The General Agreement on Trade Services - GATS

Preamble

ESIB – The National Unions of Students in Europe was founded in 1982 to promote the
educational, economic, cultural, social and political interests of students in Europe. ESIB,
through its 44 members from 34 countries, currently represents more than 10 million
students in Europe.

1. Introduction

The General Agreement on Trade in Services (GATS) of the World Trade Organisation (WTO)
is the central process which gives rise to privatisation of education. The GATS encourages
the progressive liberalisation of educational services, among others, and has gained
increasing importance in the world market for trade in education. When making specific
commitments and negotiating under the GATS, services are categorised under the UN
Central Product Classification, thus treated from a producer perspective, which denies any
social context, making no distinction between education and other services. This ignores the
range of functions that services have and the fact that there are functions that have
significant public content and interest.

2. Areas of Concern in the GATS Process

 
2.1 Unclear Scope

The GATS provides [1] that a service supplied in the exercise of governmental authority[2] is
not subject to the GATS rules. However, ambiguity arises from the fact that these terms are
not defined. As regards higher education (HE) in Europe, the fundamental problem is that,
although HE remains essentially public, recent developments have led to the increased
introduction of the private sector into public higher education institutions (HEIs), and with
this, the setting up of private-public partnerships and the introduction of private funding,
combined with the traditional public investment in HE. Many countries have a mixed
education system, and education cannot solely be said to be confined to the above
definition. More problematic yet, is that in the event of disagreement as to what is actually
classified under this definition, it is the WTO Dispute Settlement Panel that would ultimately
take the decision as to what is, or what is not, a public service.

2.2 Lack of Transparency

The negotiating procedure, and the manner in which requests and offers are made under
the WTO rules, is strategically very sensitive and therefore untransparent. Negotiating
partners are usually very reluctant to publicly discuss those areas of vital interest to them
or those in which they are willing to commit, or publish those offers or requests made by
them. Requests and offers made in the period leading to the actual negotiation are not
usually made public unless those making them wish to do so. They are not collected by the
WTO secretariat and not accessible to the public. Indeed, only a few governments making
offers and requests actually publish them. This lack of information compromises the role of
society in influencing the debate on the provision of higher education.

Furthermore, the negotiations are not conducted separately for the different sectors, but
jointly for all sectors at the same time. Therefore requests to commit in one sector might
not only be granted on the basis of commitments made in that sector, but also on
commitments in other sectors. This leads to the impossibility to formulate an informed
opinion on the different requests and offers in all of the sectors. During the ministerial
conferences, at which point specific commitments are set, the structure and procedure is
such that Ministers are unable to communicate with the rest of their delegation, thus
inaccessible. The lack of previous knowledge on the requests to be made, and the forum in
which they are put forward puts undue pressure on Ministers to take up specific
commitments and does not take into due consideration technological impact and risk
assessment.

2.3 Inclusion of Stakeholders

In addition to the inadequacy of trade principles to education, the Ministries primarily
responsible for the development of GATS rules and negotiations are those dealing with trade
and economy rather than education Ministries. This means that the latter are excluded from
the whole process, as are education stakeholders. Indeed, it is only a negligible number of
governments that ensure active participation of education ministries and stakeholders in the
GATS process.

2.4 The Binding and Progressive Nature of GATS

A particularly legal concern is the binding nature of the GATS, as an agreement adopted
within the institutional framework of an organisation that operates upon rules which
effectively bind those who adopt them. Furthermore, the impossibility of withdrawal of
specific commitments within the first three years of their existence, as well as compensation
that has to be made for the withdrawal of commitments after such time, makes GATS much
more powerful than other international treaties in the field of HE. Coupled with this is the
concern that the GATS and commitments made thereunder are not static, and require
further negotiation, in line with the concept of progressive liberalisation provided for in the
GATS.[3]

3. Specific Areas of Concern

 
3.1 The Increase of Private Investment in Higher Education

Particularly problematic in terms of the largely publicly funded higher education systems in
Europe is the great fear that, while trade in educational services will benefit from a boost of
private investment, public support therefore will decrease. The role that trade plays in this
scenario is to encourage countries without the capacity or political will to invest in the
physical and soft infrastructure for HE, to rely increasingly on private and foreign investors
and providers.

This in turn will give trade rules a heavy influence on the terms and use of the private
investment made and thereby national policy for education. Furthermore, there is great
concern on the implications that this has on access to HE. While GATS advocators believe
that increased student access to education and training is one of the strong rationales and
articulated benefits linked to trade liberalisation, ESIB is greatly concerned with issues of
affordability in the context of envisaged increasingly competitive and commercial HE
provision.

Furthermore, state subsidies for education institutions may be considered as hindrances to
trade and thus may, under the GATS rules, have to be abolished or, in accordance with
‘Most Favoured Nation’ principle, be given to domestic and foreign providers alike. In the
latter case, public funding would be spread among more HEIs, decreasing the effectiveness
of the public funds available.

3.2 Quality Assurance, Recognition and Registration

ESIB is greatly concerned that generic international quality standards of industry-based
mechanisms might be applied to education. Furthermore, GATS provides[4] that
qualifications, requirements and procedures, technical standards and licensing are not to be
‘more burdensome than necessary’ in ensuring ‘the quality of the service’. The language
used for this is purposely vague, and these terms are undefined, so that it poses a threat to
quality assurance and accreditation standards and procedures.

In this context, registration and licensing of foreign providers, particularly the threat of
diploma mills and rogue providers, posed by the concept of market-driven for-profit
education, is also relevant. Some countries have established new regulations for registering
and licensing foreign or private providers, but many have not. Developing countries in
particular do not have sufficiently robust mechanisms to regulate foreign providers
adequately, and are thus concerned about their inability to protect students.

ESIB is also greatly concerned that some of the requirements established for recognition of
qualifications and licensing may be perceived as potential barriers to trade and will therefore
be targeted for liberalisation during future rounds of GATS negotiations.

4. ESIB Opinion

ESIB strongly opposes an extension of commitments in the education sector into the GATS
treaty, as education is first and foremost an instrument for the growth of welfare and social
development of a society.

ESIB is committed to increasing possibilities for cross-border education, but stresses that a
trade regime is not appropriate to address educational issues.

ESIB stresses that educational services should be excluded from the GATS and negotiations
on trade in educational services under the GATS discontinued.

ESIB affirms its support for the primary role of UNESCO and UN Human Rights Bodies in the
promotion of educational, social, information and cultural rights. ESIB strongly encourages
UNESCO to set up a framework to enable and facilitate the provision of cross-border
education, as an alternative to the GATS.

This statement was adopted at the 49th Board Meeting
in Reims, France, November 2005

[1] Article I(3)
[2] Defined in the same article as one that is not supplied on a ‘commercial basis’ and is not ‘in
competition with one or more service suppliers.
[3] Part IV
[4] Article VI(4)