The General Agreement on Trade in Services (GATS) is an agreement which seeks to open up the “services” market of every World Trade Organisation (WTO) member. In doing so, the agreement limits what national or local governments can do in a particular service sector.

The GATS rules apply to 160 service sectors, many of which are the responsibility of local government. Examples affect local government powers to give preference to local employment, buy locally made goods or favour local suppliers and regulate services such as waste disposal, building control, water supply, roading and transport.

Many other essential social services are also covered by the GATS agreement — including education, health, electricity supply, telephones, prisons, postal services, and banking. There are widespread concerns that the agreement will over-ride any national or local regulation that is deemed to obstruct trans-national providers of these services.

The Christchurch City Council says it is wrong that local government has not had a chance to influence the talks and how they are being approached. It believes local services and rules about essential services should be made locally and that the government must exclude all public services from any GATS agreement.

The Christchurch Council wants the government to slow down and take another look at the way World Trade Organisation (WTO) deals have been working so far. It also wants the Government to try to make sure the WTO has no ability to overturn New Zealand laws and practices that protect health, the environment, development and human rights.

— A report on the implication of GATS written for the Christchurch City Council by Social and Economic Policy Analyst Mary Richardson can be downloaded (PDF document, 9pg, 61kb) from here

Christchurch Councillor Alister James, chairman of the Council’s Strategy and Finance Committee, says that as new sectors are added to the GATS agreement, the government can limit the amount of access overseas providers have. James: “But all limits and exceptions must be set when a country initially offers a sector. After that, you can only get new limits if you negotiate compensation with all the countries which have a right to enter that market. That would be virtually impossible, so you can see it’s really important to get it right before a sector becomes part of the GATS system.”

North Shore City Strategy and Finance Committee Chairperson Tony Holman says the council is “far from impressed” with the lack of government consultation so far. Holman: “GATS is anti-social, anti-environmental and anti-triple bottom line, not to mention anti-local enterprise, ownership and sovereignty. We don't need to look too far to see the folly of many free-market experiments in our community...”

Local Government NZ: “It is inconceivable that local regulations, adopted and applied in a transparent and objective manner should be subject to international agreements that might have the effect of thwarting the decisions of communities about how they wish their town or city to develop...”

LGNZ’s concerns were sparked when a sister organisation in Canada, the Federation of Canadian Municipalities (FCM), said that it had legal advice which suggests that GATS may constrain municipal regulatory powers and delivery of public services, particularly where public-private partnerships, contracting out, or other commercial elements are involved. The legal advice also suggested that the agreement’s “transparency” objective may also require delay and effort in order to justify local authority regulatory decisions.

All Australian opposition parties, Australian Labour Party, Democrats and Greens now have policies critical of GATS, and have called for a Senate inquiry into GATS and for the details in the agreement negotiations to be made public.

Source – Christchurch City Council Press release 13 December 2002 “Chch City Council concerned about global Trade in Services deal”; Press Release 13 December 2002 “Arena applauds growing resistance to GATS by local government”; Local Government NZ briefing paper to Minister of Foreign Affairs and Trade, Phil Goff (August 2002) “The General Agreement on Trades and Services”;

KELSEY TO LAUNCH REPORT

Professor Kelsey is author of a series of books about New Zealand’s experience of globalization, including the best-selling “The NZ Experiment”. She is a trustee of the free trade watch-dog group Arena (Action, Research and Education Network of Aotearoa) which argues that the GATS agreement will lock-open New Zealand’s services to foreign transnational companies.

Kelsey: “ Unsurprisingly, corporations have been the driving force behind this agreement. The service industry is big business and heavily dominated by multinationals based in rich countries. These companies want to operate freely within every country of the world. But many services sectors are still owned and regulated by governments. Opening up the trade in services will provide a bonanza for those businesses.”

“ The GATS agenda threatens affordable access to basic services. It is linked directly with the new fashion to promote public private partnerships (PPP) for essential services. If multinationals are seeking to make a profit out of water, health and education, people without purchasing power are likely to lose out. Recent water privatisation in Puerto Rico has meant that poor communities have gone without water while US military bases and tourist resorts enjoy an unlimited supply. A system governed by people’s ability to pay will not bring desperately needed services to the world’s poorest people...”

