Will GATS Win More Jobs for the Philippines?

In light of the upcoming Fifth Ministerial Meeting of the World Trade
Organization, this paper calls on the government to open up the debates
on the Philippine commitments concerning the General Agreement on Trade
in Services (GATS) and seek the views of the local service industries
and other stakeholders such as the trade unions before making any
formal initial offers to GATS this year.

On the agenda in the Ministerial Meeting of the World Trade
Organization (WTO) in Cancun, Mexico September this year is the
proposed liberalization of the service industries, which, unlike the
industrial or agricultural industries, had not been subjected to any
global trading agreement before. For how can trade tariffs be imposed
or lifted on services which can not be placed in boxes or container

But the WTO neo-liberal magicians have found a way of making services
‘tradeable' globally and, consequently, in liberalizing its global
trading – by allowing the freer entry (meaning setting up shops or
buying into local service industries) of foreign service providers
(e.g., banking, telecom, distribution, education, etc.) and by asking
the host countries to treat them equally like the locals. In addition,
the WTO's General Agreement on Trade in Services (GATS) encourages the
freer movement of personnel of foreign service providers and the
relaxation of rules on service consumption across national boundaries
(e.g., accountancy or architectural services done in one country and
sent to consumers in another country through the internet). With the
pressures of transnational service companies such as Barclay's, the
GATS was included in l994 among the two dozen or so global trade
agreements to be administered by the WTO, with the understanding that
member countries did not need to open up their service industries then.
They were simply asked to join GATS and to negotiate for the
liberalization of their service industries later.

Well, the pressure is now on for the full liberalization of the sector.
As a result of the Doha Ministerial Conference in 2001, the WTO's
member countries are being asked to make broad liberalization
commitments in the service sector and to submit formal ‘initial offers'
by March of this year. The WTO expects the negotiations to last till
2004 and to have the full implementation of GATS commitments by 2005.
These deadlines mean that there will be a drastic restructuring of
service industries in most countries of the world. It is precisely in
anticipation of such service industry realignment that Dr. Mahathir
asked its 57 or so Malaysian banks to merge into 10 ‘anchor banks' in
order to become stronger vis-à-vis the bigger foreign banks expected to
come in under GATS.

But what has the Philippines done? What have we committed to GATS? Will there be more jobs for the country under GATS?

Unfortunately, very little has been published by the concerned
government agencies such as NEDA on the progress of the negotiations on
GATS and the commitments the Philippines has made or is formulating.
Before the firing of its DG Dante Canlas last year, NEDA organized an
orientation workshop on what is GATS. However, unlike what Canada or
Australia has done, NEDA has not publicized its proposed commitments to
GATS and has not actively enlisted the local service industries and
other stakeholders such as the trade unions in formulating the
Philippine position on GATS.

In Canada, United States, Australia and Europe, the service industries
have been very vocal as to what service industries they feel should be
liberalized and which should remain restricted. On the other hand, the
trade unions in these countries, with their access on the information
related to the liberalization commitments being discussed by their
governments in the WTO, have registered their collective position that
the concepts of ‘public service' and ‘universal service' should never
be compromised or whittled down in any GATS negotiations, especially in
relation to health, education and other basic services.
One general assumption being made by some economists and observers is
that the Philippines is a run-away winner under GATS since we are a
major source of skilled service personnel such as accountants,
engineers, technicians and so on in Asia. However, the original authors
of GATS took pains in excluding the movement of persons seeking
employment overseas in the coverage of GATS. What is covered is only
the movement of personnel of service-providing companies with jobs or
contracts to fulfill in a host country. Obviously, what the GATS
authors did was to avoid influencing the existing pattern of global
labor sourcing by the more developed countries, which is highly
restrictive and selective, that is, open only to certain job categories
such as programmers, nurses and maids.

The real fight in GATS is how service-providing companies of certain
countries can penetrate the service industries of other countries. This
is why in Australia, the government there and the Australian Chamber
are closely coordinating their efforts in identifying service industry
winners and how these industries such as their competitive education
industry can be positioned under GATS and create more jobs for

Sadly, we have not heard of any joint and strategic government-industry
consultation and coordination here in the Philippines. Instead, the
discussion is more focused on how the country can comply with the
requirements of GATS, including the controversial issue of making the
Constitution GATS-compatible such as the removal of the nationality
requirement in the exercise of the professions such as accountancy.
Last year, the European Union made a request to the Philippine
government for the wholesale liberalization of the following "service
sectors" — professional services, business services, postal and
courier services, telecommunication services, construction and related
engineering services, distribution services, environmental services,
financial services, tourism and travel-related services, news agency
services, transport (air, maritime, land, other) services and energy
services. This list covers practically the entire service sector of the
economy. Will the liberalization of these ‘service sectors' create more
jobs for the country, or will they lead to more job displacements and
painful industrial restructuring?

It will do well for NEDA and other concerned government agencies to
open up the debates on the Philippine GATS commitments and seek the
views of the local service industries and other stakeholders such as
the trade unions before making any formal initial offers to GATS this

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