Hence, the US proposal referred to earlier “invites” members to “ascribe in their schedules “no limitations” on market access and national treatment, as some members already have done. Further, … all members (should) consider undertaking additional commitments relating to regulation of this sector”.

Once HE and library services are placed under WTO control they will in effect be so forever. If a government changes its mind about a provision (or another government comes in) and a change is required, the WTO stipulates a three year gap since the provision “came into operation”, then three months notice, then substitute commitments from the government concerned that compensate for the reversal and are satisfying to all WTO members. Further, any reversal of WTO commitments must pass the so-called “necessity test” of Article X IV. This maintains that regulation must be in pursuit of a WTO-sanctioned objective (“to protect major public interests, including safety, human, plant and animal life or health, national security or public morals”- notably not literacy, learning or scientific/cultural advance), and must be the least trade restrictive method of achieving that objective. 9

It is interesting to consider why the EU is supporting a new round, given the huge share in world trade in services which it already controls. Part of the reason appears ideological, the European Commission especially favouring an analysis such as that of Moore: “allowing foreign suppliers to compete with domestic ones lowers prices, improves quality and increases choice.” 10 In the UK, broadly pro-liberalisation measures have been ongoing in education and information provision since the early eighties. One notes the advent of so-called “parentocracy” with league tables in schools offering choice to parents, the growth of the opt-out sector (dating from the 1988 Education Reform Act), Education Action Zones, business sponsorship of schools and universities and the introduction of student tuition fees. One notes in HE the development of quantitative performance indicators such as the RAE, which have resulted in increased institutional competitiveness and rivalry within and between groups of HE institutions. The current Government seems likely to follow the liberalisation route without WTO prompting; hence soundings towards religious and specialised schools versus so-called “bog-standard” comprehensive school, frequent floating of education voucher proposals, and a refusal to rule out top-up fees in universities. The other part of the reason is the immense lobbying efforts of business; a factor referred to throughout this article.

Taken in the long-term, however, such liberalisation will have very major deleterious consequences. These can be grouped according to particular “obstacles” to free trade seen in the operation of the current HE and public library systems.

Assuming all else to be equal, the requirement to subsidise public and private providers equally could result in private institutions’ funding being raised to the level of public institutions’. This is extremely unlikely given the current political climate (and in any case one might wonder why private schools for instance should benefit from the taxpayer- as in one sense they already do through lenient tax treatment as charities). More likely is that public funding will be cut back in an attempt to prevent perceived “discrimination” between public and private provision. Even given a heftier loans and scholarship system in HE (and say, discounts in the case of libraries for social security recipients), three unhelpful results would obtain. The most obvious of these is an exacerbation of the disparities in take-up of HE and of library services between the higher and lower socio-economic sectors. 11

The second is a decline in take-up of non-vocational courses in HE. Hence in Australia, from the introduction of the HECS system under PM John Howard through its expansion till the present day, there has been a decline in classics, anthropology and some modern languages as subjects available for degree courses. Simultaneously law, commerce, business and IT thrive since they offer better prospects of a future career. Thirdly, the type of graduate careers themselves will be affected, as more students feel forced into commercially lucrative rather than socially useful occupations. Already many University Careers services are bankrolled by major corporations (Oxford University Careers Service, for instance, obtains 10% of its funding from a group of big-name businesses). The requirement to pay off fees will result in a move even further away from the public sector amongst graduates, especially in the case of relatively low starting-salary occupations such as teaching. Similar considerations would apply to the library services; rather than provide a balanced and exciting mix of resources for users, private institutions would focus on purchasing and lending those resources most commercially viable.

Private funding in HE and public libraries requires close regulation by Government since it may not always (or even often) be appropriate. One recalls Nottingham University’s acceptance of BAT’s donation of £3.8m to finance a centre for corporate social responsibility. Problems of business sponsorship of University academic research have been highlighted recently and have resulted in a number of medical journal editors who have developed a new policy in an attempt to limit the influence that companies wield over research they fund. 12

Aside from ethical questions, the very issue of efficiency, apparently fuelling much of the GATS provisions, should point towards continued Government support for public HE and libraries. Despite generous government handouts, commercial operations, lacking the accumulated expertise and backup of the public sector, often flounder spectacularly. Buckingham University has been a notable exception, although with 75% of its students hailing from outside the UK this may be partly due to the fact that its two-year degree offers a cheaper option for paying international students. The real cost of a degree at Harvard or Yale averages three times that at Oxford or Cambridge- hardly a model to follow. It is unlikely that new information providers would prove any more efficient than the public library system, lacking its expertise and developed contacts.

