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Resistance to making education a tradable commodity

Presentation by Larry Kuehn
Education Forum of the People’s Summit of the Americas
Mar del Plata, Argentina
November, 2005


Turning public services into tradable commodities is one of the objectives of the neo-liberal ideology and system. In order to make public services into commodities, it is necessary to privatize the services and define them in ways that allow for a price to be set on the services.

Trade agreements serve as one of the mechanisms used to privatize and commodify public services, including public education. Trade agreements, of course, are only one of the many pressures to privatize public education.

Another is the reduction of public expenditure on public services. The World Bank and the International Monetary Fund, with their conditions for loans, have pushed for more privatization, as well as for reduction in state spending.

Still another force in reshaping education in a business model is what could be labeled “policy trading.” This is a process where the education technocrats in the ministries of education of various countries are brought together and convinced that they must use the approaches of the corporations in governing education and other public services. A key element of this approach is the setting of similar performance standards and using quantitative methods of evaluation, with an emphasis in education on standardized testing to produce the numbers for evaluation.

All of these mechanisms assist in undermining public education and expanding. privatization. They all promote individualism and individual success, rather than the setting of social goals of success for all. They all contribute to increasing the gaps between the rich and the poor, and are counter to building democratic societies.

While all of these elements are important and inter-related factors in privatizing and commodifying public services, the focus here is on one element—trade agreements.

Why is education ending up as a factor in trade agreements? What are the underlying economic reasons?

One of the driving forces is the changes taking place in the economies of all countries as services become a greater and greater portion of economic activity. These changes are particularly strong in the most developed economies, those of the United States and Europe, as well as in the smaller developed economies like that of Canada.

These used to be referred to as “industrial economies.” Now the more appropriate label would be to call them “highly developed service economies.” In all of these countries, services now represent 70 percent or more of the gross domestic product and as much as 80 percent of the employment.

Industrial production has moved to a few of the less-developed, but rapidly developing, countries, mostly in Asia and, of course, China in particular.

Because the richest economies are producing services rather than goods, they are looking for ways of making services more tradable and profitable. The United States has a massive deficit in international trade because it is importing so many of the goods that it formerly produced and sold to other countries. As US-based corporations move their production out of the US to other countries that have low wages, the very basis for economic stability is undermined. In addition, the expenditures on hundreds of US military bases around the world, along with expenditures on active wars, create more of a looming crisis for the US economy. Europe has a similar dilemma, but without the same high expenditures on a war machine.

So how can these developed countries reduce their growing trade deficits? Because they have become service economies to such a large degree, the answer has to be in expanding trade in services.

One of the service areas in which the US has a trade surplus is education. The positive balance of trade for the United States, for example, is more than 12 billion dollars annually.

This shift to trade in services has to be seen as key to understanding the negotiations currently taking place in the World Trade Organization in the lead up to the meeting of the WTO in Hong Kong in December.

This round of the WTO was supposed to produce new rules that would assist the less developed countries to increase their development through reducing subsidies and tariffs on agricultural goods. The claim was that this would open new markets for less developed countries.

However, in return, the US and Europe are demanding that the less developed countries open services, allowing for local services to face competition from services being sold by North American and European countries.

The mechanism for opening services is the General Agreement on Trade in Services (GATS). This is a treaty that came into effect in 1995 when the World Trade Organization was created. In its initial form, only limited services were included, with many countries making only minimal commitments to public services that would be open to foreign competition.

There is now, however, a great deal of pressure for countries to open up services, including education. A number of countries have already agreed to open up their education system to being covered under GATS. In many of these cases, it is likely that trade negotiators agreed to these without any consultation with education authorities or any idea of the potential impact on a country’s ability to direct their education system to focus on their educational needs.

Opening education to trade under the WTO rules gives up important powers for people and their governments to shape education in ways that serve their own culture and society. Profit-making, transnational corporations will increasingly gain the ability to shape a country’s education.

The impact will not be seen immediately. However, over a period of years, a country will lose more and more of its autonomy in education. This is because trade agreements—the GATS, or regional agreements like the FTAA and CAFTA—have built in to them two mechanisms that place more and more restrictions on government action.

