The
Submission can be downloaded in RTF format for viewing and
printing. You'll need the Adobe Acrobat Reader to open the file. The
Reader is available free at Adobe's web site.
AFTINET Submission to the Senate Foreign Affairs, Defence
and Trade References Committee Inquiry
on the General Agreement on Trade in Services (GATS)
and a Free Trade Agreement with the United States
(Part 2)
Prepared by Dr Patricia Ranald
and Louise Southalan
21 March 2003
Part 1
Part 3
SECTION TWO - Terms of
reference relating to the GATS negotiations
Australia’s goals and strategy for
the GATS negotiations
The Government’s GATS discussion paper
defines Australia’s objective within the GATS process as being to gain an expansion
of exports for service providers (at p 10). Also within the section dealing with
Australia’s objectives is a statement that the Australian government ‘will not
agree to any diminution of our overall right to regulate that would constrain our ability
to pursue legitimate policy objectives in the regulation of services sectors, or
compromise the capacity of governments to fund and maintain public services’ (DFAT
2003a p 10). A similar statement is made in DFAT’s explanatory paper issued with the
release of the government’s initial GATS offer.
Such a statement is welcome in principle,
but raises more questions than it answers. What exactly is meant by the ‘overall
right to regulate’, and does this differ from a right to regulate in particular
sectors? Is it an objective of the government that public services be exempted from the
GATS negotiations? Is it an objective to ensure that the capacity of all levels of
government to regulate not be diminished?
The discussion paper fails to state what
broader principles underpin the government’s GATS negotiating position. The WTO
negotiating process is one of give and take, and of trading interests against other
interests. Beyond the objective of increasing export opportunities, the discussion paper
gives no indication of the principles on which the GATS negotiations will be conducted by
Australia. One may gain some idea of these principles from the government’s recent
foreign and trade policy white paper, however, which is characterised by the primacy it
accords US-Australia relations in both strategic and economic spheres.
The emphasis within the discussion paper on
the trade export aspects of the GATS agreement obscures the role of other public policy
objectives. On a reading of the discussion paper one might ask whether the national
interest is assessed purely in terms of maximising export opportunities, or whether other
policy goals have importance, such as environmental sustainability, human rights,
protection of marginalised groups, maintenance of Australian culture, and Australian
control of Australian resources.
Formulation and response to requests,
and the transparency of the process
Lack of transparency in WTO processes
WTO documents make frequent reference to
the need for ‘transparency’, but this transparency is conceived in terms of an
obligation on countries towards exporters in other countries. WTO bargaining and
negotiations, on the other hand, are characterised by a lack of transparency. This hinders
governments of less powerful states in developing informed policy positions on trade. It
is a particular obstacle for developing countries and impedes their ‘capacity to
evaluate the requests submitted to them by developed country trading partners’
(UNCTAD 2002 par 53). However it is also of direct relevance to Australia, as a middle
power in a global trade environment dominated by the US, EU and Japan. Despite this,
recent proposals by a group of developing countries to make the WTO meeting process more
transparent have not been adopted.
The DFAT discussion paper presents the WTO
negotiation process as one in which governments make decisions to liberalise as a
self-contained process (DFAT 2003a p 6). However, the reality is that such decisions are
taken as part of bargaining process in a context of great disparities in bargaining power.
The lack of transparency means that the public is unable to assess whether the bargains
struck are appropriate, and in fact is hardly able to ascertain what bargains have been
struck at all. The small amount of information made available by governments on particular
requests is presented as being unrelated to other requests and offers. There are also
trade-offs with negotiations in other areas such as agriculture. This was illustrated
clearly in the comments of EU Trade Commissioner Pascal Lamy in his visit to Australia
last year. The Australian Financial Review reported that Mr. Lamy said that ‘the EU
wanted Australia to lift restrictions on foreign ownership of Telstra and the sensitive
water-distribution industry in return for any concessions from Europe on barriers to
agricultural trade in coming world trade talks’ (Australian Financial Review 17 July
2002 pp 1,9).
