"Who? Whom?" Lenin famously asked early in the 20th Century. And "Who gets what, when and how?" was the introductory question in a standard mid-century American political science text. These questions marked the style of the period. It was the era when many of the major international companies that became household names by making cars and pumping oil were becoming dominant. It was an age of huge industrial expansion, the culmination of a 200 year industrial revolution. Cities and towns were packed with factories and warehouses. You worked long hours in an assembly line or an office and hoped that the shop steward might work on the foreman. You hoped that the union might win you a longer lunch break or 1%.

Even ten years ago this model was taken for granted. Our politics and our economics were based on who-whom dualities. In its New Zealand variant we thought essentially in terms like National or Labour, capital or labour, importer or exporter, farmer or townie, worker or boss. Now the questions have become ambiguous, not least because the economy is marked now less by the industrialism of resources and goods and more by the provision of services.

In 1999 over 60% of the world’s mergers and acquisitions - the mark of economic change - were in service industries. In developing countries the proportion was nearly 90%. Jane Kelsey points out this at the start of her analysis of the latest manifestation of the new economic order. The General Agreement on Trade in Services (GATS) is not to be confused with its parent GATT, the earlier General Agreement on Tariffs and Trade. "The reason the GATS has such major implications is because it creates rights for services companies from one country to operate in another country. This trade agreement is no longer about border taxes (tariffs) and quotas. It is about guaranteeing rights to foreign companies and requiring that domestic regulations, made for whatever reason, are not ‘unnecessary barriers’ or ‘overly burdensome’ to their commercial operators" (p8).

The spokespeople for the WTO would have us believe the former. A former WTO Director-General of the WTO, Renato Ruggiero, observed that the GATS proposals would extend WTO’s powers "into areas never before recognised as trade policy". Ruggiero saw himself as fashioning a sort of economic constitution for a world that could no longer play by the old rules. So did his successor, Mike Moore. "Governments", said Mike, with his deadpan comic style, "are free in principle to pursue any national policy objectives provided the relevant measures are compatible with the GATS" (p9).

Pressed by critics, GATS backers claim that national governments will retain the "right to regulate". Kelsey is sceptical. This phrase, she emphasises, is in the GATS preamble only. If governments specify exemptions, they will be allowed an exemption for a short period, but in the body of the text of the GATS there is no provision for countries to act independently. The whole point of the new order is to make exacting rules to ensure a uniform obedience to the dictates of the WTO.

In 1992, an analysis of the Uruguay Round of trade regulation looked ahead to the culmination of the process, pointing out that GATS advocates hoped for "the extensive restructuring of what were once thought of as purely domestic regulations. This required a sea change in social purpose. Both the intellectual framework in which service industries were visualised and the vast array of social interests and institutions related to regulations would now have to be judged according to the narrow commercial criterion of whether they impede trade. Significant deregulation would also be necessary, since regulations also limited entry for national firms, thereby making national treatment an insufficient means of achieving true competition" (quoted p18).

The assumption we have been used to is that if something is not expressly denied, it’s OK. That’s the basic idea behind our legal system. It looks as though the new dispensation wants to reverse this. Unless a national government has retained a particular power for itself to regulate the provision of a service, the terms of the GATS will take precedence. As Moore says, Wellington will be free to do what it likes - as long as it does nothing to impede the international trade in services.

We know that one of the dirtiest words in the new dictionary is "subsidy". We are used to hearing about the elimination of subsidies on goods. But just what will be considered an illegal subsidy when it comes to services? The NZ Government has said that it is relaxed about the situation because no clause yet expressly prevents it from enacting its own policies to favour local service suppliers. We would have to agree in future rounds of talks.

Kelsey is not so sure. GATs schedules were drawn up in 1993 on the express assumption that subsidies should be dealt with under the new rules. NZ said that it has prepared its position based on the acceptance of this interpretation. Why have Australia and the European Union (EU) reserved sections of their economies from full foreign competition? "And, if the NZ Government really believe that subsidies weren’t covered by the Agreement, why did it reserve the right to pay specific subsidies to the NZ Film Commisssion and Te Reo Whakapuaki Irirangi in its schedule?" (p21).

