Does the WTO Want Our Water?
by Lori Wallach
When most people think about trade, they conjure up images
of ships laden with sacks of coffee and steel beams ferrying
between nations, and trade agreements focusing on cutting
tariffs and quotas on trade in goods. In reality however,
today's "trade agreements," such as the 1994 North
American Free Trade Agreement (NAFTA) and the 1995 World
Trade Organization (WTO), have little to do with trade.
Instead they focus on granting foreign companies new rights
and privileges within the boundaries of other countries,
on constraining federal, state and local regulatory policies
and on commodifying public services and common resources,
such as water, into new tradable units for profit.
A leak this week of European negotiating demands in WTO
service sector negotiations that have been quietly underway
since 2000 in Geneva provided a harsh wake-up call to
the world about what is really at stake in these global
Up for grabs at the negotiating table is worldwide privatization
and deregulation of public energy and water utilities,
postal services, higher education and state alcohol distribution
controls; a new right for foreign firms to obtain U.S.
Small Business Administration loans; elimination of a
list of specific U.S. state laws about land use, professional
licensing and consumer protections, and extreme deregulation
of private-sector service industries such as insurance,
banking, mutual funds and securities.
The national consumer group Public Citizen joined the
Polaris Institute of Canada and civil society groups around
the globe in a coordinated release of the secret documents.
Europe's demands of the United States and 108 other WTO
signatories provide the "smoking gun" evidence,
after months of speculation and concern, about how these
secretive WTO negotiations threaten essential public services
upon which people worldwide rely daily.
The negotiations are to expand the scope of General Agreement
on Trade in Services (GATS,) one of the 21 pacts enforced
by the WTO. The "GATS-2000" talks are promoted
by the United States and European nations on behalf of
multinational service sector conglomerates.
Think of GATS as a Trojan Horse - appealingly dubbed
a "trade agreement" - which in reality contains
a massive attack on the most basic functions of local
and state government. You might ask what the GATS provision
creating a new right for corporations to establish a "commercial
presence" within another country has to do with cross-border
trade. The answer: nothing. Actually, the terms create
a right for a foreign firm to set up subsidiaries in other
countries or acquire local companies under terms more
favorable than provided domestic competitors. For instance,
once a service sector is covered under GATS, governments
may not limit the number or size of service providers,
meaning that applying zoning rules on beach front development
or limits on concessions in national parks to foreign
firms would be forbidden. This is why many people consider
GATS to be a backdoor attempt to revive the Multilateral
Agreement on Investment (MAI), a radical investment pact
that was killed by public opposition in 1998.
The GATS not only promotes privatization of public services,
but it makes it extremely difficult for countries, states
and local governments to reverse privatization experiments
that fail. Under GATS, if cities seek to bring a privately
operated utility back into the public realm, they only
can do so if the U.S. government agrees to compensate
all WTO countries for lost business opportunities of their
companies. Thus, if the United States agrees to Europe's
GATS-2000 demands to subject water to GATS disciplines,
then Atlanta, for instance, which just reversed a disastrous
water privatization involving a French company, could
do so only if compensation was offered not just to that
company but to all WTO signatory countries. Another GATS
threat revealed in the secret European document is a demand
to include retail electricity services under GATS, which
would mean that privatization nightmares like California's
energy deregulation would be nearly impossible to fix.
GATS also sets strict constraints on government regulation
in the services sector - even when those policies treat
domestic and foreign services the same. GATS allows federal,
state and local regulations to be challenged as barriers
to trade if they are not designed in the least trade restrictive
manner. For instance, Europe has charged that the rather
modest Sarbanes-Oxley corporate accountability legislation
inspired by the recent corporate crime wave violates these
GATS limits on domestic service sector regulations. Also,
because GATS is geared toward market access for foreign
competitors, the agreement is hostile to regulation in
general and in particular to the diversity of domestic
regulations in the U.S. that vary from state to state,
yet state and municipal officials are excluded from these
The leaked EU documents have prompted civil society groups
worldwide to call for a moratorium on the "GATS-2000"
talks and for a public process involving state and local
officials. The clock is ticking as all WTO member nations,
including the United States, are expected to respond to
the European demands within weeks, starting March 31,
2003. At a congressional hearing this week, U.S. Trade
Representative Robert Zoellick dodged congressional inquiries
about when or if the public and Congress would have an
opportunity to vet the U.S. "GATS-2000" commitments.
Zoellick recently submitted similar service sector commitments
without public consultation in the regional NAFTA-expansion
talks known as the Free Trade Area of the America (FTAA).
Only growing public and congressional pressure is likely
to stop the Bush administration from trading away our
basic public services and governments' basic public interest
Lori Wallach is the director of Public Citizen's Global