Negotiations are underway that could dramatically transform the Higher Education sector, yet few people in the UK are aware of them. These crucial decisions are being made through the World Trade Organisation's General Agreement on Trade in Services (GATS), which has an agenda of sweeping deregulation and privatisation of services. The implications for Higher Education are enormous.

The GATS agreement, according to the European Commission, is "first and foremost an instrument for the benefit of business". Trade in services is a huge growth area in today's economy. It is therefore understandable that the World Trade Organisation (WTO), heavily influenced by the business lobby, is keen to further open up the global market in services. `Services' covers everything from telecommunications to space travel, and includes sectors such as education and health, which are increasingly seen as highly profitable markets. European business lobbyists argue that opening up the education sector to private competition can only be beneficial: "Schools will respond better to paying customers, just like any other business…" Negotiations are now underway, and look set to be completed by the end of 2002.

The small print of the GATS agreement makes it clear that public education will not be exempt from this ambitious liberalisation agenda. This involves the removal of barriers to `free trade' for foreign competitors, guaranteeing them equal access to the UK educational market. Many would argue that public education should be protected from the rigours of WTO rules. However, only public services supplied by governments "neither on a commercial basis nor in competition with one or more service suppliers" are exempt. As the UK Higher Education sector comprises a mix of public and private institutions, with increasing amounts of funding coming from fees and other private sources, it is clear that HE in this country is not protected by this exemption.

Education is one of the key areas that the European Commission (EC) has explicitly highlighted as being "ripe for liberalisation". The EC conducts WTO negotiations on behalf of the United Kingdom, and appears ready to use education as a bargaining tool in order to gain access to other countries' markets. As the majority of EU services are already liberalised it will need to offer up education in trade-offs in order to get a "big deal".

The removal of "barriers" to trade in education services could severely restrict the current regulatory framework governing Higher Education. The GATS negotiations aim to remove barriers to free trade in order to give foreign competitors equal access to the UK education `market'. Barriers cited by the WTO include measures restricting the mobility of students, restrictions on the translation of foreign degrees and qualifications, nationality requirements and, most significantly for public education, "the existence of government monopolies and high subsidisation of local institutions".

There is a real risk that GATS will result in an end to state financial assistance for UK Higher Education students. The new area of GATS rules and restrictions on state subsidies could identify government payment of student tuition fees as discriminatory. This could force the government to either subsidise students at private institutions equally, or end state financial support to students altogether.

The GATS agreement could mark a dramatic step in the direction of a wholly privatised HE sector. Surely such significant decisions should not be made behind the closed doors of the controversial WTO, but should be placed in the public domain, subject to vigorous public debate? This paper therefore calls for extensive research into the implications of GATS, and awareness-raising within the government and the wider Higher Education sector.


The Threat to Higher Education

Introduction

`There is a major risk that the WTO's initiatives will clash head-on with the principles upheld by all those who value a quality public education system.'
Education International

The Higher Education sector in the UK has been through a period of substantial change and restructuring in recent years. In an increasingly globalised world dominated by the growth of new technologies and means of communication we can expect to experience further rapid change over the next few years. What most of those involved in the HE sector are unaware of, however, is that its very basis is under threat. Whilst the debate rages in the UK over Higher Education funding issues such as tuition fees, student loans and grants, staff pay and the corporate funding of research, most of us have no idea that currently in Geneva international trade negotiators are working on a deal which could remove the responsibility for making such decisions from our government, and subject it to powerful World Trade Organisation (WTO) rules. If the current negotiations reach a conclusion, the implications for the UK Higher Education sector could be enormous. The prospect of the liberalisation of the education services sector in order that it might compete more efficiently and profitably in the global marketplace raises critical concerns about quality, affordability and, more fundamentally, the role of governments to provide a quality public education system for the benefit of society. Yet few people involved in HE are aware that such crucial decisions, which could change the face of the entire sector, are being made at this very moment.

