Local And Regional Reaction To GATS And Similar Trade Rules

Original Publication Date: 
24 Gennatio, 2005
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Local and Regional Reaction to GATS and Similar Trade Rules


Some of the strongest opposition to the GATS and other re- or de-regulatory trade agreements is coming from local and regional councils, backed by critical civil society movements.

GATS is the General Agreement on Trade in Services of the World Trade Organisation (WTO). GATS Article I.3 states: "In fulfilling its obligations and commitments under the Agreement, each Member (of the WTO) shall take such reasonable measures as may be available to it to ensure their observance by regional and local governments and authorities … ."

The lack of power of parliaments and elected office holders, whether national, regional or local, in the field of trade negotiations, particularly at their later stages, underlines the importance of early and firm action to defend key services and democratic rights.

Widespread local refusal of trade-imposed re-regulation will put pressure on national governments and their trade negotiators. It will also support those national legislators and local councillors who want to defend and strengthen democracy in the field of trade negotiations.


One institution that has reflected local activism is the Assembly of European Regions (AER). Created in 1985, it currently brings together 250 member regions from 30 countries and is committed to institutionalising the participation of regions in European politics. The unanimously adopted declaration of the AER's November 2004 annual assembly included, as its first point, the Assembly's resolve to:

"Ask that international trade liberalisation be organised in a balanced way, through the democratic process, with the participation of all concerned institutions, including the regions, and stakeholders. Account should be taken of the established values and standards of the European Union, such as human rights, in particular workers' and children's rights, and the social and environmental standards, as the Assembly of European Regions does not share the principle of total submission to the global logic of unregulated competition and free trade."

The AER's declaration arises from its longstanding concern about the GATS, and comes amid local-level action in Europe as well as on other continents.

In France, about 600 local or regional councils have asked for more transparency and a moratorium in the GATS negotiations, and some have declared themselves GATS-free zones. Paris's municipal council declared the city a GATS-free zone in February 2003.

The first General Assembly of France's National Network of Elected Office Holders and Councils for GATS-Free Zones, held in December 2004, brought together some 100 elected office holders: MPs, mayors, and local and regional councillors.

The Assembly adopted a programme of action for the run-up to the December 2005 WTO Ministerial Conference in Hong Kong, including a campaign for the suspension of the current GATS negotiations.

The Assembly expressed deep concern about closed-door WTO negotiations on government procurement of services (GATS Article XIII), which would have direct consequences for local and regional government (via GATS Article I.3). A GATS Annex and "Reference Paper" under negotiation would severely restrict the procurement prerogatives of local and regional councils. By contrast, the proposed texts would enhance the powers of multinational companies.

In Belgium, a leading development NGO called 11.11.11. carried out a successful campaign in autumn 2004. On its initiative, 171 Flemish communes - 55% of the total - had by early December signed a motion on GATS and water. The motion was also signed by four of the five provinces. Among the signatory communes are the two largest Flemish cities: Antwerp and Gent. 11.11.11. was expecting more signatures over the following two weeks.

Flanders is the Dutch-speaking region of Belgium, with about 60% of its population. Belgium's capital, Brussels, passed a similar motion, proposed by Attac.

The 11.11.11 motion calls for:

- confirmation of water as a human right and democratic control over water services;

- an end to pressures on developing countries to liberalise their water, and more support for their public services;

- exclusion of water and other public services like health and education from the GATS;

- preservation of public water services in Flanders;

- more transparency and democratic participation in the GATS negotiations, especially for local authorities;

- rejection of a reduction in the regulatory powers of local authorities, and a call for impact studies;

- a moratorium in the Gats negotiations.

In Switzerland, the city of Geneva, where the WTO has its head office, called for the suspension of the GATS negotiations and declared itself a GATS-free zone by a resolution adopted by its municipal council in June 2003. In Lausanne, another Swiss city, the communal council has passed a motion to that end, but a final decision is pending. GATS-related questions have been submitted in the councils of 15 Swiss cantons and 20 communes.

