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Public Citizen’s Global Trade Watch submits comments to USTR on the proposed International Services Agreement (ISA)

By Public Citizen's Global Trade Watch

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The merits of U.S. involvement in prospective ISA negotiations and the terms of reference for such an agreement should be judged with respect to whether such an undertaking offers benefits for the majority of U.S. consumers and workers. ISA negotiations will only meet this standard if they are designed to preserve policy space to regulate the service sector in the public interest. Past U.S. trade agreement service sector rules have prioritized service sector industry demands to constrain governments’ ability to regulate, reaching behind the border to undermine domestic policies regarding quality, safety and affordability of services.

It is our understanding that the current Parties considering ISA negotiations have agreed to use the World Trade Organization’s (WTO) General Agreement on Trade in Services (GATS) rules as the framework for possible ISA commitments. Even so, the ISA’s status would be as a freestanding Free Trade Agreement (FTA) in services, and not part of the WTO, given most WTO members are not interested in joining these negotiations. Before binding the United States to a new array of service sector obligations under the ISA – and thus possibly limiting the policy space needed to pursue stated Obama Administration priorities and needed by Congress and state legislatures to regulate services in the public interest – USTR should examine the impact and implications of existing U.S. service sector commitments under GATS strictures. And, any ISA should only go into effect with explicit congressional approval.

The prospect for the ISA to safeguard consumer interests, much less further them, is limited by the preliminary decision to premise “liberalization” on the GATS framework, which Public Citizen urges USTR to reconsider. GATS rules conflate liberalization and deregulation. Under GATS rules, countries may not maintain or establish certain forms of regulation commonly applied in the United States on the national and state levels with respect to service sectors for which market access commitments are taken, even if such policies apply to domestic and foreign suppliers alike. This includes limiting the number or size of service suppliers, banning a particular service, employing economic needs tests, or requiring that services be provided through a particular type of legal entity. Agreeing to limit regulation of service sectors, in the context of rules that are not subject to alteration absent consent by all involved countries, is not a prudent approach. From the Enron energy debacle to the global financial crisis, American consumers have been severely damaged by the deregulatory agenda promoted by the service sector industry. Yet, GATS rules have not been updated since the global financial crisis or other prominent examples of the perils of extreme deregulation, despite U.S. and worldwide efforts to reregulate financial and other services in the wake of various deregulation-spurred debacles. And, new emerging challenges, such as relates to climate and energy services, require even greater flexibility.