Background Paper on the

General Agreement on Trade in Services (GATS) and

Post-Secondary Education in Canada

Prepared by Robert Clift, Executive Director

Confederation of University Faculty Associations of British Columbia (CUFA/BC)

November 29, 1999

 

 

Introduction

 

The General Agreement on Trade in Services (GATS) is a multilateral agreement concluded in 1994 designed to govern international trade in services, as the General Agreement on Tariffs and Trade (GATT) has done for international trade in goods. To date, The GATS has only been enforceable to the extent that signatory countries have been willing to make commitments to place sectors of their economies under the GATS regime. The November 1999 meeting of international trade ministers in Seattle will seek to expand the range of services to be governed by GATS and move towards the so-called “horizontal” approach, where some GATS rules would be applied across-the-board to all 160 service sectors covered by the agreement, including education.[1] This sea change is facilitated by the rhetorical imperative that national economies will wither and die unless they open themselves up fully to trade and investment opportunities; a stance taken primarily by the industrialized nations who want to compete in each other’s economies, and who want access to markets in developing nations.

 

If GATS were applied to the Canadian education sector, the effects would be profound. Education would no longer be considered a public service; instead it would be categorized as merely another commercial enterprise. The Canadian government then would be required under GATS to give access to the Canadian “education market” to companies from any of the GATS signatory countries. Foreign companies would be treated at least as favourably as Canadian companies, but in certain circumstances would be treated more favourably. For example, the Canadian government could not require that foreign companies place Canadians on the governing boards of their operations located in Canada, or even that the company hire Canadian teachers. Also, foreign companies would be protected from those regulations that could be viewed as peripheral to the delivery of the service, such as licensing requirements.[2] Furthermore, public funds currently provided to public institutions would also have to be provided to private institutions or potentially be subject to action as an unfair subsidy.[3]

 

The specific danger facing the Canadian post-secondary education sector is that officials in the federal Ministry of Foreign Affairs and International Trade, and the federal politicians themselves have been captured by the rhetoric of expanding trade opportunities and appear to be ready to make commitments to put most service sectors on the table during the new round of GATS negotiations which will begin with the November meeting in Seattle. Although the officials and politicians claim that health care and public education will be protected in the GATS negotiations, the have not proposed any specific protection for these sectors and instead seem to be relying on interpretations of existing GATS provisions.  The major questions for Canada’s post-secondary sector are: Is the post-secondary sector subject to the GATS under existing provisions? If so, what can be done to protect the sector from the full effects of GATS?

 

Is Canadian Public Post-Secondary Education Subject to GATS?

 

Article I, Paragraph 3 of the GATS defines the scope of the agreement as follows:

 

(b)      “services” includes any service in any sector except services supplied in the exercise of governmental authority;

 

(c)  “a service supplied in the exercise of governmental authority” means any service which is supplied neither on a commercial basis, nor in competition with one or more service suppliers. [4]



[1] “Quad Officials Agree to Explore New Approach to WTO Services Talks,” Inside U.S. Trade, July 24, 1998, and The Commercial Education and Training Services Industry, Industry Canada, November 12, 1999, pp. 10-13, available on the Internet at http://strategis.ic.gc.ca/SSI/sk/conseduc.pdf

[2] General Agreement on Trade in Services, Article VI, Paragraph 4, available on the Internet at http://www.wto.org/services/2-obdis.htm. Also see The Commercial Education and Training Services Industry, pp. 9-10, and “…which however is coming up against national regulations,” The WTO and the Millennium Round: What is at stake for Public Education? Education International and Public Services International, available on the Internet at http://www.ei-ie.org/pub/english/epbeipsiwto.html

[3] General Agreement on Trade in Services, Article XV, and Anti-dumping, subsidies, safeguards: contingencies, etc., World Trade Organization, available on the Internet at: http://www.wto.org/wto/about/agmnts7.htm

[4] Available on the Internet at http://www.wto.org/services/1-scdef.htm

[5] Education Services: Background Note by the Secretariat (Document # S/C/W/49), World Trade Organization, September 23, 1998, p. 15, available on the Internet at http://www.wto.org/wto/services/w49.doc

[6] For a more complete discussion of this see A Preliminary Analysis of the Effects of Multilateral Agreement on Investment (MAI) on Canadian Universities, Colleges and Institutes, Robert Clift, October 1998. Available on the Internet at: http://cufabc.harbour.sfu.ca/briefs/mai.html

[7] One such interest group is the private providers of education and training services in Canada who, in 1997, reported $110 million in offshore sales (The Commercial Education and Training Services Industry, p. 14).

[8] “Health, education not on WTO table,” Financial Post, November 16, 1999, available on the Internet at http://www.nationalpost.com/financialpost.asp?s2=canadianbusiness&s3=news&f=991116/128122.html







Last Updated: 99/11/29