These two mechanisms operate as a wedge and a ratchet, to borrow tools as a metaphor.

A wedge has a sharp edge on one side, but gets thicker as it goes to the side opposite the sharp edge. It is used in Canada to split wood for burning in fires to keep warm in snowy winters. The wedge starts by making a small cut in the wood, but as it is hit it goes further into the wood, and the thicker part splits the wood, breaking it apart into pieces.

The trade agreement does this to services, such as education. Initially only small areas of education are covered, perhaps only aspects of education already private and commodified. But built in to these trade agreements are commitments to continue to negotiate to expand the liberalization of the rules, opening more and more to the trade rules. We are seeing this in Canada, where the business elites in Canada, the US and Mexico are pressuring the governments to open new negotiations to further integrate the economies of the three countries. So the trade agreement serves as a wedge to force open and privatize more and more of what have been considered social and human rights rather than commodified services.

The ratchet is another tool that has its equivalent in the trade agreements. It is a tool that pulls a rope or a chain always in one direction, never allowing it to go backwards in the other direction.

Trade agreements also include commitments that changes in the trade rules will always go in one direction, towards liberalizing the rules. Once an area is included in a trade agreement, it cannot be withdrawn by a country. If there is a change in government that wants to reclaim an important area like education for its national interests, it cannot do that without paying large penalties. It is for this reason, in particular, that opponents of neo-liberalism must do everything possible before agreements are signed. Change later, when the agreement is already in effect, becomes more costly and difficult.

Countries face very real threats to ever gaining mastery of their social and economic futures, particularly if they lose control of their education system. Education is key to both maintaining cultural integrity and shaping economic and social development.

So is there any good news about the negotiation of trade agreements? Yes. The good news is that it definitely is becoming more difficult to negotiate multilateral trade agreements. This meeting of the Summit of the Americas was supposed to finalize the agreement on the Free Trade in the Americas. However, little progress has been made and certainly the projected deadline has been missed.

There are also warnings from the head of the World Trade Organization that there may not be an agreement achieved for the December meeting in Hong Kong.

Because of the loss of momentum for global and large regional trade agreements, the United States, as well as Canada and Europe, have moved to create bi-lateral and smaller regional trade agreements. We have seen this in the Americas with treaties like the US-Chile Free Trade Agreement and the Canada-Chile Free Trade Agreement.

I have done an analysis of the potential impact on education of the US-Chile Free Trade Agreement and it is available here in Spanish. Most of the elements apply in similar ways in other trade agreements.

More recently, CAFTA, the Central America Free Trade Agreement, was ratified by most of the countries in Central America, and by only two votes in the US Congress. All of these agreements include education.

These smaller trade agreements do not signal a change in the objectives. This is just a different strategy for promoting the interests of corporate capital.

These bi-national or regional agreements are part of a process of creating many agreements that have the provisions that cannot be achieved in the global negotiations. Individual countries are more vulnerable to pressure from the US or Europe when dealing with one country at a time

The objectives of those promoting trade agreements that include services have not changed. They have only changed strategies to smaller-scale negotiations that are harder to monitor and oppose.

In response, our strategies much change as well. We must put more effort into research, analysis, and communication about these negotiations. We must also oppose these agreements before they are ratified, as our colleagues in Central America have done.

We also have a new tool to use, particularly in opposing the inclusion of education in trade agreements. Only weeks ago, UNESCO agreed to a new treaty on protection of culture—a treaty opposed by the United States, which wants all culture to be seen only as a commodity. The UNESCO treaty must be ratified by 30 countries before coming into effect, but when it does it will provide a counter to the WTO, helping countries to resist making all culture a commodity subject to trade rules. No element, after all, is more central to culture than education.

In conclusion, we must resist trade agreements that perpetuate global inequalities. We must resist including public services that are human rights in trade agreements. We must especially resist including education in trade agreements.

Given the global nature of these agreements, we can only carry out this resistance if we work together and share our knowledge and analysis. Our resistance will only be successful through solidarity, supporting one another in the struggles.


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