Info Service on WTO and Trade Issues (May14/01)
6 May 2014
Third World Network
services under serious threat from TISA, warns PSI
Published in SUNS #7794 dated 30 April 2014
Geneva, 29 Apr (Kanaga Raja) -- The Trade in Services Agreement (TISA)
and its excessive breadth, under negotiation among a group of countries,
poses considerable risks to safeguarding public services and vital
public interests, including privacy rights, Internet freedom, environmental
regulation and consumer protection, according to a new report by Public
Services International, the global trade union federation.
The report outlines some of the proposed deregulatory disciplines
that would lock in privatisations of public services and prevent reversal
of national policy, extend national treatment and market access commitments
to the Internet, prohibit "forced localisation" and requirements
that service providers store data they collect within the country,
or prohibit the sale or use of that data for commercial purposes.
Recalling the revelations by whistle-blower Edward Snowden of excessive
surveillance and spying by the US National Security Agency (NSA),
and the contemplated measures in Europe and elsewhere to prevent such
spying, the PSI report says: "If the US gets its way, the TISA
will also undermine user privacy by permitting the uninhibited collection
and transfer of personal data."
On the proposed TISA measures and disciplines, including the use of
‘necessity tests' for any regulatory measures, the PSI report says
that these might come in the way, for example, of the right of governments
to apply universal service obligations in privatised sectors.
The report, titled "TISA versus Public Services", and released
on 28 April, says: "Legitimate treaties to promote international
trade must fully preserve the ability of governments to restore, revitalise
or expand public services. On many levels, the TISA fails this critical
test. Indeed, the TISA's very ethos - extreme secrecy, aggressiveness,
hyper-liberalisation, and excessive corporate influence - contradicts
public service values."
The report was released just as the TISA negotiations resume behind
closed doors this week in Geneva among some 50 countries grouped under
the "Really Good Friends of Services".
They include Australia, Canada, Chile, Chinese Taipei, Colombia, Costa
Rica, the European Union, Hong Kong-China, Iceland, Israel, Japan,
Liechtenstein, Mexico, New Zealand, Norway, Pakistan, Panama, Paraguay,
Peru, South Korea, Switzerland, Turkey and the United States.
The PSI report was authored by Scott Sinclair with the Canadian Centre
for Policy Alternatives, and Hadrian Mertins-Kirkwood of the Institute
of Political Economy, Carleton University.
Referring to the TISA, Rosa Pavanelli, General Secretary of PSI, said
in a media release: "This is an attempt to secretly extend the
most damaging parts of the infamous GATS agreement that previously
sparked global protests. The aim of public services should not be
to make profits for large multinational corporations. Ensuring that
failed privatisations can never be reversed is free market ideology
Jan Willem Goudrian, Deputy General Secretary of the European Federation
of Public Service Unions (EPSU) said: "This agreement will bind
future governments, regardless of who wins elections and what the
courts say. If the European Commission has nothing to hide, they must
immediately release full details of these negotiations."
According to the media release, PSI and civil society organisations
have mobilised to protest against the secret TISA negotiations, with
actions being taken in Switzerland, Australia, the United Kingdom,
Japan, India, the Netherlands, Austria, Belgium, Brazil, Canada, the
United States, Colombia, Mexico, Panama and Costa Rica.
The PSI report notes that governments around the globe are currently
engaged in the biggest flurry of trade and investment treaty negotiations
since the "roaring nineties," when the belief in the virtues
of liberalised market forces was at its peak, and that official enthusiasm
for more intrusive, "21st century" treaties is at a level
not seen since the creation of the World Trade Organisation (WTO)
and the North American Free Trade Agreement (NAFTA) in the mid-1990s.
"The negative impacts on public services include: confining public
services within existing boundaries by raising the costs of expanding
existing public services or creating new ones; increasing the bargaining
power of corporations to block initiatives when new public services
are proposed or implemented; and locking in future privatisation by
making it legally irreversible."
According to the report, early in the new millennium, campaigns to
stop the GATS expansion mobilised public and political pressure to
counter excessive demands for the liberalisation of public services.
"Today, however, the secretive negotiation of a new, aggressive
successor to the GATS poses an even more serious threat to public
The report further said that TISA negotiators are mandated to achieve
"highly ambitious" liberalisation of trade in services,
and that most of the nations involved have already undertaken far-reaching
services liberalisation and are already bound by a dense web of services
Pushing this agenda even further, as the TISA mandate dictates, would
involve "truly radical liberalisation, exerting strong pressure
on the few remaining excluded sectors and surviving exemptions for
key programs and policies," said the report.
