A Fundamental Transformation of the Relationship between Citizens and States: The EU and GATS

international | eu | opinion/analysis Sunday January 11, 2004 20:08 by Deirdre DeBurca / Brendan Young - DAPSE

Draft EU constitution advances the neo-liberal agenda

I believe that popular resistance to the imposition of the neo-liberal
economic agenda is vital- whether one lives in Ireland or Bolivia. However,
it is often easier to see this agenda being imposed in the developing world
than it is to recognise it as an increasingly central dimension of the
‘European Project’.

The ongoing debate about the risks to the EU if a new weighted voting system
is not agreed as part of the draft EU Constitution has revealed little about
the new areas to be decided by Qualified Majority Voting (QMV). One such
area is EU trade policy on Health, Education and Cultural and Audio-visual
Services.

The Treaties of Amsterdam and Nice, gave the Commission the exclusive right
to negotiate deals in the World Trade Organisation (WTO) and the General
Agreement on Trade in Services (GATS), including in public services such as
water and public transport. Under Nice, the Council of Ministers had to
agree these decisions by QMV, representing 72% of the population of the
Union. However, decisions on trade offers in Health, Education and
Cultural-Audiovisual Services had to be unanimous.

Under Title III-12 and Title V-III-217 of the draft constitution, the
Commission will now have the exclusive right to make international trade
deals in all Services. The Council of Ministers decisions on the Commission’
s trade offers in Health, Education, and Cultural and Audio-visual Services
will now be by QMV, with a weak caveat in relation to the latter. A majority
of 13 out of 25 countries, representing 60% of the enlarged EU population
under the new weighted voting system, will be in a position to decide for
everybody. The national veto on trade in these areas has been removed.

The EU Common Commercial Policy, as outlined in the Constitution, seeks ‘the
conclusion of tariff and trade agreements relating to trade in goods and
services’ and ‘uniformity in measures of liberalisation’ (Title
V-III-217-1). The change to QMV for all trade offers by the Commission, and
a Common Commercial Policy pushing liberalisation of trade in services,
means that the draft Constitution will prepare the way for commercialising
all services, including Education, Health and Cultural / Audiovisual
Services. And it will put this framework into basic EU law – which
democratically elected governments will not be able to change in the future.

Many European citizens claim to be agnostic on the issue of who delivers key
services - the state or the public sector. Many are not yet aware that the
trend towards liberalization and privatization is part of a global
neo-liberal economic agenda that is being pushed through international
institutions such as the WTO, the IMF and the World Bank. The GATS, for
example, is a rolling process of liberalization of international trade in
services, opening them up to private commercial trade by multi-national
corporations. The GATS is an irreversible process. Once agreements are made
it is virtually impossible to get out of them. Furthermore, disagreements in
the GATS are dealt with privately by the Disputes Resolution Panel of the
WTO, a body of ex-corporate lawyers who make judgements based on GATS / WTO
rules – not any requirement for public services to meet social needs.

The effect of GATS, and the liberalization and privatization of public
services (called Services of General Interest within the GATS), is a
fundamental transformation of the relationship between citizens and states.
Services formerly delivered to citizens by states on the basis of
entitlement are being handed over to the private sector to be delivered on a
commercial, profit-making basis. The desirability of competition is the
dominant justification supporting GATS, and the neo-liberal economic agenda
generally. However, this competition exists purely at the level of rhetoric,
as large multi-national corporations are in a position to dominate most
sectors. Therefore state monopolies are typically replaced by private
monopolies, and citizens must then access services based on their ability to
pay. Neo-liberal economic policies result in the transfer of a great deal of
power and wealth into the hands of multi-national corporations and a
significant reduction in the level of democratic control over key public
services. Furthermore, no satisfactory system of international governance
exists at present that can regulate the activities of multi-national
corporations and subject them to democratic control.


The trend to privatization applies to developing countries as much as the
developed world. Pressure on the governments of developing countries to open
up sectors of their economies to liberalization and privatization is applied
both through the IMF and the World Bank when conditions for loans are being
agreed with those countries, and during negotiations on various trade rounds
occurring within the WTO. In a landmark move, the US House of
Representatives in July 2000 approved a measure to pressure the IMF and the
World Bank to stop requiring that impoverished countries charge “user fees”
to their people for access to primary health services and primary education
as part of the austerity programmes which these countries were obliged to
adopt. However, there are many examples of the relentless push to
privatisation continuing in developing countries.

For example, a report, ‘Water Justice for All’, published by Friends of the
Earth International in March 2003, shows that water privatization has had
negative impacts on communities in many countries and describes global and
local resistance to the control and commodification of water by the private
sector. 14 Case Studies were involved and included, Malaysia, Uruguay,
Indonesia, Bolivia, Peru, Sri Lanka, and Paraguay. The report points out
that only about 5 percent of the world's water is currently in private
hands. The water sector thus has an enormous potential for the few
multinational corporations that dominate this market: mainly Suez (France)
and Vivendi Universal (France), Thames Water (UK but part of German RWE) and
Betchel (USA).

It is important to make the link between the Common Commercial Policy of the
European Union as set out within its new draft constitution, and the
emerging privatisation of water services in developing countries. Both
reflect the neo-liberal economic agenda that is being imposed globally at a
highly accelerated pace, and without any real democratic debate. However,
while a minority of EU citizens (including the Irish) will be given a vote
as to whether or not they want to adopt the draft EU constitution (and
within it the EU’s Common Commercial Policy), the poorest people of the
developing world have absolutely no choice about whether to submit to an
economic ideology which will have such a devastating effect upon the most
basic aspects of their lives.


I believe that popular resistance to the imposition of the neo-liberal
economic agenda is vital- whether one lives in Ireland or Bolivia. However,
it is often easier to see this agenda being imposed in the developing world
than it is to recognise it as an increasingly central dimension of the
‘European Project’. The cultural, political, economic and peace dividends
that have resulted from the current process of European integration are
undeniable. Yet with each successive European treaty since the 1986 Single
European Act, the neo-liberal economic model has become more firmly
entrenched. It is sometimes difficult to reconcile the social-democratic
traditions of many European Member States, their emphasis on social
protection, worker’s rights and environmental protection with the narrow
profit imperatives of the neo-liberal agenda. And yet, at the heart of the
EU Constitution is a fundamental contradiction between the commitments to a
“Social” Europe and the commitment to continue participating, through the
WTO, in the creation of a single, global, neo-liberal free- market economy.


The imposition of a global neo-liberal economic model on the countries of
the world is, in effect, a giant global experiment. Those who support
significant state-involvement in the economy can point to many examples
where this has been a successful model. In contrast, the almost doctrinal
belief in neo-liberalism as a form of socio-economic management is purely
that – an ideological belief system based on very few reliable examples.
Unfortunately, however, the imposition of this economic ideology is
fundamentally restructuring our economies, and it will not be easy to
reverse many of the changes should the model fail, as it is quite likely to
do.

The Democracy and Public Services in Europe is a group that was established
following a GATS workshop at the Irish Social Forum last October. It is
attempting to promote informed debate and discussion about these issues
amongst politicians, the NGO community and the public at large. If you are
interested in finding out more, you can contact Brendan Young at
youngbren@eircom.net. Please do engage in the debate and encourage others to
do so also.