The lack of transparency within the WTO
process makes it difficult to participate in debates about such fundamental matters as the
capacity for governments to regulate, the appropriate mix of public and private control
over resources and services, and principles for the expenditure of public funds. The GATS
negotiations impact significantly on all of these matters.
Lack of transparency in the negotiation
process at domestic level
The secrecy at the international level is
mirrored at the Australian domestic level. The GATS negotiations are being undertaken by
the federal government largely in isolation from any public debate on the issues being
negotiated. Decisions to make commitments will have dramatic consequences for the public,
yet the public has not been adequately informed of the proposals or their implications.
Release of the Government’s
initial GATS offer
On April 1 the Government made its initial
GATS offer public. As this is the first time that such offers have been publicly released,
it is an important step towards transparency in trade negotiations. While AFTINET welcomes
the release as a first step, it does not meet the requirements for transparency and
accountability in the GATS negotiations. Notably:
- the public was only able to know the content of the offer
after it had been lodged with the WTO in Geneva. AFTINET sought public discussion before
the offer was lodged;
- the offer is an initial offer only, subject to change at any
time over the next 18 months of further negotiations. There should be commitment to a
process of community consultation before any changes are made; and
- the government has not released its requests to other
countries. It is not possible to know, for example, whether Australia has made requests on
health, education or water to other countries, including developing countries.
The content of the initial offer is
discussed below.
Consultation
Under the Australian Constitution, much of
the responsibility for the regulation and delivery of services falls upon state
governments, and through them is delegated to local governments. Because of this it is
critical that state and local governments and agencies be well informed and consulted
about the implications of the GATS negotiations. The extent to which this has occurred so
far, however, appears to be minimal, particularly for local government, as noted in
resolutions passed by a number of councils and the National Local Government Association.
In this context the fact that DFAT produced
a discussion paper and sought public comment is to be welcomed. However, there are
fundamental inadequacies in the information provided in the discussion paper which mean
that responses to it can only be generated from a position of ignorance of critical facts.
In particular, the discussion paper summarises requests made to Australia, without
disclosing which countries have made particular requests and the detail of each request.
Requests made by Australia to other countries are barely mentioned at all, making it
impossible to comment meaningfully on the impact of such requests on developing countries
in particular. This hinders scrutiny and debate by civil society about the operation and
effects of Australia’s trade policy.
The discussion paper provides a description
but no detailed analysis of Australia’s current commitments and their implications.
This reflects a broader failure within the paper to acknowledge debates about the merits
of the approach to liberalisation adopted under GATS. The discussion paper refers
uncritically to potential economic benefits from the GATS processes without reference to
costs associated with this process, both economic and non-economic (DFAT 2003a p4).
The discussion paper deals selectively with
the GATS negotiation processes. As discussed below, there is no reference within the paper
to the ongoing negotiations within the WTO Working Parties on regulation and GATS rules.
These are important developments which can impact significantly on Australia, yet the
discussion paper proceeds on the basis that the bilateral negotiations are the only
matters on which public comment need be sought. This emphasis on the bilateral
negotiations tends to present the GATS requests as occurring in isolation from ongoing
multilateral commitments. The obligation of WTO members to progressively higher levels of
liberalisation is mentioned (at page 4 of the discussion paper), but no comment or
analysis is given as to the implications of such an obligation, which effectively narrows
the policy choices of future governments.
The GATS negotiations in
the context of the ‘development’ objectives of the Doha Round
The Doha round of negotiations was
heralded as the ‘development round’ because developing countries were persuaded
to agree to it on the basis of promised benefits to them from new rules of international
trade. The proposal about interpretation of the TRIPs agreement relating to the
affordability of medicines was particularly claimed to offer beneficial outcomes to
developing countries, and on this basis the Doha round was put in place. During the Doha
round agreement on the public health provisions of TRIPs has not materialised, with the US
opposing agreements which it sees as harming the commercial interests of its large
pharmaceutical corporations.
The lack of progress on TRIPs makes it more
important that the development outcomes of the Doha round be assessed in terms of the
other WTO agreements. The GATS agreement does not even contain the promise of benefits to
developing countries, but delivers benefits to industrialised countries. It has
significant implications for the capacity of developing countries to control their own
development, particularly via regulation and public ownership.
