GATS Casts a Long Shadow over Public Education

A quiet revolution is being organised for our public services.

Unlike the very public revolution led by Roger Douglas and the Labour Party in the 1980's the current Labour Government is keeping this revolution very quiet. It is coming about through GATS (General Agreement on Trade in Services) which is one of 15 international agreements being negotiated under the auspices of the WTO (World Trade Organisation).

The agreement aims to "liberalise" trade in services - meaning to open them up to private enterprise without government restrictions or regulations. "Services" here means "anything you can't drop on your foot" according to our Ministry of Foreign Affairs and Trade and includes our education system. In fact all our state services are included except defence.

In a bald statement of where GATS is heading investment bankers Merrill Lynch have predicted that through commercial pressures and GATS all education worldwide will be privatised over the next 10 years and for private corporations there will be massive financial gains to be made.

How would this come about? The general rules of GATS include requirements that the best treatment accorded to any foreign service provider must be accorded "immediately and unconditionally" to all foreign service providers. Alongside this are rules that require the treatment of foreign providers to be the same as the best treatment given to domestic service providers and neither must there be any restriction on the number of these foreign providers the government will agree to fund.

Our government is playing down any risk to public education by saying that only private education is covered by GATS. This is at best misleading and the grave implications for our public education system cannot be understated.

The government quotes Article I:3 which says that services are excluded if they are "supplied in the exercise of governmental authority" but this same article then goes on to say that such governmental services are excluded only if they are supplied "neither on a commercial basis nor in competition with one or more service suppliers".

In reality our education system is tied in because the government funds most areas of education in a commercial or semi-commercial basis. In our tertiary sector the explosion in funding for private tertiary education under current Minister Steve Maharey (from $17million in 1999 to $150million this year) will make it quite impossible to deny government funding to any foreign provider on the same basis as these local private providers.

Even in compulsory schooling the government gives substantial subsidies to private schools. How will we argue that this funding is not given on a commercial basis or that our public schools are somehow not in competition with these private schools and therefore not covered by GATS?

Our government apparently still clings hopefully to the belief that public education is somehow protected but the WTO Secretariat itself only agrees that this may be the case. However it is clear from the international trend towards commercialisation that GATS Article I:3 will be interpreted narrowly and increasingly so as time passes.

Having committed to GATS - and New Zealand is in fact leading the charge in education along with Australia and the United States - it will become quite impossible to resist the slippery slope.

The critical point though that makes protection of our public education system at best token is that it will not be the Government which decides if it is funding schools on a commercial basis nor if our public schools are in competition with private schools. This will be decided by a GATS Disputes Committee, dominated by "free marketeers" which will convene in Geneva as soon as a foreign corporation complains to its government that our government will not extend subsidies to it on the same basis as it funds our public schools. Should the corporation view be upheld then our government will be liable to heavy financial penalties payable to all affected parties.

Unless action from New Zealand citizens changes the course of current government policy on GATS the medium term future looks decidedly bleak. It is a future where foreign private providers could drain education funds, undermine and weaken our public education system so that privatisation for schools in wealthy communities appears a welcome relief. An extreme scenario? Not at all. The Labour government's approach to railways in the 1980's is a good example of what can happen when public services are underfunded, commercialised and then privatised.

Other nightmare scenarios for education are almost inevitable under GATS. Even if we are nominally protected at present, under GATS "abuse of monopoly" rules New Zealand could be cited if schools in our public education system offered courses which were currently offered by a foreign private provider. Again a GATS Disputes Committee would decide to what extent our education system was "in breach of its monopoly".

Or another example. Suppose a public school board of trustees bans a soft drink vending machine from its premises to encourage healthier diets for its children. Under GATS rules this would be disclosed by our trade officials to the Council for Trade in Services. Foreign soft drink companies could then lobby their governments to insist the ban is lifted because of commitments we had already made in the "advertising services" and "distribution services" sectors of GATS. If this failed they could lobby through the ongoing GATS negotiations to obtain new commitments from New Zealand to lift such vending machine bans in schools.

This may seem a trivial example but it gives a clear picture of the all pervasive extent of GATS not just in education but across our entire community. It is little wonder that private corporations are salivating at the huge pressure being developed through GATS to commercialise and privatise our public services.

Disturbingly, from the outset our government had the opportunity to cite restrictions for our public education system but did not. It put forward 3 general restrictions but across all the 5 areas of education it put in none. In fact it has made specific commitments in each of primary, secondary and tertiary education. And once a commitment is made there is no backtracking.

But there is more. GATS rules also require that "members shall enter into successive rounds of negotiations with a view to achieving a progressively higher level of liberalisation". The ratchet effect takes over. Movement in one direction only is allowed - that of commercialisation and privatisation.

To underline this "no backtracking is allowed" GATS contains other rules including one on domestic regulations whereby negotiations are under way to develop "disciplines" to ensure that any new government measures do not constitute "unnecessary barriers to trade in services". Still a further GATS obligation requires governments when making regulations to take the "least restrictive necessary" approach so as to allow unrestricted free trade.

These rules mean much less freedom for governments to legislate in the best interests of their citizens or their public services and more freedom for private corporations to move at will around the world. A democratically elected New Zealand government would be quite unable to roll back privatisation or commercialisation in our public services for example because the financial penalties from breaches of GATS rules could effectively cripple the country.

With these GATS rules it is childishly naïve for the government to believe it can do some sort of balancing act between exporting educational services to other countries and protecting the integrity of our public education system at home. In the current international environment this is quite untenable.

It is ironic that the International Covenant on Economic, Social and Cultural Rights requires New Zealand to take measures to "prevent third parties from interfering with the enjoyment of the right to education". Under GATS this would be a lost ideal because unlike through GATS provisions, there is no mechanism to require the government to comply with its international human rights obligations.

GATS casts a long, dark shadow over our public education system and our community. It's time the lights came on.

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