For immediate
release: 5 April 2003
“Neoliberalism is the
chaotic theory of economic chaos, the stupid exaltation of social stupidity,
and the catastrophic management of catastrophe.” Don Durito, a struggling
campesino from southern Mexico.
The shifting
ground of free-trade
by Garrick Martin
Victor Hugo Daza was
17 years old when a soldier on the streets of Cochabamba, Bolivia, shot him in
the face in 2000. Only a few months before, the Bechtel Corporation had taken
control of the city’s public water supply almost immediately doubling and
tripling water rates.
Basic access to water
quickly became out of reach to Cochabamba’s poor. It didn't take long for massive protests to erupt. Bechtel refused to lower its prices. The
Bolivian army was called in to protect Bechtel’s contract. Hundreds of people
were wounded in the huge demonstrations, Victor Hugo Daza was killed, and the
city was in turmoil for months.
The uprising was such
that the international attention drawn
to this Bolivian city of 600,000
eventually forced Bechtel to leave town.
The Bechtel
Corporation has since attempted to claim $25 million dollars compensation from
the Boliva under a bilateral investment agreement with Holland. This dispute will be heard in secret by an
international tribunal comprising three individuals. Public participation will
not be allowed, nor will media coverage. The decision is still pending today.
A free-market
economist might argue that absurd price rises by a company, such as Bechtel,
will inevitably be corrected by the market forces, such as a smaller competitor
with cheaper prices. But the need for
drinking water won't wait for market forces.
New Zealanders
are also familiar with
privatisation. During the Rogernomics
era, $19 billion worth of public assets such as electricity generation and
Telecom were corporatised and privatised.[i] Our small country has been praised from afar
for its free-market reforms. Hopefully pride generates warmth, as we head into
another winter of electricity shortages and price rises.
However, the New Zealand government is still
pursuing the related and elusive goal of agricultural trade
liberalisation. Agriculture is
inevitably the first excuse wheeled out by thegovernment whenever concerns are
raised about ‘free-trade’ or the World
Trade Organisation (WTO). Haggling over
agricultural trade, especially market access and elimination of export
subsidies has been a constant drama at the WTO.
In pursuit of this
elusive free-trade in agriculture, the New Zealand government will be expected
to trade off concessions in other areas. This includes locking open more of New
Zealand’s essential services to foreign companies through the General Agreement
on Trade in Services (GATS).
The GATS is an
agreement being re-negotiated at the World Trade Organisation to allow greater
access by overseas companies to control and profit from national services.
Services such as education, transport and public utilities are seen as big
business. The GATS agreement, driven by
the European Union and the United States, will deprive New Zealanders of
control over their health, education,
postal, broadcasting, transport and other services which get traded off.
In Serving Whose Interest, a recent expose of New Zealand's
commitment to GATS, Professor Jane Kelsey notes that services now account for
60-70% of Gross Domestic Profit (GDP) and employment in industrialised
countries.[ii] The global environmental services sector
alone is a worth US$280 billion, and is expected to grow to US$640 billion by 2010.
The growth of that sector is directly linked to the privatisation of what were
previously public services and utilities. [iii] It’s estimated that two fifths of the
foreign direct investment in NZ since the late 1980s has been acquisitions of
privatised or deregulated services such as Telecom, Tranzrail or the BNZ.[iv]
Jim Sutton has said
that public health, public education, and water distribution systems are not
included in NZ commitments to the GATS, but leaked documents in 2002 showed
that the EU are demanding those and a lot more.[v] Given the government's eagerness to comply
with the WTO, we have to wonder if Sutton can withstand the pressure?
The environmental and
social cost of such GATS commitments would be high, and they would be
practically irreversible. Breaking these commitments could lay the government
open to trade sanctions from governments whose companies claim their interests
are affected. New local or central government environmental regulations could
also be open to attack as “unnecessary barriers to trade”. There is a real risk
that low standards or market-style regulations that operate in other countries
could be used as the measuring stick for New Zealand.
Around the world,
water services – the collection, extraction and distribution of water – are
being privatised. At a time when water is increasingly becoming a globally
scarce resource, multinational companies such as Bechtel or Vivendi (the
world’s largest water company, who partly own Auckland’s United Water) are
profiteering from the control of this essential resource.
Under the market access
rules in the GATS agreement, if the New Zealand government made commitments on
water it would not be able to limit the number of water companies operating in
any part of New Zealand or impose ‘unnecessarily burdensome’ regulations on
water treatment.
Environmental
services such as sewage and hazardous waste management, or refuse collection
and treatment, could be affected by similar market access rules under the GATS.
The New Zealand government has already secretly made commitments for our
environmental services in the free trade agreement it signed with Singapore in
2000. What's going to stop it from doing the same in GATS?
After twenty years of
the ‘New Zealand Experiment’, the present Labour Government is still pursuing
neo-liberal economic policies.
Deregulation and privatisation by any name or by any authority will
inevitably leave a lasting effect on New Zealand society. New Zealand doesn't need this… especially
when there is already so much to do in the garden.
The garden, and even
the very ground is shifting under our feet.
Text ends: 918 words
For further resources on the GATS and free
trade contact ARENA:
www.arena.org.nz PO Box 2450, Christchurch. (64) 03 366 2803
GATS resources relating to the environment
are also available from Friends of the Earth (FOE) Australia, http://www.foe.org.au/nc/nc_trade_GATS.htm
FOE UK has produced a thorough 6-page
briefing on water privatisation:
http://www.foe.co.uk/resource/briefings/gats_stealing_water.pdf