The discussion paper does not address the
issue of how Australia’s approach to the GATS negotiations fits within
Australia’s foreign policy objectives regarding developing countries, which is
particularly striking given the effect that Australia’s requests might have on these
countries. Other countries have incorporated their development policies into their
approach to the GATS negotiations. Canada and New Zealand, for example, both cite
particular measures they have adopted within their GATS strategy to take account of the
impact of GATS on least developed countries. DFAT does formulate and disseminate
development policies as a function of AusAID’s work. AusAID defines its objectives as
‘advancing Australia’s interests by assisting developing countries to reduce
poverty and achieve sustainable development’ (AusAID 2001 p 5). It is unfortunate
that the discussion paper indicates that these development goals do not appear to play any
role in Australia’s position on the GATS negotiations.
In this regard it is useful to note the
consultation document on GATS prepared by the European Commission, in which, in addition
to the goal of improving the conditions of access for EC services exporters, two other key
objectives are identified:
- ‘to make progressive liberalisation of trade in
services not only consistent with, but also supportive of, sustainable development, while
- ensuring that WTO members can adequately protect their
national policy objectives’ (at p 13).
In the event, the European
Commission’s (EC) requests to other countries, leaked in February 2003, reveal that
its actions do not live up to its rhetoric. EC requests to Least Developed Countries seek
the removal of these countries’ capacity to regulate foreign investment and public
services (European Commission 2003).
Australia’s trade and foreign policy
White Paper refers to an objective of promoting prosperity in developing countries. If
this is a genuine goal, it should be reflected in the approach taken to our trade
relations with these countries. This should include recognition of the importance of
developing countries maintaining a capacity to regulate and discriminate against foreign
investors and corporations, so as to have some control over the development process.
The impact of the GATS
on the ability of all levels of government to regulate services and own public assets
Australia’s regulation at all levels
of government may be the subject of challenge by another country under the GATS Agreement.
Article XXIII provides that countries may seek rulings from the WTO’s Dispute
Settlement Body (DSB) as to whether any measures by a country have nullified or impaired
any benefit ‘it could reasonably have expected to accrue to it under a specific
commitment’. If the DSB determines that the measure in question (such as a local
government’s planning provisions, for example) do nullify or impair such an expected
benefit, the member affected ‘shall be entitled to a mutually satisfactory
adjustment’, which may include ‘the modification or withdrawal of the
measure’. If the parties cannot agree on a mutually satisfactory adjustment, then
Article XXIII provides that Article 22 of the Dispute Settlement Understanding shall
apply, which allows affected members to apply measures against the country in question.
The effect is that great economic and
political pressure can be brought to bear on Australia as to how governments should
regulate. The decision about whether such regulation is ‘acceptable’ or not is
made by a closed body of trade experts, who consider trade issues only, not the broader
public policy objectives which governments must have regard to.
A further issue for regulatory capacity is
that Australia will not be able to change its commitments without cost. The GATS Agreement
provides that countries cannot make any change until at least three years after the
commitment has entered into force, and then must enter into negotiations with affected
countries as to the type and amount of ‘compensatory adjustment’ to be made. If
agreement is not reached within the period set for negotiation, the affected countries can
refer the matter for compulsory arbitration. If Australia wished to change its
commitments, it could not do so until after the compensatory adjustment had been
implemented. Failure to do so means that affected countries can take measures in
retaliation (GATS Article XXI).
Clearly then, under the existing GATS
provisions, domestic regulation is affected by the GATS rules. The effects arise not only
from the direct measures that may be taken by other countries to challenge Australian
regulation, but also by the more subtle impact of this on guiding the substance of
law-making. The fact that such a supra-national constraint on domestic policy and law
making exists, largely without the knowledge of the public, serves to undermine the
democratic process, by which law and policy is developed as a product of debate and public
input.
In addition to the effects of the current
GATS rules, regulatory capacity is significantly impacted upon by proposed changes to the
rules. These proposed changes are proceeding through the Working Parties on GATS rules and
on Domestic Regulation.
