June 23, 2005

U.S.Trade Negotiators Should Learn Lesson from WTO Gambling Case; Secret WTO Service Sector Talks Now Under Way in Geneva Would Undermine the U.S. Public Interest, Threaten Local Democratic Authority

Statement of Lori M. Wallach, Director, Public Citizen’s Global Trade Watch

This week in Geneva, Bush administration trade negotiators are participating in talks to expand the World Trade Organization’s General Agreement on Trade in Services (GATS), an agreement setting policies on who may own and operate service sector enterprises and how such businesses may be regulated within the 148 WTO signatory countries. GATS rules are subject to the WTO’s binding dispute resolution system, meaning that nations must conform domestic policies to GATS rules or face the threat of trade sanctions.

The April 7, 2005, WTO ruling regarding U.S. gambling regulation should be a wake-up call to U.S. trade officials regarding the wide-ranging implications of the GATS rules. Last month, 29 U.S. state attorneys general wrote to the U.S. Trade Representative raising concerns about GATS, cautioning U.S. negotiators against expanding GATS before engaging in more robust consultation with state and local officials.

Rather than heed the state attorneys general, it appears that the Bush administration is moving towards subjecting additional elements of the U.S. service sector to GATS rules in a manner threatening to state and local democratic control in communities across the United States. From water and sewer services to higher education, the ability of national and local elected officials to protect the health and welfare of their constituents is on the GATS negotiating table.

In addition, new rules are being discussed that would subject all U.S. service sector regulations, including those that treat domestic and foreign service firms identically, to second-guessing by WTO tribunals to determine whether they are the “least trade restrictive” way to pursue a policy goal.

Although Bush administration officials repeatedly claim that countries are free to choose which service sectors would be covered by which WTO GATS rules, new information coming from the talks indicates that methods are being devised to force nations to subject more service sectors to GATS rules. Despite the concerns of the attorneys general and other state and local officials, reports from Geneva reveal that U.S. negotiators are among those ramping up the pressure on other nations to bind a broader range of service sectors to GATS requirements.

In response to the diplomatic bullying, 181 civil society organizations from around the world have signed the attached statement saying it is time to “Stop the GATS Power Play.” U.S. signatories to the letter include the Alliance for Democracy, Center for Reflection, Education and Action, Inc. (CREA), Citizens Trade Campaign, Congregation of Sisters of St. Joseph of Peace, Friends of the Earth United States, Global Exchange, Institute for Agriculture and Trade Policy, International Forum on Globalization, Minnesota Water Alliance, Network in Solidarity with the People of Guatemala (NISGUA), Oakland Institute, Public Citizen and the Sierra Club.

Public Citizen calls on Congress to pay attention to what U.S. negotiators are pushing in Geneva and to make clear that they do not want local U.S. democratic authority traded away.