Liberalisation of trade in services
One of the most significant developments in recent years, in terms
of trade and investment, has been the progressive liberalisation of
services. This liberalisation has been facilitated by regional and
multilateral agreements. The only multilateral agreement to date,
the General Agreement on Trade in Services (GATS), seeks to establish
a multilateral framework of legally-binding rules governing the conduct
of world trade in services, including transportation and distribution
services, such as airlines and retail stores; consumer services, like
hotels and fast food chains; public services, such as education, health
care and sanitation; repair services, as in car mechanics; financial
services, such as those offered by banks, insurance companies, etc.;
and public utility services, such as electricity, water, gas, and
telecommunications. Basically, transnational corporations and banks
-the major promoters and beneficiaries of the expansion and internationalisation
of services- have designed GATS. GATS -coming into force in 1995-
transformed services into another highly profitable category of commodities
which transnational corporations are eager to control and exploit.
However, the concept
of services includes such diverse activities that they are impossible
to address uniformly in any multilateral agreement. But more important,
GATS undermines a country's ability to manage its basic services in
the public interest. Public services should go beyond a strictly economic
notion, because people’s quality of life and health depend on
them. All people should have the right to universal access of basic
services such as clean water, health care and education. The increasing
private involvement in essential public services undermines this right.
UK Government's
support for GATS
The UK, as the world’s second largest exporter of trade in services,
strongly supports the GATS negotiations. By convention, the European
Commission acts as lead negotiator and speaks on behalf of EC Member
States in the WTO on the basis of positions agreed with all EC Member
States. Following the Inter-governmental Conference in Nice in December
2000, which will lead to a new Treaty of Nice after ratification by
all Member States, the scope of the European Community’s common
commercial policy is being extended to cover trade in services. The
Department of Trade and Industry (DTI) claims the UK is playing an
influential part in the development of the European Community's negotiating
objectives and priorities.
Lord Brittan -former EU Trade Commissioner- has played a central role
in the push for liberalisation of services. On 7 February 2001, Leon
Brittan became Chairman of the LOTIS Committee of International Financial
Services London (IFSL), a lobby group representing the UK financial
industry. In his new position Lord Brittan was responsible for lobbying
the European Commission on talks over liberalisation of services in
the WTO (GATS 2000) that had just entered a second stage.
LOTIS Committee:
the bottom line
The LOTIS structures provide a private forum where government and
business discuss strategies for ongoing WTO negotiations on liberalisation
of trade in services. This allows the UK financial services industry
an unjustified control over large parts of the UK trade policy agenda.
While it is useful and justified for governments to take business
concerns into account when formulating trade policy, privileged co-operative
arrangements between business and government as embodied in IFSL/LOTIS
do not belong in a truly democratic policy-making process.
Introducing
GATS and lobbying by the services industry
The breakdown of the World Trade Organisation's (WTO) 1999 Ministerial
Conference in Seattle thwarted corporate dreams of a broad push for
global trade and investment liberalisation. No WTO Millennium Round
was launched in Seattle. But government negotiators, backed by active
corporate lobby groups, managed to salvage part of the Millennium
Round agenda. In the beginning of the year 2000, WTO negotiations
on extended liberalisation of trade in services, nicknamed 'GATS 2000',
were launched. Corporate lobbying was decisive for the coming into
being of the General Agreement on Trade in Services (GATS), one of
the so-called Marrakesh agreements concluded at the end of the GATT
Uruguay Round in 1994. As a result of this corporate influence GATS
is geared towards serving the interests of transnational service industries,
instead of being for the general benefit.
Opposition
The corporate-driven agenda of the GATS 2000 negotiations is being
confronted with a rapidly mounting opposition. Citizens' groups around
the world see the WTO services negotiations as the greatest threat
to democracy to come from an international economic agreement since
the Multilateral Agreement on Investment, defeated in October 1998.
The proposed GATS disciplines on domestic regulation, for example,
threaten to subordinate social and environmental policy goals to the
commercial advantage of transnational corporations. And there is considerable
concern that GATS rules could in future be applied to public goods
such as education, health and water -- key services which should be
kept outside the scope of the WTO's free trade agenda.
LOTIS
and the UK trade policy agenda
Within the UK government, the Department for Trade and Industry (DTI)
is most actively involved in the IFSL/LOTIS corporate-state alliance.
While IFSL is relatively open about the involvement of government
officials in its efforts to promote the liberalisation of trade in
services, the DTI maintains a total radio silence on this point.
The DTI web site remains completely silent on the department's involvement
in IFSL and its subsidiary LOTIS bodies. This silence is explained
by the controversial content of the recently uncovered minutes of
LOTIS Committee and High-Level LOTIS Group meetings. In the period
covered by the minutes (April 1999 - February 2001), officials from
several UK government departments - in particular from the DTI, Treasury
and Foreign & Commonwealth Office - participated actively in LOTIS
Committee and High-Level LOTIS Group meetings, sharing information
and discussing strategy with their corporate 'partners'.
LOTIS roots
and move to a higher level
The origins of the Liberalisation of Trade in Services (LOTIS) Committee
date back to the early 1980s. Right from the start there have always
been close links between the LOTIS Committee and the UK government.