The Working Party on Domestic Regulation
was established under GATS Article VI.4 to develop ‘any necessary disciplines to
ensure that measures relating to qualification, requirements and procedures, technical
standards and licensing requirements do not constitute unnecessary barriers to trade in
services’. This envisages a mechanism for determining whether government regulation
should be required to be recast in other ways so as to be least trade restrictive. As part
of these negotiations the Australian government has supported a necessity test for
domestic regulation. This would allow regulation to be challenged on the basis that
another measure is reasonably available, ‘taking into account technical and economic
feasibility, that achieves a legitimate policy objective and is significantly less
restrictive to trade’ (DFAT 2001c p1).
Such an idea seeks to fit public policy
making, which involves a range of non-economic as well as economic values, within criteria
that require that particular economic characteristics (the quality of being ‘least
trade restrictive’) be preferred. The Australian government should reject this.
The agenda of the Working Party on GATS
rules includes the definition of ‘subsidies’. One proposal is to include
government funding of public services in the definition of ‘subsidies’. This
would mean that ‘national treatment’ and ‘equal access’ rules would be
applied to government funding of services. Foreign corporations could argue for equal
access to these funds through compulsory competitive tendering. The effect would be the
privatisation of public services. This is discussed further below in relation to
particular sectors.
The DFAT discussion paper fails to make any
mention of any of these issues, or the Australian government’s position regarding the
proposed changes. This is a serious omission. Combined with the lack of information on
offers and requests and their implications, it seriously undermines the public
consultation process.
The DFAT explanatory paper which
accompanied the release of the government’s initial GATS offers does refer to the
negotiations on GATS rules, acknowledging that the proposed changes could affect the
ability of governments to regulate services and to provide and fund public services. The
paper states that the government will support the right of governments ‘to regulate
and to fund public services and not to support any new rules which cast doubt on that
outcome’. Such a commitment is welcome; however, as these negotiations are also held
in secret, without changes to the process the public will not know the result of these
negotiations until after their completion. A commitment to a transparent process would be
an important improvement.
Regarding the content of the
government’s initial GATS offer, we welcome the fact that no new offers have been
made on health, education, postal services, water for human use or audio visual services,
and that currently there are no changes to the Foreign Investment Review Board or to the
limitations on foreign investment in Telstra.
Under the government’s initial offer
commitments have been offered in environmental, financial, telecomunications and maritime
sectors. The environmental sector is discussed further below. In financial services the
changes are said by the government to reflect changes to financial regulation which have
already occurred in domestic law. In telecommunications the changes are to
Australia’s existing commitments on numbers of satellite services and foreign
investment in Optus and Vodaphone, which the government again has said reflect changes in
domestic regulation since the previous negotiations. In maritime services the additional
offers are on port services, including pilatage, towing and tug assistance and shore-based
operational services.
New offers have an effect on regulatory
capacity, regardless of whether they reflect existing practice or not, because they remove
the flexibility of future governments to regulate contrary to scheduled commitments.
Australia will be bound by the final offer and could expect penalties under the GATS rules
if a future government wished to change them. Accordingly, new offers should not be made
without prior public debate.
Investment
A particularly important regulatory
function is the general capacity to control the nature of foreign control of Australian
land, resources, projects and culture. Controls on investment are a cornerstone of this
function.
The discussion paper states that requests
have sought the elimination of Australia’s horizontal commitments regarding
investment. The EC requests reveal that it has explicitly targeted restrictions that
Australia has placed on previous GATS commitments which allow government to set overall
economic policy by, for example, controlling foreign investment. It has requested, for
example, that the foreign investment policy guidelines and the Foreign Acquisitions and
Takeovers Act, which allow for the rejection of foreign investment on the basis of
national interest considerations and for discriminatory treatment of foreign-owned and
controlled enterprises after establishment, be removed. It has also requested that the
requirement that at least two of the directors of a public company have Australian
residency be removed.
