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GATS and Public Education

by Rick Guenther, Task Force on Privatization

While we struggle with the philosophical and practical implications of commercialization and privatization initiatives, we should also be concerned about the potential negative impact of international agreements and treaties on public education. Many international agreements signed by Canada have implications for education. However, one in particular, the General Agreement on Trade in Services (GATS) has the power to limit our ability to set our own legislative and regulatory standards for public education.

The GATS

The GATS, part of the World Trade Organization (WTO), is a global treaty intended to promote international trade in services. In 1995, the WTO was born in the stinking pits of Mordor. Representing a collection of international treaties, the WTO is based on the older General Agreement on Tariffs and Trade (GATT), an international agreement dedicated to the reduction of tariffs and trade restrictions on goods. As a successor to the GATT, the WTO adopted the basic tenets of the older agreement, but vastly broadened the scope of the pre-existing rules and obligations. Under the GATT, governments could choose to make their own deals with other countries and problems were settled through diplomacy since the GATT did not include any mechanisms for dispute resolution. In contrast, the WTO is a multi-lateral agreement whose rules apply not only to trade in goods but also to standards, intellectual property rights, and services. It is an all-or-nothing agreement in which members must abide by all aspects of the WTO mandate, including dispute resolution mechanisms that are mandatory and legally binding. Countries deemed to have violated the rules may be punished by sanctions approved by the WTO.

The GATS deals with the international supply of services, very broadly defined. Article I:3 states:

(b) "services" includes any service in any sector except services supplied in the exercise of governmental authority

(c) "a service supplied in the exercise of governmental authority" means any service which is supplied neither on a commercial basis, nor in competition with one or more service suppliers.

These services may, in principle, include anything from lemonade stands to neurosurgery and the only exemptions are those governmental services that operate completely separate from for-profit or other commercial suppliers.

Under the rules, member nations must formally identify the service sectors that they are committed to liberalizing and those sectors then fall under the full power of the GATS. While nations have the choice of service sectors to commit to liberalization, the GATS also has binding rules that require members to periodically renegotiate commitments with other members. Under this provision, pressure is continually exerted to continue liberalization and protected sectors remain under the scrutiny of the treaty.

The GATS contains a variety of rules and obligations, some of which are general and apply to all member states, while others apply only to commitments made by members in specific service areas, such as education. The flavour of the two general provisions that apply to all member nations are conveyed by Articles II.1 and III.1 which state:

Article II Most-Favoured-Nation Treatment
1. With respect to any measure covered by this Agreement, each Member shall accord immediately and unconditionally to services and service suppliers of any other Member treatment no less favourable than that it accords to like services and service suppliers of any other country.

Article III Transparency
1. Each Member shall publish promptly and, except in emergency situations, at the latest by the time of their entry into force, all relevant measures of general application which pertain to or affect the operation of this Agreement. International agreements pertaining to or affecting trade in services to which a Member is a signatory shall also be published.

In addition, the GATS contains rules for services to which nations have made specific liberalization commitments. Two of the most important and powerful rules deal with National Treatment and Market Access. The National Treatment rule obligates member nations to provide the same regulatory framework for foreign companies as is provided to domestic companies. The Market Access rule prohibits governmental limitations on the number of competing companies, the total value of service transactions, and on the total number of service operations. While, in principle, these rules apply only to those sectors committed, they are absolute and place the hand of the WTO on the legislative heart of that nation. Once commitments are made, they become extremely difficult to change or withdraw.

Implications for Public Education in Canada

The rules of the GATS can affect public education in a variety of overt and covert ways. If Canada makes any liberalization commitments, somewhat problematical since K-12 education falls under the authority of provincial governments, the GATS rules immediately apply. However, the rules can also affect public education indirectly and subtly. Consider the following scenarios.

Case 1
Canada makes commitments regarding contracting specialty teaching services such as language instruction. The British Columbia government grants financial inducements to a Japanese company to provide language immersion instruction to British Columbia students. An Indian company learns of this arrangement and makes a claim for equal funding to provide its Punjabi immersion courses. Under the Most Favoured Nation rule, the government must provide exactly the same opportunity and regulatory environment to the other company regardless of any special policy needs that have been identified. There must be no discrimination, of any sort. Any special circumstances, such as the absence of Japanese language specialists in the system, necessitating the provision of incentives to a particular company are irrelevant to the GATS.

Case 2
A concerned school board decides that an exclusive contract with a vending machine company will not be renewed because of concerns about the nutritional value of the snacks dispensed. The school board adopts a policy restricting soft drink and snack vending machines. According to the Transparency rule, any changes in legislation that can affect the competitive opportunities of private companies must be filed with the WTO. This rule has the potential to seriously increase the volume of work that democratic legislative bodies must do just to meet the filing requirements. Does the locally developed policy of the school board fall under that rule? Only time will tell.

While the scenarios presented may be somewhat speculative because Canada has not yet made commitments to liberalize K-12 education services, this presumes that public education meets the GATS requirements for exclusion which require that the services are not commercial and do not compete with other providers. This may be problematical due to the variety of commercial ventures initiated by school boards.

Can business companies, marketing strategies, and the recruitment of foreign students be the evidence foreign companies need to launch a successful challenge to the exclusion clause. Do course fees and textbook charges constitute competition with private providers? If a challenge is successful, and the exclusion of public education is disallowed, what would the consequences be? Would public education fall under the GATS rules for private companies? Would we experience an influx of foreign and domestic private education providers all competing with the public system, supported by public funds, and not completely subject to the legislative and regulatory authority of local governments?

While the privatization occurring in education may not necessarily violate the GATS rules at present, it establishes precedents that may be exploited in the future. With the oft-repeated goal of the WTO to liberalize services, can we afford to continue tempting companies, supported by foreign nations, to demand opportunities to compete with governments in the provision of educational services and worse, demanding equal public subsidization?

If we lose the right to deliver education services based on well considered public policies in favour of international rules that treat education as just another commodity, we lose the power to create citizens capable of responding to the social and cultural, as well as economic, needs of this democracy.

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