This paper has been written by People & Planet, with the aim of bringing these issues to the attention of the Higher Education sector. People & Planet (formerly Third World First) campaigns in the HE sector on issues of poverty, human rights and environmental protection. For example in 1997 People & Planet founded and co-ordinated the `Ethics for USS' campaign. Last year the campaign achieved a ground-breaking success, by persuading USS (Universities Superannuation Scheme), the £22bn university pension fund, to adopt a socially responsible investment policy.

This paper aims to provide a preliminary overview of how negotiations in the WTO could drastically affect Higher Education. There is much further work that urgently needs to be done in order to fully understand the potential risks and drawbacks of these WTO negotiations, and to take action to preserve a high quality public education system that is accessible and beneficial to all. This paper therefore calls for extensive research into the implications of GATS, and awareness-raising within the government and the wider Higher Education sector.

Jess Worth
October 2000

Section 1: What has the WTO got to do with Higher Education?

WTO - the post-Seattle agenda

`Essentially unknown to the public, the agreement is designed to facilitate international business by constraining democratic governance. The talks are taking place behind closed doors in close consultation with international corporate lobbyists.' - Scott Sinclair

`No sector will be excluded, and the aim must be, in no more than three years, to conclude an ambitious package of additional liberalisation…in politically difficult as well as in other sectors.' - Sir Leon Brittan, former European Commissioner for Trade

The World Trade Organisation (WTO) was suddenly catapulted into the public consciousness in November 1999 when it held its Ministerial meeting in Seattle. Amid huge public demonstrations and crippling internal disagreements, WTO members tried, and failed, to launch an ambitious new round of trade liberalisation negotiations. Its many critics, both internal and external, claimed that it is a profoundly undemocratic and unaccountable institution, and that the liberalisation dogma that lies at its heart is essentially flawed, resulting in huge profits for multinational corporations at the expense of the world's increasingly marginalised poor. They saw the WTO as a threat to democracy the world over, because its trade rules override the laws and regulations made by democratically-elected governments. Its power lies in its ability to enforce its rulings by authorising economic sanctions.

The debacle in Seattle was an unmistakable indication of the extent to which the WTO needs to be reformed. Such was the level of criticism that at the time even its  supporters recognised that major changes needed to be made. In the words of Stephen Byers, UK Secretary of State for Trade and Industry, the WTO "will not be able to continue in its present form. There has to be fundamental and radical change in order to meet the needs and aspirations of its 134 members." Almost a year on, such changes have not materialised, yet the WTO is carrying on regardless.

Most people are unaware that, despite the very public set-back of Seattle, the WTO is at this moment quietly but determinedly progressing towards unprecedented expansion which has the potential to strike at the very heart of democratic governance. Although they failed to launch a new round, Ministers have launched new negotiations to expand the existing WTO General Agreement on Trade in Services (GATS). These negotiations are now underway, and making rapid progress. Although they have received minimal publicity their significance cannot be overestimated, as they have the potential to `radically restructure the role of government worldwide.' Specific areas up for grabs include education, health and environmental services. This briefing will focus on the threat to public education, and specifically the UK Higher Education sector, posed by the GATS 2000 negotiations.

GATS - Liberalising the Services Sector

`[The GATS extends] into areas never before recognised as trade policy. I suspect that neither governments nor industries have yet appreciated the full scope of these guarantees or the full value of existing commitments.' - Renato Ruggiero, former Director-General of the WTO

The GATS is the `first ever set of multilateral, legally-enforceable rules covering international trade in services.' It was first negotiated as part of the Uruguay Round - the last round of international trade negotiations, completed in 1994. These negotiations essentially set up a framework through which further, far more comprehensive measures could be agreed over the coming years. In the words of Mike Moore, the current Director-General of the WTO, `The negotiations of the Services Agreement in the Uruguay Round was a great achievement, but it was really only a starting-point. Its importance lay in creating the architecture of a completely new agreement. The market access commitments which governments undertook in 1995…didn't involve much in terms of actual liberalisation.' The agreement contains a `built-in commitment to continuous liberalisation through periodic negotiations.' In this context, the GATS 2000 renegotiations were launched.