LOTIS Committee meetings are held every 2-3 months, with an average
attendance of 15 private sector representatives and 5 public servants
from the Treasury (HMT), Department of Trade and Industry (DTI), Foreign
and Commonwealth Office (FCO), Bank of England (BoE) and Financial
Services Authority (FSA).
In April 1999,
the LOTIS Committee was supplemented with a so-called High-Level LOTIS
Group, consisting of "17 chairmen or chief executives from banking,
insurance, the securities industry, law, accountancy, information
and shipping [... and] also boast[ing] a strong Whitehall presence
in the form of senior figures from the Treasury, the Department of
Trade and Industry and the Foreign & Commonwealth Office."
Andrew Buxton, then Barclays Bank Chairman and President of the British
Bankers Association set up the High-Level LOTIS Group. As Buxton commented:
"With the establishment of High-Level LOTIS, the City will be
able to put its views at the highest level - and with the added punch
[...] It is an important building block in ensuring maximum private
sector input to the forthcoming [i.e. GATS 2000] negotiations."
The Buxton-Brittan
Link
The
High-Level LOTIS Group was modelled on a very successful prototype.
In the Spring of 1996, Andrew Buxton (Barclays Bank) and Ken Whipple
(Ford Financial Services) has set up the so-called Financial Leaders
Group, comprising over forty Chief Executive Officers (CEOs) of major
banks, investment banks, insurance companies, and trade associations,
predominantly from the EU and the US. The Financial Leaders Group
(FLG) was to provide momentum to the deadlocked negotiations on a
WTO Financial Services Agreement. The crucial role of the Financial
Leaders Group in the WTO Financial Services negotiations, especially
during the final phase in December 1997, has been widely recognised.
EU Trade Commissioner
Sir Leon Brittan, who had been negotiating the WTO Financial Services
Agreement on behalf of the European Union, was very excited by the
Financial Leaders Group's role in bringing the WTO Financial Services
negotiations to a successful conclusion. In 1998 he invited Andrew
Buxton to create a similar structure, to involve European services
industry leaders in (preparations for) the upcoming GATS 2000 services
negotiations. The European Services Network, consisting of a European
Services Leaders Group and a working level Policy Committee, was launched
at an official meeting hosted by the European Commission in Brussels,
in January 1999.
All three high-level
pressure groups, formed by Andrew Buxton - the Financial Leaders Group,
the European Services Forum and the LOTIS Committee and High-Level
LOTIS Group - worked closely together in the run-up to the 1999 Seattle
WTO Ministerial Conference. In March 2001, it was announced that former
EU Commissioner Sir Leon Brittan, now Lord Brittan of Spennithorne
and vice-chairman of investment bank UBS Warburg, would succeed Andrew
Buxton as chairman of the High-Level LOTIS Group. Eric Wesselius illustrates
with various examples how -in the LOTIS Committee and High-Level LOTIS
Group- relations between public and the private sector officials have
become so close, that even insiders sometimes lose sight of the distinction
between public servants and corporate lobbyists.
Privileged
access for LOTIS
The close links with key trade people in the UK government provides
the LOTIS Committee with privileged access to information and the
policy-making process itself. At a regular LOTIS Committee meeting,
UK government officials or, occasionally, European Commission officials
provide corporate LOTIS members with information on recent developments
within the EU's Article 133 Committee (Services), the Council for
Trade in Services and the services-related Working Groups at the WTO
in Geneva. Internal EU papers and draft papers submitted to Committee
on Trade in Services by other WTO Members are distributed among LOTIS
members on a regular basis.
LOTIS and the
Seattle WTO Ministerial Conference
The 1999 WTO Ministerial Conference in Seattle was supposed to deliver
negotiating guidelines and modalities for the GATS 2000 negotiations.
Thus, the months leading up to the Seattle Ministerial were a busy
time for key service industry lobbyists like Andrew Buxton. As co-chair
of the Financial Leaders Group, chairman of the European Services
Leaders Group and chairman of the High-Level LOTIS Group, Buxton grabbed
every opportunity to convey the corporate demands for GATS 2000 to
government negotiators. Despite all these efforts, the Seattle Ministerial
was not exactly the lobbying success that Buxton and his LOTIS fellows
had hoped for. But they were quick to pick up the pieces. In December
1999, Buxton wrote a letter to UK Trade Secretary Stephen Byers, in
which he asked the government to argue for a quick start of the GATS
2000 negotiations "without waiting for movement in other areas."
This was the beginning of a fruitful relationship between Byers and
Buxton.
Concluding
remarks
The close links and close co-operation between business and government
in International Financial Services, London and its LOTIS Committee
and High-Level LOTIS Group, Erik Wesselius concludes in his research
paper, explain why UK government policy on trade in services, and
in particular the preparations for the GATS 2000 negotiations, are
so biased towards a corporate market-opening agenda. While it is useful
and justified for governments to take business concerns into account
when formulating trade policy, privileged co-operative arrangements
between business and government does not belong in a truly democratic
policy-making process.
Read the full
paper at: http://www.gatswatch.org/LOTIS/LOTIS.html
