Aik Hoe LIM Trade in Services Division, WTO EDUCATION SERVICES AND THE DOHA ROUND

© Trade Services Division, WTO, Nov 2005 GATS: Structure n Framework Agreement n Annexes covering certain sector- or policy- related issues n Schedules of Specific Commitments (one Schedule for each WTO Member)

© Trade Services Division, WTO, Nov 2005 nMEASURES AFFECTING TRADE IN SERVICES AT ALL GOVERNMENT LEVELS nALL SERVICES (except governmental services and air traffic rights) GATS: Scope, coverage, definition

© Trade Services Division, WTO, Nov 2005 MODE Cross-border Trade (1) Consumption Abroad (2) Commercial Presence (3) Movement of Natural Persons (4) EXAMPLE (Education) Distance-learning programme from country A relayed in B Bs resident attends a post- graduate course in A University from A operates a training center in B Teacher from A gives courses in B GATS: 4 modes of supply

© Trade Services Division, WTO, Nov 2005 Governmental Services Excluded from coverage are services provided in the exercise of governmental authority which, in turn, are defined as services that are supplied neither on a commercial basis, nor in competition with one or more service suppliers. (Article I:3).

© Trade Services Division, WTO, Nov 2005 Is public education covered by the GATS? n No jurisprudence so far n Absence of commercial basis n Absence of competition

© Trade Services Division, WTO, Nov 2005 Potential inclusion in the scope of the GATS per se has little concrete consequences Commitments remain a choice A Member can choose NOT to make a commitment Of course, no obligation to privatize No obligation to open the market to foreign providers

© Trade Services Division, WTO, Nov 2005 The only general obligations that apply in case of inclusion are... n Most-Favoured-Nation (MFN) Treatment (but barring all foreigners is MFN consistent) n Transparency obligations n Availability of legal redress n And that is the situation of 100 Members of the WTO

© Trade Services Division, WTO, Nov 2005 There is formal liberalization only in sectors in which a country undertakes specific commitments on market access and national treatment –MA: Absence of quota- type and similar restrictions. –NT: Non-discrimination with regard to all measures affecting the supply of a service.

© Trade Services Division, WTO, Nov 2005 What does a commitment mean? –Applies only to what is covered by GATS –A commitment does not mean privatization –Does not mean deregulation

© Trade Services Division, WTO, Nov 2005 –It means guaranteeing under certain conditions the participation of foreign services suppliers alongside the national public and private ones –In most instances those foreign service suppliers were already there (there are even cases where Members try to attract them)

© Trade Services Division, WTO, Nov 2005 Specific Commitments n If it decides to make a commitment, it can: exclude parts of a sector or a mode of supply limit market access discriminate vs. foreign providers discriminate amongst foreign providers (via MFN exemptions, PTAs or MRAs) bind less than the status quo pre-commit to future liberalisation maintain a horizontal restriction

© Trade Services Division, WTO, Nov 2005 Main Provisions Governing Market Access and National Treatment n Market Access –Limitations on the numbers of service suppliers,* –Limitations on the value of service transactions,* –Limitations on the number of service operations,* –Limitations on the number of natural persons in a sector,* –Restrictions on types of legal entity, –Limitations on foreign capital participation *Includes limitations in the form of economic needs tests. n National Treatment (non-discrimination) –Measures which modify the conditions of competition in favour of domestic services or service suppliers

© Trade Services Division, WTO, Nov 2005 n Even after making a commitment, still have some options: –invoke exceptions (Article XIV) –modify or withdraw a commitment any time after 3 years - but must pay compensation (Article XXI) –possible emergency safeguard under negotiation

© Trade Services Division, WTO, Nov 2005 Why Did Members embrace Commitments? n Because they were comfortable with their existing degree of opening to foreign private providers n Because they felt it worthwhile to bind certain legal guarantees (not necessarily all existing conditions) to those foreigners, probably to create more capacity and attract more diversity

© Trade Services Division, WTO, Nov 2005 Why Did Members embrace Commitments? (continued) n Because paradoxically those guaranteed conditions may be worse than the former ones or the de facto ones. n Because non-discriminatory domestic regulation (standards, licensing requirements, etc) were not affected by commitments.

© Trade Services Division, WTO, Nov 2005 n And because restrictions limiting market access and national treatment can be scheduled against any commitment taken.

© Trade Services Division, WTO, Nov 2005 With all that in mind who took commitments on education services A total of 46 Members (counting EC as one) 32 for primary education 36 for secondary education 37 for higher education 36 for adult education 21 for other education services

© Trade Services Division, WTO, Nov 2005

Education in the new services round Proposals by Australia, Japan, New Zealand and the United States –acknowledge the central role played by governments in providing and regulating education –private education complements, but does not replace public systems –circumscribed focus (adult and higher education)

© Trade Services Division, WTO, Nov 2005 Types of barriers identified Total prohibition of foreign providers Administrative burden and lack of transparency Fiscal discrimination Accreditation/recognition discrimination Adapted from Saner and Fasel (2003)

© Trade Services Division, WTO, Nov 2005