Services open to exploitation


Linda Kaucher warns that a new EU "liberalisation" plan is an attack on democracy that threatens quality public services.


While people across the expanded EU have been expressing their joy at an enlarged European family and their hopes for a continent free from wars, the cynical manipulation of the EU bloc in the interests of multinational corporations has been quietly pressing ahead.


While an enlarged free-trade bloc sounds beneficial, the enlargement takes in not just geography and population but the very definition of "free trade," in the form of expanded access rights for multinational corporations which eat away at the rights of governments.


There is nothing European in this wider corporate access, because the new rights will also apply to subsidiaries of US corporations registered in any EU member state.


For international investors, boundaries, blocs and borders are only meaningful in terms of how they affect corporate control and opportunities for profit.


Unlike the patriotism and European consciousness that we are encouraged to engage with, profit has no nationality.


The EU directive on services, now in draft form and due to be adopted next year, is a huge step towards corporate control of the EU "free trade zone."


While media attention focuses on celebrations, cultural diversity and worker migration, this directive is shifting power away from member states to multinational corporations.


The Department of Trade and Industry is actively promoting this directive. Many of the civil society agencies which critically appraise EU trade policy do so from a development perspective and there are two reasons why they may fail to take note of this important directive.


One is that it comes from the commission on internal markets and not the agencies' usual focus, the trade commission. The other is that it is not about how EU trade policy affects the developing world, but about how it is affecting us.


Nevertheless, the loss of EU governments' right to regulate, the forcing open of markets for the unfettered entry of multinationals and the loss of democracy will spread to the rest of the world.


Under this directive, liberalisation will be forced on all member states and across all services, except for transport, financial services and telecommunication, which are covered by existing EU legislation.


Trade activists have been trying for years to raise awareness about the World Trade Organisation's general agreement on trade in services (GATS), under which countries are pressured to "liberalise" their services that is, open them to multinational control. Inherent in this is pressure to privatise public services. However, under GATS, give or take the backroom pressure, countries choose which services they want to liberalise. With this directive, here in Europe - the richest services market of all - there will be no choice.


And the onus will be on EU members to make explicit any licensing requirement or regulation - for instance, regulation to protect the environment, domestic business or workers' rights. "Disciplines," as regulation and licensing are described, must be "objective and transparent, with clear deadlines." They must be provided and failure to do so will be taken as "consent to no restriction."  This obligatory transparency is the entry point for challenges to "restrictions," toward getting rid of regulation.


According to the draft directive, once regulation is made transparent, there will be a "systematic screening" of any "attempted" restrictions. The examples given in the draft are quotas or fixed minimum or maximum prices. This screening will be carried out by the commission, the member state and "stakeholders."


With the internal markets commission pursuing an unrestricted free-trade agenda and the "stakeholders" - that is, multinational corporations - represented by teams of trade lawyers, it is likely that it will be easier for governments to give in to pressure to reduce regulation than to try to defend it, even if they are inclined to do so.


A government such as our own , advocating and committed to facilitating unrestricted free trade, will be unlikely to attempt any defence of regulation. The danger to democratically formulated legislation will become apparent.


The draft directive also stipulates that there must be just one contact point for corporations seeking entry to a market, in order to reduce "red tape." In Britain, this will be the Department of Trade and Industry. The DTI has used the crudest of imagery - a man falling backward off a chair with red tape around his legs - to promote the directive and to convince small and medium businesses that such a policy is in their interests.


However, in an environment where international corporations will have open access, small and medium-sized businesses will have little chance to compete. Under this system of a single contact point, intervention by other departments with responsibility for protecting the environment, limiting multinational takeovers, protecting consumers or ensuring local government input will be discouraged.


Again, it will be easier not to bother. It should be a major concern that the DTI, which has admitted that it has never considered international human rights, women or sustainable development in its policies or work, will have sole responsibility for service liberalisation. In international parlance, "trade facilitation" includes reducing customs requirements. "Trade facilitation" was rejected internationally at the WTO ministerial in Cancun last September, when developing countries closed ranks to resist the four new issues that a corporate-driven EU and US were trying to force on them.


Another of the rejected issues was "transparency in government procurement." While "transparency" has a healthy ring to it, in international trade terms, this is the transparency described above, applied to both national and local government spending - the onus of making any regulation totally explicit so it can be easily challenged.


Although both of these were thrown out by developing countries which anticipated the disadvantages that they would entail, both are now being quietly forced on all EU members. The DTI is, in fact, currently conducting a "consultation" on the draft directive. However, the integrity of this is undermined by the fact that the department is already committed to and actively promoting it.


Other reasons why this consultation is a meaningless exercise include the fact that small and medium business organisations, but few others, have been informed, despite the fact that the directive will affect everyone. There is little chance that the actual submissions will be published - this is not how the DTI operates. And, most significantly, a British consultation is lost in the wider context of the EU.


The usual slippery situation is that the DTI says that it is doing what British citizens have called for, but that their views are overridden by other states. At least, with GATS, the British "consultation" was followed by an EU consultation. This provided an opportunity for civil society to speak up strongly, forcing EU trade commissioner Pascal Lamy to state that health and education would be excluded from the EU GATS liberalisation offer - even though this was not quite the exemption that it appeared to be.


For this directive, which has all the disadvantages of forcing open our services to multinational investors, but without the "choice" offered by GATS, we need at least an EU consultation, with submissions published in full. Free-market advocates like Tony Blair use the concept of "choice" again and again to emphasise the benefits of the "free market" for consumers, even though what we generally get when markets are liberalised is multinational monopolies.


One example is the security and private prisons business, dominated globally by Group 4.

Another is privatised water services, controlled by a small handful of European companies, and a third is the waste collection industry, which is owned worldwide by about three multinational corporations.


These are all global service monopolies. Thus, not only are consumers tricked by this myth of "choice" but, under the services directive, consumers' rights to practical redress are set to be severely curtailed.


If a corporation registered in one member state operates in another under a "temporary residence," then redress against it will have to be sought in the member state in which it is registered. This is disastrous for consumers and the consumers' movement should be extremely concerned about this aspect.


Many Eurosceptics, themselves free-trade advocates on behalf of corporations, seek to raise concerns about the "loss of democracy" in, for instance, European-wide environmental protective measures, slating them as being restrictive to trade. This is not the nature of this directive and that argument does not apply. This directive shows the power of corporations to lobby for - and get - what they want from the EU.


It is not EU restriction pitted against big business, but EU regulation pitted against democratically elected governments and their right to regulate on our behalf. An EU-wide consultation would allow people to reject what is being planned in regard to service liberalisations in the EU, without rejecting the benefits of the EU.


Instead of this directive, we need EU directives derived from democratic processes, in response to our collective concerns as European citizens, with honest and open consultations that do not have predetermined conclusions.

We need directives that utilise European coherence to prioritise sustainable development, democracy and human rights and to develop principled positions and useful action plans in our relationships with poorer countries.


Corporate-driven centralised directives, attempting to con us and disallow regulation, along with pretend "consultations," are destructive to the goals of a sustainable Europe.


Linda Kaucher is active in the UK GATS Network.  This article first appeared on May 24 in the Morning Star, Britain's socialist daily, which is accessible on-line at