Removal of Australia’s horizontal
commitments would involve the abolition of the Foreign Investment Review Board, and the
abolition of any requirements for minimum Australian ownership in any industries. These
regulations are a means of implementing policies of controlling foreign influence in
strategic industries like the media, telecommunications, airlines and banking. The Foreign
Investment Review Board has the power to review foreign investment in the national
interest. Its discretion is very seldom exercised, but it is a power which the Australian
government should retain. Investment in telecommunications is a particular target of the
EC, which has requested that limits on foreign equity in Telstra and foreign investment in
Optus be removed.
If these few remaining restrictions on
foreign investment in Australia were to be weakened, all of these industries would be
vulnerable to foreign takeover. The discussion paper contains no discussion of what these
requests entail and the implications of acceding to them. The government should oppose
these requests.
The impact of the GATS
on the provision of, and access to, public services provided by government, such as
health, education and water
Assurances are given in the discussion
paper and elsewhere that the government does not intend that public services or
government’s capacity to regulate services be diminished by the GATS negotiations. If
this is the case, public services should be formally exempted from the negotiations (DFAT
2003a pp 6, 10). The European Commission has stated in its draft responses to GATS that it
will not make further undertakings regarding health, education and audio-visual services,
in response to public concerns (European Commission 2003 p 1).
It is particularly important that public
services be clearly exempted in light of the ambiguity about GATS Article 1 (3). This
Article states that all services are covered by GATS except those supplied in the exercise
of governmental authority, i.e. those ‘supplied neither on a commercial basis, nor in
competition with one or more service suppliers’. Ambiguity arises about which
services are covered by this exemption because in Australia, as in many other countries,
public and private services are provided side by side. This includes education, health,
water, prisons, telecommunications, energy and many more. The discussion paper asserts
that public services will not be caught by GATS under this clause, and draws a
distinction, by way of example, between public education services and private education
services. However no argument is presented as to why these should be seen as qualitatively
different under the GATS agreement. It is legitimate to ask whether, for example, there is
any guarantee that public TAFE will not be subject to GATS, as it is operating in an
increasingly competitive national vocational education and training market. Comments by
the WTO Secretariat do not offer support for the government’s assertion, and, rather,
suggest a narrow interpretation of Article 1.3 (WTO 1998a, quoted in Ellis-Jones &
Hardstaff 2002 at p 25).
The likely resolution of this ambiguity
will be through rulings of WTO Dispute Panels, deciding on challenges by a member state to
the public service arrangements of another member state. The panels may well adopt
interpretations similar to that offered by the WTO Secretariat, which would bring many
services currently considered to be public services under the coverage of the GATS
agreement. Other governments have taken steps to protect themselves from such an outcome
through horizontal limitations. For example, the EU has made a horizontal commitment
stating that ‘services considered as public utilities at a national or local level
may be subject to public monopolies’. In contrast, Australia has made no such
horizontal commitment, and so is dependent on an interpretation of Article 1 (3) which
finds that public services are not subject to the GATS unless specific commitments have
been made.
In the context of such ambiguity, the
government should make an explicit statement that public services are exempt from
Australia’s GATS negotiations, and should decline to make further commitments in
public services.
Education services
The discussion paper states that requests
have been made for full commitments in all sub-sectors of education. Acceding to such
requests would allow foreign education service providers to operate with a
commercial presence in Australia. The outcome of the current negotiations of the Working
Party on GATS rules would be of particular relevance. If, as has been discussed in the
Working Party, the definition of ‘subsidy’ is broadened to include government
funding of services, then such foreign education service providers would be able to
require the right to tender for government funding on an equal basis with government
schools, universities and TAFE colleges, on the basis of the national treatment obligation
under GATS.
This would lead to privatisation of public
education services. Decisions about funding and provision of education services should be
made democratically after public debate by elected governments, not through trade
negotiations.
The implications of responding to requests
for further commitments in the education sector illustrate the need to exempt public
education, and all public services, from the negotiations.
Health services
Australia’s scheduled commitments are
limited to podiatry, chiropody and dental services (although dental services are listed
under professional services, not under health services). Dental services have no
limitations on modes 1-3. Currently public dental services are limited, but the effect of
these commitments is that if governments decided to introduce public dental services in
the future, foreign corporations could seek access to the public funds under the national
treatment obligation.