Member states of GATS will become a Most-Favoured Nation (MFN) and granted preferential terms of trade. GATS’ terminology and its rules sound technocratic but their assumptions are far from neutral. All MFNs are to be allowed all rights of access. Specific exemptions can be stated in advance, and are supposed to be granted only for a time - ten years in this case. After the ten years?

Nobody knows. How could they, when the right answer is the interpretation of trade lawyers reading the text that has already generated controversy and confusion - before it has come into effect. What we do know is that GATS has been designed by the people who brought us neoliberalism and deregulation, that its stated purpose is to deepen these trends, that the people who interpret its clauses work for the biggest players in the world’s economy. Cases have to be brought by national governments. In the ethereal logic of WTO legalism it could be that a case brought by, say, the US against, let’s say, North Korea failed. In the real world of power and interest it is less likely.

For one thing, while an MFN member cannot treat a service provider worse than the rules say, it can treat them better. So the rationale behind the exercise is not equal treatment at all. It’s not supposed to be about fair trade between countries, not even in principle. Its avowed purpose is to foster a particular type of economy within its member countries.

As the most obvious trend in world trade has been for less advantaged countries to flaunt themselves like cheap whores, hoping to turn a trick as tariffs and wages fall, it is hard to suppose that GATS will do anything other than hasten the process. We’ve been used to the rush to the bottom in the manufacture of semiconductors or jeans. Now it’s the turn of service industries to get their discipline (a term favoured by GATS people). See Jeremy’s review of the World Investment Report 2002, elsewhere in this issue, where he refers to these examples in more detail. Ed. GATS is a law with the express purpose of giving an advantage in setting up a service business to a person or persons from a foreign country - if they are competing against a domestic government. It’s not per se about giving foreigners control. Foreigners might come from anywhere. The motivation for GATS is less the stated wish for efficiency than the need to sideline alternate sources of public authority.

NZ politicians seem to think it’s all about farm exports. They say that if we preen and pout, or (the Opposition addition) if we had sent troops to Iraq, the Americans will let in our meat. But if the US has not already practised what it preaches, if it passes tariffs which small, purist countries eschew, why will it now change? This has never been clear.

GATS spells out the necessity of "successive rounds of negotiations, beginning not later than five years from the date of entry into force of the WTO Agreement and periodically thereafter, with a view to achieving a progressively higher level of liberalisation" (Article XIX, quoted p27). Kelsey notes that any "regulatory conditions ... that governments list in one round of negotiations are targeted for removal in the next round".

Another way that GATS tips the playing field to help out the winning team is by specifying that any concession that a MFN reserves must be balanced by a new concession. Discussing the current muddle over broadcasting policy, Kelsey writes that, if NZ were to develop quotas and to "identify genres that need particular emphasis" (as the Government has expressed its policy) "it would need to be prepared to offer a ‘compensatory adjustment’ in the form of further liberalisation of other aspects of services, goods or agriculture to a government whose audio-visual services providers could show they were disadvantaged. The value of the adjustment would be equivalent to the value of lost ‘trade’ in audio-visual services. Because NZ’s GATS commitments are already extensive, this could be difficult and might simply shift the dilemma to another service" (p41).

This has always been the way of negotiations between unequals, particularly when there is one superpower, the US, a handful of major powers like Japan and the EU, and a lot of small countries. There are lots of weak countries to play off against each other. The WTO is trying to make it easier for the big boys through GATS. Water finds the lowest point; trade negotiators find the most dependent national economy.

We can look forward to a permanent revolution of capitalist production. GATS is a sort of global constitution for economic relations, enforcing uncertainty and anxiety, especially in relations between employees and bosses. The rhetoric to do with "change" and "innovation" has served to grease the way of the contractual society, in which we are all to become contingent, disposable labour. Meanwhile, business is to be guaranteed stability.

The key to the GATS is its insistence that MFNs must ensure that they allow no "unnecessary barriers" to trade. Any domestic regulations must be "not more burdensome than necessary". What is burdensome, and who finds it burdensome? What is necessary? In whose opinion? Who’s asking the questions?

Kelsey notes that "regulations on qualification requirements, technical standards and licensing affecting any service sector covered by GATS could potentially be challenged of being more ‘burdensome’ (on foreign service companies) than necessary and not being ‘necessary’. This requirement implies the primacy of voluntarism over regulation - the kind of light-handed or self-regulation that has created problems in the international accountancy-cum-consultancy firms and recently in NZ’s building industry. If regulations were challenged at the WTO, what are inherently political judgments would end up being decided, in secret, by a WTO Dispute Panel that is comprised primarily of trade lawyers, academics and former trade diplomats" (p19).

