# CE2004078EN.01071101.xml

| 27.3.2004 | EN | Official Journal of the European Union | CE 78/711 |
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27.3.2004

EN

Official Journal of the European Union

CE 78/711

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(2004/C 78 E/0760)

WRITTEN QUESTION E-1318/03

by Erik Meijer (GUE/NGL) to the Commission

(7 April 2003)

Subject:   Concern about maintaining non-commercial services outside Europe following the EU's requests in the WTO GATS 2 negotiations

Subject:

| 1. | Is the Commission aware of the outrage expressed by the American national consumer organisation Public Citizen at the position taken by the Commission in preparation for the WTO negotiations in Geneva on services (General Agreement of Trade in Services 2000); Public Citizen claims that the Commission will be asking for European firms to have access to postal services, drinking water supply, energy supply, environmental management, public transport, higher education, the distribution of alcohol and the sale of insurance in the United States and the rest of the world and calling for the abolition of rules protecting consumers, the environment and democratic decision-making by elected representatives? |
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1.

Is the Commission aware of the outrage expressed by the American national consumer organisation Public Citizen at the position taken by the Commission in preparation for the WTO negotiations in Geneva on services (General Agreement of Trade in Services 2000); Public Citizen claims that the Commission will be asking for European firms to have access to postal services, drinking water supply, energy supply, environmental management, public transport, higher education, the distribution of alcohol and the sale of insurance in the United States and the rest of the world and calling for the abolition of rules protecting consumers, the environment and democratic decision-making by elected representatives?

| 2. | Should the reassuring statement made by Commissioner Lamy on 10 March 2003, at the start of the EP debate on the EU's approach to the GATS 2 negotiations, to the effect that all the commitments entered into by the EU are merely temporary, that the audiovisual media should be protected on grounds of cultural diversity, that government monopolies should remain possible, that there would be no pressure for privatisation or liberalisation and that the European socio-economic model should be maintained, lead us to conclude that the EU is much tougher on the outside world than on its own inhabitants? |
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2.

Should the reassuring statement made by Commissioner Lamy on 10 March 2003, at the start of the EP debate on the EU's approach to the GATS 2 negotiations, to the effect that all the commitments entered into by the EU are merely temporary, that the audiovisual media should be protected on grounds of cultural diversity, that government monopolies should remain possible, that there would be no pressure for privatisation or liberalisation and that the European socio-economic model should be maintained, lead us to conclude that the EU is much tougher on the outside world than on its own inhabitants?

| 3. | Following the Unctad contribution to the developing countries' GATS lists of requests, will the developing countries be prepared in good time to adopt an equivalent position on the horizontal issues of emergency safeguard measures and credits for autonomous liberalisation that are of crucial importance to them, or does the Commission recognise that they need more time? |
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3.

Following the Unctad contribution to the developing countries' GATS lists of requests, will the developing countries be prepared in good time to adopt an equivalent position on the horizontal issues of emergency safeguard measures and credits for autonomous liberalisation that are of crucial importance to them, or does the Commission recognise that they need more time?

| 4. | How does the Commission intend to allay fears outside the EU about demands that would disrupt local and regional service provision, not least to avoid a situation in which world public opinion sees the EU as playing the negative role traditionally expected of the United States? |
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4.

How does the Commission intend to allay fears outside the EU about demands that would disrupt local and regional service provision, not least to avoid a situation in which world public opinion sees the EU as playing the negative role traditionally expected of the United States?

Answer given by Mr Lamy on behalf of the Commission

(26 May 2003)