What are services?
`Services underpin all forms of international trade and all aspects of global economic activity.' - Global Services Network
`Services are associated with everything we need and everything we elect governments to do. Broadly defined, a service is a product of human activity aimed to satisfy a human need, which does not constitute a tangible commodity. There are many types of services, ranging from heart surgery to road construction, electricity transmission to education, and childcare to water purification…

`Services affect virtually all aspects of our lives from birth to death. Countless people deliver services that are vital to our daily lives. In turn, many of our jobs are directly tied to the provision of services to others. More broadly, how we choose to organise the delivery of vital services, for example, to make them affordable and universally accessible, is a fundamental aspect of how we govern ourselves.' Scott Sinclair

The category of `services' covers a huge range of activities. Most WTO members refer to 11 broad categories of services, classified by the UN, when making their commitments. These categories are: Business services, including R&D, computer, real estate, rental/leasing, advertising, marketing, etc; Communication services, including telecoms, postal, audio-visual; Construction and related engineering services; Distribution services; Education services; Environmental services, including environmental protection, refuse disposal etc; Financial services, including insurance, banking, asset management and financial information; Health and social services; Tourism and travel services; Recreational, cultural and sporting services; Transport services, including sea, air, rail, and road; and a catch-all `other' category.

Trade in services has been the most rapidly growing area of international trade in recent years, and currently accounts for over one-fifth of world exports. It is particularly important to the economies of OECD countries, where services account for more than 70 per cent of employment and production. GATS is a high priority for the UK, which has `…a vital economic interest in seeing services markets liberalised around the world. We are among the world's top services exporters, second only to the US in 1997. Last year our exports of services were worth £53 billion, equivalent to eight per cent of our GDP.' - Peter Mandelson MP, then Secretary of State for Trade and Industry, 1998

Because of the wide range of activities that fall under the heading `services' - from telecommunications to space travel - the GATS extends into areas never before recognised as trade policy, though its essential aim is the same as other WTO agreements: to open up markets and facilitate global free trade. It has `an extremely wide scope of application,' extending its scope to `all measures by Members affecting trade in services. A relevant measure can take the form of a law, regulation, rule, procedure, decision or administrative action. It can be applied by a central, regional or local government authority or by a non-government body in the exercise of powers delegated by a government authority.' Indeed, the WTO boasts that it is `…the world's first multilateral agreement on investment, since it covers not just cross-border trade but every possible means of supplying a service.'

Summary of significant features of GATS

GATS is an `extraordinarily ambitious and quite complex' agreement which:

Covers practically all government measures
Covers all service sectors, and all modes of supply. No discrimination is allowed between profit and not for profit suppliers and the US wants to extend this to disallow differentiation between services which are supplied electronically and those which are not.
Extends beyond trade, and beyond `non-discrimination'. Far more than a simple `trade' agreement, it is designed to cover all government measures which affect the supply of a service having some international component.
Its most significant constraints currently apply only to sectors specified by member governments
It is effectively irreversible. Once governments have made commitments they are to all intents and purposes "locked in" and cannot go back on their commitments, or make exemptions in that area, at a later date.
Most of the protection provided in the agreement is uncertain and temporary - any protection is a target for eventual removal in repeated re-negotiation sessions
It is designed for ever-increasing expansion


GATS 2000 - aiming for a `big deal'

In the post-Seattle climate of continued controversy and suspicion over its motives, the embattled WTO needs more than ever to get a `big deal' and prove that it is neither inept nor paralysed by internal divisions. It is attempting to prove itself through successfully completing the extremely ambitious challenge of GATS 2000. In this round, every service is on the negotiating table, and the aim is to increase specific commitments by members and insert new `horizontal' provisions that apply across-the-board to all members, services, sectors and modes of supplies. The sweeping deregulation proposed could have huge implications, as services are the most regulated aspect of any society.