As with education, health services are
currently provided by the states on a commercial basis, and it may be argued that this is
done in competition with one or more service providers. Again, the implications under GATS
Article 1 (3) are significant, as has been specifically noted by the WTO Secretariat:
‘The co-existence of private and public hospitals may raise questions, however,
concerning their competitive relationship and the applicability of the GATS: in
particular, can public hospitals nevertheless be deemed to fall under Article
1.3?…The hospital sector in many countries…is made up of government and
privately owned entities which both operate on a commercial basis, charging the patient or
his insurance for the treatment provided…It seems unrealistic in such cases to argue
for continued application of Article 1.3 and/or maintain that no competitive relationship
exists between the two groups of suppliers or services. In scheduled sectors, this
suggests that subsidies and any similar economic benefits conferred on one group would be
subject to the national treatment obligation under Article XVII’ (WTO 1998b, quoted
in Ellis-Jones & Hardstaff 2002 p 42). In view of the risk, if not the likelihood, of
such an interpretation being adopted by a WTO Trade Dispute Panel, there is a clear need
to exempt public health from the negotiations.
The impact of the National Treatment rule
on public health services, particularly if the proposed re-definition of the meaning of
‘subsidy’ occurs, would presumably have an effect similar to that predicted for
public education. That is, the public health system would be privatised. In a
market-dominated field the poor would be particularly at risk of not being able to access
health care, with the safeguards offered by a public health system being undermined. Such
a scenario does not seem unrealistic when one considers that the WTO has asked members to
‘ensure that ongoing reforms in national health systems are mutually supportive and,
wherever relevant, market-based’ (Ellis-Jones & Hardstaff 2002 p 67).
The requests for full commitments on modes
1-3 should be refused, and health, as with other public services, exempted from the GATS
negotiations.
Water services
The discussion paper notes that there is
‘broad support for the adoption of a broader classification scheme for environmental
services’, but provides virtually no information on what this in fact means, and the
implications of such reclassification. The proposal includes defining ‘environmental
services’ so widely that it includes the provision of, among other things,
‘water for human use’. Australia has supported this EU proposal (DFAT 2001b p
1). The effect would be that supply of water - a substance essential to human life, and
which is in crisis globally and within Australia - would become subject to the rules of
GATS, which operate on a market basis. This change is sought to be made in a global
context in which 10 major water multinational corporations dominate the market and
exercise great influence.
The supply of water in Australia, as
elsewhere, involves the weighing of public policy objectives, including the need to ensure
access to all and the need to conserve the resource. Currently in Australia a robust
public debate is underway as to the appropriate and fair means of regulating water supply,
particularly with the drought affecting eastern and southern Australia. A broadening of
the definition of environmental services to bring water for human use within GATS would
dramatically change the balance of interests in this important area without public debate
as to the merits of such a change.
The consequences of making supply of water
subject to GATS are that the horizontal obligations of market access and national
treatment would be applied, subject to any horizontal commitment by Australia limiting its
obligations to liberalise. This would seem to make it more likely that public water supply
services by public utilities would be targeted by the EU or US, whose multinationals
exercise such market dominance. Indeed, the leaked EC requests show that the EC wishes
Australia to extend sectoral coverage to include water for human use and wastewater
management.
A challenge to public water services would
involve a complaint by the US or the EU, for example, that a particular mechanism by which
one of the Australian states or local governments supplies water to the public operates
contrary to the GATS obligations and is in fact a restriction on trade. The capacity of
Australian governments to regulate in this area would be constrained by the need to avoid
Dispute Panel rulings to pay compensation to affected countries.
Such important public policy issues should
be democratically decided by governments after public debate, not negotiated in trade
agreements. On this basis alone the government should oppose the reclassification of
environmental services to include water for human use.
