After the Potters Bar crash, the airwaves buzzed with demands for the maintenance of the railways to be taken from private subcontractors. Old railwaymen remembered the days when there was a unified service with esprit de corps. They knew every inch of track on their patches. Now insecure freelancers were cutting corners to meet the demands of cheese-paring managers. The relatives of the dead reserved a particular loathing for Jarvis, the engineering company with the maintenance contract. Just after the crash, it was rumoured that a crucial set of points had been smashed by hooligans, rather than neglected by overstretched workmen. The novelist Nina Bawden, who sustained horrible injuries and lost her husband, said that the spin was corporate PR at its most shameless. Jarvis’s directors would do anything to avoid responsibility – even blame “sabotage, little green men and agents of a foreign power”.
I could not have put the consequences of rail privatisation better, but I am sure a free-marketeer could make a case against renationalisation. Public bureaucracies have their vices: sloth and conservatism being the most prominent. But a debate would be a waste of breath. Whatever engineers believe or inquiries into the disaster recommend, the private sector cannot be run off the rails. If the electorate hoped, in electing this government, that it was giving it a mandate to return railway maintenance to public ownership, then its wishes count for nothing. Britain has signed an irreversible commitment to allow full, unlimited free-market access to “rail maintenance and repair” under the terms of the World Trade Organisation’s Gats treaty.
I doubt if one voter in 10,000 has heard of the General Agreement on Trade in Services, and the government seems more than happy to sustain public ignorance. Despite a call from 262 MPs for an independent assessment of its consequences, there has never been a full explanation of what Gats means for local and national democracy. The World Development Movement, a London-based pressure group, is filling the gap. As the demands grow for further trade liberalisation in the spring of 2003, it has produced a report, Serving (Up) the Nation, on how Gats may pose a greater risk to public accountability than Nato or the European Union.
The report’s authors, Mark Ellis-Jones and Peter Hardstaff, admit that a “fog of uncertainty” surrounds the treaty but add that the WTO and its allies in right-wing governments are determined to lift that fog in the coming months. A shortlist of what may follow includes: abolition of the licence fee, which gives the BBC an unfair commercial advantage; the removal of controls on hotel-building in national parks; legal challenges to restrictions on the production of ozone-depleting pollutants; and the assertion that national standards on the training of doctors and other professional service providers are illegal. It is even possible that the government will be required to withdraw funding for state hospitals and schools unless it can provide matching funds to foreign corporations anxious to profit from the healthcare and education markets.
To understand how such cautious researchers can reach such apocalyptic conclusions, it is necessary to understand where Gats came from and where it is going. The treaty was drawn up in 1995, at the height of capitalist utopianism. Markets were no longer just for the exchange of goods; they were the best and only means of ordering the affairs of mankind. The interests of corporations were identical with everyone else’s interests.
The seemingly innocuous use of the word “services” in the WTO’s title of the agreement concealed an imperial vision that was in tune with the giddy times. Services were defined with extraordinary broadness as pretty much anything you couldn’t drop on your foot. The uninitiated might think that getting healthcare free at the point of delivery is a right in Britain. To the WTO, it is a commercial service. Everything from the funding of students to the management of landfill sites is a service. According to the United Nations, 60 per cent of the world’s cross-border corporate mergers and acquisitions in 1999 were in the service sector. Services are what the clever corporate money is into.
Along with stretching the concept of service, the agreement goes well beyond what most people think of as the object of free trade: the removal of tariffs. Any regulation or public subsidy could be recast as an instrument of protectionism. Once a government had locked itself in to a part of the agreement – on the liberalisation of, say, legal services – the WTO’s dispute panels in Geneva would decide whether regulation was “legitimate” or “necessary”. Its guide reeked of 1990s Messianism. The WTO took it as read that opening up markets would benefit us all. It would decide whether regulation produced “unnecessary barriers” or was “overly burdensome”. As the European Commission said, Gats was “first and foremost an instrument for the benefit of business”. Democracy has never been in the picture.