The common factor in all business demands to lighten regulations is the need to cut costs. For profit seekers in core services like education and health the sin of standards, in the word’s sense both of being universal and of being a measure of quality, is that they hamper the restless, opportunistic global search for cheap materials and cheap labour. Privatisation and high quality social services - except for the top end, where the reverse is true - are incompatible.

Kelsey notes that GATS advocates claim that health and education are exempted under a clause allowing governments to provide services "supplied in the exercise of governmental authority", so long as the service is "supplied neither on a commercial basis, nor in competition with one or more service suppliers" (p22). This is unlikely to happen much. Both sectors have long operated with a mishmash of private and public aspects and both are targeted by business interests. Education for foreign students has become fast growing and almost entirely commercial operation (as opposed to educational in the old sense).

Maybe the drafter of the phrase "governmental authority" had in mind only the police and the army. After all, the expression is used in the context of "public morals and public order". There is, we might be wise to bear in mind, a now dominant tradition of Republicanism in the US that would limit government to these functions. Maybe - as GATS advocates will say - this is not at all the intention. But how do we know how it will be interpreted a generation from now? (see Jeremy’s review of "Cowboy Diplomacy", elsewhere in this issue. Ed).

And when national governments are allowed to make rules to do with "human, animal or plant life or health", what is meant? In the context of our national debate over genetic modification (GM), do we have any hope of agreeing what we intend? Will we know what powers we should retain publicly? If New Zealanders disagree, which interpretation will be given the nod in Geneva?

The litigious bits are likely to come from formerly public activities which host champion "partnerships". The whole notion of "partnerships" is to ease private interests into public spaces. Governments partnering corporations are not to be allowed to restrict the number of services that are supplied or how they are supplied. They cannot legislate the operations of service providers or their output. In education, this would most probably lead to an ever greater number of dodgy teacher training outfits and ever more deskilled teachers. Neoliberalism and universal high-quality public education are incompatible - which is one reason the powerful have tossed so many insults at teachers for the last 18 years.

The teacher unions have opposed GATS: "We are committed to the principle of quality public education that is free and universally available. We believe that the concept of education as a tradeable service in a deregulated international market is incompatible with that principle" (p43).

The Government is not keen on these 20th Century values. Soaring into a weightless future it wants to cast off the deadweight tax eaters and bring on board its "invisible export" earners. From their perspective the global trade in education "can help reduce the infrastructural commitments required of governments, and so free resources to be concentrated in other aspects of education policy".

Kelsey’s pithy summary of the result: "the income received by education providers has allowed the Government to reduce real levels of public funding to education, while the ‘freed up’ resources have largely flowed to the private sector".

The de facto result of GATS will be - yet again - to use public money to help out private interests. This time it will be done in the name of levelling the playing field by getting rid of subsidies. And what will happen, Kelsey asks, if and when the flood of language students slows, "forcing serious adjustment costs back on a public education system for which the Government has largely divested its fiscal responsibility?".

"The Labour government", Kelsey writes, "has presided over a massive diversion of education funds from the public to the private sector. In 2000 it reneged on an election promise and proceeded with a plan instigated by the National government to pay accredited private providers the same tuition subsidies as public universities, polytechnics and colleges of education for courses within the same categories - even though those providers had none of the accompanying statutory obligations to research, offer a broad menu of courses or operate as ‘critic and conscience of society’" (p45).

GATS will accelerate this tendency for private education, at all levels, to cherry pick the popular and the lucrative, leaving public education the job of subsidising private institutions’ costs and the grudging responsibility for training the masses of newly deskilled young.

The Post-Primary Teachers’ Association (PPTA) notes that "education is a process, not a product". The value it provides is social. But (to take just one example) the rationale behind the unit standards approach to learning is to commodify education as a product in a mass international market. Again, the particular intentions of particular reformers at the NZ Qualifications Authority (NZQA) are not the issue. The issue is: what, in our neoliberal economy, has actually happened to public schools?

