Taken from "The MJ", 19 September 2002. ----------------------------------------------------------------- Phil Cooper finds out how local authorities are fighting against threats to their basic freedoms posed by GATS international trade treaties. ------------------------------------------------------------------ World trade agreements seem, at first glance, to be some distance away, both figuratively, and literally, from the responsibilities of UK local government. For this reason discussion and action by local authorities on such topics might be considered irrelevant, fanciful, ultra vires or merely the obsession of a few elected members with an internationalist bee in their bonnets. This might hae been the reaction until April this year when a briefing paper discussed by the LGA's European and International executive committee began to sound alarm bells. The report, prepared by the Local Government International Bureau, warned that discussions already well advanced in the World Trade Organisation in Geneva threatened some basic powers and freedoms of UK councils across a wide spectrum of responsibilities. Villain of the piece was the General Agreement on Trade in Services or GATS. As The MJ reported at the time (3 May, page I) there were, and still are, genuine fears that this putative international trade treaty would curtail the powers of local authorities in everything from service procurement and regulation to the granting of planning consents. The LGIB/LGA report accused ministers, principally, DTI ministers, of residing over negotiations for an 'over-zealous liberalisation and deregulation' of trade to the benefit of multi-national companies that would 'upset the delicate balance' struck for 150 years between the desires of the free market and the need to protect the public good in such areas as health, safety of the individual and the environment. The report complained that Whitehall was not consulting local government on the issue. Now, it seems, things are starting to move and are moving apace, which brings its own problems. 'We are approaching a watershed in the negotiation process and that is March of next year,' says LGIB director Mike Ashley. A three-month consultation for local government will begin at the end of September and the results feed into the Government's negotiations with the WTO which begin in March. But, warns Mr. Ashley: "The difficulty is that we are being asked to respond without the details of the potential effects that GATS might have. We are facing a situation that irreversible binding international agreements are being made before we know fully the effect of them." It is necessary to backtrack somewhat to describe GATS and why it is perceived to presen such a threat. Ostensibly, GATS exists to prevent national governments from discriminating against foreign companies in favour of domestic ones, or in favour of one foreign company over another. Two current issues within UK local government come to mind. In the first, a number of councils are looking to improve mechanisms, particularly through the use of Section 106 agreements attached to planning consents, whereby developers of major construction projects are obliged to provide building jobs, or to train people for building jobs, from among the local population. Under GATS, this requirement could be deemed unacceptable. Similar provisions currently in force in countries such as Egypt and Colombia designed to give preferential treatment to local employment have been targetted by the European Commission as being against the GATS regulations. The governments concerned have been asked to abolish these controls. Secondly, the British Chambers of Commerce have recently suggested that local firms need more help to bid for local government contracts where they are increasingly being sidelined by major companies, many of them foreign-owned. The BCC are suggesting Government establish a clearing house for contracts under #100,000 to give, in effect, preferential treatment to smaller, domestic suppliers. This could also be prohibited by GATS. Once services are committed by national governments to GATS - and this is the process which is being discussed in earnest from March next year - the regulations set legally binding rules that are enforceable through the WTO's disupute settlement body. Any WTO member country can lodge a complaint against another where it believes national, regional or local government is acting against the GATS liberalisation ethos. If WTO arbitrators agree the complaint is justified the national government of the offending country will have to ensure that the 'abuses' cease. So in the cases cited above, Parliament would have to pass or amend legislation to prevent councils giving preference tolocal labour, or local suppliers. Governments tend to argue that they can limit the effects of even change their mind over services which they are offering up to GATS but, says Barry Coates, director of the World Development Movement, this is a very difficult procedure so that, in effect, a GATS agreement is is irreversible. 'The GATS issue effectively binds future policies. Once agreed by national governments councils will find they are locked into a process that destroys local discretion. This is happening at a time when best value and promotion of local well-being should actually be bringing more powers and freedoms back to local authorities.' There should, says Mr. Coates, be a fully independent impact statement of the potential effects on council powers before a consultation gets underway; this is something that GATS allows for. Mr Ashley confirms that no such impact statement is in prospect. Both also agree that the DTI has so far failed to make public the specific services that it will be offering up to the international GATS negotiators for regulation under the agreement. 'But,' says Mr. Coates, 'we know from international sources that construction is certainly on the UK government's list.' A few councils have already begun to pass resolutions expressing their fears about GATS. These include Stirling, Warwick, Warwickshire, Manchester, Chester-le-Street, Brighton and Hove, Oxford, Haringey and Flintshire. At least a further 16 are known to be drafting resolutions. There will need to be a far greater outcry, however, for the DTI to take notice and, in the words of Mr. Ashley, 'pursue the precautionary principle in these negotiations.' Should this fail to happen, a situation could result where local authority's desire to protect and enhance the future of its local environment, its local firms and its local workforce could be deemed, in the words of GATS, as being 'more burdensome than necessary' by a bureaucrat in Geneva, or Brussels or by a managing director in the United States, mainland Europe or the Far East. If that occurs, there could be nothing that anyone here can do about it.