The Bin Tax, the WTO and GATS


"Suspicion is growing that national governments are no longer in the driving seat-that most crucial decisions on trade and economic policy are being made in the boardrooms of multinational corporations and round the table at the World Trade Organisation"
New Scientist Editorial June 9th 2001

"Think Globally Act Locally". I don't know who came up with this slogan but its relevance has never been more apparent. Increasingly decisions made behind closed doors by bureaucrats in the World Trade Organisation (WTO), the European Union (EU) and the like are impacting directly on everyone's lives. The General Agreement on Trade in Services is one such decision.

The GATS was first brokered in 1994 as part of the much older General Agreement on Tariffs and Trade signed in 1948. According to the WTO, the GATS agreements cover 160 services' sectors including telecoms, transport, distribution, postal services, real estate, insurance, construction, environment, tourism and entertainment. What few people realised when the deal was first done is that the GATS also includes healthcare, education, housing, water, waste management and other basic services usually run by government agencies.

The agenda of the GATS agreement is quite simple: to privatise as many services as possible opening them to international competition. You can access the text of the agreement on the WTO's website www.wto.org. The preamble states the aims as

"wishing to establish a multilateral framework of principles and rules for trade in services with a view to the expansion of such trade under conditions of transparency and progressive liberalization"

"Liberalization" means privatisation. True the treaty makes allowances for some countries being introduced at a slower rate but it also states clearly that liberalisation once achieved must be "irreversible". Services are to be taken out of the hands of governments and sold to the highest bidder. What does this mean in practice?

In the Spring of last year thousands of residents of Cochabamba in Bolivia seized control of the city's central plaza to protest at a dramatic increase in their water bills which had more than doubled in one go. There was a violent military crackdown and uprisings throughout the country. Six people were killed and hundreds injured. A full account of this struggle can be found at www.globalexchange.org

The target of the protest was Aguas Del Tunari (ADT) the local water utility that had just been privatised and a major part sold to International Water Limited an affiliate of the San Francisco based Bechtel Group. The government backed down and cancelled ADT's contract.

What is significant about this besides the heroic struggle are two things.

Firstly at every stage of the way the WTO and the World Bank insisted on this privatisation. In February 1996 they told the mayor of Cochabamba that unless it was privatised there would be no World Bank money for the water system. In July 1997 World Bank officials told the Bolivian president in Washington that the privatisation of the Cochabamba water was a pre-condition for debt relief from themselves and International Monetary Fund.

The second issue of significance is that Bechtel, having incorporated International Water Limited as a Dutch company, is now suing the Bolivian Government under a 1992 trade agreement between Holland and Bolivia for $25 million in damages and lost profits!

Well, you might say corrupt tin pot dictatorships in South America - it could never happen in the Western World. Think again! One of the key articles in GATS currently under negotiation is article VI.4 the so-called "Necessity test". In a trade dispute final authority will rest with the GATS Disputes Panel to decide whether a national law restricting the operation of a transnational company is "necessary"

A very weak version of such a necessity test is already incorporated in the North American Free Trade Agreement. Recently the state of California banned a petrol additive MBTE that was contaminating water supplies. The Canadian manufacturer of the chemical filed a complaint and is looking for $976 million.

According to them the Californians should dig up every petrol tank in the state and reseal them and hire a swarm of inspectors to make sure that it is done just right. To just take the chemical out would be "trade restrictive". According to Gregory Palast in the Observer (April 15th 2001) "The GATS version of the Necessity Test is NAFTA on steroids".

The EU "has a hard on for GATS". Their Web page www.europa.eu.int gushes that "the EU therefore leads in the drive to liberalise trade in services worldwide and remove barriers to a truly global market". The Nice treaty calls for "the achievement of unity in measures of liberalisation".

Privatisation of water, bins and even health services is coming. Bray and Limerick are the latest examples of bin services to be privatised here. East Anglia Water from the UK has since bought into Nobel who are one of the major operators since the bins were privatised in Bray. The Council continued to provide a service but increased their bin charges after Nobel told them that they would have to bring them up to £150 a year in the interests of fair competition!

With the new version of GATS they will be able to enforce such measures through the courts if councils prove uncooperative. We must continue to resist not only right at the bottom but also internationally to stop our future being sold behind closed doors.

Conor Mc Loughlin


More on Globalisation


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This edition is No66 published in September 2001

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