The General Agreement on Trade in Services (GATS)

Contents:
 

What is the GATS? (Source UNESCO)

The GATS was adopted by the Uruguay Round and covers all internationally traded services. It is also the first multilateral agreement to provide legally enforceable rights to trade in all services including cultural ones.

The agreement defines four ways of providing an international service:

Services supplied from one country to another (e.g. banking or architectural services provided through telecommunications or regular mail), known as "cross-border supply".

Consumers or firms using a service in another country (e.g. tourism or aircraft or ship maintenance work), known as "consumption abroad".

A foreign company setting up subsidiaries or branches to provide services in another country (e.g. Insurance companies or hotel chains) officially known as "commercial presence".

Individuals travelling from their own country to supply services in another (e.g. auditors, physicians, teachers, etc.), known as "presence of natural persons".

Both national treatment and Most Favoured Nation (MFN) principles apply to trade of all services except those provided in the exercise of governmental authority.

Governments can choose the services in which they make market access and national treatment commitments and they can limit the degree of market access and national treatment they offer. In short, every country has the right to choose the sectors in which it wishes to make an offer of liberalization, and can also establish a list of specific commitments it wishes to make to provide foreigners access to its’ services market...

On the other hand, the Most Favoured Nation clause and the principle of transparency are general obligations under the GATS, so they will apply even if the country has made no specific commitment to provide foreign companies access to its market. "Members shall accord immediately and unconditionally to services and service suppliers of any other Member treatment no less favourable than that it accords to like services and service suppliers of any other country" (GATS, Article II). However, special temporary exemptions to this MFN obligation have been allowed alongside the commitments, and will normally last no more than 10 years...

In English, GATS (General Agreement on Trade in Services); in French, AGCS (Accord Général sur le Commerce des Services).

Source: 25 questions on culture, trade and globalisation: http://portal.unesco.org/culture/en/ev.php-URL_ID=18680&URL_DO=DO_TOPIC&URL_SECTION=201.html

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Scott Sinclair, “The GATS, Democratic Governance and Public Interest Regulation”

The GATS came into being January 1, 1995 after eight years of complex negotiations. The resultant Agreement subsumed and reached well beyond the General Agreement on Tariffs and Trade (GATT), which had regulated trade since 1948. In his article “The GATS, Democratic Governance and Public Interest Regulation”, Scott Sinclair demonstrates that with the introduction of the GATS, “Multilateral rule-making, and especially enforcement, to protect commercial trading interests surged ahead of international rule-making, in other vital areas such as environmental protection, human rights, public health, and cultural diversity” (2). Contrary to GATS proponents who assert that it does not threaten public services and public interest regulation, Sinclair argues that the GATS intrudes into and restricts vital areas of democratic public policy-making, by privileging international commercial interests over other legitimate societal interests (http://www.rsc.ca/files/publications/transactions/2001/Sinclair.pdf)

See also the Polaris Institute http://www.polarisinstitute.org/gats/main.html

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The GATS Explained by the World Trade Organization (WTO)

www.wto.org

Ranging from architecture to voice-mail telecommunications and to space transport, services are the largest and most dynamic component of both developed and developing country economies. Important in their own right, they also serve as crucial inputs into the production of most goods. Their inclusion in the Uruguay Round of trade negotiations led to the General Agreement on Trade in Services (GATS). Since January 2000, they have become the subject of multilateral trade negotiations.

General obligations and disciplines

Total coverage: The agreement covers all internationally-traded services — for example, banking, telecommunications, tourism, professional services, etc. It also defines four ways (or “modes”) of trading services:

Services supplied from one country to another (e.g. international telephone calls), officially known as “cross-border supply” (in WTO jargon, “mode 1”)

Consumers or firms making use of a service in another country (e.g. tourism), officially “consumption abroad” (“mode 2”)

A foreign company setting up subsidiaries or branches to provide services in another country (e.g. foreign banks setting up operations in a country), officially “commercial presence” (“mode 3”)

Individuals travelling from their own country to supply services in another (e.g. fashion models or consultants), officially “presence of natural persons” (“mode 4”)

Most-favoured-nation (MFN) treatment Favour one, favour all. MFN means treating one’s trading partners equally on the principle of non-discrimination. Under GATS, if a country allows foreign competition in a sector, equal opportunities in that sector should be given to service providers from all other WTO members. (This applies even if the country has made no specific commitment to provide foreign companies access to its markets under the WTO.)

MFN applies to all services, but some special temporary exemptions have been allowed. ...[The WTO granted ] the right to continue giving more favourable treatment to particular countries in particular services activities by listing “MFN exemptions” alongside their first sets of commitments. In order to protect the general MFN principle, the exemptions could only be made once; nothing can be added to the lists. They are currently being reviewed as mandated, and will normally last no more than ten years.