Public regulation and funding also allows, albeit sometimes to a limited extent, public oversight of HE and public libraries. Alexa McDonough, the leader of Canada’s National Democratic Party, has commented on this issue that the GATS constitutes “the greatest transfer of economic and political power in history… from communities and nation states into the hands of a small number of global corporations”. The “commercial sensitivity” defence for decision-making opacity is common to those who have tracked the creep of public-private systems into the NHS and the education system. The GATS would allow yet more of that control to slip through the Governments’ (local especially) fingers. Already public management tends to be at an artificial disadvantage in competitive tendering process for PPP projects; if such systems are seen as methods of Government regulation offering the level-playing field for GATS, it is very likely that private involvement in social policy would increase exponentially. It goes without saying that, as with PFI/PPP projects, private control of HE and library systems would probably result in worse conditions for employees. It is notable that in Australia, there has been a move away from a tenure-based system to a contractual system for many posts. This has also resulted in a marked reluctance amongst academics to criticise University policies openly.

A few final points arise concerning the public library system and the GATS. First of all, the British Library Association has long called for more permissive copyright restrictions, especially as this impacts upon the translation of works into electronic format which would allow wider distribution and use. A regulatory regime which made no differentiation between for-profit and non-profit information-providers could result in a deterioration of even the current copyright position. Secondly, commercially operated libraries may well feel less pressure to maintain independent, relatively decentralised user-led systems of procurement. It is more likely that outsourcing of collection development and cataloguing will occur if public libraries have to compete with private ones. Potentially, certain information sources could be favoured (through commercial deals, for instance in smaller libraries with one particular encyclopaedia company) in one chain of libraries rather than another. This would obviously result in impoverished and biased information provision if it occurred on a wide scale.

The UK Government has painted opponents to GATS as misled and confused rabble-rousers, when actually its own ministries display a breathtaking ignorance of WTO procedures. Indeed, no-one is sure of the potential impact of any new commitments; Pascal Lamy, the EU commissioner for trade, demanded an assessment of these at Seattle, indeed it was part of the “built-in agenda” for the GATS. Yet no assessment has been made.

Gradually awareness is building around the GATS, however. Intensive lobbying of the DTI and other government departments has been ongoing by various campaigning groups, which have now formed a “Trade Justice Coalition”. Thanks to them, some MPs are now realising the threat; an early-day motion demanding an assessment of the impact of future talks has been signed by an encouraging 262 MPs at the time of writing. The National Union of Students has recently passed policy against the inclusion of HE in the GATS. Hopefully it will articulate this through, for example, focusing on the GATS during the Party conference season, and working with other Student Union peak groups across the world. Finally, some of those Trade Unions whose members will be affected by the GATS are beginning to follow the Association of University Teachers in researching into and questioning the GATS.

In conclusion, the current system of regulation and funding for HE and public libraries is definitely not perfect. However, it does at least ensure the quality of UK degrees and teaching, and library provision and services, in a relatively fair and efficient manner. Through universities and libraries, education and learning enriches the lives of the population; creates public servants, doctors and nurses, artists, innovators, businesspeople and those who will safeguard the rule of law in our country; and ensures a citizenry with an active and critical interest in those governing their lives. Universities and libraries are simply too important to be handed over, through GATS regulation, to governance by a small number of often inept and ideologically-driven WTO bureaucrats.

Notes

  • http://gats-info.eu.int/gats-info/g2000.p1?NEWS=bbb
  • Robert Vastine, President, Coalition of Service Industries, Testimony before the Subcommittee on Trade of the House Committee of Ways and Means, US Congress, 8 th Feb 2000
  • Available at www.ustr.gov
  • WTO Council for Trade in Services, Education Services- Background Note by the Secretariat, 23 rd Sept 1998, S/C/W/49
  • Guardian, 26 th Feb, 2001.
  • Dearing Commission, p.221
  • Lamy Addresses New WTO Round, speech to the US Council for International Business, New York, 8 th June 2000
  • Brown, Gordon, speech in New York reported on UK Gov website, 26 th July 2001
  • Gats: Fact and Fiction, WTO, March 2001, available at www.wto.org
  • Guardian, ibid
  • “A Proposal Concerning Top-Up Fees”, which includes consideration of the access effects of a loans and scholarships system as regards one UK University, is available from the author.
  • The Washington Post, Company Drops Feud Over Aids Vaccine, 11.9.01

Anneliese Dodds has previously worked with ‘People and Planet’, and was a Student Union President at Oxford University. She is currently studying for a Masters degree in social policy by research at Edinburgh University and is a member of the Cuba Solidarity Campaign.

 

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