CRITIQUE OF U.S. SUMMARY POSITION ON SERVICES IN THE FTAA by Ruth Caplan, Alliance for Democracy
In promoting U.S. corporate interests in marketing services throughout the Western
Hemisphere, the U.S. Summary Position on Services has selected provisions from NAFTA and
the WTOs General Agreement on Trade in Services (GATS) which are most favorable to
PRIVATIZATION OF SOCIAL SERVICES
While the U.S. position pays lip service to not having the FTAA negotiations promote
privatization of social services - including education and health care services - it does
not propose to carve out these services. Instead it relies on the deeply flawed exemption
for government services in GATS. Further, since privatization of social services has been
mandated for indebted countries through the IMF and World Banks structural
adjustment programs, the U.S. looses little in Latin America by saying: "the United
States is not seeking nor would we agree to use the FTAA negotiations to promote
privatization of such public services."
U.S.-based insurance companies such as Aetna International, Cigna International and the
American International Group have already profitably entered the Latin American market
with managed care by appealing to the healthy segments of the population. The poor are
left to rely on a defunded public sector. The prestigious New England Journal of
Medicine lays out the corporate agenda quite clearly in "The Export of Managed
Care to Latin America." The authors say:
As for-profit managed-care plans expand in the United States, the rate of profit begins
to fall and the market becomes increasingly saturated....Under these circumstances,
corporations seek new markets abroad.....The executives of corporations that have entered
the managed-care market in Latin America have reported substantial revenues relative to
expenditures. They have predicted strong profit margins in the next several years and have
expected high rates of return for investors....
Karen Stocker et al, April 8, 1999, page 1131
Similarly, the explosion of "distance learning" via the internet will open up
markets throughout the Western Hemisphere to corporate profits. Under "market
access," the U.S. specifically calls for an obligation to "guarantee access to
and use to [sic] publicly-provided telecommunications networks."
If the U.S. is serious about protecting public health and education from corporate
intrusions, it should propose excluding them entirely from the FTAA through carve outs, as
it proposes for transportation services. The same protection should also be given to
drinking water supplies.
SIGNIFICANT EXPANSION OF COVERAGE
Top Down: The U.S. proposes "that the scope and coverage of the services
chapter of the FTAA Agreement should be comprehensive and should cover, in principle, all
service sectors and service suppliers." To implement this, the U.S. supports a
"top-down ('negative list) approach." This means all services will be
covered unless "a particular FTAA country negotiates a reservation for a particular
sector or measure." With this, the U.S. hopes to get what they failed to achieve in
the original GATS and are unlikely to get in the current GATS negotiations which allow
countries to schedule their commitments on specific services.
Local Jurisdictions: The U.S. position conforms with GATS which covers all levels
of government, rather than NAFTA which excludes local jurisdictions from major provisions.
With these two provisions, corporations are in a much better position to pry open local
Energy: The U.S. includes energy services which are excluded from the NAFTA
services chapter. In the GATS context, the USTR states: "To realize fully the
benefits of an efficient, competitive energy sector, we need to consider the entire chain
of activities involved in resource identification, preparation/production and conversion,
transmission and transportation and distribution, sales and marketing (both wholesale and
retail), and information management." This expansive definition of energy services
could have serious environmental implications.
Non-governmental Bodies: The U.S. wants to cover non-governmental bodies exercising
delegated governmental powers, e.g., churches providing social services with government
THE CORPORATE STICK OF INVESTOR-TO-STATE DISPUTE SETTLEMENT
The U.S. wants the provision of a service through
"commercial presence" placed in the Investment Chapter. This is no minor
technicality. Under investment, the U.S. supports giving investors the right to sue
governments directly using the dispute settlement provision. This
"investor-to-state" provision is found in NAFTA but not in GATS. Combined with
proposed local coverage, this provision would leave all local, state and federal laws and
regulations pertaining to public and private services vulnerable to corporate challenges
by the service providers as well as their investors.
NO LIMIT ON NUMBER OF SERVICE PROVIDERS
The U.S. wants to prohibit mandatory requirements to "restrict sales of goods or
services within the host Partys territory." This means no limit on the
number of private education or health care or prison or water supply companies that can
operate in a given state or community. This supports privatization of these services since
the exemption for services supplied "in the exercise of governmental authority"
is defined as "any service which is supplied neither on a commercial basis, nor in
competition with one or more service suppliers." Once there is a private school or
private hospital in a community, the floodgates are open.
TRANSPARENCY--COMMENTS ON PROPOSED REGULATIONS
The U.S. wants to require "advance notification of proposed regulations and
solicitation of comments from interested parties." This would give corporations,
which can afford the resources to track all such local, state and federal regulations, an
easy way to put pressure on local jurisdictions to pass laws and adopt regulations which
favor opening up markets.
RESTRICTING DOMESTIC REGULATION
Limitations on domestic regulation through "no more burdensome then
necessary" language could further curtail the ability of national and local
jurisdictions to protect their residents. So far, the U.S. only says " the issue of
domestic regulation is important and [they] will be giving further consideration to what
provisions on domestic regulation might be appropriate."