A Global Trade Union Challenge: the Liberalisation of the Trade in Services

By Fatih Aydemir (fatihaydem@hotmail.com) and Fransiska Sri Indah Budiarti (indah.budiarti@world-psi.org) – Global Labour Policies and Globalisation 2009/2010

….. the idea of a self-adjusting market implied a stark utopia. Such an institution could not exist for any length of time without annihilating the human and natural substance of society; it would have physically destroyed man and transformed his surroundings into a wilderness.

(Polanyi, 2000:36)


As part or cause of structural adjustment and stabilisation programme forced under Washington and Post-Washington Consensus by especially WB, IMF and GATT-WTO we can observe these impacts briefly as: privatisation of the public enterprises, deregulation of labour markets, flexibility, mass unemployment, growing informal sector, increasing self employment (for survival and providing subsistence), increasing low-paid informalized labour, horizontal and vertical divisions in employment at local, national and transnational level, etc. At the very same time commodification of public services (health, social security, education, water, land) hit the workers second time by impoverishing them.

On the contrary it is more plausible that the populations of even successful and advanced states and regions would be at the mercy of autonomised and uncontrollable (because global) market forces. Interdependence would then readily promote disintegration – that is, competition and conflict – between regulatory agencies at different levels. Such conflict would further weaken effective public governance at the global level. Enthusiasts for the efficiency of free markets and the superiority of corporate control compared with that of public agencies would see this as a rational world order freed from the shackles of obsolete and ineffective national public interventions. (Hirst & Thompson, 2003:102)

In fact, in most of the countries even in developed countries (i.e. during Reagan and Thatcher government in 1980s US and UK trade unions) a common response of the trade unions against neo-liberal policies was fighting against privatisation and liberalisation. It is still valid but has global aspect since these policies are implemented throughout the world and became one of the key points in the agenda of global unions. Accordingly, the aim of this paper is to discuss on the sacrifizing rite of deregulation& liberalisation process of the services to the global market forces and the global trade unions’ response to this ritual.


Neo-liberal policies have been implemented through the past three decades as a receipt to the crisis of 1970s and 1980s and as a unique model for “sustainable growth and development”. These policies have been prescripted by especially the International Monetary Fund (IMF) and the World Bank as part of their consent with US Treasury, which later became known as the ”Washington Consensus” and later “Augmented Washington Consensus” throughout the world. Table 1 below are the main policy instruments of the consensus.

The vision of the consensus is that macroeconomic policies have to provide the stable framework to allow improvements in allocation to unleash market forces. Thus, macro policies have to secure only the preconditions for economic growth, which is triggered endogenously by improved allocation through structural adjustment policies (Herr & Priewe, 2005, 278).

Privatisation of public properties (like the public enterprises and properties in banking and insurance, telecommunications, post, energy, health, education etc), liberalisation of the public goods and services (health, social security, education, water, energy, infrastructure etc), opening the national economies to foreign trade and investment and abolishing the governmental subsidies are very crucial instruments of the resource reallocation for structural adjustment policies.

Countries that were not willing to adopt such policies have often come under heavy pressure from the World Bank and IMF. They made economic liberalisation a condition for qualifying for a loan (Jauch, 2004, 2).

III. WTO – GATS: the Further Step in Liberalisation of the Service Sectors

The formation of WTO (see Table 2 for brief info) in 1995 to replace GATT was a further step in establishment of a global free market and trade, as well as in services.

While having a more representative governing structure than the IMF or the World Bank, WTO procedures are often non-transparent and are dominated by the interests of the powerful industrialised countries. The so-called Quad (USA, EU, Canada and Japan) control the decision making process at the WTO ministerial conferences where they push through their commercial interests at the expense of socio-economic development in the South. (Jauch, 2004, 6)

There are 23 different agreements that govern WTO regulations. The mains are:

1)      The General Agreement on Trade in Services (GATS) was signed in 1994 at the end of the Uruguay round. It regulates free trade in services such as financial, commerce, telecommunication and postal services, and transportation. Trade ministers agreed to launch a new round of negotiations, Doha Development Round. The negotiations began in 2000.

2)      The General Agreements on Trade and Tariffs (GATT), which industrial powers pushed through during the Uruguay Round of negotiations, provides for the gradual reduction and eventual elimination of tariff and non-tariff barriers to trade in goods (Jauch, 2004).

3)      Trade Related Intellectual Property Rights (TRIPS) regulates trade in copyrights, patents, trademarks etc. These so-called intellect property rules, basically obstruct consumer access to essential goods especially medicines (Jauch, 2004).

4)      Trade Related Investment Measures (TRIMS) regulates trade and investment. TRIMS outlaw investment policies that are regarded as “discriminating” against foreign products. Such outlawed measures include requirements for foreign investment to purchase a share of their industrial inputs from local producers (Jauch, 2004).


There are growing fears that the present negotiations under the General Agreement on Trade in Services (GATS) could jeopardise access to vital public services and to other services of general interest for a large part of the world’s population. These services are too crucial to human well-being to be subject to private sector competition under WTO disciplines (GUFs, ETUC, WCL, 2003).

The protest movements have achieved some success and even managed to convince some of their governments to take stronger stance against the dominance of industrialised countries and the interests of their TNCs in the WTO. This led to the collapse of the WTO Ministerial meetings in Seattle in 1999 and in Cancun in 2003 (Jauch, 2004, 7).