"Most observers, however, agree that the real intent of the TISA
is not just radically deeper liberalisation among the current participants.
Ultimately, the goal is to broaden participation by including the
key emerging economies - China, Brazil, India and South Africa - and
smaller developing countries under the agreement."
The report noted that while the TISA negotiations are taking place
in Geneva, home of the WTO, they are being conducted entirely outside
the framework of the WTO.
"The TISA is clearly being driven by developed countries and
multinational services corporations frustrated with the WTO's Doha
Development Agenda, launched in 2001," it said.
Despite gaining agreement on a limited package of reforms at the ninth
WTO ministerial meeting in Bali in December 2013, the Doha Round negotiations
remain stalled, and this impasse has more to do with the inflexibility
of the US and the EU on agricultural and development issues than with
developing countries' resistance to deeper services liberalisation,
said the authors of the PSI report.
Nonetheless, they added, the TISA group of countries, headed by the
US and the EU, has broken away to focus exclusively on achieving their
key offensive interests in services. This decision "to take their
ball and go home" signals that, despite official assurances to
the contrary, rich countries are fully prepared to turn their backs
on the Doha Round if they don't get their way.
The TISA negotiating sessions are not open to all WTO members - even
as observers - while the negotiating texts are kept secret, the report
underscored, citing, for example, that US negotiating proposals are
stamped classified for "five years from entry into force of the
TISA agreement or, if no agreement enters into force, five years from
the close of the negotiations."
"It is hard to imagine why developing countries that have been
so undiplomatically excluded from the TISA negotiating process would
willingly accept its results," said the authors, adding that
developed countries' high-stakes pressure tactics also call into question
the future viability of the WTO as a negotiating forum.
The report also underlined that the TISA negotiations are fundamentally
different from previous plurilateral negotiations in the WTO context
because key participants, particularly the US, are unwilling to automatically
extend the results to all other WTO members on an MFN (Most Favoured
"Instead, the whole point of the TISA is to pressure major developing
countries into joining the agreement on terms dictated by the Really
Good Friends group."
Under WTO rules, said the report, there are only two legitimate options
for refusing to extend the results of a plurilateral negotiation to
all members on an MFN basis.
The first is to conclude a "Plurilateral Trade Agreement"
within the meaning of Article II: 3 of the WTO Agreement. An example
of this is the WTO Agreement on Government Procurement which, while
not compulsory, is open to all WTO member governments.
"Adding any such agreement to the WTO, however, would require
the unanimous consent of all WTO member governments. Given the continued
objections to TISA by South Africa, India and other key WTO member
governments, this option is not politically feasible."
According to the report, the second option is to classify the TISA
as an economic integration agreement or Preferential Trade Agreement
under the terms of Article V of the General Agreement on Trade in
Services (GATS). Before this could happen, the WTO would have to be
notified and the agreement would be subject to review by the WTO Committee
on Regional Trade Agreements.
A number of conditions must be met for an agreement to qualify, including
that it have "substantial sectoral coverage." This coverage
is defined in terms of the number of services sectors, volume of trade
affected and modes of supply.
GATS Article V further stipulates that within this broad sectoral
coverage, the agreement must "provide for the elimination of
substantially all discrimination" through the "elimination
of existing discriminatory measures" and/or the "prohibition
of new or more discriminatory measures."
The authors said that due to the rancour surrounding the breakaway
TISA talks, this option can also be expected to face a rough ride
in the obligatory WTO review process. In the past, the WTO has received
notification of many Economic Integration Agreements covering services
with little fanfare. The TISA would differ in that it only covers
services, and is not part of a wider economic integration pact.
"Even if the TISA passes such a review, its legality could ultimately
be decided by the WTO Dispute Settlement Body. This could occur if
a WTO member government that was not party to the TISA insisted that
its services and service providers were entitled, on an MFN basis,
to the same treatment as TISA participants."
According to the report, dispute settlement is another area of potential
dissonance between the TISA and the WTO. As a stand-alone agreement,
the TISA would require a separate settlement mechanism and bureaucracy.
This creates the messy prospect of TISA interpretations of GATS provisions
that diverge from those of the WTO Dispute Settlement Body.
"Clearly, there are grave legal uncertainties surrounding the
TISA and its relationship to the WTO. These obstacles raise serious
doubts about the claims by the European Commission and some other
TISA participants that their goal is to multilateralise the TISA and
ultimately to incorporate the agreement into the WTO system,"
the report stressed.