Or look at public health, where a parallel deskilling has occurred. The member states of the EU are more equal in their standards of living and social values than are the members of most national groupings, and they are certainly richer. Yet even there, the EU has asked the UK to "remove unnecessary training from licensing requirements for nurses" (quoted, p78).

Readers will ponder their own examples of policies, seemingly unrelated to GATS as they might often be, which are ideologically compatible with a GATS view of life.

Kelsey gives the example of "the number of hotels in a historically sensitive area ... or the number of commercial advertising signs that clutter up a suburb or tourism area" (p25). The new market in services potentially endangers our wilderness.

As matters stand, Kelsey shows, "it would be illegal under GATS for local authorities to limit planning consents for developing a tourism attraction to firms from the local community or require them to employ workers from that community" (p26).

Local authorities in fact stand to lose their more significant functions. The powers of councils to enact bylaws to do with zoning, shopping hours and building standards are all in doubt. Local government was not consulted about GATS. Neither will it be able to complain if it doesn’t like GATS policies in action.

From head office in Geneva the WTO probably sees all local government as a nuisance. It’s bad enough that national governments still exist. Global entrepreneurs just do not need another layer of public accountability. Some councils, aware, like poor countries, of their inferior bargaining position, rush to please, competing against the next town or the next country to be most accommodating to the needs of big business. Reforms to NZ local bodies should be seen in this context. We already know what happens to a community when it is hollowed out, when small towns die, when inherited patterns of social interaction are interrupted.

What will constitute the sort of "legitimate objective" the WTO will allow for a town council? What might our country look like if there are no local communities empowered to resist the decisions of trade lawyers in Geneva? If local councils are toothless, it won’t matter if they bark at unsympathetic developments or if they wag their tails. They will not affect decisions.

An especially invidious consequence for New Zealanders will result from GATS’ denial of the Treaty. As a public regulatory document Waitangi could challenge GATS hegemony. So it will be deemed of less importance. Instead NZ’s governments will be invited to grant a preference to "a Maori person or organisation engaged in a commercial or industrial undertaking" (p35). In other words, the WTO and the NZ government want to legislate an advantage in business for NZ individuals of a particular ethnic background on the basis of their stated wish to make a buck. It’s hard to imagine any persons other than the favoured few not being furious. It’s hard to see how Maori will be well served or how race relations will improve.

One respected authority has argued that GATS is a manipulation by US transnational corporations. The TNCs want "a global market in private health care, welfare, pensions, education and water, supplied - naturally - by US companies, and which will undermine political support for universal access to social services in developing countries" (Robert Hunter Wade, London School of Economics, quoted in the Guardian, published in the Press, 26/3/03).

This interpretation makes sense. The US dominates service industries even more than it dominates the production of goods, which might be why the provisions of GATS are so crudely biased in favour of the big global corporations.

50 years ago, when Yugoslavia’s President Tito became the first leader to openly defy Moscow’s hegemony in the Communist world, Stalin branded him a "deviationist". Now, launching the final phase of the counter-revolution, the WTO curses at "divergent regional and local attitudes" (p52). In both cases, the post-war and the post-cold-war, a united front had to be shown so that rebels, reactionaries and other terrorist threats to the new order could be dispatched.

GATS rules are to rule. Kelsey characterises the new game: "Services are no longer viewed as socially desirable goods, which governments have an obligation to ensure are affordable, accessible and of good quality for all. They become marketable commodities, whose affordability, access and quality are determined by a market that is subject to corporate, and generally foreign control. In this way, GATS extends, reinforces and locks in the neoliberal model pursued in NZ since 1984 - policies of privatisation, deregulation, unrestricted foreign investment, user charges, contracting out, market-driven competition, labour market ‘flexibility’ and commercialised Treaty settlements" (p10).

Who has drawn up the new rules for trading services and why have they done so? Conflating the Bolshevik Russian and the liberal American we could ask, Who gets what, and how is what done to whom? The new dispensation of GATS is intended to see off the ideological questions of the 20th Century and to offer a final answer. As far as the WTO is concerned, history has ended. In the 21^st Century big business will be freed up to seek profits anywhere in the world.

Whose interests are now being served? Is GATS a tool of the big and the rich? If it walks like a duck and quacks like a duck, it’s probably a duck. We should bang on our transparent wall. The Christchurch City Council has passed an excellent resolution against the immediate ratification of GATS. Unions worldwide are campaigning against it.