— “Serving Whose Interests?” by Jane Kelsey, available from Arena, P.O.Box 2430, Christchurch ($20 per copy) or can be downloaded from the Arena website at www.arena.org.nz

Source – Arena newsletter Spring 2002; Press Release from Arena 21 January 2003; Jane Kelsey paper “GATS —- What’s a Global Agreement on Services Got to do with Local Government in NZ?”

DETAILS OF “REQUESTS” TO NZ LEAKED

Running to over 1000 pages, the leaked documents represent a wish-list of the rules and regulations that EU corporations want eliminated to ease their entry into service markets worldwide. The document asks that the 29 countries open up their postal services, water supplies, finance and banking, electricity generation and supply and telecommunications services to European transnational companies. The EU also wants all these countries to lower or abandon their vetting of foreign investments in all services sectors.

According to these papers, the EU's specific “requests” of New Zealand include:

VOICES: ON THE GLOBAL AGREEMENT ON TRADE IN SERVICES “ Services are the public tangible manifestation and expression of our shared values as citizens. How we choose to heal our sick, teach our kids, protect our water, connect to one another through transport and communication are expressions of our collective vision for society.” — Naomi Klein, author of “No Logo” and “Fences and Windows” “ In the GATS agreement, “services” are defined with extraordinary broadness as pretty much anything you couldn't drop on your foot. The uninitiated might think that getting healthcare free at the point of delivery is a right in Britain. To the WTO, it is a commercial service. Everything from the funding of students to the management of landfill sites is a service. According to the United Nations, 60 per cent of the world's cross-border corporate mergers and acquisitions in 1999 were in the service sector. Services are what the clever corporate money is into.” — Nick Cohen, columnist for New Statesman (UK) “ Services industries are vitally important to New Zealand's economy, and an increasing component of trade. According to figures from Statistics New Zealand, our services exports have increased by 55 % since 1997. Last year services exports were almost 25% or $10,033 million of total exports earnings, and are growing faster than goods exports. “ We expect the WTO GATS negotiations to create opportunities for New Zealanders to increase their exports in innovative industries such as engineering, architecture, education, consultancy, environmental management and tourism. New Zealand’s services requests reflect the creativity and diversity of New Zealand's services exports, and our strong belief in their value to foreign consumers...” — Jim Sutton, New Zealand Trade Negotiations Minister “ New Zealand’s services industries are internationally competitive and have been pressing the Government to seek the reduction of trade barriers in negotiations with Singapore and Hong Kong. Negotiations in the GATS could open up new global opportunities for financial services, consulting, engineering, education and postal services. “ GATS is the most misunderstood of all the WTO rules. The GATS does not require governments to privatise essential services like education or water or to offer government subsidies to private providers. Under GATS countries are free to continue to regulate in the national interest and to maintain exceptions. But they cannot not expect other countries to liberalise when they are not prepared to do so. That applies particularly to Europe where many services sectors are still heavily protected”. — Stephen Jacobi, Executive Director, New Zealand Trade Liberalisation Network “ Trade Minister Jim Sutton and the Government only ever talk about the holy grail of free trade in agriculture. It’s time they started to explain to people what the implications of these services agreements are for the rights of New Zealanders to control what happens in our country. “ The leak of European Union “requests” of New Zealand confirms what Arena and many international critics have claimed: that the GATS is a Trojan Horse

for the takeover of core public and essential services by transnational companies aligned with the EU and US. Once commitments are made, governments can only change their minds at a price which almost none can afford. The backlash we are already seeing from these documents is another nail in the coffin for the WTO’s attempt to dictate how governments meet their people’s needs ...” — Professor Jane Kelsey, Arena Network “ Decision-making on [domestic regulation] is passing from democratically-elected governments (including local governments) to appointed tribunals and dispute-settlement panels at the WTO in Geneva. It could be argued that a trade panel determining the appropriateness of “regulations” from safety standards for manufactured goods to the licensing of hospitals to public water quality testing, is undermining governments’ sovereignty. “ Governments can complain about the laws or regulations of other governments to a panel of trade law experts. There is no right for local authorities to complain or defend themselves in these situations. A local authority being challenged would have no right to present to the panel its reasons for passing a particular regulation nor could it comment on the practicality of “less burdensome” options.” — from Christchurch City Council report on GATS and the potential repercussions for local government “ Perhaps more than any other industry, the “third sector” — charities, not-for-profit organisations, community groups and social businesses — should be the natural soulmate of a [British] Labour government. Ministers say they want more charities and social organisations to deliver public services — from home help and housing to refuse collection and residential care. And the Treasury is offering millions of pounds to encourage them. “ The General Agreement on Trade in Services (GATS) however threatens this revival for the voluntary sector. Huge foreign companies want to bid for local authority contracts, and any special treatment for social organisations is deemed unfair competition. Government leg-ups for voluntary groups face a challenge because super-rich multinationals don't get the same treatment. “ Many elected local councillors ask their officers to consider factors such as the environment and job creation when making purchasing decisions. All this could be ruled illegal if ministers allow GATS to creep further into public services...” — Gideon Burrows, New Statesman (UK) 2nd December 2002 “ The establishment of an international agreement is of course not, in itself, a cause for concern. The reason the GATS has such major implications is because it relates to the ‘rights’ of service companies from one country to operate in another country. This trade agreement is no longer about border taxes (tariffs) and quotas. It is about requiring that domestic regulations are not ‘unnecessary barriers’ to trade or are not overly ‘burdensome’. The GATS therefore intrudes further into domestic regulatory policies than any other trade agreement and has massive implications for how governments intervene in markets and for democratic decision-making.” — from “Serving (Up) the Nation” guide to the WTO General Agreement on Trade in Services published by the World Development Movement (www.wdm.org.uk)

