"This Council believes that before extending GATS (the General Agreement on Trade in Services) the government should consider the possible effects of GATS upon the provision of public services, especially at the local level. This Council asks the Chief Executive to write to the Sec'y of State for the ETR with the following questions:
1. Which Council services will be affected by GATS?
2. What will be the effect on procurement, planning and sustainable development?
This Council should write to the local MPs, James Plaskitt and Andy King, asking them to take up the issue and should express its concern to the LGA"
Dear Council/Exec member,
As far as we understand it, at the 27th February WDC meeting the above motion was sent forward for consideration by the WDC Executive at a future date. Cllr Gifford suggested that, in the interim period, central government should be given an opportunity to respond to the motion, thus enabling both sides of the story to be represented when the WDC Executive make their decision.
In our experience, central government tends to aggressively defend GATS. We anticipate that the response you receive will be of a particular form; it will attempt to show that fears over GATS are unfounded, and it will almost certainly claim that GATS critics are at best deluded and at worst engaging in calculated scaremongering.
This dossier has been compiled for two reasons. Firstly, to bring together in one document some of the core evidence underpinning fears about local government and GATS. Secondly, and perhaps more importantly, to articulate a "pre-emptive" response to the defence the government is likely to issue. We hope that the thorough nature of this document will convince you that our fears for local government under GATS are well founded, and show how the government's defence of GATS is based on a highly selective (if not disingenuous) use of the facts.
The chapter titles are fairly self-explanatory, and we urge you to take the time to read through them. Of course, we are more than happy to speak to WDC Exec members either individually or in a group if there are any further queries.
One issue we feel we simply must draw your attention to is the article from the Canadian newspaper. This shows how, in Canada, local government is fearful of the effect GATS will have on the planning function. Initially we were going to recommend this article as a good introduction to local government fears vis a vis GATS and planning, but with the proviso that the Canadian and UK regulatory system are (of course) not identical so not all the fears may transfer across the Atlantic. However, we were surprised to learn only the other day that the picture in the UK is even bleaker than that the Canadian municipalities are experiencing. This is exposed in an email we have reproduced below. The email is a response to a query (by a UK GATS campaigner) that asks how relevant the Canadian article is to the UK system. Given the technical nature of the language we have inserted a brief explanation at the end. We really cannot overstate how significant this revelation is, as it blows a wide hole in the government's defence of GATS.
"...The examples of violations will be similar - any measures that restrict retail development on the basis of their potential damage to existing businesses or neighbourhood character, any zoning or store hours regulations for which there is a less "trade restrictive" alternative, etc. The UK part of this will be especially easy to do because your government, in contrast to other European nations, put zero limitations on its retail commitments when the EC GATS schedule was submitted in 1995.
Since it is the EC, and notably not the US (and now not Canada), that is pushing for new disciplines on domestic regulation to be negotiated through the GATS, it is Europe where this issue has to be taken on. I questioned your top DG Trade officials at a transatlantic meeting about why the EU would be pursuing enhanced consumer regulation on food origins, etc. and that same time as they are establishing the grounds to undermine these same regulations through new domestic regulation disciplines in the GATS. The response was incredibly adamant. The EC will pursue getting GATS domestic regulation disciplines, that they believe the trade offs that there have to be made between expanding trade and consumer protection are ones they can live with, and that zoning and store hour regulations need to be disciplined because they are used for protectionist purposes. When I questioned one DG Trade official particularly on the zoning issue, he said that even EU local governments use this for protectionist purposes so he agreed with the proposal to put zoning on the list of regulations to be targeted. DG Trade clearly wants European local governments to be disciplined by new GATS rules on domestic regulation..."
