TISA: Negotiations at a standstill

The example of Ghana's capital Accra shows just how problematic it is to privatize public services. Photo: A Safe Water Network (SWN) staffer supplies clean drinking water in an upper middle class district. The people in poorer districts cannot affort this.
Article as analysis
Even if the TISA negotiations were to be continued in 2017, they are still fraught with problems, especially regarding the liberalization of public services.

The Trade in Services Agreement (TISA) – being negotiated since 2012 outside the World Trade Organization (WTO) framework by 23 of its members – should have been a done deal by the end of the year 2016. A Ministerial Conference had been scheduled in Geneva on 5 and 6 December for the purpose. It was cancelled at short notice. For the time being, the future of the TISA remains in limbo. The differences were too vast and numerous, in particular as regards the liberalisation of public services and data protection.

On 7 October Wikileaks revealed that the European Union (EU) had demanded that participating developing countries1 freeze their public service offers, without being able to alter them subsequently. This would affect telecommunications in Costa Rica, Mexico and Pakistan, environmental services in Costa Rica, Panama and Peru, the energy and mining sector in Mexico and Pakistan, or in Mauritius, the prohibition on giving preference to local staff when recruiting. This is all the more astonishing, in the light of EU unwillingness to liberalize its own public services. For developing countries, however, it would mean that their public services would be thrown open to foreign competition and eventually be privatized. Besides, many countries cross-subsidize their public services so as to ensure the availability of basic services even in remote, «unprofitable» areas. If developing countries bow to the wishes of the EU, they would henceforth be at the mercy of foreign providers by operation of the ratchet clause – they would no longer be able to reverse privatizations if they failed to deliver the desired outcomes. But the EU goes even further by demanding market opening from developing countries involved in the TISA in the retail trade, air traffic and maritime transport.

Environmental and information technology services

And Switzerland? In its third revised offer dated 21 October, Switzerland bowed to EU pressure and discontinued its opposition regarding municipal and cantonal environmental services and environmental impact assessments. All of this will now fall under the ratchet clause.

Yet Switzerland, like the EU by the way, has always given the assurance that the TISA would not lead to the privatisation of public services. What the new Swiss offer really means is that municipalities and cantons will have to liberalize when it comes to future investments in garbage and sewage disposal. No longer is it mandatory to entrust environmental impact assessments to Swiss entities.

Switzerland has also agreed to the liberalization of information technology services, under EU pressure.

When it comes to granting the wishes of other States, however, the EU is extremely reluctant. Hence its opposition to the "new services" being mooted by the United States, which are only now being developed and are therefore hardly if at all regulated.

Free data transfer and education

Finally, the Annex on e-commerce, which concerns the cross-border transfer of personal data, is also highly problematic. Here too the EU vehemently opposes United States demands. The question is, for how much longer.

In short, if the TISA is signed, services will be thrown onto the market on a large scale. Private educational institutions merit special attention here. If they are allowed unrestricted access to third countries under market conditions, two-speed educational systems will develop sooner or later. Private schools would be expanded at the expense of public ones, and the best teachers would gravitate to places where the financially better-off can afford to school their children. It must be very seriously considered whether this is a sustainable model.


1 Chile, Colombia, Costa Rica, Hong Kong, Mauritius, Mexico, Pakistan, Panama and Peru