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(2004/C 33 E/083)

WRITTEN QUESTION E-0821/03

by Patricia McKenna (Verts/ALE) to the Commission

(17 March 2003)

Subject:   GATS and water privatisation

In the WTO, the Commission has been in the forefront of the liberalisation of water services in developing countries. Does the Commission agree that privatisation of water services in the developing world serves the interests of large multinational corporations rather than the interests of the world's poorest people?

Before requesting the liberalisation of water services in third countries, has the Commission undertaken an independent study of the effects of such liberalisations?

If not, will the Commission agree to carry out such an assessment in close cooperation with the relevant NGOs before requesting further liberalisations from third countries?

Answer given by Mr Lamy on behalf of the Commission

(25 April 2003)

Environmental services are covered by the ongoing general agreement on trade in services (GATS) negotiations, and the Community has made a negotiating proposal, and presented requests on environmental services, including on water distribution and waste water services, to most of its trading partners. The main objective of the Community for the negotiations is to reduce, or eliminate, barriers to trade in environmental services.

The Community requests on water distribution do not ask for privatisation, they clearly exclude any cross-border transportation either by pipeline or by any other means of transport, and they do not seek access to water resources. Moreover, even if a World Trade Organisation (WTO) Member chooses to take commitments, these do not undermine or reduce in any way the host governments' ability to regulate water management and allocation among users, to choose the more appropriate form of private participation and to impose equitable pricing policies and ensure affordability for the poor. The Community has and will continue to support developing countries in this respect, including through the provision of technical assistance.

The Community's approach to water related services, including in WTO, is guided by its overall policy on water, which is based on a thorough assessment of the issues, and challenges, involved. This includes, evidently, also the question of private sector participation in the provision of water and sanitation services. There is recognition that the private sector needs to be involved in efforts, together with government and civil society, to bringing water and sanitation services to the unserved and to strengthen investment and management capabilities. In view of the high capital demand for water infrastructure investment (by some estimates up to USD 180 billion annually compared to present investment levels of USD 70-80 billion annually), it is necessary to augment public funding by mobilising private funding for water utilities, wastewater treatment, irrigation and other water-related programmes and to make the sector a more attractive target for private investment. To achieve the latter goal private investors — local or foreign — must be given confidence that their legal and financial rights are protected. The Commission believes that the GATS negotiations, if adequately driven, could make a useful contribution to this goal. Liberalisation of trade in water services should be used as an instrument to facilitate infrastructure investments, strengthen water management capabilities and foster technological development, taking into account developing countries' administrative capacities and regulatory framework.

In addition, the Commission has launched a ‘Sustainability Impact Assessment’ (SIA) of the WTO negotiations. In this context, one specific sector study is devoted to environmental services, with a particular emphasis on water wastewater services. Consultation with stakeholders is an integral part of the SIA process, and mechanisms have been established to ensure that stakeholders can contribute fully to the SIA study both as experts, and as part of the consultative process. The contractors and the Commission are committed to actively seeking the expert views of stakeholders, and to ensuring a comprehensive and inclusive process of consultation with civil society.

In addition, the Commission is regularly consulting civil society, including non-governmental organisations (NGOs) with relevant experience and particular interest in trade policy, on its policy. This dialogue is an important element in the process of formulating trade policy.

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