Trading Away Our Water Rights?
Speech by Dr Patricia Ranald, AFTINET
Convenor, for the Seminar on World Water Day, 22/03/02, Parliament House, Sydney.
companies like Frances Suez are rushing to privatise water, already a $400 billion
global business. They are betting that water will be to the 21st century what
oil was to the 20th" (Fortune
Magazine, May 15, 2000 p 55).
What if our government signed a legally binding international
agreement which meant that water had to be treated purely as a traded commercial good?
What if the rules of this agreement meant that regulation to ensure equitable access and
affordable pricing of water services could be challenged by transnational corporations as
a barrier to free trade? What if the agreement meant that governments had to open up the
funding of publicly owned water services to privatisation by transnational corporations?
What if the negotiations for such an agreement took place behind closed
doors and it was legally binding on all levels of government without any legislation being
passed in the Australian parliament?
Impossible? Unfortunately not.
The Australian government is taking part in negotiations over the next
two years in the World Trade Organisation (WTO) which could have these results in
Australia, and have even more devastating impacts in developing countries. These
negotiations are about changes to the General Agreement on Trade in Services (GATS). They
seek to reduce that right of governments to regulate services, to remove all barriers to
trade in environmental services and to define all water services as commercially traded
goods rather than public goods requiring public regulation . This is a fundamental attack
on democracy . Decisions about essential services like water should be made democratically
at the local and national level, not secretly signed away in trade agreements.
Why, you might ask, would governments want to sign away their own
powers? They are under pressure form transnational corporations which see water as a
source of vast profits: the oil of the 21st century. Also many governments like
our Federal government support privatisation and deregulation as part of their political
ideology, but they know it is highly unpopular. By transferring the decision to an
international body they can pass the political responsibility on to the WTO.
What is GATS?
The Australian government and other member governments of the WTO
signed the General Agreement on Trade in Services (GATS) in 1994. It potentially applies
to all services, from banking to transport and telecommunications, to health, education
and prisons, but not up until now to most water services. GATS aims to promote
international trade in services, and to remove barriers to such trade.
Although some GATS rules apply to all services, many only apply to
those services which each government agrees to list in the agreement. However, GATS
commits governments to increase over time the range of services included in the agreement,
without any review of its impacts.
Under GATS rules, a government cannot give better treatment to local
service companies than to foreign service companies in the services areas it has listed in
the agreement. This is known as "national treatment". Governments cannot limit
the access of companies by limiting their numbers or requiring them to have local content
or train local people.
The GATS Agreement was signed with little public debate in Australia.
Signing of trade agreements is a Cabinet decision. WTO agreements are briefly tabled in
parliament and examined by a parliamentary committee, which can only make recommendations
This is in contrast to UN agreements on human rights and the
environment, most of which require domestic legislation for their implementation.
Like other WTO Agreements, GATS rules are legally binding on
governments, and can be enforced through the WTO dispute system. Governments can complain
about the laws of other governments to a panel of trade law experts and the winner can ban
or tax the exports of the loser.
What changes are proposed to GATS and who wants them?
Governments are being asked to increase the range of services which
they agree to be covered in the GATS, and to make changes to the rules of GATS which could
reduce their right to regulate services, and to provide and fund public services.
GATS has some rules which recognise the right of government to regulate
services and to provide and fund public services. These rules are there because many
governments recognised that many services need to be regulated or provided by government
to ensure equitable access to them.
However, the GATS rules on public services are ambiguous. The agreement
says that public services are generally not covered by the GATS, except if they are
supplied on a commercial basis or in competition with other service providers. Since many
public services have been exposed to private competition through privatisation and
competitive tendering policies, this means it is not clear whether some GATS rules can
apply to some public services. The current agreement only fully covers public services if
governments list them in the GATS agreement. Most governments have not listed public
services like health, education or water.
Governments are now being pressured by global services corporations to
reduce the right of governments to regulate services and to open public services to
private investment. They see water services as trillion dollar markets which should be
opened up to them. They see government regulation and provision of public services as
barriers to trade.
There is a proposal to reduce the right of government to regulate by
declaring that regulation in areas like qualifications, licensing requirements, and
technical standards. must be "least trade restrictive" .This means that
companies could challenge such regulation under the WTO disputes process and the
obligation would be on governments to show that their regulation is not a barrier to
trade. The disputes are heard by experts in trade law and public interest and
environmental considerations are given little weight. Companies can argue that
environmental or health regulation which is not found elsewhere is too trade restrictive.