(26 May 2003)

| 1. | The Commission is aware that Public Citizen has made a number of sensational and misleading claims about the Community's request to the United States. The critique is based on two misperceptions about the General Agreement on Trade in Services (GATS), namely that it promotes privatisation and that the agreement is a threat to governments' ability to regulate in the public interest.
  Neither the GATS nor the Union's requests are aimed at forcing the privatisation of public undertakings, whether or not they are entrusted with the provision of services of general interest. The Union is seeking commitments that will allow EU service providers access to third country markets in a number of sectors where the government has either already decided to open a particular sector to private domestic suppliers or where experience has shown that competition can be a tool in improving performance without endangering equitable access to public services.
  For example, current United States commitments in waste water services only cover ‘services contracted by private industry’. The Union has asked for an extension of this commitment to allow Union service providers to bid when municipalities contract these services out to private companies. This does not mean privatisation of municipal services, as it has been suggested, but if a municipality already uses or intends to use private contractors, there seems to be little reason to exclude Union service suppliers.
  Furthermore, the Union is not calling for nor does its requests imply the abolition of rules protecting consumers, the environment or democratic decision-making by elected representatives. Many services are strictly regulated for good reason and the GATS explicitly recognises World Trade Organisation (WTO) members' sovereign right to regulate economic and non-economic activities within their territory in pursuance of public policy objectives. To capture its full gains, market opening must be accompanied by an appropriate institutional and regulatory framework to encourage competition and to help ensure equitable access to essential services. The Union has no intention of seeking the deregulation of services. |
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1.

The Commission is aware that Public Citizen has made a number of sensational and misleading claims about the Community's request to the United States. The critique is based on two misperceptions about the General Agreement on Trade in Services (GATS), namely that it promotes privatisation and that the agreement is a threat to governments' ability to regulate in the public interest.

Neither the GATS nor the Union's requests are aimed at forcing the privatisation of public undertakings, whether or not they are entrusted with the provision of services of general interest. The Union is seeking commitments that will allow EU service providers access to third country markets in a number of sectors where the government has either already decided to open a particular sector to private domestic suppliers or where experience has shown that competition can be a tool in improving performance without endangering equitable access to public services.

For example, current United States commitments in waste water services only cover ‘services contracted by private industry’. The Union has asked for an extension of this commitment to allow Union service providers to bid when municipalities contract these services out to private companies. This does not mean privatisation of municipal services, as it has been suggested, but if a municipality already uses or intends to use private contractors, there seems to be little reason to exclude Union service suppliers.

Furthermore, the Union is not calling for nor does its requests imply the abolition of rules protecting consumers, the environment or democratic decision-making by elected representatives. Many services are strictly regulated for good reason and the GATS explicitly recognises World Trade Organisation (WTO) members' sovereign right to regulate economic and non-economic activities within their territory in pursuance of public policy objectives. To capture its full gains, market opening must be accompanied by an appropriate institutional and regulatory framework to encourage competition and to help ensure equitable access to essential services. The Union has no intention of seeking the deregulation of services.

| 2. | The Union has already opened sectors involved with provision of services of general interest to foreign suppliers where these were already open to domestic competition, e.g. telecommunication and postal services. Second, the Union requests concern sectors where policy objectives such as access for the poor can be ensured through means other than restricting competition, including universal service obligations or subsidies. For many people in developing countries, access to affordable and efficient services of general interest still remains a distant hope. Removing barriers that restrict the access of foreign firms or discriminate against them may help improve access to and the performance of certain services of general interest. |
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2.

The Union has already opened sectors involved with provision of services of general interest to foreign suppliers where these were already open to domestic competition, e.g. telecommunication and postal services. Second, the Union requests concern sectors where policy objectives such as access for the poor can be ensured through means other than restricting competition, including universal service obligations or subsidies. For many people in developing countries, access to affordable and efficient services of general interest still remains a distant hope. Removing barriers that restrict the access of foreign firms or discriminate against them may help improve access to and the performance of certain services of general interest.

