The growth of the global services sector presents a lucrative opportunity for transnational corporations (TNCs): for instance, world expenditures on water now exceed $1 trillion annually; on education, over $2 trillion; and on health care, over $3.5 trillion. From 1990 to 2000, commercial services exports, monopolized by TNCs, grew seven percent. In 2004, the value of global exports of commercial services reached $2.1 trillion, a 16% increase from the previous year.
Hence, it should not be surprising that rich countries like the U.S. and EU are aiming to further open up the services sector of Third World countries through the GATS agreement. GATS is the first and only set of multilateral rules governing international trade in services. Its scope is such that it covers all services and applies most favored nation (MFN) treatment to these.
This has raised concerns that the reach of the GATS could extend even to vital public services such as education and health, leading to their commercialization. Commercialization means that user fees will be raised to “cost-recovery” levels, putting these services out of reach of the poor.
Locally, this trend can already be seen in the privatization of water services in Metro Manila. When private concessionaires Maynilad and Manila Water took over the operation of services from the state-owned Metropolitan Waterworks and Sewerage System (MWSS) in 1997, basic tariffs were at P4.96 and P2.32, respectively. By 2004, rates had grown to P16.18 and P10.43, or increases of 226% and 350% respectively.
The reduction of tariffs on industrial goods has actually been part of the original purpose of the General Agreement on Tariffs and Trade (GATT), the multilateral trade agreement that eventually gave birth to the WTO. However, it was during the Fourth Ministerial Conference in 2001 that WTO members launched multilateral trade negotiations to expand liberalization on industrial products. These negotiations are known as the non-agricultural market access or NAMA.
However, it is clear that industrialized countries will be the biggest winners if tariffs on industrial goods were reduced or eliminated since they are among the largest traders in manufactured goods. In 2002, the EU and the U.S. jointly accounted for more than half of world exports and imports of manufactures.