The WTO Council on Trade in Services adopted a negotiating agenda in May 2000, with the aim of completing the round of negotiations by December 2002. It called for members to submit their positions by December of 2000, followed by a `stock-taking exercise' in March 2001. These initial stages will largely determine what will be in the final agreement. As Sinclair notes; `while the real trade-offs and arm-twisting may only take place in the latter stages of negotiations, the collective decisions made by negotiators in this early `rule-making' phase of the talks could profoundly affect the scope and coverage of any revised GATS package that emerges.' Despite the major implications GATS 2000 could have for many sectors in the UK, in particular public services, there has been little consultation (apart from with business) and no public debate about the UK government's negotiating position.

Section 2. `Ripe for liberalisation' - GATS and Education

The rest of this paper will concentrate on the implications of GATS for public education, and specifically on Higher Education which is likely to be first in line for liberalisation. Educational services are already covered in the original GATS agreement. However, only a few WTO members made liberalisation commitments in the sector, and those which did generally limited the scope of their commitments to the area of privately funded education services.

There is strong reason to believe that all this might change. The WTO Council for Trade in Services reports that: `Noting the small number of existing commitments in education services, most of the delegations that spoke stressed the need to secure an improved coverage of the sector in the next round of negotiations.' It is becoming increasingly clear that this could result in the deregulation, and re-regulation along pro-competitive lines, of the broader education sector. In other words, a dramatic shift away from public education and towards privatisation. This paper attempts to set out the evidence for this, and argues that all those who value quality public education must strongly resist the GATS 2000.

The liberalisation of education: who supports it?

New Labour Government and the European Commission

`Britain has been a whole-hearted supporter of free trade since the GATT's establishment. We remain an unashamed champion of free trade today.' - Tony Blair

It is extremely difficult to determine in any detail the UK government's position regarding the GATS 2000 negotiations, further than general statements broadly singing the praises of free trade and liberalisation. This is because in the WTO the European Commission negotiates on behalf of all European member states. Individual governments do get input into the EC's negotiating position, but it is the Commission which will ultimately sit at the negotiating table. Again, at this stage it is unclear exactly what the Commission's `shopping list' will consist of. One thing is certain though: the Commission's representative in charge of services has clearly stated that he views the education sector as `ripe for liberalisation' along with health and environmental services. This should come as no surprise. EC statements on GATS reflect extremely closely, indeed are broadly synonymous with, the agenda of business lobby groups whose main aims are to reduce or eliminate constraints placed by governments on their international commercial activity.

`An instrument for the benefit of business'

`Many developed country service negotiators and WTO staff appear to be ardent, even fervent, advocates of promoting commercialisation, privatisation and deregulation of services through an expanded GATS. These officials, together with some influential government and business representatives, may also perceive an opportunity to salvage the WTO's shaken post-Seattle credibility by delivering an expanded, stand-alone agreement on services.' - Sinclair

`Considering Seattle, we have every reason to be pleased.' - Robert Vastine, President, Coalition of Services Industries
Although there has been little public debate or civil society consultation about whether it is appropriate to subject our education system to the rigours of the free market in this way, the EC has been careful to thoroughly consult business lobby groups such as the European Services Forum and the Global Services Network. Indeed, according to the EC website on services: `An active services industry involvement in the negotiations is crucial to target the EU's negotiating objectives towards the priorities of business. The GATS is not just something that exists between Governments. It is first and foremost an instrument for the benefit of business.' (our emphasis)

And business is very keen to see education included in GATS 2000. This is hardly a surprise, given that education is, increasingly, a highly profitable market. Education spending worldwide now tops $2 trillion a year. The vast majority of this is public money. Public expenditure on education as a percentage of GDP is around 6% in OECD countries, 80% of which is devoted to direct public expenditure on educational institutions, and makes up 4% of developing countries' GDP. Rapidly growing, however, is the private `education industry' -  for-profit companies providing services outside the public system, everything from creating software to designing curricula to managing schools to developing `virtual universities'. This currently generates around $100 billion in the US alone. Other leading exporters of education and training services are UK and France.

