The Big Leak

Carter Dougherty

Published 4/26/2002


The European Union is demanding that foreign companies be allowed to
compete with the U.S. Postal Service as part of World Trade Organization
talks that began last year.
According to a draft copy of its demands obtained by The Washington
Times, Europe also wants access to American markets for municipal water and
waste services. It also will call for foreign companies to be given access
to Small Business Administration loans.
The European demands, which will be formally presented to the U.S.
government by the end of June, mark the opening salvo in WTO negotiations on
trade in services, an area that includes industries from finance to
telecommunications to energy. The talks began in earnest when the
organization agreed at a November meeting in Doha, Qatar, to make a new
attempt to remove barriers to international commerce.
Harry Freeman, a Washington-based analyst of trade negotiations, said
the U.S. market is already open to foreign companies and that as a result
demands by Europe and other trading partners are bound to be politically
contentious here.
"What the European Union is going after is pretty predictable," Mr.
Freeman said. "These are the clear bones of contention."
A European official, who asked not to be identified, said the document
is "not final and official" but conceded that it gives a clear look at the
demands the United States will hear from its trading partners in the new
The Office of the U.S. Trade Representative, which will present a list
of U.S. demands to Europe later this year, had no comment on the document.
Europe is renewing a long-standing demand that the United States allow
foreign-owned ships to ferry lucrative cargo between U.S. ports, something
that is prohibited by the Jones Act. The law requires these ships be built,
owned and operated by Americans. A coalition of shippers, shipbuilders and
maritime-state legislators has always frustrated efforts to change the law.
The suggestion that foreign companies be allowed to deliver U.S.
letters seems certain to face equally tough opposition.
"We oppose this idea, as does the Postal Service and the other unions,"
said Sally Davidow, spokeswoman for the American Postal Workers Union.
World negotiations on services are governed by General Agreement on
Trade in Services, created in the early 1990s. It lays down rules for
regulating services that affect such agencies as the Securities and Exchange
Commission, the Federal Communications Commission and state insurance
Also, countries must hash out among themselves promises to allow
foreign companies to deliver mail or provide transportation services.
A relatively unknown pact when it was created, the services agreement
has become the latest whipping boy for many critics of globalization. The
same labor unions, environmental groups and other activists opposed to the
WTO are making it the center of their campaign against the new negotiations.
Many of the groups, especially in the United States, say new
negotiations will force cities to sell municipal utilities such as water and
electricity and could put them in the hands of far-off corporations.
"Now the cat is out of the bag," said Ruth Caplan, who handles trade
issues for the Alliance for Democracy, a group critical of the WTO. "From
the mail we receive to the water we drink, the European requests show that
our basic public services are under threat."
But business groups scoff at the notion that the WTO negotiations will
destroy government monopolies.
"The foundation of the WTO is not discriminating against foreign
companies," said Bill Reinsch, president of the National Foreign Trade
Council. "If we don't let American companies do it, we don't have to let
European ones in."

Copyright © 2002 News World Communications, Inc. All rights reserved.


MD : 042/02
SOURCE : Commission
FOR : Discussion
DATE RECEIVED : 06-03-02

GATS 2000
Request from the EC and its Member States (hereinafter the EC)
the United States of America
General remarks
This request covers horizontal commitments, MFN exemptions and the following service sectors:

- Professional services
- Business services
- Courier and postal services
- Telecommunication services
- Construction and related engineering services
- Distribution services
- Environmental services
- Financial services
- Tourism and travel related services
- Transport (air, maritime, land, other) services


EC request to the United States of America
This request includes sub-sectors that are listed under the negotiating proposal of the EC (S/CSS/W/61). The work on the revision of classification of this sector is still underway. For this reason, the sub-sectors lack reference to CPC.

The United States has only partially committed this sector (commitments in courier services). The EC requests United States to commit this sector as follows, based on the EC proposal for the revised classification of postal and courier services:

Services relating to the handling of postal items, whether for domestic or foreign destinations:
A. Handling of addressed written communications on any kind of physical medium, including:
- Hybrid mail services
- Direct mail
B. Handling of addressed parcels and packages
C. Handling of addressed press products
D. Handling of items referred to in A. to C. above as registered or insured mail.
E. Express delivery services for items referred to in A. to C. above.
F. Handling of non-addressed items.
G. Document exchange.
H. Other services not elsewhere specified.

EC request for sub-sectors B., C., E., F. and G. :
Modes 1, 2 and 3 : Undertake full commitments for market access and national treatment.
Mode 4 : Commit as referred to in the section « Horizontal commitments ».

EC request for sub-sectors A. and D. :
Modes 1, 2 and 3 : Undertake commitments for market access and national treatment.
Mode 4 : Commit as referred to in the section « Horizontal commitments »


EC request to the United States of America
The EC requests the United States to commit the following sub-sectors, and schedule existing commitments accordingly, based on the EC proposal for the classification of environmental services.

For all sub-sectors, remove limitations on activities covered.

A. Water for human use & wastewater management
Water collection, purification and distribution services through mains, except steam and hot water

Extend sectoral coverage to include the above services, and take full commitments in that sub-sector for mode 2 and 3.

Waste water services (CPC 9401)

What this confusing? Here are a few definitions which will be helpful. For a fuller understanding of GATS, please refer to "In Whose Service?"

MOST FAVORED NATION: A WTO/GATS rule that member countries must treat service providers from all other member countries in the same manner. This rule applies to all services.

NATIONAL TREATMENT: A WTO/GATS rule that member countries must treat foreign corporations from other member countries at least as favorably as domestic companies. Only applies to services for which the country has scheduled a commitment.

MARKET ACCESS: A WTO/GATS rule that member countries may not restrict the number of service providers, the number or value of services, or have regulations regarding the specific type of legal entity or joint venture which may be set up to provide the service. Only applies to services for which the country has scheduled a commitment.

Countries may make a commitment just to National Treatment or Market Access for specific services. When they make any commitment as a result of bilateral negotiations, these commitments will apply to all WTO member countries because of the Most Favored Nation rule.

GATS defines four modes of providing services.

MODE 1 is when the service is provided across borders such as when a telephone company provides a service between two countries.

MODE 2 is when someone travels to receive the service in another country, such as foreign students.

MODE 3 is when the service is provided by "commercial presence in the territory of any other Member." This is the foreign investment mode and why GATS has been called the first multilateral agreement on investment.

MODE 4 is when the service is provided by a service corporation sending its employees to another country to provide the service.