Governmental services are explicitly carved out of the agreement ... to allow publicly funded services in core areas of their responsibility. Governmental services are defined in the agreement as those that are not supplied commercially and do not compete with other suppliers. [It is not so simple as this, because while government services may not be commercial in nature, they can be considered to (inadvertently) compete with foreign (commercial) services setting up within a given country. This has already been demonstrated by cases such as the UPS suit against Canada Post]

For more detail see: http://www.wto.org/english/thewto_e/whatis_e/tif_e/agrm6_e.htm

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Culture and the GATS

In response to the challenge posed by the GATS to cultural sovereignty and cultural diversity, several key initiatives have been undertaken. This section offers annotated links to several on-line resources concerned with culture and global trade liberalization.

The GATS jeopardizes the ability of countries to maintain cultural sovereignty—the ability of a country to enact laws and policies that protect and promote its culture and cultural industries. For example, the GATS trade liberalization objectives designate national policies and structures such as public funding for arts and culture as barriers to “equitable” trade. What is called “deregulation” actually refers to the negotiation and application of complex new trade rules. Violations of this “deregulated” trade are settled at the WTO’s Dispute Settlement Body (DSB).

General Agreement on Trade in Services (GATS)
A Growing Threat to Cultural Policy

Already, GATS places constraints on the ability of sovereign governments to implement cultural policies and programs. Proposals in the new round of liberalization talks and the comprehensive negotiating agenda adopted by the WTO, can only bring further restrictions on governmental measures that support domestic cultural expressions and ensure cultural diversity.

...for purposes of analyzing the consequences of trade agreements on cultural policy one can consider that aspects of the process of artistic creation are “services,” for example, the work of the author, painter, musician or the film distributor...
Garry Neil, Coordinator INCD 3 May 2002 http://www.incd.net/paper03.html

An Open Letter From Artists September, 2003

Our world of unequal economic relationships has created unequal cultural relationships. We believe governments have a responsibility to resist the economic push by implementing policies that support diverse local artists and cultural producers, and ensure pluralism in the media and the arts. This will create more choice and bring about a greater balance in exchange between cultures. Governments must also preserve threatened cultures and languages, especially those of indigenous peoples.

An important struggle between these incompatible visions is underway in trade negotiations. Trade officials negotiate rules that would hasten a global monoculture and make it virtually impossible for communities to support their artists. We oppose these efforts. http://www.incd.net/letter/letter.htm

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International Network on Cultural Diversity (INCD)

www.incd.net

INCD is a worldwide network of artists and creators, cultural NGOs and professional cultural associations, academics and others working to counter the adverse effects of economic globalisation on arts and culture. INCD has 300 members in 71 countries, a number of which are international organisations with a presence in other countries.
http://www.incd.net/docs/draftconventioncomments0804E.htm

The INCD’s proposal for the UNESCO Convention on Cultural Diversity : http://www.incd.net/incden.html

Paris, February 2005: More than 550 delegates from 140 countries, two intergovernmental institutions and 23 Non-Governmental Organizations met to continue negotiations of the draft text of a convention on cultural diversity. http://www.incd.net/docs/Newsletter50E.htm

UNESCO preliminary draft of a Convention on the Protection of the Diversity of Cultural Contents and Artistic Expressions.http://www.incd.net/incden.html

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International Network on Cultural Policy (INCP)

www.incp-ripc.org

The International Network on Cultural Policy (INCP) was created in 1998 with the goal of “promoting the importance of cultural diversity in the face of technological, economic and social cshange”. The INCP set out to create an International Instrument on Cultural Diversity (IICD) because “existing international agreements in the cultural sector do not sufficiently address the policy issues inherent in ensuring cultural diversity. Most instruments are of a declaratory nature only and are unable to balance out the international trading system with its enforceable dispute settlement mechanisms”. The IICD highlights the importance of “maintaining space for domestic cultural expression, the importance of public financial support, the role of public service institutions, and the contribution of independent cultural industries”. http://206.191.7.19/iicd/brochure_e.shtml

The INCP Working Group on Cultural Diversity and Globalization has been working with UNESCO in developing an International Convention on cultural contents and artistic expressions. Such a convention aims to ensure that culture is protected under new global trade regulations, recognizing that “specific cultural policies are often required to promote cultural diversity” and “reaffirm[ing] the right of states to maintain or adopt appropriate measures for the development of cultural expression and the promotion of cultural diversity, while also complying with their international obligations”. A draft of the INCP Working Group's International Convention on Cultural Diversity presented in Opatija, Croatia, October 16-18, 2003 is downloadable on http://206.191.7.19/iicd/list_e.shtml