For example, the US and Canada successfully argued against an EU ban on beef containing
high levels of hormones on the grounds that such regulation did not exist in North America
and that was so burdensome for their companies that it was a barrier to trade.
There is also a move to apply "national treatment" rules to
government funding. This would define the funding of public services like health and
education as unfair "subsidies" to public services. Under the rules of national
treatment, transnational corporations could argue for equal access to them through
compulsory competitive tendering, leading to privatisation .
Australian Government Policy
The Australian government has supported a stricter WTO test to
reduce national rights to regulate services. It has also supported the definition of all
water services as traded goods which could be covered by GATS.
In the past, governments have recognised that equitable access to water
requires careful public regulation and often government provision of water services.
Up until now, the GATS definitions of services includes sewerage and
sanitation services but not drinking water services, and no government has listed water
services to be fully covered by the GATS.
But the WTO Doha Ministerial Meeting in November 2001 made a general
commitment to remove all barriers to trade in environmental services. The Australian
government is supporting an EU proposal to broaden the definition of environmental
services to include all water services. This means that water services could be included
in GATS negotiations, and governments could face pressure to include water services in
their GATS commitments. If the other changes to GATS proceed, (to reduce the right of
governments to regulate and to open up the funding of public services to foreign
corporations), then GATS could become a means of privatising water services.
Another proposal being debated in the WTO is for an investment agreement which would
have many of the features of the OECD Multilateral Agreement on Investment which collapsed
in 1998. It collapsed after public exposure and debate revealed that it was an attempt to
remove the powers of governments to regulate transnational investment, and to give
corporations the power to challenge laws and sue governments if regulation restricted
investment. rights. Transnational corporations are lobbying for an investment agreement
with a complaints mechanism which would enable foreign investors to challenge laws which
harm their investments and to sue governments for damages. The model preferred by
corporations is the infamous disputes process of the North American Free Trade Agreement
(NAFTA) between the US, Canada and Mexico. Corporations have used this process to sue
governments for millions of dollars on the grounds that environment or health and safety
legislation has harmed their investments.
The Canadian-based Methanex Corporation is suing the U.S for US$970 million because of a
ban by California and other states on the fuel additive the company manufactures, which
has become a major groundwater contaminant. Among other claims, Methanex is arguing that
the ban was unnecessary because less trade-restrictive measures were available;
The U.S.-based Sun Belt Water Inc. is suing Canada for US$10 billion because a Canadian
province interfered with its plans to export water to California. Even though Sun Belt had
never actually exported water, it claims that the ban reduced its future profits
- The U.S. Metalclad Corporation sued a local municipality in Mexico for US16.7 million,
because it was refused permission to build a 650,000-ton/annum hazardous waste facility on
land already so contaminated by toxic wastes that local groundwater was compromised;
Under bilateral investment agreements based on the NAFTA model:
Aguas del Tunari, an affiliate of U.S.-based Bechtel has threatened to sue Bolivia for
more than US$25 million, for breach of its contract to provide water services to the City
of Cochabamba. When public anger erupted over steep price increases, Bolivia cancelled its
privatisation deal with the company.
- Compania de Aquas del Aconquija (a subsidiary of Vivendi) is suing Argentina for US$300
million, arising from a water and wastewater privatisation deal gone sour. The claim
alleges that public health orders, mandatory service obligations, and rate regulations all
offended its investor rights;
(Source: Steven Shrybman, "Thirst for Control" www.canadians.org)
What can we do about it?
The Australian Fair Trade and Investment Network is a network of over
50 human rights groups, churches, unions, environment groups, and community organisations
which conducts public debate and community education on trade and human rights issues and
seeks to make our government accountable for its trade policies.
The decisions about GATS and an investment agreement will be made over the next two
years. There is time to campaign to expose these issues to public debate, and to tell our
government that we do not want our rights to make decisions about essential water services
AFTINET is campaigning to put pressure on our government and is linking with movements
in other countries to influence the WTO process.
Some Campaign materials are available on our website now and we will be launching new
materials in April.
We are making the following demands of our government:
- a review of the impact of the existing GATS agreement and full public discussion of the
- no reductions in the ability of governments to regulate services;
- clear exclusion of public services, cultural services and water services from the GATS
- all GATS negotiating requests and responses should be made public and publicly debated
before governments make commitments;
- GATS and other trade agreements to be debated and ratified by parliament, not by
- No WTO investment agreement which would remove the rights of government to regulate
foreign investment or give corporations the right to challenge public interest legislation
and sue governments for damages.
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