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Lebanon’s accession to the WTO. Potential consequences on services.

Sunday 30 April 2006, by Webmoudir

All the versions of this article: [English] [français]

An initial short review

I-What is the General Agreement on Trade in Services (GATS)?

The General Agreement on Trade in Services (GATS) was signed in 1994 as part of the agreements establishing the World Trade Organization (WTO).

- Multilateral agreement (Most-Favoured-Nation principle)

- Objective: Progressive liberalization of trade in services.

1-Which services?
“Any service in any sector except services supplied in the exercise of governmental authority.” (Art. 1.3.b)

except services supplied in the exercise of governmental authority
=

- neither on a commercial basis

- nor in competition with one or more service suppliers (Art. 1.3.c)

Hence, in effect, only such sectors as justice or government are excluded. Education, for example, is actually concerned given that there are public and private schools in competition.

Any service in any sector”: 12 sectors and about 160 subsectors including education, health care and the environment.

- No distinction between sectors (despite the fact that education or health care are essential sectors…)

- No sector is excluded a priori.

2-Rules applying to each “open” sector:

a- Non-discrimination

Most-Favoured-Nation principle: All suppliers from all countries must be granted a like treatment (as the Most-Favoured-Nation). No difference in treatment is allowed: only the supplied service matters.

National treatment principle: Like treatment for international, local and public companies.

Prohibition of subsidies: Subsidies are considered by member countries as having “distortive effects on trade,” hence, member countries will enter into negotiations with a view to developing “disciplines to avoid such trade-distortive effects.”

In effect, these measures bar a public service delivery in sectors liberalized in the GATS process.

b-Market access (Art. 16):

The GATS requires complete freedom of access to markets, i.e., the elimination of all discriminatory measures (limitations on the number of service suppliers, limitations on the total number of service operations, etc. – Art. 16.2)
Prohibition of every measure considered as a “barrier to trade” or as “more restrictive than is necessary.”

=National regulations must be GATS-compliant or disappear

In particular, this may have an impact on:

- Labour Law (legal number of working hours per week, minimum wages, acquired social rights)

- The environment (anti-pollution norms, health standards, etc…)

In order to remove a sector opened in the GATS process, it is necessary to:

- Wait for three years after the entry in force of the agreements;

- Trade off an equivalent sector in compensation.

Hence, in effect, the process is irreversible. Even if a there is political will recognizing the importance of the existence of public schools or of a public postal system in Lebanon, if these sectors are opened in the GATS process, it will be impossible to go back and recreate a public service.


3-Violation of the States’ sovereignty

a) The DSB (Dispute Settlement Body)

If a country liberalizes a sector under an internal need clause (meaning that there must be a need to allow a foreign company to enter the market), it is not the country but the DSB that decides what the country’s needs are.

The DSB consists of a panel of experts who are in agreement with the WTO’s spirit and who are dependent on the organization. Hence, it is the same organization that is both party and judge.
The DSB is entitled to condemn States, but not companies… Its criteria are only commercial.

b) Compliance
Art. 6.4
A country’s laws, general conditions and requirements must not be more burdensome than is needed and must not constitute “unnecessary barriers to trade in services.”

4-CONCLUSION

The WTO and the agreements establishing it are not neutral but ultraliberal, created by and in the interest of multinationals and of private interests. One quote properly summarizes this fact:
“Without the enormous pressure generated by the American financial services sector, particularly companies like American Express and CitiCorp, there would have been no services agreement and therefore perhaps no Uruguay Round and no WTO.” (David Hartridge, Director, Trade in Services Division, WTO, Clifford Chance symposium, 1997)

In every domain under GATS jurisdiction, the norms implemented by any ruling body must be GATS-compliant and must not constitute “barriers to trade.” In case a dispute arises, the DSP rules.

This may lead to the elimination of:

- all active economic policy

- all opportunity for political choice

- the very idea of public service

= challenge to the concept of State itself

The GATS is more than an agreement: it is a society project, the project of a society that is not based on solidarity but on competition and in which least social concerns become the norm.


Translation : Anne May, Coorditrad


WTO = World Trade Organisation
GATS = General Agreement on Trade in Services

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