THE GUTS ON GATS – It’s a Good Thing!

What is the GATS?

The General Agreement on Trade in Services is part of a series of agreements members of the World Trade Organisation signed onto in 1995. It’s a set of rules which applies to international trade in services between the 145 members of the WTO.

The aim of the Agreement is to open up trade in services. Well over half of the globe’s income is generated by services but only a fifth of that activity is traded. Imagine how much more choice you would have and how much the value and quality of services would improve if there was better access to global service markets.

The GATS has two parts – the framework agreement containing the general rules and disciplines AND the national schedules which list individual countries specific commitments on access to their domestic markets by foreign suppliers.

It doesn’t put us in a straight jacket.

It is an incredibly flexible agreement. It contains several general obligations. The two main ones require that all foreigners are treated the same no matter where they come from (the “most favoured nation” obligation) and all rules and regulations about service delivery should be published promptly (so called transparency obligations).

Having accepted these obligations, GATS members then make specific commitments about which sectors they will leave open to foreign competition, about the degree to which foreigners and their own traders will be treated alike in those sectors (the “national treatment” obligation) and about the degree of market access they are willing to grant off-shore providers.

There is no wholesale opening of our services markets.

The Government made several specific reservations. Foreigner service providers must obtain investment approval if their investment is over specified thresholds. And the Government has the reserved the right to give preferential treatment to Maori people and organisations and to state owned enterprises.

This means the Government can extend special treatment to New Zealanders which it doesn’t also have to grant to foreigners. There are also controls on the sorts of workers foreign companies can bring to New Zealand and how long they can stay.

Foreign competition in the services sector does great things for YOU.

Compare how quickly a cheque is cleared in our banking system to how long it took fifteen years ago, look at how cheap it is to talk to your sister in the UK for an hour and think about how little of your pay packet it now takes to fly between Wellington and Christchurch.

It’s about being able to go and work overseas (kiwi engineers building hydro dams in Indonesia, kiwi lawyers working in London, agricultural consultants working in China), it’s about having foreign visitors come and stay in our hotels, it’s about people in other countries buying our CDs and watching our movies. Freeing up services trade is all about more choice, better quality and better value.

You probably owe your job to the services sector.

Three out of four New Zealanders have jobs in the services sector. Services trade accounts for three quarters of our national wealth, and a quarter of our export earnings ($10 billion). Those earnings have more than doubled in the last five years.

The GATS provides exporting services industries with certainty, clarity and transparency about their markets. This is just the sort of environment needed for growth. GATS commitments also provide assurances about the openness of markets and thereby protect thousands of New Zealand jobs.

Myth Busters – Where the GATS Opponents go Wrong

It’s all being done in secret. If this was really the case why would the Government put a summary of our requests and those made of New Zealand on the Ministry of Foreign Affairs and Trade’s website. And lets be realistic, in any negotiation you never reveal your whole hand at the start of the process. It leaves you no where to go.

The GATS will allow foreign multi-nationals to control New Zealand. It will put their rights ahead of the ordinary New Zealander’s right to affordable, accessible, quality services. This is another catch cry of the critics. But it completely overlooks the fact that any foreign national or corporation has to comply with New Zealand laws, licensing requirements, quality standards and, if resident here, pay New Zealand taxes.

Allowing greater market access under GATS does not mean a hundred hotels could be built on the Heaphy track or that a foreign waste disposal company could demand the expansion of an Auckland landfill. Those are questions of domestic regulation.

The existence of the GATS does not confer any right on foreigners to be exempt from planning and zoning rules or any other obligation required of New Zealanders.

The GATS is anti-democratic. Like all international agreements, the GATS is an agreement to abide by a set of multilaterally agreed rules and therefore entails some surrender of sovereignty – just as we all surrender some of our personal “sovereignty” to live in society. But unlike the individual, a nation’s surrender of a degree of sovereignty to belong to an international agreement is voluntary, conditional and temporary. No country is obliged to become or remain a member of the WTO.

The GATS locks us into free market model of privatisation and deregulation. Opponents maintain that deregulation and privatisation will be rife. That’s wrong. New Zealand’s commitments do no more than reflect our general regulatory environment. We are not bound to do anything we don’t already do - and haven’t been doing for years. Simply put, the GATS is about “letting more people do stuff – much less about how they do it”.

We are locked into our current regulatory framework. GATS opponents argue that the provisions allowing members to withdraw or amend their commitments are so complex that amendment is virtually impossible. There is little basis for this statement because no one has tried to use it yet.

New Zealand’s obligations make no mention of the Treaty of Waitangi. There is no specific mention of the Treaty but New Zealand has excluded from GATS coverage “current and future measures at the central and sub-central levels of government according more favourable treatment to any Maori person or organisation.” GATS cannot, and will not override the Governments Treaty obligations.

GATS threatens our education system. Some of the most strident anti-GATS rhetoric has been directed at the threat to New Zealand’s education system. For a start our GATS commitments only cover private education – not public education. Allowing foreign education providers into New Zealand has not meant education standards have gone into an exorable decline.

Surely to attract students, foreign providers not only have to meet, but provide higher standards, than the already high standards of our public education system. Are anti-GATS campaigners really saying that they want to deny our children the ability to choose the best quality education available? Taken to their logical extension anti-GATS arguments would, for example, deny foreign students access to Harvard and Oxford.

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