Under the initial offer several new
commitments are proposed under environmental services. While ‘water for human
use’ is not included in the offer, water is significant for a number of the newly
added services, notably ‘remediation and cleanup of soil and water’ and
‘protection of biodiversity and landscape’. These services, together with
‘protection of ambient air and climate’ and ‘noise and vibration
abatement’ are added to Australia’s offer without limitations on either market
access or national treatment.
Postal and courier
services
The discussion paper refers to a number of
requests for commitments in express delivery and postal services, without giving any
indication of what these requests are. It also mentions that a request has been received
for full commitments for ‘a combined classification of postal and courier
services’. No information is provided in the discussion paper about this proposed
reclassification, although the EC request invites Australia to frame its offer in
accordance with this proposal.
The leaked EC requests confirm that the EC
is targeting Australia Post under the GATS negotiations. These requests specifically state
that ‘postal items’ refers to items handled by any type of commercial operator,
whether public or private, and include the standard letter. The EC is seeking full
commitments in all modes relating to all postal and courier services. If these requests
were met, competition would be introduced for postal services relating to the standard
letter. The 50 cent cost for the standard letter to be sent anywhere in Australia makes
postal services affordable for Australians living in rural, regional and remote areas.
Such services might operate with commercial competitiveness in large urban areas, but
rural, regional and remote areas rely on cross-subsidisation in order for a common postal
rate to be applied for all standard letters in Australia. The important public policy goal
of providing for a common postal rate across Australia is currently met through regulation
and a monopoly service. Again, this should be democratically decided.
Audio-visual services
Australia currently has made no commitments
in the audio-visual sector, and has put in place an MFN exemption for co-production
arrangements. This allows Australia to treat the nationals of other member states
differently from each other in the area of audio-visual co-production. Under the GATS
agreement such MFN exemptions should in principle not exceed a period of ten years, and
are subject to negotiation in subsequent trade liberalising rounds (Annex on Article II
exemptions, s 5). In 2004 ten years will have elapsed since Australia entered into the
GATS agreement. The discussion paper makes no mention of these issues.
The Trade Minister has acknowledged that
audio-visual services play an ‘integral role in developing and reflecting a sense of
national and cultural identity within Australia’s multicultural society [and] provide
opportunities for almost universal access by Australians to their own experiences and
narratives’ (DFAT 2001a p 1).
The strength of the US audio-visual and
media corporations means that this issue is also particularly important in the
negotiations regarding the USFTA. In regards to GATS, though, the DFAT discussion paper
states that requests have been made for the removal of the MFN exemption and for full
commitments to National Treatment and Market Access. Accession to these requests would
impact dramatically on Australian broadcasting and the capacity to express and reflect
Australian culture. Specific issues arising from such bilateral requests are discussed
below, however it should be borne in mind that in addition to the bilateral process, the
negotiations taking place within the WTO Working Parties on GATS rules and government
regulation have particular significance for public broadcasting in Australia.
Australian content and ownership
Australian regulations currently require
minimum levels of Australian content in audio-visual services, including advertising. Full
commitments to Market Access and National Treatment would require the removal of such
regulations. Australian content rules are a vital pillar of Australia’s cultural
identity and diversity which ensure that Australian voices are heard and Australian
stories are told, specifically in relation to music, drama, documentaries, children's
programs and pre-school programs. Their removal would threaten Australian culture and the
Australian film and television industry.
A related impact of commitments to National
Treatment and Market Access would be severe damage to the local film and television
industry. The current local content regulations foster a local skills base which enables
quality films and television programs to be made in Australia. The removal of these rules
would not only be an attack on Australia's culture, but would also destroy a vital and
growing industry.
As the Media Entertainment and Arts
Alliance has noted, the rapid pace of technological change in the audio-visual sector
means that government needs to retain full power to regulate in order to respond to and
pre-empt changes in the sector. Government regulatory capacity is particularly important
in areas which are not easily reducible to economic criteria (MEAA 2002). The Disputes
Panels of the WTO decide whether government regulations are contrary to WTO obligations on
the basis of trade concerns, not broader social policy objectives such as the preservation
of cultural identity. Social policy objectives do not always translate into measurable
economic categories, and this is particularly the case with cultural and artistic areas.