The following question is posed on one of the INCP’s FAQ pages. However, the answer provided seems to put too much faith in the supposed “flexibility” and “choice” offered by the GATS. Countries have been under increasing demand to commit more and more services to the GATS, and differing interpretations of the GATS has already led to numerous disputes. That “the INCP draft would not remove the cultural services or audiovisual services sectors from the scope of the GATS, nor would it alter the horizontal Most Favoured Nation (MFN) and transparency obligations for any services” raises ambiguities whether the INCP’s proposed Convention actually goes far enough...

If countries wish to retain cultural policy space, why do they not simply take advantage of the flexibility of the GATS and not schedule commitments that conflict with their cultural policies?

It is important to note that it is not just the GATS that could affect cultural policy measures. With WTO consideration of such issues as investment and competition on the horizon, both of which could affect cultural policy measures, it is clear that the challenge of maintaining cultural policy space extends beyond the services disciplines of the GATS and into other WTO agreements. Indeed, the same challenges are present for other regional and bilateral negotiations and agreements. A Convention would provide an international point of reference on cultural policy that could be put to use to determine the appropriate treatment for cultural goods and services as the rules-based international trading system evolves through bilateral, regional and multilateral agreements.

The GATS does indeed have a certain flexibility. WTO Members can choose those sectors in which to schedule market access and national treatment commitments, and can choose the extent of their commitments. Article XIX of the GATS states that the "process of liberalization shall take place with due respect for national policy objectives...," providing WTO Members with the ability to ensure that domestic cultural policy objectives are reflected in their commitments or absence of commitments in their GATS schedules. Moreover, the INCP draft would not remove the cultural services or audiovisual services sectors from the scope of the GATS, nor would it alter the horizontal Most Favoured Nation (MFN) and transparency obligations for any services.

In other words, a Convention on Cultural Diversity would provide a new forum of multilateral cooperation, consultation, and of rights and obligations among parties that would allow signatories to be better informed as they engage in the domestic decision-making envisaged under Article XIX.
http://206.191.7.19/iicd/faq_e.shtml

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UNESCO International Convention on Cultural Diversity

http://www.unesco.org

Paris, 31 Jan 2005 - 11 Feb 2005 Second Session of the Intergovernmental Meeting of Experts Preliminary Draft Convention on the Protection of the Diversity of Cultural Contents and Artistic Expressions

The Paris meeting is a follow-up to the First Session of the Intergovernmental Meeting of Experts (20-24 September 2004) and aims at examining the work of the Drafting Committee (UNESCO, Paris, 14-17 December 2004) which revised the Draft Preliminary Convention on the basis of the written comments submitted by Member States on the first version of the draft convention distributed in July 2004.

UNESCO preliminary draft of a Convention on the Protection of the Diversity of Cultural Contents and Artistic Expressions

The UNESCO Universal Declaration on Cultural Diversity was adopted unanimously by the General Conference at its 31st session on 2 November 2001. The Declaration was born of the wish of the Member States to define a standard-setting instrument, in the context of Globalization, for the elaboration of their national cultural policies, whilerespecting international rules and fundamental rights. It is the first time the International community has possessed a legal instrument which raises cultural diversity to the rank of“common heritage of humanity”. http://portal.unesco.org/culture/en/ev.php-URL_ID=13066&URL_DO=DO_TOPIC&URL_SECTION=201.html

The Convention seeks to enable countries to maintain their own cultural policies in order to ensure cultural sovereignty and diversity in a global market characterized by "distortions resulting from high levels of concentration in industries involved in the production and distribution of content; the differing levels of access to economies of scale because of language or size of population; the lack of capacity in developing countries to commercially develop and promote their creative talent, or the ability of established producers to sell distribution rights to audiovisual content at low cost in foreign markets once production costs have been recouped in domestic markets". The social benefits of culture, which generate economic and social prosperity and contribute to democracy and identity, must be considered by governments in developing their public policies. For this reason UNESCO's Universal Declaration on Cultural Diversity recognizes that cultural goods and services should not be treated simply as mere commodities. An effective dispute resolution mechanism is to be created for matters involving rights and obligations accepted under the Convention. http://206.191.7.19/meetings/2004/faq_france_e.shtml
http://206.191.7.19/meetings/2004/faq_canada_e.shtml

In order to protect cultural sovereignty within agreements such as the GATS, the Convention seeks to provide a framework for policies that create a “balance between the right to promote the production and availability of domestic cultural content, and the obligation to remain open to cultural content from other countries”.
http://206.191.7.19/meetings/2004/faq_france_e.shtml

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Who’s Afraid of Canadian Culture?