"Given the potential adverse repercussions for the Doha Round
and even the WTO itself, why would TISA participants engage in such
a high-stakes gamble," the report asks, adding that the most
straightforward answer is that key TISA governments, led by the US,
are responding to strong corporate pressure.
It noted that the TISA appears to have been the brainchild of the
US Coalition of Service Industries (CSI), specifically its past president
Robert Vastine, who, it said, was one of the first to suggest, as
early as 2009, that plurilateral negotiations on services should be
conducted outside the framework of the WTO.
Working through the Global Services Coalition (GSC), a multinational
services lobby group, the CSI then garnered the support of other corporate
lobbyists for the TISA initiative, it said, adding that the TISA is
a political project for this corporate lobby group.
"Rather than moderate their demands for radical services liberalisation
in response to legitimate concerns, the GSC is pushing the WTO and
the Doha Round to the brink. The group also appears to be largely
indifferent to whether or how the TISA fits into the WTO or the existing
Instead, says the report, the strategy is to attain a sufficient critical
mass of participants in the TISA so that multilateralisation becomes
a fait accompli.
"Indeed, the CSI's preferred outcome is not to extend the results
of the TISA on an MFN basis, but to secure a highly ambitious agreement
among like-minded core participants", and that in this regard,
the TISA would "form a template for the next generation of multilateral
rules and levels of market access."
"Developing and emerging market economies would then be targeted
one-by-one to join the agreement as political conditions permit -
that is, when neo-liberal or more compliant governments are in power.
Sadly, such a crude strategy could actually succeed," said the
According to the report, negotiators are reportedly agreed on a core
part of the TISA text that conforms fairly closely to the GATS, but
that one major difference is that the TISA adopts a "negative
list" approach to national treatment.
Under the TISA, national treatment obligations would automatically
apply to all measures and sectors unless these are explicitly excluded.
For example, under the TISA, like the GATS, national treatment would
apply to subsidies, meaning that any financial support for public
services would have to be explicitly exempted, or be made equally
available to private, for-profit services suppliers.
"This ‘list it or lose it' approach greatly increases the risk
to public services and other public interest regulations now and in
the future. Any public policy that a government neglects to protect,
even inadvertently, is exposed to challenge and any country-specific
exemption becomes a target for elimination in subsequent negotiations,"
said the report.
It also noted that TISA negotiators are working on GATS-plus rules
and restrictions that could push trade treaty restrictions into new,
The report went on to outline some of these "new and enhanced
Firstly, it said that among the TISA's most threatening characteristics
are its obligatory standstill and ratchet provisions.
The standstill obligation would freeze existing levels of liberalisation
across the board, although some parties will undoubtedly try to negotiate
limited exemptions in sensitive sectors, while the TISA's ratchet
clause requires that "any changes or amendments to a domestic
services-related measure that currently does not conform to the agreement's
obligations (market access, national treatment, most favoured nation
treatment) be made in the direction of greater conformity with the
agreement, not less."
According to the report, this ratchet provision, which has reportedly
already been agreed to, would expressly lock in future liberalisation,
which could then never be reversed.
In addition, the TISA will obligate governments to automatically cover
all "new services," meaning those that do not even exist
"Under such far-reaching rules, current neo-liberal governments
can lock in a privatisation scheme for all future generations. These
are precisely the types of constitutional-style restrictions that
must be avoided if democratic authority over public services is to
Secondly, the report noted that one of the key pieces of unfinished
business under the GATS concerns domestic regulation. The GATS Article
VI: 4 called for further negotiations to ensure that "qualification
requirements and procedures, technical standards and licensing requirements"
do not constitute "unnecessary" barriers to trade in services.
With the WTO process stagnated, TISA participants intend to come up
with their own domestic regulation text. Binding domestic regulation
rules in the TISA would provide corporations with a means to challenge
new or costly regulations, even those that treat domestic and foreign
services and service providers even-handedly, said the report.
The proposed restrictions on domestic regulatory authority would expressly
apply to non-discriminatory government measures affecting services.
In other words, the new "disciplines" would restrict domestic
laws and regulations - such as worker safety requirements, environmental
regulations, consumer protection rules and universal service obligations
- even when these regulations treat foreign services or services suppliers
no differently than their domestic counterparts.
