GATS and Corporate Political Power

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Erik Wesselius, Corporate Europe Observatory

The GATS 2000 negotiations largely follow a double corporate agenda of undermining public services and of deregulation. They constitute a veritable threat to democratic decision making by putting private interests above the public interest. This corporate bias is not accidental, but the direct result of systematic and sustained political pressuring by transnational services corporations, usually working through dedicated pressure groups like the US Coalition of Service Industries (USCSI) and the European Services Forum, and using the prestige of business leaders to lend weight to their demands.

Corporate lobbying for a multilateral agreement on services started in the early 1980s. At that time major US services corporations, united in the USCSI, were able to get the issue on the agenda of the GATT Uruguay Round. David Hartridge, former director of the WTO Services Division, has publicly acknowledged that "without the enormous pressure generated by the American financial services sector, particularly companies like American Express and CitiCorp, there would have been no services agreement."

Corporate pressure was equally strong during the negotiations of the WTO Financial Services Agreement (an annex to GATS) in the mid-1990s. This time, European financial service providers joined forces with their US counterparts in the Financial Leaders Group, bringing together the world's biggest banks and insurers. According to former EU Trade Commissioner Leon Brittan, "the close links established between EU and US industry... were an essential factor in obtaining the final deal."

In fact, Commissioner Brittan considered the Financial Leaders Group such a success that he wanted to use it as a prototype to create momentum for the GATS 2000 negotiations, originally scheduled to be launched at the WTO Seattle Ministerial. In his words, "The example of the EU-US Financial Leaders Group -- involving a group of business leaders to provide high-level momentum to the negotiations -- has been the model for the creation of a new mechanism for Europe. A similar deal will be needed for the next round of services liberalisation negotiations." Thus in early 1999 the European Services Forum (ESF) and the high-level European Services Leaders Group (ESLG) were created, with Brittan's active support.

The ESF and ESLG have privileged access not only to the Trade Directorate of the European Commission but even to meetings of the Committee 133 of the European Council -- a remarkable fact, considering that these secret meetings are closed to members of the European Parliament itself.

The good understanding between DG Trade and the ESF was attested last year, when upon a "spontaneous application" by ESF managing director Pascal Kerneis, DG Trade granted the ESF 49,200 euro as 50% of the expected costs of the international conference on GATS 2000 that ESF organised in Brussels on 27 November 2000.

Or to give another example of the close links between corporate and government elites, consider the career of Leon Brittan after his resignation from the European Commission in 1999. Having been appointed vice-chairman of investment bank UBS-Warburg in October 1999, he now lobbies the European Commission on behalf of International Financial Services London (IFSL), representing the interests of the City of London financial industry.

In the spring 2001 issue of IFSL World, Brittan turned his attention to the industry's need to fight off criticism from civil society, writing that "non-governmental organisations have staked a claim in the international debate [on] globalisation, the international institutions and the WTO in particular". Business, he contends, "cannot afford to ignore them. What we have to do is to take the debate on and win it."

The previous paragraphs demonstrate the extent to which corporate interests are shaping the WTO agenda on trade in services. Challenging corporate political power should be a central feature in the international campaign to bring GATS to democratic account.

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