The Geneva resolution observes, among other things, that GATS commitments drastically limit the freedom of action of local elected representatives; have serious social, environmental and cultural implications; and would, in stages, create a world temporary labour market, thus putting downward pressure on wages. The resolution also recalls that the GATS itself was not submitted for consultation to parliamentarians, local councils or citizens (text of the adopted draft resolution).

At a local meeting organised by Attac in Lausanne in November 2004, the co-ordinator of Attac's anti-GATS campaign in France said that the central problem of the GATS is that it confiscates democracy. Many local councillors, also those on the Right, are ready to understand how the GATS can deprive them of their capacity to fulfil their tasks as the elected representatives of the people.

In Austria, the STOP GATS Campaign - www.stoppgats.at/ - claims to be the country's broadest alliance of organisations that are critical of globalisation. Its focus is on the preservation of public services, especially health, education, water and public transport. More than 50 NGOs participate in the campaign, whose main sponsors include Attac, Greenpeace and the Austrian Trade Union Confederation (ÖGB). The campaign demands transparency and consultations in international trade and economic negotiations, and a stop to the GATS negotiations until their possible consequences are adequately assessed.

The campaign has brought an increasing number of municipalities to support the demand for a moratorium in the GATS negotiations. The campaign's web site contains a model resolution for municipal councils.

In March 2003, the municipal council of Vienna, the country's capital, adopted a resolution presented by its Green and Socialist members. Under the resolution, the city rejects further liberalisation of public services, as requested in the current GATS negotiations by many WTO Members, and instead demands an immediate moratorium in the negotiations. The resolution also demands the inclusion of Austria's Länder and municipalities in procedures to determine the country's position on global economic and trade agreements. (Text of the draft resolution - "Antrag 2")

In Italy, various NGOs have been proposing model resolutions for adoption by provincial and communal councils.

The text of one such resolution (1) calls on the national government to engage in genuine consultations with citizens, parliaments and local authorities before taking any decision regarding the GATS, (2) also calls on the national government to make every effort to obtain the exclusion of local governments and authorities from the scope of the GATS, and (3) calls on the national association of Italian communes (or provinces) to set up a working group to monitor the state of the WTO negotiations so as to keep local authorities informed of potential risks arising from them. (Full text of a model resolution.)

The council of the province of Genoa passed a resolution along those lines in June 2003, with the centre-left majority voting in favour and the centre-right opposition abstaining. The province of Ferrara and many communes, including Turin, Italy's fourth largest city, have also adopted such resolutions.

Canadian municipalities have over the past few years developed a range of actions on trade. In March 2003, the Board of Directors of the Federation of Canadian Municipalities (FCM) unanimously passed a resolution that "strongly opposes the inclusion of any municipal services or regulations in trade negotiations" (text of the resolution).

The trade negotiations mentioned in the resolution are the current GATS negotiations, the negotiations on the Free Trade Area of the Americas and other trade agreements, including ongoing bilateral negotiations.

The FCM resolution complains that while the central government has the authority to negotiate international trade agreements, it is the municipalities that are directly and indirectly affected by such agreements' adverse effects.

The FCM is Canada's national organisation for local government and represents over 1,000 cities, towns and districts across the country. The FCM statement followed resolutions passed by many individual municipalities (over 70 by May 2002), challenging the central government's plans to expand Canada's commitments under the GATS.

The Council of Canadians is a citizens' organisation that has been active in raising awareness of the issues among municipal councillors. It has prepared a resource paper with tips for local-level campaigns: "The GATS and Your Community".

The Australian Services Union (ASU) has, since 2002, carried out a nationwide GATS campaign, launched after the union's national conference resolved that the GATS negotiations could seriously affect its members' livelihoods and the level of serve to the community.