Canada negotiated a cultural exemption during The North American Free Trade Agreement (NAFTA), but subsequently the Free Trade of the Americas Agreement (FTAA) and the General Agreement on Trade in Services (GATS), as well as several cases that the US has taken to the WTO Dispute Settlement Body (DSB) against Canada, demonstrate that such a cultural exemption no longer stands secure.
See Leslie Regan Shade, "Whose Afraid of Canadian Culture?" http://courseweb.edteched.uottawa.ca/CMN2168/shadecul.htm

See also Ellen Gould, "Update on the GATS Negotiations and Their Implications for Public Sector Libraries"(June 2004) http://www.cla.ca/issues/gats_update_gould.pdf

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More Links to Cultural Policy Organizations

International Network of Observatories in Cultural Policies
A resource of organizations concerned with cultural policy and promoting cultural activities can be found at:
http://www.unesco.org/culture/development/observatories/ html_eng/members.shtml

For example:

INTERARTS (European Observatory of Regional and Urban Cultural Policies)
INTERARTS is an international cultural co-operation agency with headquarters in Barcelona. Its purpose is to carry out cultural projects and socio-economic territorial development within the construction of the European social space as well as to develop cultural relations between Europe and the rest of the world.
http://www.interarts.net

ERICArts (European Research Institute for Comparative Cultural Policy and the Arts)
ERICArts was designed as an independent multinational research body comprised of over 70 experts and institutions from 30 countries. They work together in integrated project teams in order to tackle European issues through a programme of comparative research on cultural policy and media developments, cultural education and various professional artistic fields.
http://www.ericarts.org

Centre for Arts and Culture
An independent think-tank associated with George Mason University
http://www.culturalpolicy.org/

On June 2, 2003, the Center for Arts and Culture launched the Cultural Commons, an online space for networking, information exchange, community building and issue identification in cultural policy. http://www.culturalcommons.org

Culture Link Network
Network of Networks for Research and Cooperation in Cultural Development
http://www.culturelink.org/

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GATS FREE ZONES

The Commons Service Group declares the zones in which we take action to be “GATS FREE ZONES”

Many cities, organisations and groups have declared themselves a “GATS FREE ZONE”. This maneuver holds no legal ground. It is a symbolic response to the fact that citizens have not been consulted regarding an agreement that will affect their communities directly.

The Commons Service Group declares art to be a“GATS FREE ZONE.” This is an aesthetic maneuver that we are employing in disseminating information about the GATS to artists, professionals and audiences of contemporary art.

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Origin of the GATS FREE ZONE logo

The movement against the GATS has gained visibility through the creation of a logo available in eight languages declaring "GATS Free Zones". Originating in France, this movement has taken hold in many countries, including Austria, Belgium, Italy, the Netherlands, Spain, the UK, Canada, the United States, and Australia.* In France, more than six hundred local, municipal, regional and departmental governments have passed resolutions declaring their territories "GATS Free Zones".

While strong on a symbolic level, the declaration of "GATS Free Zones" does not have any legal bearing on the commitments each country has already made at the level of this WTO agreement. It is a protest against the fact that GATS negotiations have taken place completely outside of democratic processes, and that the GATS supersedes each state's own constitution. It calls for a moratorium of the ongoing GATS negotiations at the WTO so that a genuine public debate can at last take place.

This mode of action allies elected representatives, concerned citizens, and political activists. This alliance of diverse individuals and group within the same movement caught our attention and imagination.

We have adopted the symbolic force of the GATS Free Zone declaration, opting for its deplacement towards the more immaterial and fluid territory of art.

We declare Art and Culture GATS FREE ZONES.

The GATS imposes itself on all social relations, organizing their systematic commercialization. We stress that these very "zones" of exchange between individuals constitute the commons. The WTO, through the GATS, constrains the existence and development of the commons, limiting the alternative kinds of exchanges that are possible in this age of globalization.

Links to more information on GATS Free Zones:

Download the GATS FREE ZONE logo in 8 languages: http://horsagcslogo.chez.tiscali.fr/download.html

"Report on the "Etats generaux" --Estates General-of Local Governments against the GATS" http://www.tni.org/archives/george/etats.htm

* Cities such as Vienna, Liege, Namur, Sheffield, Vancouver, Toronto, Québec, Melbourne, and more than 50 cities in the United States, have declared themselves GATS Free Zones.
http://www.forum-social-tarnais.org/article.php3?id_article=347

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Compiled by the Commons Service Group
last update: July 2005