MIMINUM WAGE AND YOUNG PEOPLE

The new legislation also removes the exemption of employers having to pay the minimum wage to employees who take 60 or more credits of training per year. This exemption also included apprentices.

Knowles also says that increasing the pay rate for unskilled people reduces their incentive to up-skill themselves. She claims that research shows that every increase in the minimum wage is accompanied by a drop in employment, and that the situation is compounded for young people, who are most likely to be unskilled and most afflicted by unemployment.

Federated Farmers also cautions the government that raising the minimum wage is no substitute for growing the skills base of young NZ’ers. Vice-president Charlie Pedersen says the government needs to focus on the skill shortages of young NZ’ers entering rural industries. He says Federated Farmers would never support employees being underpaid but there needs to be a stepping-stone into rural industries that encourages employers to carry the risk of employing and training staff. Pedersen says farmers are crying out for skilled young workers and that no amount of tinkering with the minimum wage is going to help that.

Sources — New Zealand Herald 19 December 2002 “Minimum wage increases, Govt ratifies bargaining convention”; Scoop press lease by New Zealand Council of Trade Unions $8.50 minimum wage welcome, but still too low; Scoop press lease by Business NZ 19 December 2002 “Minimum wage change hurts employees; New Zealand Herald 18 December 2002 “Business attacks wage bill” by Keith Taylor; Scoop press lease by Federated Farmers 20 December 2002 “FFNZ: government must focus on skill shortage”

TEACHER SHORTAGES

The number of people training to be teachers has risen but the newly qualified candidates are only beginning to come through. McCutcheon points out that although teaching training numbers are up, many teachers do not stay in the profession. 30% of the new teachers hired in 1999 had quit by 2001.

Sources — New Zealand Herald 15 January 2003 “Not enough teachers at the chalkface” by Jo-Marie Brown; The Daily News 15 January 2003 “Nats blame Govt over teacher shortage” NZPA

NATIONAL TOUR ON UNIVERSAL INCOME PROPOSAL

The tour of free public workshops, demonstrations and displays will visit Christchurch, Dunedin, West Coast, Wellington, Taupo, Tauranga, Hamilton, Manukau City, Auckland Central, Hawkes Bay and Palmerston North throughout February and March. The presenter is Patrick Danahey, a researcher and author from Nelson. For more information, visit the Universal Income Trust website at www.geocities.com/caeruit or contact Patrick Danahey at email ceres7@netaccess.co.nz

Source – email from Sarah Ayre of UIT 16 January 2003

UNITED NATIONS KEEPS FOCUS ON YOUTH EMPLOYMENT

To this end, the UN Secretary-General Kofi Annan has joined with the heads of the World Bank and the International Labour Organisation (ILO) to bring together a high-level panel of 12 eminent people drawn from private industry, civil society and economic policy. Last week, this expert group met in Geneva, Switzerland, to continue their work to develop and promote national strategies for creating jobs for young people.

In a background paper prepared for last week’s group meeting, the expert panel points out that employment creation policies have often been neglected in favour of macroeconomic policies aimed at stabilisation, fiscal prudence and budgetary balance. The panel doesn’t disagree that sustainable, long-term economic growth is the best way to create employment ... but it points out that “improved economic growth in and of itself is often not enough, particularly when special groups such as youth are concerned.”

