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Strategies and tactics at WTO - II
By Umberto Mazzei,
Geneva, 25/11/09
The WTO negotiation has two other very
important issues, besides agricultural and industrial goods. That
is, Trade in Services and protection of Intellectual Property. The
first one is about free circulation of services and the second is
about prevention of free circulation of knowledge. The first seeks
to privatize public services monopolies and the second seeks to
expand private monopolies of science.
Services
To open trade in services can be risky.
Whoever doubts it, take a look at
the result of opening trade to fake financial "products" from Wall
Street. In classical economics, services are almost ignored. Adam
Smith despised them. Now, they are given such importance, as to be
considered main actors of an alleged "post-industrial” economy. A
vision that may apply to the United States and Singapore, but not to
the Chinese or the European models. The greatest openness in
services occurs in FTAs (Free Trade Agreements), but openness is
also being negotiated at the WTO.
The barriers to services trade are not
tariffs, but rules and regulations at any level of legislation:
national, regional, municipal or guild norms.
The measures that restrict trade in services
are classified under Article XXVIII of the General Agreement on
Trade in Services (GATS) of WTO, which is then reflected in US-FTAs,
Decision 439 of the Andean Community or in the Montevideo Protocol
of ALADI.
Defining services is a bit complicated. The
Economist's defined them as "what can be sold and you can not drop
on your foot." Services are intangible, invisible and instantaneous
(no accumulation). We must also differentiate between the tangible
good and the service delivery, as with the telephone and the phone
call.
Some define services by their effect,
because the "change on the status of the person or property
affected”. However, there are services to prevent changes - security
- or over unwanted changes - insurance. Some, empirically, define
them as any economic activity outside agriculture or industry. The
services would be a tertiary sector, which supports the others with
education, communication, distribution, transfer, supply, transport
and so on. The services are divided into service areas and I believe
that the most basic division is between public services and private
services. It's not clear, since
there are grey areas in distribution, but I consider as public those
infrastructural services that cater a physical community.
The strategic importance of public
services.
Curzio
Malaparte, in "The Technique of the Coup," reveals the strategic
importance of public services, when he recommends to occupy first
the distribution centres for electricity, water, transport, fuel and
telecommunications. Centres that are aimed at also by airplane
bombers. Therefore, it is dangerous for national security reasons to
leave public services in the hands of foreign companies. The United
States is one example, it prevented a Dubai company to tender for
administration of a port terminal or a Chinese oil company to buy an
U.S. oil company in difficulties and also prohibits foreign costal
sailing between its ports.
Public services are of
utmost importance, because they channel development in any country.
Any inequality in coverage and quality increases the gap between
economic development and social fabric, which in turn increases
public insecurity and diminishes salubrity. It also affects both,
the quality of intellectual and technical development and the
production and circulation of private goods and services.
There is talk about the ineffectiveness of
the services run by the public sector in developing countries and
also in some developed ones. It is true that there is inefficiency
and corruption in essential services like health, sanitation,
electricity, environmental, water, education, but that is not solved
by their privatization. Whoever doubts it, take a look at the case
of Reliant and Enron supplying electricity in California
(blackouts).
In public service, coverage and quality are
the measure of success. That means reaching all inhabited places,
even the unprofitable ones, which is unattractive for a private
company. Public services administration can improve quality with
public oversight, one that involves participation of the communities
served, so they can point out failures. There are successful
examples in Europe and some in Latin America.
Public services are often monopolies, is that which attracts private
companies, so they can set prices at the highest profit; prices
which the poor can not easily reach.
Private services
in WTO
Trade in
services has been classified into four modes of supply. Mode
1, called cross-border trade, such as Internet access.
Mode 2, called consumption abroad,
such as tourism. Mode 3, commercial presence authorizing the
presence of juridical persons such as banks, etc.. Mode 4 Presence
of Natural Persons, which is the temporary presence of persons to
perform a job, such as consulting, construction, etc..
The first two modes of delivery are scantly
mentioned in the negotiation.
The controversy revolves around the two presences.
Developed countries - agents of the
international corporations - ask for Commercial Presence on every
thing, with emphasis in public services and government procurement.
Developing countries – with plenty of labor – demand Presence of
Natural Persons.
