EQUATIONS response to the Leaked EC Requests

Home

GATS Basics

GATS 2000

GATS Debate

Campaign

Critics

Corporate

About

Feedback

The Government of India should unconditionally reject EC requests

Paragraph 15 of the Doha ministerial declaration was a travesty of justice for many reasons. Prodded on by the QUAD the WTO sanctioned the Request - Offer stage within a highly compressed time period, ignoring several warning signals on the GATS. Thrown by the wayside include several proposals by developing countries calling for an assessment before they were asked to commit further. The UN sub-commission on human rights resolution calling to question the implications of the GATS for human rights. Growing discontent from local governments and hundreds of civil society organisations from around the world who argued, among other issues, that the agreement deeply intruded into the hitherto sovereign space of domestic policy.

The Draft EC requests to WTO member governments has been leaked and even a cursory glance shows the enormity of the challenge faced by developing countries. The implications of the requests are clear for India. It is a frontal attack on the Indian constitution, its commitment to decentralisation and the obligation of the state to provide basic services to its citizens. On all accounts the EC requests add one more chapter to the murky saga of GATS in which developing countries have played a marginal and defensive role.

There are several areas where the EC requests will have far-reaching implications in India for the incipient services industry, basic services provision and for regional/local governments who enjoy substantial powers as mandated by the constitution.

Here are a few

  • The EC request in accountancy services conflicts with the findings of the Government appointed Working Group on the Accountancy sector. The expert group has recommended that foreign accounting professionals should be restricted till the country attains a comparative level of economic development in this area. The suggested transition period for providing market access to foreign accounting professionals is 8 years after India attains 3.5 % share of the world market for accountancy services for 2 consecutive years. The report cautions against commercial presence since foreign firms will endanger the survival of domestic service providers by their huge organisational and financial strength.
  • The EC request for full commitments under Market Access and National Treatment in printing and publishing services is in conflict with the Parliamentary standing committee decision of Feb 26, 2019 to disallow Foreign Direct investment (Mode 3 - Commercial presence) in the print media.
  • The EC request for bound commitments in telecommunications will further distort the market. There is substantial private participation in basic telephony through the autonomous liberalisation policies of the Government and the impacts on rural areas are clear. The original agreement with the government was that these companies (Bharti Telecom, Tata Tele Services, Hughes Telecom, Reliance Telecom and HFCL Infotel) would supply about 60000 Village Public Telephones (VPTs) as part of social obligations. As of Feb 2002 these private companies together provided a paltry 1500 VPTs.
  • The request for full commitments under retailing services will also run into rough weather in New Delhi. FDI in retailing has also been a highly contested issue. The Government first took a pro-opening up stance following a McKinsey consultancy report that was optimistic of the benefits to the 260 million Indian urban middle-class if Wal-Mart and company swamped the markets. Small retailers have attacked the McKinsey report. Their apprehensions are that major foreign chains will first find a foothold by aiming to takeover existing chains in India and then after taking over prime locations, will make it difficult for others to enter through predatory pricing. They fear loss in jobs and an oligopolistic market controlled by a few players. Apparently Wal- Mart employs 1,400,000 in its 5000 stores. The Indian retail industry functions out of 1.2 crore outlets and has an employee base of more than 3 crores (1 crore is = 10 million). The Union Consumer Affairs ministry has officially opposed FDI in retailing citing apprehensions of employment, concerns related to pricing for the common consumer and quality standards.
  • Though the Government of India is not opposed to tourism in the GATS, its presence and thus the EC requests, is problematic for reasons spanning economic, environmental, sovereign and livelihood imperatives. Economic for the reason that the government does not maintain enough data on the complex and fragmented tourism industry to arrive at an informed opinion for opening up. A huge segment of the tourism trade which consists of SMEs (Small and Medium Scale Enterprises most of which are in the informal sector) is virtually unmapped. It has been estimated that nearly 85% of tourism sector providers consists of such SMEs. The reasons cited for opposing opening up of the retail sector thus apply here. Commitments under National Treatment and Market Access would mean that the domestic economy would gain little from the operation of Multinational Tourism providers (Repatriation of earnings by foreign nationals in India presently requires the consent of the Reserve Bank of India. The EC request is to eliminate this requirement)
  • The numerous environmental violations by the tourism industry are now being recognised by governments around the world. In India the Supreme Court recently passed a landmark judgement on March 15 2002 and ordered the former Union Environment minister Kamal Nath to pay a fine of rupees one million for environmental damage caused by 'callous interference with the natural course of a river'. The company, Span Motels, has also undertaken to bear its share of the project cost of ecologically restoring the environment around the Beas River in the Kulu-Manali region. The imminent danger in the GATS is that it only vaguely addresses environmental concerns in Articles XIV and XX.
  • The recognition of tourisms adverse impacts on the environment is exemplified with the Convention on Biological Diversity devoting significant importance to deliberations on Tourism. 183 countries are party to the CBD and the EC is a prominent member. It is thus obliged by International Law to adhere to the CBDs core principles i.e. a) The conservation of biological diversity b) The sustainable use of its components c) Fair and equitable sharing of the benefits and in particular to encourage the knowledge and practices of indigenous people. Tourism presence in the GATS goes against this grain. The EC ministry that participates in the CBD negotiations is duty-bound to oppose the EC request for full commitments in Market access and National treatment in this critical sector.
  • Article 51 A of (Part IV A) the Indian Constitution envisages that it shall be the duty of every citizen to protect and improve the natural environment including forests, lakes, rivers and wildlife. Common Property Resources belong to the community and should be used rationally in the public interest and bringing water collection into a multilateral trade framework is a violation of customary and easementary rights of the community. Under entry 17 of the State list of the Indian Constitution the regional governments are vested with the powers to control the subject of 'Water'. Opening up the area of Water without consultation of States is tantamount to violating the constitution.
  • As far as requests in waste management go, the 73rd and 74th Amendment to the Indian constitution clearly mandates local bodies municipalities (urban) and panchayat (rural) to manage civic amenities under Schedule 11 and 12. Commitments in these sectors would again imply that India should conduct a bottom up democratic consultation to arrive at its negotiating position.
  • The EC request for full commitments under protection of biodiversity and landscape is especially disturbing. Under the concept of eminent domain the Indian State has ownership of all lands including forests. According to the Indian Constitution (Article 48 A) the State should strive to protect and improve the environment and to safeguard forests and wildlife. Biodiversity protection is presently done by the Forest Department (which come under state and central jurisdiction) on a non-profit basis and so the very basis of making a request in this sector is flawed. This clearly falls under the government exemption clause. It also brings to light the inherent problems with numerous clauses of the GATS, which are open to such skewed interpretations.

We urge the Government of India to reject the EU requests unconditionally. The Government should offer services sectors to GATS rules only after conducting a cross-sectoral bottom-up democratic consultation with all regional governments. Regional governments should similarly arrive at their rationale on services liberalisation after consultations with all stakeholders including representatives of local governments and industry.

This is why we have elected our governments.

Equations, Bangalore, India

GATSwatch is a joint project of Corporate Europe Observatory and Transnational Institute
Paulus Potterstraat 20, 1071 DA Amsterdam, The Netherlands