| 3. | WTO members adopted ‘Modalities for the treatment of autonomous liberalisation’ at the beginning of March 2003. By establishing agreed criteria for granting credit for autonomous liberalisation, negotiators, from both developed and developing countries, can now engage more confidently in their bilateral negotiations for specific commitments on market access.
  The deadline for concluding negotiations on an emergency safeguard measure under the GATS has been postponed several times, following lack of agreement between the members seeking such a mechanism and those who question its desirability and feasibility. The latter group includes both developed countries and some developing countries. The Union has been active in the discussions, which have not yet shown a business case that could have been solved by an emergency safeguard mechanism.
  A safeguard is temporary in nature and so would not respond to the argument that developing countries need a mechanism for rolling back commitments that turn out to have unintended consequences. In addition, such a mechanism for withdrawal of commitments already exists in Article XXI of GATS. Given the flexibility provided for by GATS, new commitments can, whenever necessary, be underpinned by specific reservations to deal with emergency situations.
  The Union recognises the importance of helping developing countries increase their negotiating capacity and the important role played by the United Nations Conference on Trade and Development (Unctad) secretariat in providing continuous assistance to developing countries' participation in the services negotiations. The Union is also working constructively with the group of Least Developed Countries (LDCs), and other WTO members, on the establishment of ‘Modalities of for the treatment of LDCs in the negotiations’, as mandated by GATS Article XIX. |
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3.

WTO members adopted ‘Modalities for the treatment of autonomous liberalisation’ at the beginning of March 2003. By establishing agreed criteria for granting credit for autonomous liberalisation, negotiators, from both developed and developing countries, can now engage more confidently in their bilateral negotiations for specific commitments on market access.

The deadline for concluding negotiations on an emergency safeguard measure under the GATS has been postponed several times, following lack of agreement between the members seeking such a mechanism and those who question its desirability and feasibility. The latter group includes both developed countries and some developing countries. The Union has been active in the discussions, which have not yet shown a business case that could have been solved by an emergency safeguard mechanism.

A safeguard is temporary in nature and so would not respond to the argument that developing countries need a mechanism for rolling back commitments that turn out to have unintended consequences. In addition, such a mechanism for withdrawal of commitments already exists in Article XXI of GATS. Given the flexibility provided for by GATS, new commitments can, whenever necessary, be underpinned by specific reservations to deal with emergency situations.

The Union recognises the importance of helping developing countries increase their negotiating capacity and the important role played by the United Nations Conference on Trade and Development (Unctad) secretariat in providing continuous assistance to developing countries' participation in the services negotiations. The Union is also working constructively with the group of Least Developed Countries (LDCs), and other WTO members, on the establishment of ‘Modalities of for the treatment of LDCs in the negotiations’, as mandated by GATS Article XIX.

| 4. | The Commission is fully aware that there is concern about the effects of further services liberalisation and that some people have linked these concerns to cases where privatisation has encountered problems and the regulatory regime that was introduced proved to be inadequate. Nevertheless, such policy failures were not caused by the GATS. The Commission will continue to explain that the GATS process leaves governments free to choose whether their services should be provided by public or by private companies and free to regulate in pursuance of public policy objectives. The Commission is currently preparing a Green Paper on Services of General Interest, which will include a section examining possible links between these services and trade policy.
  In this context, the Commission is committed to ensuring a regular and transparent information and dialogue with representatives of civil society. Consultation takes place within Directorate General Trade's civil society dialogue, where consumer organisations participate. The Commission also meets consumer organisations to discuss these issues on an ad hoc basis, for example in the Commission Consumer Consultative Committee or in the context of the Transatlantic Consumer Dialogue (TACD), where the Union and the United States' consumer organisations are represented. |
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4.

The Commission is fully aware that there is concern about the effects of further services liberalisation and that some people have linked these concerns to cases where privatisation has encountered problems and the regulatory regime that was introduced proved to be inadequate. Nevertheless, such policy failures were not caused by the GATS. The Commission will continue to explain that the GATS process leaves governments free to choose whether their services should be provided by public or by private companies and free to regulate in pursuance of public policy objectives. The Commission is currently preparing a Green Paper on Services of General Interest, which will include a section examining possible links between these services and trade policy.

In this context, the Commission is committed to ensuring a regular and transparent information and dialogue with representatives of civil society. Consultation takes place within Directorate General Trade's civil society dialogue, where consumer organisations participate. The Commission also meets consumer organisations to discuss these issues on an ad hoc basis, for example in the Commission Consumer Consultative Committee or in the context of the Transatlantic Consumer Dialogue (TACD), where the Union and the United States' consumer organisations are represented.

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