WikiLeaks Says Secretive Trade Agreement Paves Way to ‘Corporatization of Public Services’
TRADE, 30 May 2016
28 May 2016 – WikiLeaks has released thousands of documents that critics of free trade said show how officials negotiating the Trade in Services Agreement, or TiSA, could force privatization on public institutions around the world.
The most surprising revelations in the WikiLeaks documents released this week involve state-owned enterprises, or SOEs — government-owned corporations that often operate like private businesses but pursue public goals, experts said.
The United States Postal Service might be considered a SOE. The service has a monopoly on snail mail. But it also competes against private companies by selling money orders, retail merchandise and express deliveries. When the postal service needs more money, it raises the price of stamps and other products or, when times are desperate, goes hat in hand to Congress.
WikiLeaks and others claim that negotiators from the United States and 22 other countries want to erode SOEs to clear the way for multinational corporations to take over their functions. TiSA would seek to lower trade barriers for finance, telecommunications and other service industries. It would cover around 75 percent of the world’s $44 trillion services market, according to the Office of the US Trade Representative.
“This corporatization of public services — to nearly the same extent as demanded by the recently signed TPP — is a next step to privatization of SOEs on the neoliberal agenda behind the ‘Big Three,'” said a WikiLeaks statement.
The “Big Three” referred to TiSA, the controversial Trans-Pacific Partnership, or TPP, a deal that the US and 11 other governments have finished negotiating but not yet ratified, and the Transatlantic Trade and Investment Partnership, or TTIP. American and European diplomats are now negotiating the TTIP. European trade officials have said they would like to conclude TiSA talks by the end of the year.
Defenders of the trade agreement said TiSA critics were crying wolf. Nobody expects the pact to abolish Britain’s National Health Service, for example, said Claude Barfield, a resident scholar at the American Enterprise Institute and a former consultant to the US Trade Representative under President Ronald Reagan. Instead, TiSA would prevent governments giving favorable treatment to state-owned enterprises at the expense of foreign competitors.
“There will continue to be SOEs, but it’s just the biases and special deals they get from governments will be, if not ended — that’s probably not possible —at least curtailed a great deal,” Barfield said. “Treat SOEs the same way you treat private corporations.”
The US Postal Service, for example, would need under TiSA to behave according to the same rules as German courier service DHL when shipping express mail, a function that’s outside its normal ‘public service’ duties of delivering regular mail and parcels, according to the internal documents WikiLeaks claims to have obtained. It couldn’t depend on Congressional handouts, in other words.
“Each Party shall ensure that any state-owned enterprise that it establishes or maintains, when engaging in commercial activities… acts in accordance with commercial considerations in its purchase or supply of services, and in its sale of goods,” the WikiLeaks documents said.
Those rules would especially impact China, where the communist state controls much of the economy via state-owned businesses. Echoing arguments in favor of the TPP — which does not include China — Barfield said nailing down TiSA now would help set ground rules for when China also joined the accord. “When you are talking about SOEs, China is the big elephant in the room,” he said.
Celeste Drake, a trade and globalization policy specialist at the AFL-CIO, agreed. She was skeptical of the deal but saw merits in the TiSA’s proposals.
“We want trading rules that set up a level playing field,” Drake said, adding that the AFL-CIO hadn’t yet taken an official position on the deal. “It’s not level if one country is providing subsidies to allegedly ‘private enterprises’ that other countries are not providing because it is against the rules. That’s one of the threats from China: that it is using public monies to subsidize state-controlled businesses so they can behave in a predatory manner and destroy US jobs.”
US trade officials declined to comment on or confirm the authenticity of the WikiLeaks disclosures.
But TiSA critics said the deal wasn’t as straightforward as its supporters suggested.
“We know trade theory predicted that there would be greater economic activity if trade barriers were lifted on commodities and manufacturing,” said Mark Langevin, subregional secretary of Public Services International, a coalition of labor unions. “That’s generally our experience. Some people benefit from that. Some don’t. Trade theory has not really been tested out on services. The advocates of TiSA are guessing.”
WikiLeaks dropped internal documents passed around by TiSA negotiators in 2014 and 2015, too. They and the most recent leaks contain provisions that have concerned Langevin and others.
The deal could bar signatories from establishing new significant state-owned enterprises because in theory they might impinge on foreign competition, experts said.
“If TiSA had existed prior to the establishment of the National Health System in the UK, then it would not have been able to exist,” said Deborah James, director of international programs at the Center for Economic Policy Research. “I can’t imagine how we could be able to have a single-payer health system here. There would never be change in a way that would disadvantage a foreign company. This is their intention.”
The deal also would bar government entities from undoing privatization.
“Pearson sells a lot of educational services around the world to public school authorities,” said Langevin, referring to the British multinational that makes textbooks and other learning materials. “What happens when a public school authority says ‘We aren’t going to buy these texts anymore? We are going to make our own.’ Under this, they would be sued.”
The WikiLeaks document said TiSA would exempt schools, water utilities, and similar public sector businesses. Countries could exempt specific sectors, too, like businesses that operate on Native American reservations in the US.
But it’s not easy to separate, say, government-owned mass transit’s responsibilities to the community from other, purely moneymaking functions, said Jane Kelsey, a law professor at the University of Auckland in New Zealand, where officials privatized and then renationalized their railroad, ferries, and national airline in the past 15 years after private companies let those networks fall into disrepair.
“Attempts to carve out the ‘public good’ functions is… extremely difficult in a practical sense,” she said in an e-mail. Kelsey wrote an analysis for WikiLeaks documents that accompanied the group’s release of the documents.
Barfield believed profit-seeking managers would always run businesses better than bureaucrats or government-appointed executives. He admitted, though, that big state-owned corporations couldn’t be privatized overnight.
“A lot of the inefficient SOEs in China employ hundreds of thousands of workers,” he said. “If you are going to cut them down to size you need to do that gradually. You cannot dump these workers out on the streets.”
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