Accordingly, it is crucial that government retain full capacity to regulate in the
audio-visual sector
Another implication of making commitments
to national treatment relates to subsidies. Currently Australian governments support the
film industry through tax concessions and financial support via such bodies as the Film
Finance Corporation. These are means of subsidising Australian film makers. If national
treatment commitments were made it seems almost certain that these subsidies would be the
subject of challenge by other countries with competing film industries, notably the US.
GATS requests have also been made to
Australia by the EC in the advertising sector. This sector is closely linked to
broadcasting, film and media, due to the frequent cross-over by the workforce. In many
ways a local advertising industry allows a local film and television workforce to be
viable. Australia’s category of ‘Other Business Services’ currently does
not include the ‘advertising’ sub-sector. The leaked EC document requests that
Australia bind this sub-sector in the same way as the rest of the sector – that is,
with no restrictions except on Mode 4 as indicated in the horizontal section. The effect
would be to remove restrictions on foreign corporations in providing advertising services
in Australia, which would be likely to have a severely detrimental effect on the local
industry. The Australian Government should reject any requests to change audio-visual
content policy.
Australia also has specific restrictions on
foreign investment in news media and television which are intended to prevent total
domination of a relatively small market by global corporations. This is a legitimate
public policy goal which should not be traded away in the GATS negotiations. Requests to
remove Australia’s horizontal commitment allowing for limits on foreign investment
pose a significant threat to diversity in the media. This was discussed above in relation
to foreign investment more generally.
Public broadcasting
The ABC and SBS carry out important roles
as Australia’s public broadcasters, providing a mechanism by which a diversity of
material is made freely accessible to the population. Universal access to information is
important for a range of reasons, not least its importance to the healthy functioning of
democracies. Commercial media operates within a market structure, seeking ultimately to
gain maximum revenue. In contrast, public broadcasting is able to operate with broader
social policy goals, including fostering local and untested artists and arts, and catering
for non-mainstream audiences such as particular ethnic and language groups. Commercial and
public broadcasting clearly fulfil quite distinct roles, and it should not be assumed that
the role of public broadcasters could or should be filled by commercial interests (MEAA
2002).
The ambiguity that surrounds other public
services under the GATS agreement also affects public broadcasting. The ABC and SBS
deliver many of their services on a commercial basis and in competition with one or more
private service providers. Accordingly, it seems that public broadcasting may already be
considered as falling within the scope of the GATS agreement. If so, then the market
access and national treatment obligations within the GATS will apply to public
broadcasting services, except to the extent limited by Australia’s horizontal
commitments. This takes on a particular significance in view of the negotiations within
the WTO Working Party on GATS rules. If ‘subsidy’ is defined as including
support by government for public agencies like the ABC and SBS, then the national
treatment obligation would allow foreign media and broadcast corporations to demand equal
rights to receive such support, probably through competitive tendering, leading to
privatisation.
Conclusion
We welcome the release of the government's
initial offers in the negotiations, However the GATS negotiations could still have an
adverse impact on existing social policies as well as the policy and law-making capacity
of governments at all levels. Public services are at risk of privatisation. The GATS
negotiations particularly disadvantage developing countries, and form part of the Doha
round, which to date shows little prospect of delivering promised benefits to developing
countries.
The government should:
- Develop a full community consultation process before any
changes are made to the initial offer which it published on April 1,
- Disclose full details of the specific requests made by it by
other governments,
- Support the exclusion of all public services from the GATS,
including public health services, public education services postal services and water
services, and decline to make further commitments in public services,
- Support the exclusion of audio-visual services from the
GATS,
- Oppose any proposals which would remove the right of
government to regulate levels of foreign investment in any industry,
- Oppose any proposals which would open up the funding of
public services to privatisation,
- Oppose the inclusion of water services for human consumption
in the GATS,
- Oppose any proposals which would reduce the right of
governments to regulate services, including the application of a ‘least trade
restrictive’ test to regulation, and
- Submit all policies on GATS to full parliamentary debate and
a parliamentary vote before commitments are made.
Part 1
Part 3
Top of page |