Education is already big business, but the potential to increase profits, if global corporations were able to open up the vast and hitherto untapped public education market, is enormous. The Global Services Network, then, is very clear that the negotiations `should be used to achieve a contestable, competitive market in every services sector in every WTO member country.' The US corporate lobby is more specific. Its first priority for the coming negotiations is `to achieve maximum liberalization in all modes of supply across the widest possible range of services, as soon as possible.' Its second is to `fully embrace important new sectors in the liberalization effort…[including] existing ones that have not received sufficient attention, like education.' European business lobbyists argue that opening up the education sector to private competition can only be beneficial. They are highly critical of the "culture of laziness which continues in the European education system," where students "take liberties to pursue subjects not directly related to industry. Instead they are pursuing subjects which have no practical application." Far preferable would be the privatisation of all schools, subjecting them to market forces and thereby encouraging competition: "Schools will respond better to paying customers, just like any other business…"



Section 3: What will coverage by GATS mean for public education?

Shouldn't the public education sector be exempt from GATS?

Many people believe that education is essentially different in nature and function from other services traded commercially on an international scale, and therefore should not be subject to the rigours of WTO rules. The EC and our government, when pressed, assure us that our public education system is perfectly safe. The European Commissioner for Trade argues in a letter to Caroline Lucas MEP that the coverage of education in GATS is restricted and limited `in line with the importance attributed to social goals which remain an essential feature of the European identity' and therefore public education is, and will continue to be, protected. Unfortunately when you look at the small print behind the rhetoric, it becomes clear that the opposite is the case: public education as we know it is profoundly at risk from the GATS renegotiations. The following section looks at the key arguments evinced by politicians to assure us that we are worrying ourselves needlessly, and explains why they do not stand up to scrutiny.

Argument 1. `Public education is exempt from GATS as it is a government-provided service'

`GATS applies to any service in any sector, except services supplied in the exercise of governmental authority - i.e. services supplied neither on a commercial basis nor in competition with one or more service suppliers.'

Any assumption that this clause exempts the entire UK public education sector from GATS is a dangerous one to make. Almost all public services, despite being `supplied in the exercise of governmental authority', could be considered to be delivered in competition with other suppliers. State-run schools and universities compete with private enterprises at every level, making the whole education system vulnerable to GATS disciplines. Indeed, there are very few public services that would qualify for this exemption: the NHS `competes' with private hospitals, the London Underground `competes' with taxi drivers and so on.

The UK HE sector is even more unlikely to qualify as `non-commercial'. `Commercial basis' is not defined in GATS but, for example, the charging of tuition fees may well be classed in the WTO's eyes as commercial, especially if different institutions charge different levels of fees. More fundamentally, as the WTO itself points out in its briefing on education services:

`In the United Kingdom in the 1980s, a movement away from public financing and toward greater market responsiveness, coupled with an increasing openness to alternative financing mechanisms, has led universities in new directions, balancing academic quality with business management…The results of these policies have been to increase competition and encourage investor and corporate participation in the education sector.'

The 21st century UK Higher Education sector, with its mix of public and private funding, is clearly neither non-commercial nor non-competitive: indeed, very few government services are. This means that most aspects of HE will be unprotected by this exemption, leaving the current system vulnerable to restructuring, deregulation and legal challenge under GATS.