The campaign, under the slogan of "GATS? get lost!", comprises a broad variety of activities (member meetings, briefings to local authorities, lobbying, distribution of stickers, leaflets, etc), and includes:

- a special union web page, as a hub for up-to-date information and campaign resources;

- writing to local councils, local governments, water boards and similar bodies, raising concerns over the current GATS negotiations. The response from these bodies has overwhelmingly been one of substantial support for the union's concerns and campaign;

- the circulation of a petition to be signed by members, calling on the national government to end the secrecy of the GATS negotiations and for parliament to establish a standing committee, so that parliamentarians can be held accountable on GATS issues;

- a detailed submission to the Federal Department of Foreign Affairs and Trade, covering issues such as the implications of GATS for services in city and country areas, transparency, and preserving democratic decision-making in local and State government.

The Australian government made public its initial offer in the GATS negotiations on 31 March 2003, on the same day it was lodged with the WTO. Before, the government had held national consultations on the offer, based on a government discussion paper.

The ASU was pleased that the initial offer showed no additional impact on local government, and that the government had introduced greater public scrutiny into the negotiations through its information and consultations. "The ASU campaign has definitely achieved results," said the union, while warning that the GATS negotiations were still under way so that the campaign would be continued.

For its part, the Australian Local Government Association (ALGA), in a statement released as the government lodged its initial offer, reiterated its demand that local government controlled water, waste management and other services should be specifically excluded from the ambit of the GATS.

The association, which represents over 700 local government bodies, also said:

"Local government is concerned that its regulatory and administrative powers may be compromised as a result of the current round of GATS negotiations in some areas including licensing, regulation of services (such as waste disposal, building control), planning [building] permission/permits and general discretionary powers [such as giving preference to local providers]. …

"Any weakening of the public governance arrangements within Australia would be strongly opposed by local government. We also urge the [government] to ensure that the provision of a public subsidy (by any sphere of government) is not interpreted as a barrier to trade." ALGA also opposes proposals that may lead to diminution or circumvention of local environmental laws and regulations.

Local Government New Zealand represents all the country's 86 local authorities. In its February 2003 submission on the GATS negotiations, the organisation recognised the right of the central government to make international commitments, but sought an assurance from the government that "(1) in relation to activities undertaken by local government no commitment be given under the GATS without full consultation with local government and its communities; and (2) no commitments will be made that are inconsistent with the legislative framework governing local government, in particular its ability to reflect local democratic decision making and promote community well being in a sustainable way".

Noting that GATS requires each central government to "take such reasonable measures as may be available to it to ensure … observance (of its GATS obligations and commitments) by regional and local governments", the NZ organisation said that the definition of "reasonable measures" was critical to its view of the GATS. In the organisation's view, were there to be a discrepancy between a council's activities and a government GATS commitment, "reasonable measures" would not include amendment of the legislative framework governing local government, but rather dialogue between the government and the council concerned.

A comment one could make on the last point is that, although it could be useful to have a national government's assurance to engage in dialogue rather than re-regulation, such an assurance might not be decisive. In the context of a WTO agreement, what matters ultimately is the view of other WTO Members, and, if any of them should press a complaint, the judgement rendered by the WTO's dispute settlement machinery.

Local Government New Zealand's submission was in response to a government consultation paper on the requests addressed to New Zealand by 18 other WTO Members in the framework of the current GATS negotiations. The submission briefly explains how the requests have implications for local government as owner, operator or regulator of the following services: business and professional; distribution (retail trade); environmental; recreational, cultural and sporting; and transport. For the URL of the full text of the submission, see the list of sources below.

In the USA, it was reported in December 2004, States are using their powers to opt out of the government procurement rules set down in trade agreements. That decision is usually made by the State's governor, without legislative input. "With each new pact, from Chile to Australia to CAFTA, fewer States have agreed to be bound to those rules." President Bush may be relieved that Texas is one State that has agreed to all of them, including the procurement rules of the WTO.

In September 2003, US Trade Representative Robert Zoellick had requested state governors to commit themselves to comply with procurement provisions in pending bilateral and regional trade agreements. Such provisions prevent government from giving preferences to local businesses or restricting outsourcing on public contracts. Twenty-three governors supported the request. But by May 2004, four of those governors - three Democrats and a Republican - had withdrawn from the commitment. Other State governors were considering a similar move.