The report said that it is highly probable that the TISA will contain
restrictions on domestic regulation that are even more intrusive than
those under discussion in the GATS process, adding that a core group
of TISA countries including Chile, Hong Kong, Mexico, New Zealand,
South Korea and Switzerland continue to push for the TISA to apply
a necessity test to regulations affecting services.
Thirdly, concerning the movement of natural persons (Mode 4), the
report said that the TISA, like the GATS, would prohibit so-called
economic needs tests, including labour market tests, unless these
measures are expressly exempted in a country's schedule of commitments.
In most countries, before hiring temporary foreign workers, a prospective
employer is obliged to demonstrate that there is a shortage of suitably
trained local workers. But under Mode 4 commitments, such economics
needs tests are forbidden. Governments could not require, for example,
that foreign companies conduct labour market surveys to first ensure
that no local workers are available to perform the necessary work
before engaging temporary foreign workers.
Fourthly, the report points out that TISA negotiators are also developing
"new and enhanced disciplines" that relate to the Internet,
electronic commerce and cross-border data flows. The "data"
in question includes personal user information, financial information,
cloud computing services and digital goods.
US industry lobbyists argue that the free exchange of data is "necessary
for global business operations" and that governments have imposed
too many "arbitrary and excessive measures" designed to
constrain US firms. The US Trade Representative has also stated that
data protections in many countries are "overbroad" and inhibit
the possibility of "truly global service."
According to the report, if US negotiators achieve their goals, the
TISA will contain provisions that extend market access and national
treatment commitments to the Internet and prohibit "forced localisation"
- the requirement that foreign companies store any data they collect
within the country they are operating in.
The report noted that the EU currently enforces rules that prevent
companies from transferring data outside of the 28 member states,
with some exceptions, and that in contrast, the US has very lax privacy
laws. In the US, corporations can collect extensive personal information
about their users which can then be sold or used for commercial purposes
with almost no restrictions. The EU is only willing to open up data
flows in the TISA if the US can demonstrate stricter domestic privacy
"However, it is difficult to imagine the US making a compelling
case for privacy in the wake of recent revelations of extensive spying
by its National Security Agency, exposed by whistleblower Edward Snowden,"
said the authors.
They also said that the TISA will apply to the Internet as it does
to other service sectors, forcing liberalisation in a way that disproportionately
benefits the industry's established major players. These massive corporations
are almost exclusively American.
"If the US gets its way, the TISA will also undermine user privacy
by permitting the uninhibited collection and transfer of personal
Fifthly, the report said that one of the most wide-open aspects of
the TISA negotiations is the blanket authority for negotiators to
develop rules "on any other issues that fall within the scope
of Article XVIII of the GATS."
Article XVIII was the basis for the 1996 Telecoms Reference Paper
and the 1997 Understanding on Financial Services Commitments, which
were driven by developed countries dissatisfied with the level of
commitments and regulatory restrictions in these sectors under the
original GATS, it added.
TISA negotiators are currently working on new sectoral agreements
covering the regulation of financial services, telecommunications,
electronic commerce, maritime transport, air transport, road transport,
professional services, energy-related services and postal and courier
These talks are aimed at developing binding, "pro-competitive"
regulatory templates for a wide range of services sectors in order
to facilitate the entry of foreign commercial providers and to privilege
multinational corporate interests, said the report.
For example, it said, such rules generally acknowledge the right of
governments to apply universal service obligations in privatised sectors.
Yet even these vestiges of public service values are subjected to
necessity tests and other pro-market requirements biased towards global
"The TISA is also explicitly designed as a ‘living agreement'
that will mandate trade negotiators to develop new regulatory templates
for additional sectors far into the future."
The scope of such highly customised sectoral agreements is limited
only by the imagination of services negotiators and corporate lobbyists,
and made even more worrisome by the near total secrecy surrounding
"Needless to say, this is totally unacceptable. Services negotiators
have a core mandate to increase foreign trade and commerce. They should
not be permitted to develop prescriptive regulatory frameworks that
would restrict and potentially override public interest regulations
that protect consumers, workers or the environment," said the
Among its conclusions, the report said that within those countries
already participating in the TISA, governments must be pressed for
full consultation and disclosure, and that governments that are not
participating in the TISA must be lobbied not to join and to resist
pressure to do so.
"Non-TISA governments should also be encouraged to speak out
against the corrosive impact of these negotiations on multilateralism,
and to block any efforts by TISA parties to access WTO institutional
resources or the Dispute Settlement Body," it said.