Argument 2: `Countries can choose not to include a specific sector, or to severely limit the commitments made in that sector'

This provides only half of the picture. GATS 2000 is far more ambitious than the original GATS agreement. Expanding market access commitments (i.e. offering up new service sectors, or offering deeper liberalisation in sectors already covered) is only one area of work. The agreement will include major new areas of provisions which will apply automatically to all services, including education. Consequentially, even if the EU does not make any further explicit market access commitments under education, preferring to keep the sector `protected', education will still be subject to restrictions under other new `horizontal' aspects of the negotiations. These areas of work alone - such as on subsidies and government regulation -  have the potential to radically affect the UK Higher Education system. They will be explored in more detail in the next section

Argument 3: `The government is committed to our public education system and will not do anything to put it at risk'

`If we want to improve our own access to foreign markets then we can't keep our protected sectors out of the sunlight. We have to be open to negotiating them all if we are going to have the material for a big deal. In the US and the EU, that means some pain in some sectors but gain in many others, and I think we both know that we are going to have to bite the bullet to get what we want.' - Pascal Lamy, European Commissioner for Trade

This speech indicates that the EU is quite willing to use education as a bargaining chip to `get what we want'. Even if EU governments would ideally prefer to continue to protect their education sectors, the nature of the GATS negotiations means that education is likely to be offered up in trade-offs in order to get `a big deal'. The EU will, after all, have to offer to liberalise something, and their options are severely limited given that the majority of European service sectors have already been liberalised. That is why the Commission has explicitly identified education as `ripe for liberalisation.'

Section 4: The implications for the UK Higher Education sector

There are three main areas of expansion on the GATS 2000 agenda: expanding market access commitments, placing new constraints on domestic regulation, and developing new rules and restrictions. Each area could have significant implications for education and specifically for the UK Higher Education sector. This section looks at each one in turn.

Expanding free trade commitments - government-run education as a `barrier' to trade

According to the WTO, education is traded internationally in the following ways:
Commercial presence: e.g. the setting up of facilities abroad by education providers
Cross-border supply: e.g. distance learning
Consumption abroad: e.g. student mobility across borders
Presence of natural persons e.g. teachers working abroad

Each area, once defined, can then be subject to `national treatment' commitments - the removal of barriers to free trade for foreign competitors, guaranteeing them equal access to the UK educational market. This does not just include barriers that formally discriminate against foreign competitors. It includes any measure, whether or not it is intended to discriminate, that is capable of altering the conditions of competition in favour of domestic service providers or certain, but not all, foreign service providers.

The WTO, in consultation with representatives of the education industry, has already identified the barriers in education that will be first in line for attention in the GATS 2000 negotiations. These include: measures restricting the mobility of students, the difficulties faced by students in translating degrees obtained abroad into national equivalents, the inability to obtain national licences, measures limiting direct investment by foreign education providers, nationality requirements, needs tests, restrictions on recruiting foreign teachers. The four areas of trade in education can also be subject to `market access' commitments - the requirement that certain kinds of limitations can be placed on any education supplier, whether they are foreign or not. For example, under market access commitments governments could not limit the number of educational institutions that are set up in an area.

Most significantly for the UK Higher Education sector, and indeed for public education as a whole, is the identification of `the existence of government monopolies and high subsidisation of local institutions' as a barrier to free trade.

Placing new constraints on domestic regulation - `safeguarding the public interest' rejected as a legitimate objective

`The main barriers to trade in services are found in national regulations…[EC] negotiating positions must reflect UK business priorities.' Peter Mandelson MP, then UK Secretary of State for Trade and Industry

`The core of the upcoming GATS 2000 negotiations will be pressurising governments to fully cover more of their domestic services, thereby constraining their regulatory authority.' Sinclair

Making sure that government regulations are `pro-competitive' is `at the core of the GATS 2000 negotiations' according to the EC. These constraints are `horizontal', and so would automatically apply to all service sectors, regardless of a country's specific commitments. The core aim of this provision is to ensure that government regulatory measures `do not constitute unnecessary barriers to trade.' This would be achieved by requiring governments to demonstrate that their regulations were `necessary' to achieve a WTO-sanctioned legitimate objective, and that no less commercially-restrictive alternative measure was possible. In reality, it looks likely that this provision will result in across-the-board deregulation affecting all services at every level of government.

