Environmental Engineering Reference
In-Depth Information
that countries are free to choose when to commit to trade rules, which sectors to cover,
and what limits to set on those commitments.
GATS critics point out that countries can open up their markets without locking into
GATS rules. They ask, what if privatizing water services results in higher rates and lower
service, which happened in Atlanta? Or what if deregulating electricity results in higher
rates but no increase in service capacity, which happened in California (Waskow, 2003;
Menotti, 2006)? If market liberalization does not work, it might be prudent for govern-
ment to reverse course and re-regulate or revert to public ownership. However, to reverse
course could violate a GATS commitment and incur the risk of a trade dispute.
So why take on the added risk of trade con
ict by making GATS commitments?
The WTO asserts that locking in commitments to liberalize trade will produce a
'win-win-win' (hereafter, just 'win'). With environmental services, the
fl
rst win is
expanded trade in environmental technology at lower cost. The second is better environ-
mental quality due to these goods and services. The third is help for developing countries
to deal with environmental challenges of economic growth (WTO, 2007b).
In short, countries can use GATS to advertise their 'lock-in' in hopes of attracting
foreign investment. The lock-in makes their long-term policy 'credible'. As the World
Bank's analyst put it, 'the freedom to change one's mind can be a nuisance' (Mattoo,
2001). GATS may not force privatization or deregulation, but it does make it di
fi
cult to
back out of a decision to privatize or deregulate, even if the results are bad.
Subnational authority
Which mayor would volunteer her harbor to be the site of an LNG port? Conversely, at
the national level, which president would not like to see more LNG ports, to diversify
energy sources? Di
erent constituencies.
GATS supporters stress that the agreement allows countries to preserve state or local
authority by avoiding sectors that are governed at the subnational level or by limiting
commitments regarding subnational measures. GATS critics say that national trade nego-
tiators rarely defer to subnational authorities. They also note that the GATS preamble
imparts a federal bias as it recognizes the right to regulate for national, not subnational,
objectives (Gould, 2002a; 2002b).
ff
erent levels of government respond to di
ff
Negotiations on environmental sectors
GATS includes several built-in agendas for ongoing negotiations. The
rst is for rounds
of 'progressive liberalization' to add new sector commitments. Current negotiations
began in the year 2000 using a 'request-o
fi
er' process. Countries that want to export a
service make a 'request', usually on behalf of a particular company. They are requesting
another country to respond with an 'o
ff
er is
notice that a country is willing to lock in 'commitments' at the end of negotiations. The
commitment is an enforceable promise to follow GATS rules on market access (no quan-
titative limits) and National Treatment (no discrimination). Negotiations may take place
between two countries ('bilateral') or a group of countries ('plurilateral'), but once they
lock in, they make the same commitment to all WTO countries. Because of the MFN rule,
every nation gets the 'most favorable' treatment (WTO-CTS, 2001).
The European Commission initiated its work on the GATS 2000 negotiations by
stating: 'The GATS is not just something that exists between Governments. It is
ff
er' to make a GATS commitment. The o
ff
fi
rst and
