Environmental Engineering Reference
In-Depth Information
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of governments, transfer technology to communities, and then
transfer ownership back to governments after they recoup their investment (OECD,
2000).
GATS critics seized the EC's water bid to headline a 'Stop GATS' campaign, predict-
ing that privatized companies would cut costs by cutting jobs (Deckwirth, 2006). In devel-
oping countries, analysts warned that investors were seeking a legitimate risk premium
through pro
nancing burden o
ff
ts, but low-income consumers could not pay it. This would put pressure on
governments to subsidize the poorest consumers, but they would not be able to do so after
signing away their ability to tap the wealthiest consumers for a cross-subsidy (Kessler,
2004).
As the GATS debate was building, the toll of troubled projects to privatize water
systems mounted, including Buenos Aires (a Veolia subsidiary), Manila and Atlanta
(both Suez subsidiaries). These failures fueled the GATS critics and bore out their pre-
dictions (Food and Water Watch, 2003).
On the defensive, the WTO published
GATS Fact and Fiction
,which stated, 'The WTO
is not after your water', and then explained that the way to avoid pressure to privatize is
to avoid making a GATS commitment (WTO, 2007b). The GATS critics would probably
accept that conclusion.
In 2003, US negotiators announced that they would not o
fi
er a commitment on drink-
ing water, stating: 'GATS is not the appropriate vehicle for pursuing privatization of U.S.
public services' (USTR, 2003).
By 2005, the European water companies were losing their zeal for owning foreign assets,
preferring 'public private partnerships' with service contracts (Deckwirth, 2006). After
Germany's electric power company RWE acquired ownership of water suppliers in 25 US
states through its UK subsidiary, Thames, it sold Thames a few years later (Food and
Water Watch, 2006).
The EC eventually tempered its market access request, seeking a full commitment only
on services supplied by private industry to private industry. The EC explicitly deferred to
any government's preference for providing 'exclusive' service through a contract or revert-
ing to public provision after a contract expires. When governments do purchase services,
the EC asked for national treatment (no discrimination) (EC, 2005).
The US o
ff
er on wastewater is not so explicit. To avoid the privatization debate, US
negotiators covered a list of services that is less than the full bundle that public utilities
provide. They also limited coverage to services 'contracted by private industry'. US nego-
tiators said their intent was to liberalize the market for services that are purchased by
industry while leaving the public sector free to choose its own path (USTR, 2003).
However, the US schedule does not say, '
purchased
by industry', and the 'contracted by
industry' language is ambiguous.
Black's
Law Dictionary
(2004) de
ff
nes a 'contractor' as a supplier. So when government
purchases a wastewater service from private industry, the service is arguably 'contracted
by' private industry. The US list of services includes some that private industry supplies
to public utilities, notably maintenance of facilities and onsite monitoring.
GATS Article XIII(a) states that market access commitments do not cover government
purchasing so long as it is 'not with a view to use in the supply of services for commercial
sale'. But that is what public utilities often do; they buy services from various contractors
to supply the ultimate consumer for a user fee.
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