Ellen Gould, independent Canadian GATS researcher
What does all this mean? Well, when a government liberalises ("opens up") a service sector under GATS, it is allowed to specify limitations on the liberalisation. For example, in the retail sector (which includes megastores like Wal-Mart, Asda, etc.), several EU member states (such as Italy, Ireland, Belgium and France) have said the establishment of retail stores (especially "big box" stores) by foreign retail providers are conditional on the fulfilment of an economic needs test. The Belgian needs test, for example, includes assessment of "the number of and impact on existing stores, population density, geographic spread, impact on traffic conditions and creation of new employment." However, as the above email suggests (and verifiable by visiting http://gats-info.eu.int/gats-info/nwtosvc.pl?COUNTRY=European__Community&SECCODE=04.C) the UK has basically foregone the right to use an economic needs test by failing to lodge such a limitation in the Market Access column. Given the structure of GATS, this failure to table any limitation means the UK government (including local government) has effectively sacrificed the option of imposing any explicit quantitative limits on developments in the retail sector. (GATS defines such limits as, for example, imposing quotas on the number of stores, imposing limits on the quantity of transactions taking place, stipulating that local workers be used, or local raw materials, or local contractors and so on.)
The government would almost certainly argue against this by saying that retail developments can still be blocked by the planning function, since planning is an issue of domestic regulation and not an explicit quantitative limit on the sector. (The WTO itself has said this, see page 10.) Clearly though, aspects of the planning function do implicitly restrict developments and trade in the sector, e.g. limiting store size, limiting store location, specifying maximum opening hours and so on. This is why giants like Wal-Mart are constantly frustrated by the planning function, which they almost certainly view as being a disguised "barrier to trade".
Nonetheless, domestic regulation IS covered by GATS. More specifically, where a government has made commitments in a sector, regulation in that sector must be "least trade-restrictive" and "no more burdensome than necessary to ensure the quality of the service." True, the WPDR (Working Party on Domestic Regulation) is an ongoing committee and has not yet finalised which domestic regulations are overly "trade-restrictive". However - and this is where the alarm bells should REALLY start ringing - it transpires that it is our very own negotiators (DG Trade, the trade negotiating arm of the European Commission) who are proposing to reign in local authority jurisdiction in areas such as zoning and opening hours, because they consider the exercise of such local authority functions as being "protectionist." What does all this mean? Well, imagine if you were a Wal-Mart megastore. You'd quite like to open 24 hours a day but the local authority refuses to grant this because of the disturbance it will cause the local community. Clearly you'd argue that it would be less trade-restrictive if you could open 24 hours a day, but (say) planted banks of trees around the site to muffle some of the noise. Whether the "tree" solution is adequate to protect the local community would seem highly questionable, but it's less trade restrictive so, in the eyes of GATS, it's a better solution which theoretically might work. Furthermore, you might also argue that the opening hour restriction is ‘unfair’ because many of your re-stocking operations are best undertaken at night. Conversely, such opening hour restrictions do not effect the operation of small local stores, so they are in effect ‘protectionist’ and favour local, smaller shops. Finally, you might also argue that, because (say) most of the retail megastores are US-owned, this ‘protectionism’ is not only giving small firms an ‘unfair’ advantage, but in effect discriminating against US companies in favour of predominantly UK-owned smaller businesses.
I appreciate that this might all sound far-fetched. But I assure you it is all verifiable, and is typical of the sword-like role both multinationals and even our negotiating representatives (DG Trade) have in store for GATS. The fact that our own representatives are being so aggressive with GATS shows why the oft-cited assertion that "governments commit at a rate they choose" is at best only half the picture.
We hope you find the remainder of this document of use. Don't hesitate to get in touch if you need any further questions answering. Having read it, we hope you will be as convinced as we are that GATS is a massive threat to local jurisdiction in service provision and regulation. As such, we hope you will not shy away from taking appropriately decisive action.
Thanks,
WarwickshireGATS
http://www.webalias.com/warwickshiregats
Co-ordinator: Steven Kelk, 72 Brunswick Street, Leamington Spa, CV31 2EQ
skelk@dcs.warwick.ac.uk, 01926 773808