One governor said: "We stand ready to engage in future trade agreements when we are certain that such trade agreements ensure a level playing field for our domestic employers and workers."

The Wall Street Journal observed that the change was a reaction to the loss of US jobs abroad through outsourcing, and signalled the difficulty trade agreements might have in getting congressional approval.


There are three basic reasons for the action being taken by more and more local and regional councils regarding the GATS and similar trade agreements:

One reason is that the GATS or similar trade agreements can have adverse implications for many of the services that local or regional authorities may, depending on a country's Constitution, themselves supply (housing, transportation, water, environment, education, health, social care, etc).

Another reason is that the GATS can have an impact on the quality of life on their territories by determining the decisions of a nation's central government regarding the presence of foreign companies or temporary foreign labour, or regarding the delivery of services provided or regulated by the central government. Examples could be any of the services mentioned in the previous paragraph or, say, postal, telecommunication, electricity, basic banking services.

A third reason is that the GATS or similar trade agreements can diminish the capacity of local or regional government to regulate services. Examples are zoning laws, "hours of operation" (shop opening hours), the rights of foreign companies, etc.

The AER's November 2004 declaration insists that the responsibilities of the regional level of government "must be maintained", in particular in the areas of economic development, education and training, housing, transport, health, care for the elderly and socially-excluded, and the protection of the environment.

Moreover, local representatives understand that when it comes to trade, central parliaments have limited powers - even those parliaments that do have a right to deliberate and to accept or reject trade agreements.

At the end of a round of comprehensive trade negotiations, like those that are currently taking place within the WTO, national parliaments are confronted by a massive and complex trade agreement reflecting a delicate bargain across many sectors.

MPs either have no say at all or are given the choice of either accepting or rejecting the whole trade package, and there are enormous pressures on them not to be responsible for the failure of many years of international negotiations. Business naturally seeks to benefit from this by injecting into the WTO negotiations as many of their liberalisation proposals as possible.


The Assembly of European Regions (AER), Annual General Assembly; Vienna, 25-26 November 2004: "Final Declaration - Reinforcing the scope for action by the regions". AER website www.are-regions-europe.org; information on France from Agnès Bertrand of IRE via PSI e-mail of 15 December 2004 and from website http://www.hors-agcs.org/agcs/; information on Belgium from Marc Maes of 11.11.11. by e-mail of 8 December 2004; Didier Estoppey: "Les zones hors AGCS pourraient bientôt conquérir la Suisse", Le Courrier, 20 November 2004: www.lecourrier.ch; "Österreich - EU: Vier öffentliche Dienstleistungsbereiche vor GATS-Zugriff bewahrt", Zeit-Fragen, 10 March 2003: www.zeit-fragen.ch/ARCHIV/ZF_102c/T12.HTM , Antonio Tricarico and Martin Koehler: "Local Italian Authorities Join Call Against GATS", Our World is Not For Sale: http://www.ourworldisnotforsale.org/newsandupdates/40.htm, "L'Accordo sui Servizi (il GATS) e le nostre Amministrazioni locali: http://www.beati.org/wto/ddr/gats_mozioni.htm; information on Canada from the website of The Council of Canadians: http://www.canadians.org; Australian Local Government Association: "GATS must not compromise local government services", 31 March 2003: www.alga.asn.au/newsRoom/mediaReleases/20030331a.php; Local Government New Zealand's submission on NZ's approach to the WTO negotiations on services, February 2003: www.lgnz.co.nz/library/files/store_001/nz-approach.pdf; "U.S. and free trade proposals", FedEx Trade News, 1 December 2004: http://www.customsdoc.com/TNR_News.asp, "Governors Rescind Agreement To Comply With Trade Pacts", Wall Street Journal, 14 May 2004.

Edward Sussex
Rev 02: 25 January 2005