The panel recommends that added attention needs to be paid to increasing the employment intensity of economic growth, especially in the rapidly expanding sectors of the economy. It says that governments should consider putting in place incentive structures that would promote employment-intensive growth through directing investment to sectors that are most employment intensive.

The paper: “Public works projects have traditionally been an important source of new jobs, particularly for vulnerable groups such as youth. Moreover, labour-intensive public works, which have been used for both regular infrastructure development and as a means of responding to crisis situations, have been demonstrated to have a positive impact on economic development. For example, labour-intensive public works projects have been shown to be cost-effective and competitive when compared with equipment-based methods in the rehabilitation, maintenance and development of infrastructure, including rural roads, environmental rehabilitation, irrigation and urban slum upgrading schemes.

“ A potential area of concern, however, is that the construction, rehabilitation and maintenance of infrastructure in some countries has been taken over by multinational public works enterprises which use more capital-intensive rather than labour-intensive methods, resulting in a loss of domestic capacity and employment.”

— UN Expert Group Meeting Background Paper: Jobs for Youth (17 December 2002) by the Department for Economic and Social Affairs, United Nations, available for download (11pg, 125kb) at www.un.org/esa/socdev/poverty/youth_back.pdf

Source – United Nations Website on Expert Group Meeting on Jobs for Youth www.un.org/esa/socdev/poverty/youth_egm.htm

ALEXANDRIA YOUTH EMPLOYMENT SUMMIT AND DECADE OF ACTION

On September 11, 2002 — a year after the terrorist attacks on New York — the delegates at the Youth Employment Summit issued “The Alexandria Declaration”, a summary and statement of principles arrived at during the five-day conference.

As the Egyptian Minister of Youth Dr Aly Hillal commented at the closing ceremony: “A year ago, a nightmare took place ... but a year later the youth of the world gathered in Egypt to dream of a better world in which peace, justice and democracy prevail. Youth are asking that their voices be heard, and that their role be recognized as active actors rather than beneficiaries ...”

Thong is keen to develop a network of young people who want to contribute to the Alexandria Summit’s “Decade of Action” on youth employment. He particularly wants to make contact with other young people involved in Youth Councils around NZ. (email sen_thong@hotmail.com)

As part of his ongoing involvement with this initiative, Thong has developed a website to gather resources for promoting youth employment initiatives in NZ. It can be found at http://projects.takingitglobal.org/nzykr

Source — Youth Employment Summit website www.youthemploymentsummit.org; vivian Hutchinson interview with Sen Thong Wellington December 2002

BUSH PLANS UNPECEDENTED CHANGE TO GOVERNMENT JOBS

Business leaders say the new initiative will revitalize the entire “outsourcing industry”, which has been hit over the past year by sluggish growth and overcapacity. Peter Bendor-Samuel, CEO of the Everest consulting group in Dallas: “The scale of this is beyond anything that’s been contemplated before ... this is a quantum leap forward in the size of the outsourcing market.”

Harnage sees the new policy as a major expansion of a trend that has been taking place in US government at all levels for the last two decades. State and local governments as well as Washington have been hiring private companies to pick up trash, run prisons, collect traffic tickets and do much of the other mundane business of government. He argues that federal employees have almost always had more expertise and experience than outside contractors did in the jobs that are put up for bid. And there have been many cases in which private contractors either drove up the costs to the government or failed to do the job well.

Other US academics point out that while there can be some real short-term gains from privatisation, research shows that this is usually only true for relatively simple goods and services. Professor Robert Jensen, from the University of Texas, says that the savings do not hold true in the majority of cases. Jensen: “Often short-term savings evaporate quickly once competitors drop out. Contractors who underbid to win a contract are free to raise rates later, often leaving governments with little choice but to accept. For complex contracts, oversight costs are high, or inadequate oversight leads to corruption. State and local experience suggests that in services such as vehicle and highway maintenance, privatisation may end up costing taxpayers more...”

Source – New York Times 15 November 2002 “Government Plan May Make Private Up to 850,000 Jobs” by Richard Stevenson; Philadelphia Inquirer 24 November 2002 “President Bush plans an unprecedented shift” by Prof. Robert Jensen of University of Texas at Austin; USA Today 25 November 2002 “White House plan could give boost to outsourcing” by Stephanie Armour and Del Jones