Hence the fears about what is left of Britain’s welfare state. Pascal Lamy, the European Union’s trade commissioner, said, as the Gats agreements were signed, that he believed health and education were “ripe for liberalisation”. Dean O’Hare, the outgoing president of Chubb, one of the world’s biggest insurance companies, led the lobbying for Gats in Washington. He told Congress: “We believe we can make much progress in the negotiations to allow the opportunity for US businesses to expand into foreign healthcare markets.” The British government said that the World Development Movement and others who took these gentlemen at their word were “scaremongers”. In 2001, Richard Caborn, then the trade minister, insisted that the EU had secured an exemption from Gats rules for public monopolies that are “not supplied for profit”. Organisations from the NHS to the BBC could relax.
Caborn’s assurances seemed watertight. But as you would expect, new Labour has recklessly signed up to liberalisation in far more areas than have its European partners. The exemption for public services – contained in Article 1.3 of the treaty – may turn out to be worthless because it is far from clear that Britain has public monopolies that can be protected. In health, not only do we have private hospitals competing with public hospitals, we also have Alan Milburn’s scheme for foundation hospitals, which can only raise revenue by shoving NHS patients aside and selling their services to the rich. In education, Eton competes with the bog-standard comprehensive. City academies, specialist schools and education action zones all use private money. The Education Act 2002 allows state schools to set themselves up as companies. Both education and health look like markets to me.
If they are, then, in the WTO’s terms, state funding is a subsidy that undermines the ability of foreign companies to compete. Either the subsidy must be abolished or it must be extended to foreign companies. In the run-up to the new negotiations, the government has admitted that it is no longer clear what the exemption under Article 1.3 covered and “would like to see further clarity”.
The WTO’s secretariat has provided it. “The coexistence of private and public hospitals may raise questions concerning their competitive relationship,” it declared. “The hospital sector in many countries is made up of government and privately owned entities which both operate on a commercial basis. It seems unrealistic in such cases to argue for the continued application of Article 1.3 and/or maintain that no competitive relationship exists between the two groups of suppliers of services.” The WTO says that “subsidies or similar economic benefits” must either be abolished or be given to private competitors. Control of health and education, the two most basic domestic services, may pass from national parliaments.
The WTO has yet to flex its muscles and smash what it deems to be “burdensome” regulations. But its potential strength is enormous. Renato Ruggiero, the former director general of the WTO, said that Gats goes into “areas never before recognised as trade policy”. He added: “Neither governments nor industries have yet appreciated the full scope of these guarantees or the full value of existing commitments.”
That may change as corporations take their cases to Geneva and the scope of Gats is extended. Britain is quite happy to swap public services at home in exchange for its corporations getting markets abroad and, along with the rest of the EU, it is urging the WTO to force the privatisation of water supplies. Mary Robinson, the former UN high commissioner for human rights, has warned that the provision of safe, cheap water in the developing world could be a casualty.
Meanwhile, the UN organisation responsible for world tourism fears that Gats will sweep away controls on hotel development. Any environmental regulation may be deemed unnecessarily burdensome. The WTO’s secretariat says that “the key question in assessing a particular regulation is whether the stated objectives can be met by policies which have smaller economic costs”. The economic impact is the sole basis of its rulings. Thus the WTO has been highly critical of legislation requiring the phasing out of ozone-depleting chemicals. The regulation is working and the ozone hole is shrinking – but why should the WTO care? The rules are a burden on business produced by elected governments and the point of Gats is to remove the former and bypass the latter.
To read the WTO’s pronouncements is to learn that ideologies survive long after the circumstances that generated them have gone. History didn’t end in the 1990s. It repeated itself with a vengeance. Globalisation, de-unionisation, “free” trade and deregulation produced the greatest market bubble in the history of capitalism. Its inevitable crash left the world facing overcapacity and deflation, the essential ingredients for an economic slump.
But like Seventh-Day Adventists, with ready reasons for the habitual failure of the Lord to establish His kingdom on earth on the appointed day, the cultists of the WTO plough on with yesterday’s disastrous policies. The problem wasn’t free markets, they say, but that markets weren’t free enough. Nothing can shake their confidence.
The WTO’s combination of secrecy and euphoric capitalist ideology is matched by that of our own government. There have been no parliamentary debates, select committee inquiries, questions to the Prime Minister or party conference motions in advance of the EU establishing its position for the next round of Gats negotiations. The Department of Trade and Industry won’t even provide a list of the commitments Britain has already made. All we have is the World Development Movement’s frightening account of the limited information in the public domain.
Serving (Up) the Nation will be published on 2 December. You can get it at www.wdm.org.uk or by phoning 020 7737 6215
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