For now, negotiations in the WTO are limited
to whatever is of interest to large corporations. They want full
opening, because when they move, they wish to skip local business or
professional services support. They want to keep their entourage,
who are the same companies that support their headquarters in
accounting, advertising, distribution, legal support, etc.. The
international corporation, in Bogota or Lima, wants to keep the same
Arthur Andersen that attests their accounts in New York or London,
perhaps (Enron et al.) with creative accounting practices.
The interest of developing countries in
opening the temporary presence of natural persons at the WTO is only
proposed, but not even discussed. It is obvious that the negotiation
is seen by some as a one way avenue.
The point of the negotiation
These days,
the debate is focused on domestic regulations. Since a couple of
weeks a group of countries including Australia, Chile, India and New
Zealand want to talk first about national rules before negotiating
market access. Some rich countries, the financial services
providers, are not interested. They want others to open doors
without altering any thing on their side. Ron Kirk, USTR said,
speaking of the Doha Round "... there will be no agreement without a
good result in services that open new market opportunities." We
assume that he refers to market opportunities also for the banks
that pack and sale fraudulent "derivatives".
The point is
that since the explosion of the financial crisis, many countries -
developed and developing - are aware of the need for national
financial regulations and pay more attention to the issues raised at
the Committee on Trade in Financial Services. There they have
discussed proposals over the regulatory framework.
There are three proposals:
a) The United
States, for greater exchange of information, mainly on life
insurance.
b) Pakistan, on a regulation for banking and
electronic commerce, because of the problems raised by an increasing
traffic.
c) Argentina, Ecuador, India and South Africa
on rules to control financial services.
There is no consensus on any.
At the
Services Council it was offered then, to brake ground, a technical
study in two stages. The first would be a list of GATS provisions on
financial services and a bibliography on the subject, to be
presented at a special session. There was no opposition. The second
phase, would be an analysis of how and if the given incentives
affect international trade of financial services. The conclusions
would be "non imputable", it means without accusing the measures
taken by countries. The US refuses, as if the grotesque props given
to its banks were a secret and not something reported and commented
upon by the world press.
Intellectual Property
Most of the work going on is over
the protection of wines and spirits,
with a multilateral system of notification and registration of
geographical indications.
The purpose is to segment the market to create artificial
monopolies. The discussion turns
over when to notify, how to notify and how to register. There are
three positions over the mandate from the Hong Kong Ministerial.
An hybrid one, from Hong Kong (Host).
A broad and strict European one,
that besides wines also wants to include food. A "joint proposal",
which follows the mandate of Hong Kong, made by countries that also
produce wine and alcohol: Australia, Argentina, Chile, USA, etc..
(Cheers, Salud!)
Recommendations
At WTO
economic policies are tied with agreements on trade, but there are
also links to other multilateral institutions. In Intellectual
Property, for example, ideas move first at WIPO. Those links can be
used to improve the balance between economic, labor and social
issues. It is good to defend national interests at WTO, but is even
better if defended also at other entities besieged by stateless
greed.
The International Labor Organization (ILO),
is a very important multilateral centre. The organization is split
in three branches: governments, employers and unions. The unions
want to harmonize labor laws to prevent international corporations
from moving jobs to countries with weak and complacent labor laws.
There is a coincidence with free governments that want normal and
democratic policies of greater employment and good working
conditions.
The World Health Organization (WHO), is
another multilateral centre to keep on sight in order to avoid
complicity with drug manufacturers. The hysteria of WHO with the
"swine flu" (H1-N1) is notorious. It declared a global pandemic with
a few deaths (141)
with a dubious diagnosis, while it waited for millions of deaths to
declare AIDS a pandemia. Of course, in the AIDS case, African
governments were not upfront buying untested vaccines.
A successful example to follow, is the
presidency of the UN general assembly by Miguel Escoto. His presence
there was crucial to organize a team with serious experts to study
the causes of the financial crisis. The panel's recommendations are
an effective counterbalance to the frivolity emanating from the
G-20, whose solution is more of the same. The G-20 also usurps an
authority over WTO that nobody has given, asking for decisions and
reports while the Director-General, Pascal Lamy, cheerfully complies
.
M.
Lamy obeys, because the G-20 is ordering what he asked for.
No member has protested. It is about
time that the representatives of free countries reminded M. Lamy,
that the WTO will belongs only to its 153 members and there is a WTO
will only if there is consensus.
The WTO Ministerial begins in Geneva on
November 30th. We wish, not
luck, but firmness.
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