President of the Russian Federation President of of

Prime Minister of the Russian Federation Prime Minister of Norway Dmitry Medvedev Erna Solberg

S T A T E M E N T

On the negative implications of expanding the scope of the WTO and GATS and the system of free trade agreements benefiting major transnational corporations

Moscow 1 October 2014

The International Conference on Public Services in the Context of WTO addressed the issue of multilateral free trade agreements championed by the international corporate sector. With the Doha Round talks deadlocked, corporate interests have spurred the negotiations of the Trade in Services Agreement (TISA), as well as other trade deals (TTIP, CETA), amounting to an attempt by the key proponents of aggressive market liberalization to promote their corporate interests.

A number of countries, including the USA and the EU (acting as a single member), have been engaged in clandestine negotiations on such free trade agreements since early 2012. Meanwhile, even the scarce information available on the negotiations is sufficient to draw very disturbing conclusions. The agreements endanger all means of protecting affordable high quality public services, efficient government regulation and, effectively, the ability of the government to perform its functions.

The term “service” as defined by the TISA covers a broad range of activities, from transportation, (tele-) communications, construction, retail, engineering, energy and water supply, wastewater disposal, accounting, marketing, advertising, banking and insurance to education, healthcare, environmental protection, culture, and many other types of services.

Yet, where GATS enables governments to select the services they are unwilling to liberalize, TISA documents reveal that all member states would be bound to liberalize “almost all service types and sectors”, which, according to some key negotiators, means 90% of all services.

Parties engaged in secret talks, who call themselves the “Really Good Friends of Services”1, are seeking a comprehensive treaty to liberalize trade and investment in services and to expand the “regulatory disciplines” to cover all services sectors, including many public services. As a result, foreign service providers will gain access to domestic markets “at no less favourable” conditions than local suppliers, while governments’ ability to regulate, purchase and provide services will be curbed, which will shift the focus of many public services drastically toward pursuing the interests of private foreign companies rather than public interests.

The broadest of all treaties under discussion, the global TISA agreement, is a direct result of a systematic advocacy campaign run by transnational corporations in banking, energy, insurance, telecommunications, transportation and other service sectors through such lobby groups as the United States Coalition of Service Industries (CSI) and the European Services Forum (ESF). The TISA talks draw on corporate practices of using “trade agreements” to bind governments to an agenda of extreme liberalization and deregulation in order to generate greater corporate profits at the expense of employees, farmers, consumers and the environment.

In addition to the extended list of services to be liberalized, the “Really Good Friends of Services” limit the rights of governments and parliaments to regulate, which goes well beyond the scope of the existing GATS. Further, the TISA treaty will affect government procurement by limiting the range of mechanisms available to governments for procuring or providing services.

1 The “Really Good Friends of Services” include Australia, Canada, Chile, Colombia, Costa Rica, Hong Kong, Iceland, , Japan, Mexico, New Zealand, Norway, Panama Pakistan, Peru, South Korea, Switzerland, Taiwan, , the United States, and the 27 members of the European Union. 2

Application of competitive neutrality principles could limit the public policy space for achieving social, economic and development goals. The TISA treaty encroaches on public interests and public services since it fails to guarantee that foreign investment in services sectors will actually further public objectives. It is particularly alarming that it threatens to undermine such vital services as energy and power supply, sanitation, healthcare, education, postal services, transportation, insurance, etc., if they are handed over to private foreign corporations seeking higher profits and become affordable only for those who can pay market rates.

There are abundant examples of governments privatizing public services and bringing in foreign corporations in the hope of accessing private capital and private efficiencies. The experience of various countries shows that privatization does not deliver: private corporations do not invest their own capital – they borrow from the same banks as governments, yet at higher costs. The theory of private sector efficiency has not been proven by experience – the World Bank studies, as well as many others confirm this. Profit maximization often leads to job cuts and a deteriorating working environment, a drop in the quality and accessibility of services, coupled with significant tariff increases. It is informative to assess the privatization of water supply and sanitation systems, which have already sparked large-scale protests in many countries, as demonstrated by the setbacks suffered by the French water corporations Suez and Veolia.

Deregulation of the financial sector and capital flows partially encouraged in the 1990s by the GATS has recently caused a global financial crisis and a subsequent wave of economic recessions. As millions continue to suffer from unemployment and austerity measures, it is a reminder that reintroduction of financial sector regulation is critical to restoring stability and forestalling future financial and economic crises. However, the rules proposed by TISA replicate and significantly expand the very deregulation that brought on the crises in the first place.

TISA will protect foreign investors against what they may deem trade restrictions even if those measures are intended to protect the environment, health, security, financial stability or public interests. TISA will also provide foreign corporations with remedies for defending their “right” to profit by allowing corporations to sue sovereign governments in non-transparent arbitration panels outside the jurisdiction of their host nations, and potentially, in violation of domestic legislation. The controversial investor state dispute settlement (ISDS) proposals are causing significant concerns among lawmakers and legal experts in a number of countries.

The changes imposed by TISA will be irreversible, rendering governments unable to renationalize service companies that collapse as a result of privatization.

The TISA treaty will also foster liberalization of so-called temporary relocation of individuals, i.e., migrant workers, without guaranteeing their rights or protecting national labour markets, such provisions pushing TISA far beyond the scope of traditional trade agreements and falling under the terms of reference of the tripartite regulatory framework of the International Labor Organization (ILO).

The European Union and the United States have clearly defined their objective as “multilateral” negotiations, which makes the proposed TISA agreement a real threat to countries outside the negotiating group. As soon as the TISA agreement comes into effect, its signatories will act as a unified bloc in WTO talks, putting pressure on other countries to meet TISA liberalization and deregulation requirements, which effectively runs counter to the WTO services sector negotiating principles. 3

The lack of transparency in the TISA negotiations is absolutely unacceptable. Trade ministries are not structured to represent the broad range of issues and interests of the people. Rather, trade ministries are often merely an extension of the corporate lobby. And, in the current TISA negotiations, corporations have unlimited access.

At this point, TISA is seeking to ensure almost absolute liberalization of the public services market to the benefit of foreign corporations. Essentially, the TISA and other free trade agreements advocated by the international corporations pursue termination, in a broad sense, of government regulation of the vital spheres of their operation, which poses a threat to governments, societies, human rights and democracy.

On behalf of millions of members of the All-Russia Life-Support Workers’ Union and the Norwegian Union of Municipal and General Employees “Fagforbundet”, which bring together life-support and public services workers and employees of small and medium-sized businesses of the two countries, we hereby call on the President of the Russian Federation, Parliaments and Governments of Russia and Norway to address the issue with utmost responsibility, ensure complete transparency and involvement of the broader public in parliamentary discussions, as well as discussions through the media and public organizations, and insist on being granted access to relevant information for making an informed decision.

Considering the high risk and irreversible ramifications of the TISA and free trade agreements for national and public interests, we urge the authorities of the two nations to prevent Russia and Norway from falling within the scope of the agreements. It is irresponsible to place corporate interests ahead of the interests of nations and governments, and put our world up for sale.

On behalf of the Conference participants:

President President All-Russia Life-Support Workers’ Union Norwegian Union of Municipal and General Employees “Fagforbundet”

Aleksandr Vasilevskii Mette Nord

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