The labour movement organized in Cancun a trade union conference (with more than 150 representatives) on the eve of the official WTO 5th Ministerial Meeting to express its key demands. The Trade Union Movement did not emerge stronger from the WTO ministerial in Cancun than they came into it. The fact that none of the key demands of the labour movement could be recognized in the trade negotiations leaves a lot to be desired. Union leaders concluded that new ways must be explored to move the social agenda forward. They expressed in particular concern about the fact, that the new coalition of 22 developing countries (G22) does not support a social framework within the WTO. One immediate conclusion from the experience in Cancun is that lobbying efforts for Trade Union proposals have to be intensified prior to ministerial meetings. In order to ensure this aim Union leaders demanded a stronger presence of the labour movement at the WTO in Geneva (Schroeder, 2003).

The global unions, organised mainly in service sectors, UNI – Union Network International and PSI – Public Services International, are two main global union federations who act with other GUFs together against WTO/WB/IMF.

Beside the joint campaigns and lobbying activities, UNI lunched a campaign, “CALL TO ACTION: GATS ACT NOW” among affiliated unions against WTO-GATS negotiations in 2008. In its campaign call, addressed to the affiliates, UNI proclaimed its position and policies against the liberalisation in services[1]. Quality Public Services (QPS) is the main campaign agenda of the Public Services International and its affiliated unions.  The campaign aims to ensure that public services are well resourced. To support unions who are campaigning for QPS by built a resource bank of information and experiences in areas such privatisation, financing services, financing services, participation in decision-making, quality jobs and strategies that win result (PSI, 2006)

The Social Clause Debate

One of the key debates of WTO negotiations is Social Clause Debate. It is important to note first that these standards essentially refer to workers rights as human rights and not to substantive conditions of employment like minimum wages or working hours (Jauch, 2004).

Some of those who opposed to the Social Clause argue that as the traditional trade barriers (like import tariffs etc.) were faced out, industrialised countries were looking at other ways of protecting their industries against the threat of cheap labour imports from developing countries (Jauch, 2004).

The ICFTU’s and many other GUFs’ basic argument on this issue is that securing core labour standards globally would prevent the downward spiral of labour rights for the sake of international competitiveness: “As developing countries compete against each other to attract foreign investment, they often adopt measures that help them keep the labour costs down. In the absence of a binding international framework of labour regulation, the following core labour standards are now being proposed to counter this trend: a) freedom of association, b) right to collective bargaining, c) elimination of discrimination in respect of employment and occupation, d) elimination of all forms of forced or compulsory labour, and abolition of child labour, including its worst forms (Jauch, 2004).

The ICFTU proposed that the WTO Council should 1) set up a joint working group with the ILO to ensure follow-up to the commitment on core labour standards, 2) examine the social impact of trade generally and on women in particular, 3) set up consultative structures for discussions with unions, business and civil society organisations, 4) in case of persistent violations of core labour standards, the joint working group should propose “appropriate multilateral action”(Jauch, 2004).


Neo liberal globalisation, particularly liberalisation in trade and especially in services discussed above jeopardize human development in the south and in the north at the same time by commodifying the fundamental human rights (health, water, education, social security etc) in the hand of global institution like WB, IMF and WTO. Taking all its aspects into account neo liberal globalisation make development, democracy, rights and freedom as an elitist project in an multipolar Empire.

In this environment trade unions has a chance to mobilise the discomfort of the global working class (in its broad description which include agrarian masses, informal sector workers, self employed for own subsistence, handicraftsman, unemployed etc) into an allied unique counter movement against this project. However, the strategies on social dialog or attempt to humanise the neo-liberal globalisation would discourage and weaken the alliance and provoke the fragmentation among the working class in all forms (south-north/informal-formal/urban-rural).

In fact, the mobilisation against WTO, WB and IMF, shows that the global working class act together around the similar demands especially around the liberalisation of the fundamental services which encourage global counter movement.

Global unions therefore should not make request from the ruling classes but lead to built a global counter movement based on civil rights movement by making human rights and freedom (including free access to social security, health, education, housing, water and sanitation), workers rights and freedoms and environmental rights as redline politics of the movement and developing a civil disobedience strategies through continual cooperate campaigns against especially global governance institution. Competition and market economy should be frontally attacked.

[1] Herewith the point of UNI demands: (1) Affiliates should not allow domestic decision-making procedures to be circumvented. That is to say, governments must respect the parliamentary and consultation procedures that would apply to domestically initiated liberalisation and re-regulation proposals. Say NO to backdoor liberalisation! (2) Affiliates should encourage their governments to make as few market-opening commitments as possible, regardless of the services concerned. That does not mean that affiliates will always oppose liberalisation proposals or foreign investment in domestic services. But it does mean that they should resist liberalisation under GATS, because GATS makes liberalisation virtually irreversible and links liberalisation to the WTO’s sanctions-based dispute settlement (enforcement) procedures; (3) Affiliates are advised to oppose any proposals by their governments to offer market-opening in the field of public services and other services of general interest. Moreover, the functioning of such services is closely linked to the fulfilment of key international human rights covenants, which should take precedence over GATS and other WTO texts; (4) Where it is not possible to prevent a government from making market-

opening offers under GATS, two conditions should be fulfilled: (a) the existing level of liberalisation would be locked in and made WTO-enforceable, but no additional liberalisation would be imposed by the WTO; (b) if a government proposes to open a service to foreign suppliers, unions must ensure that it also secures the observance, in the service concerned, of the ILO Declaration on Fundamental Principles and Rights at Work, 1998, on its own territory as well as in the country requesting market access.


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