Negotiators are currently working on a list of what will be considered acceptable as a `legitimate' objective for government regulations. They have already rejected `safeguarding the public interest', though they are happier with `promoting competition' and/or `economic efficiency'.

Yet even if a government regulation qualified as a legitimate objective, it would still have to also be the `least trade restrictive measure'. This is almost impossible to prove. As a result, this provision has been singled out as `…one of the agreement's most dangerous threats to democratic decision-making' because it would `hugely expand the authority of the WTO to interfere in the exercise of governmental authority. It would mean transferring the delicate responsibility for balancing the public interest with commercial considerations from elected government representatives to appointed tribunals or WTO panels.' Government regulation of the HE sector, and specifically the nature and extent of private involvement, is likely to be severely curtailed.

Developing new GATS rules and restrictions - an end to financial assistance for students?

`Unlike trade in goods, there are as yet no multilateral disciplines governing subsidies granted to services industries, but negotiators are charged with developing such disciplines.' - UK government

`Currently the pressure exerted by international corporate lobby groups is all in the direction of further restrictions promoting commercialisation and privatisation'- Sinclair

The biggest implications for the UK Higher Education sector may lie in the new area of rules and restrictions on government subsidies. National treatment commitments already require governments to give out the same subsidies to foreign service providers as they do to domestic providers, in the name of `non-discrimination'. But negotiations are also underway to develop disciplines on subsidies that would be applied `horizontally' to all sectors, regardless of whether governments have made national treatment commitments. This means regulating or removing `unfair' government subsidies, which, in the WTO's eyes, distort competition. Some forms of government funding provided to service sectors are likely to be defined as subsidies and so be subject to GATS restrictions.

In practice, grants and other forms of financial assistance such as the payment of a proportion of a student's tuition fees could well be identified as unfair `subsidies'. UK HE tuition fees are among the lowest charged anywhere in the world, and so are particularly vulnerable targets. If these rules are agreed, the government would either have to subsidise private, foreign-owned HE institutions, or to cease subsidising HE in this way at all. As the former would be prohibitively expensive, there is a real risk that GATS 2000 will result in the end of state financial support for UK HE students.


Towards the privatisation and commercialisation of Higher Education

`The growth in internationally traded education services is likely to have a profound impact on the higher education system of some countries and the economics of education. In some instances, higher education institutions are being forced to look for alternative sources of funds while investors are being encouraged to enter a new industry. This situation has been perceived as involving the risk that in the rush to become market-oriented, universities might be distracted from their educational missions.' WTO background note on Education Services

`Where for-profit enterprises have been introduced in education there is little evidence so far that students are performing better, that high school graduates are getting better jobs or that corporations are teaching skills that benefit the individual as well as the company.' International Herald Tribune, November 1999

The GATS negotiations, then, look set to liberalise trade in education `services'. This will result in increased corporate involvement in the HE sector, coupled with a decrease in the ability of the government to regulate this involvement. It could ultimately mean that Higher Education institutions would have to become wholly private: raising their own capital, recruiting students who could afford to pay high tuition fees, conducting research funded by corporate clients and so on. The real question is whether the impact of this will be positive or negative.

Throughout the sector concerns are currently being expressed about the rapid commercialisation of HE, brought on by the restructuring of funding in recent years. Universities are being encouraged to cut costs and raise revenues, which has both increased the participation of publicly-funded schools in commercial and foreign markets, and increased the participation of private corporations in the UK public education system. This trend of increased corporate involvement in HE has its roots in the globalisation of the economy. Globalisation is acting as a powerful catalyst in the process of transformation whereby a sector traditionally regarded as a public service is turning into an increasingly attractive market for major national and foreign corporations. These developments raise critical and unavoidable questions about equity, accessibility, academic freedom, and the maintenance of commercially `irrelevant' courses. Many fear that `the subordination of education to market forces may well undermine its accessibility and aggravate social inequalities.'

