GATS and water services Mireille Cossy World Trade Organization World Trade Institute 14 June 2010
Umbrella AGREEMENT ESTABLISHING WTO Goods Services Intellectual property Basic principles GATT GATS TRIPS Additional details Market access commitments Other goods agreements and annexes GATS annexes Countries schedules Countries' schedules of commitments of commitments (and MFN exemptions) Dispute settlement Transparency DISPUTE SETTLEMENT TRADE POLICY REVIEWS 2
Scope of the GATS Measures affecting trade in services at ALL government levels All services Except governmental services and air traffic rights Four modes of supply: Mode 1: cross-border supply Mode 2: consumption abroad Mode 3: commercial presence Mode 4: movement of natural persons 3
GATS: 2 levels of obligations General obligations apply to all Members in all services sectors: Ex: MFN treatment, transparency, etc. Specific obligations apply in sectors where a Member has undertaken specific commitments in its national schedule: Market access and national treatment obligations Other obligations applying in listed sectors 4
Scope and coverage of specific commitments Market access (Article XVI) All measures, whether discriminatory or not, falling under one of the six categories defined in Art. XVI National treatment (Art. XVII) All measures discriminating against foreign services or service suppliers [Additional commitments (Art. XVIII) Non-discriminatory measures not falling under Art. XVI or XVII. Ex: pro-competitive disciplines] 5
Water services Water-related services fall under the GATS, but are not identified as a separate category. Sewage services is found in the category of environmental services. Other water-related services: Engineering services for the construction of water supply and sanitation work; groundwater resources assessment; engineering and project management services for water supply and sanitation works turnkey projects; construction services of sewer mains; water well drilling; etc. There is no entry for water distribution services in WTO classification tools. 6
Pattern of commitments on sewage services 49 Members have undertaken specific commitments. Why so few commitments? Modes: Mode 1 generally unbound Many consider that cross-border supply is not technically feasible. Mode 2 fully bound Relevance? Mode 3 often fully bound Some limitations, e.g. regarding concessions or joint-ventures. Mode 4: Commitments are taken at horizontal level. Sectoral limitations: Some limit the commitment to advisory & consultancy services (i.e. not the provision of the service itself). Exclusion of public networks, i.e. provision of the service allowed only to private customers. 7
Example of limitations in environmental services Entry in the sector column Commitment limited to services contracted by private industry. Market access limitation These services are legally considered as municipal activities, provided primarily by entities owned by local authorities. Private operators may be allowed to provide those services on the basis of a concession granted by local authorities. Sectoral headnote: These commitments do not include public service functions whether owned and operated or contracted out by local, regional or central government. Horizontal limitation:... services considered as public utilities at a national or local level may be subject to public monopolies or to exclusive rights granted to private operators. 8
The case of water distribution services This sector does not appear in WTO classification tools. No Member has undertaken specific commitments on water distribution services so far. The EC proposal to include water distribution in the WTO classification tool. Hot debate and no conclusion. The absence of water distribution services from the WTO classification has no legal consequences and limited practical ones. 9
What happens if water distribution services fall under the GATS? The GATS is neutral with respect to whether ownership of companies should be public or private. See, for instance, the definition of monopoly supplier (Art. XXVIII(h)) Application of GATS general disciplines. Mainly the MFN obligation. No obligation to undertake specific commitments. Differences between GATS and BITs. 10
Other issues Specific commitments and the MFN obligation do not apply to government procurement. Where to draw the line between government procurement and other forms of involvement of the private sector (PPPs, for instance)? Scheduling commitments in sectors where there are public/private partnerships and exclusive providers. What does a mode 3 commitment mean when there is no competition in the market, but only for the market? Does a commitment give a right of access to a network? Question: is water desalination a service? 11
And now? Water services in the ongoing DDA negotiations... Sewage services are included in the negotiations on environmental services. 11 offers so far. Water distribution services do not appear in the collective request... but are said to be included in some bilateral requests. 12
Water services in preferential trade agreements Negative list agreements: Several exclusions concern service provided over collective networks. Some Members have excluded water distribution services and, less often, sewage services. NB: provision of water services to private customers seems to be covered in most agreements. Positive list agreements: In EC-Chile, 12 member states have mode 3 commitments on water for human use. In its agreement with Singapore, Jordan has a commitment on water treatment services (purification, waste water treatment, recycling, desalination and fluid treatment), limited to the provision of these services to Singaporean investors. 13
Pros & cons of undertaking GATS commitments in sectors with public service aspects Pros: To send signals to private investors To facilitate technology transfer and improve know-how To strengthen national policy reforms To gain commitments in areas of export interest. Cons: Unclear or incomplete regulatory framework Concerns about capacity to regulate private providers Desire to experiment policy reforms Political sensitivity 14