From: mmaxwell@cwa-union.org
Date: Fri Jun 07 2002 - 22:25:49 EDT
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National Journal's Congress Daily
06-08-2002
ECONOMICS: Protectionism for Water and Sewers?
Senate passage in May of new trade-promotion authority for the executive
branch was widely hailed by free-trade advocates as the culmination of
five years of often-frustrating efforts to give U.S. negotiators the
wherewithal to successfully open foreign markets. Assuming a conference
committee can iron out major differences between the House and Senate
versions of the bill, President Bush will soon gain the negotiating
authority that the White House has lacked since 1994.
But rather than finally ringing down the curtain on Washington's divisive
trade drama, the Senate debate merely signaled the opening of the second
act, by spotlighting a host of "new" trade issues, including
cross-border investments, that the current bill doesn't resolve. These
concerns are likely to occupy center stage in trade debates for years to
come.
The sleeper among the emerging trade issues involves privatization of
essential public services, such as water, education, and health care. An
amendment to the trade-promotion bill offered by Sen. Jon Corzine, D-N.J.,
would have forbidden U.S. negotiators from agreeing to apply international
trade rules to such privatizations. Corzine's proposal was triggered by
recent revelations that the European Union wants to use the current round
of international negotiations on the trade in services to open up postal
systems, and municipal water and waste services to greater foreign
competition. The possibility looms that a resident's local water utility,
post office, or hospital network could be owned by a foreign company-a
surrender of local control that many politicians don't like. "There
are some kinds of public policy choices that should be decided by
democratically elected governments, not unelected trade bureaucrats,"
Corzine said in a Senate floor statement.
The Bush administration disavowed any intention of pursuing privatization
of health or education. And the business community argued that Corzine's
proposal would lead America's trading partners to fence off their
telecommunications, financial, and insurance services from foreign
competition, sectors that are often public monopolies abroad but that U.S.
firms could do well against in open competition.
The Corzine amendment was eventually tabled on a 49-47 vote. But the
closeness of the margin, with only limited lobbying by organized labor, is
a sign that privatization of public services could be the next big issue
in the globalization debate. Groups pushing greater Third World
development and critics of the World Bank did not aggressively lobby for
the Corzine amendment, but they have already begun to rally around
opposition to privatization of essential services in Africa, Asia, and
Latin America. A Citizens' Network on Essential Services
(www.servicesforall.org) has been created to keep activists informed of
worldwide developments on this issue. And, most significantly from a
domestic political point of view, state and local elected officials in the
United States are just beginning to express concerns that privatization
poses a threat to their prerogatives.
Looking ahead, for anti-globalization activists, privatization of public
services is a dream issue.
There are bogeymen: big international companies-especially from France and
Great Britain-that are buying up previously state-owned water companies
all over the Third World. There are victims: poor children whose parents
can't afford to pay the dramatic increases in water or electricity prices
that have often followed these privatizations. There is evidence of
injustice. "At least initially, and on average, privatization has
worsened wealth distribution ... and income distribution," concluded
a recent review of academic studies of services privatization by the
Center for Global Development, a Washington think tank. And there are
upcoming events to rally against. In the World Trade Organization's
negotiations on services, nations have to make their initial requests for
the kinds of concessions they want from their trading partners by July 1.
These requests will provide activists with the ammunition for their
struggle against privatization of public services.
Critics of the World Bank charge that the institution's new private-sector
development strategy will accelerate the privatization of basic human
services in the Third World, leading to user fees that will make water,
transportation, and telecommunications unaffordable for the poor. The
critics fear that a new generation of World Bank loans will require
governments in developing countries to accept minimum protections for
foreign investors, making it easier for American and European firms to buy
up waterworks and power companies in Africa, Asia, and Latin
America.
Expect to hear more about privatization of essential public services
during the House-Senate conference on trade-promotion authority.
Development activists, who have already succeeded in pressuring the World
Bank to exempt health and primary education from privatization, now plan
to step up their opposition to the bank's new private-sector
strategy.
Privatization, which has long been unchallenged dogma among those
advocating free-market reforms around the world, is now under fresh
scrutiny. Opponents of privatization lost the first battle last month with
the failure of the Corzine amendment in the Senate. But the war is far
from over.
Bruce Stokes
National Journal
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