You are here: HomeArticlesGlobalizationGATS: Thirsty corporations eye the global water market

GATS: Thirsty corporations eye the global water market

WHILE looking at the General Agreement on Trade in Services (GATS) and the significance of specific commitments that have been undertaken by the World Trade Organisation (WTO), one must remember that the agreement is still in its embryonic stage.

The rules of GATS are being formulated. These preliminary rules are untested and the schedules for services are much more complex than those for goods. This adds to the difficulty of assessing the rights and obligations that members have under GATS.

GATS represents a new dimension for a large sector of world economic activity. And because such a large share of trade in services takes place within national economies, its requirements will influence domestic laws and regulations in a way that is yet to be understood by policy framers.

Among the important elements of the GATS package is the promise that successive rounds of negotiations will be undertaken to continue opening up world trade in services, especially those that are currently within the "natural domain" of the government themselves.

The size of basic services
In a well analysed article, "GATS : Water a precious tradable commodity", published in The Jakarta Post, Henry Heyneardhi states: "Only five per cent of the world's population buys water from transnational corporations (TNCs), but the annual revenue has already reached 40 per cent of the oil sector.

With this enormous potential for profit, water TNCs are pushing to legitimise the trade of water as a commodity through the WTO's General Agreement on Trade in Services."

Fortune magazine in May 2000 predicted the global trend in the water industry thus: "Water promises to be to the 21st century what oil was to the 20th - the precious commodity that determines the wealth of nations."

Water, the article stated, has become one of the biggest businesses globally. The magazine estimated the annual revenue of the water industry at some $400 billion, 40 per cent of the oil sector. This revenue is generated from a mere 5 per cent of the world's population that depends on corporations for water. Thus, the potential market growth is very high. In 1998, the World Bank estimated the market at $800 billion, and revised it to $1 trillion the following year.

The giant water TNCs are in competition for a share of the market, and are pursuing the same goal to establish a global water market where it can be traded as a commodity.

"Put water on sale, and let the market determine its future," seems to be their demand.

This goal can be achieved by legitimising the trade of water through free-trade instruments such as GATS. In the GATS-WTO regime, water supply is in the same category as education, health-care, banking, tourism, transportation and waste management.

Future negotiations and what they imply
GATS thus implies that all countries, after "appropriate negotiation", should open their market to water supply services in the future. This means that the governments shall, without any qualms, transfer water management to the private sector.

As liberalisation confines the role of the state to that of a mere facilitator, the transfer of public ownership of water services to the private sector is expected to fall first into domestic and then foreign players.

Proponents of GATS are convinced that privatisation of water and the concept of a global water market will benefit the rich and the poor.

Increasingly, civil society organisations are becoming aware, and voicing their criticism to services like water suppy being legally bound by such trade agreements as GATS.

These criticisms concern two main issues. First, of GATS helping the private sector, especially giant water TNCs to expand their operations all over the world.

When corporations sell water for profit, the quality, access and safety of water supplies are endangered and the future of water resources becomes threatened.

And, second, of the fundamental principle of water being an essential resource for every living being. Thus, decisions on this resource should be made democratically at the local, national and global level, and on the basis of people's fundamental right to safe and affordable water.

Any policy on water should be discussed and debated democratically so that indigenous communities, community-based organisations and all citizens can voice their opinions and ideas.

The government should be encouraged to carry out a comprehensive assessment of GATS and its impact on life and, more important, on that of children, before committing to it.

The assessment should be followed by an extensive public discussion and debate involving all citizens. The government should be accountable to such trade policies, and as this alone can help it stand up to powerful-governments imposing the privatisation of water.

GATS covers basic services such as water, health and education. Their delivery cannot be left to the mercies of the market forces. It is the duty of the government to ensure that everyone has access to these services, whether or not they can afford to pay. If the state abdicates from such responsibilities, its role would become meaningless.

Commitments made by governments under GATS are irreversible. The privatisation and deregulation of the service provision are controversial, and yet governments are not only signing away their right to regulate but also the right of future generations to implement different policies.

Thus, GATS has become central to the world trade body, and the future of the WTO, in effect, hinges on the opening up of the services sector through GATS.

Experts agree that these negotiations will be bitter, convoluted and irascible. And it is time the civil society in India took notice of these developments, as it is important that the government be transparent and takes its stakeholders into confidence before taking a major decision.

Published at: http://www.thehindubusinessline.com/2005/03/25/stories/2005032500540800.htm

Last modified on Friday, 19 July 2013 17:15

Top