However, this debate does not begin and end with education. The GATS is fundamentally hostile to all public services, `treating them as, at best, missed commercial opportunities and, at worst, unfair competition or barriers to entry for foreign services and suppliers.' As Sinclair points out, how citizens choose to organise the delivery of vital services is a fundamental aspect of how we govern ourselves, and from this perspective the GATS poses a much broader threat: to democracy.  Democracy is threatened both through the curtailment of governmental power inherent in the negotiations, and through the undemocratic manner in which such important decisions are being made within the WTO:


`On the one hand, the secrecy which surrounds the negotiations of these major trade agreements very often results in the main players concerned, including entire populations, being faced with a "fait accompli", in which they have had no say.  On the other hand, the colossal power that these agreements usually confer on a few economic operators dramatically restricts the scope for political and socially-oriented action in determining major choices which concern society as a whole.'

It would be reckless for governments to expand the GATS before the full implications of the existing agreement have even been assessed. Certainly, such significant decisions should not be made behind the closed doors of the WTO, but should be placed in the public domain. Sinclair argues that: `the GATS policy implications should now, finally - and, in most countries, for the first time - be reviewed, assessed, fully debated and, where necessary, the agreement should be reformed or rolled back. To expand such an agreement would be irresponsible - that, however, is precisely what WTO member governments...have already begun to do.'

Those who are committed to the provision of high quality public services for all and the democratic right of citizens to participate in decision-making on such vital issues must therefore question the validity of the GATS in its entirety.


Section 5: Acting on these concerns

`Most citizens and even elected officials still do not comprehend the full extent or implications of the existing GATS. Yet, despite this accountability gap and the serious misgivings expressed at Seattle, negotiators are already out of the starting blocks and running ahead to realise their ambition of an expanded GATS.' Scott Sinclair

The expansion of GATS has enormous implications for public education, and Higher Education specifically. Certain key principles are in danger of being eroded if the negotiations in their current form go ahead:

Quality and accessibility of Higher Education must be prioritised before profitability.
National governments must be allowed to regulate the supply of HE services.
Public education must not be subject to free trade rules as if it were a purely commercial service.
Action taken by governments for the provision of public Higher Education must not be considered a disguised restriction on trade in services.
Government grants and the payment of tuition fees on behalf of students must not be attacked as unfair subsidies.
There should be full openness and transparency of WTO negotiations on trade in services, publication of government mandates, and consultation with national unions and other bodies.

Recommendations for action:

Such important decisions should not be made behind closed doors, or be left in the hands of such a controversial, unaccountable body as the WTO. It is vital that full information about the GATS agreement and its implications are placed in the public domain and subjected to open public debate.

Specifically, it is essential that those in the HE sector are made aware of the implications of the GATS negotiations for the sector, and that the government is challenged on these issues. This paper only aims to raise some concerns. There is urgent need for in-depth research into the potential effects of the proposed deregulation of public education and other public services. To this end, People & Planet is calling on all those who are concerned about these issues to:

Encourage organisations such as the National Union of Students, the Association of University Teachers and Universities UK to undertake the in-depth research required to fully understand the implications of GATS
Write to the Department of Trade and Industry and the Department for Education, raising their concerns
Raise awareness about the implications of GATS 2000 amongst all those involved in Higher Education


For more information contact:
Jess Worth
Campaigns officer
People & Planet
51 Union Street
Oxford OX4 1JP
United Kingdom

Tel: 01865 245678
Email:   jess@peopleandplanet.org
Web:   www.peopleandplanet.org/tradejustice