Local councils attack WTO
Planning laws 'under threat from trade liberalisation'
Charlotte Denny, economics correspondent
Monday December 2, 2002
The government was accused last night of giving up control of issues at the core of local government in World Trade Organisation agreements being thrashed out in Geneva.
The Local Government Association is concerned that councils could lose their right to set tough planning laws in the little-known talks about deregulation of services.
The implications are so far-reaching that anxieties were also raised last night that the BBC could be affected by the negotiations, which are aimed at providing new business opportunities for the City.
Alarmed at demands from Britain's trading partners, the LGA has written to its members warning that their ability to set rules in areas such as land use, licensing and environmental health could be threatened by provisions in the WTO's general agreement on trade in services (Gats).
The UK is one of the strongest supporters of the Gats, which ministers believe will open up markets abroad for the City's business and financial services firms. But in return, Britain must offer concessions to trading partners by opening up its own economy.
The LGA's international bureau warned the talks could pose a threat to powers "at the very core of local government". Officials met with the DTI to discuss Gats, but in the letter to its members says the meeting failed to quell their concerns.
In a consultation document last month launched by trade minister Baroness Symons, the DTI argues that towning planning rules will not be affected by Gats rules as domestic regulatory measures which do not discriminate against foreign firms are exempt from its scope. But the LGA fears Gats provisions requiring that all regulation be shown to be "necessary" and "least trade restrictive" could be used by Britain's trading partners to challenge local councils. "There is considerable anxiety that these tough criteria are very much open to interpretation, and that the WTO dispute settlement process could be used to enforce a strongly deregulatory interpretation in favour of business interests."
The LGA fears Britain will bow to demands from its trading partners that local authorities abandon rules restricting the growth of out-of-town shopping centres because they discriminate against foreign firms like Wal-Mart, which is not in the small retail sector. While many European countries have retained the right to apply an economics needs test tosuch stores, Britain has made no such reservation.
Concerns about the BBC have been raised by a paper today from the World Development Movement ( http://www.wdm.org.uk/ ) arguing government support for public service broadcasting will be a major target for the US government. "We know that the UK communications and broadcasting sector is the major target for the USA in these negotiations," said Barry Coates, WDM's director.
The WDM says measures seen by many as crucial to high quality public service broadcasting could be challenged under Gats rules - including local content and regional production rules, limits on cross-media ownership, restrictions on foreign media ownership and public service obligations.
But seeking last night to allay concerns about the Gats talks, a DTI spokesperson said: "We haven't taken any public commitments under Gats to liberalise broadcast services, so the BBC will not be affected."
"We are in touch with the LGA and will work them over any implications that Gats will have for local authorities. No WTO members want to give up their rights to regulate."
What is Gats?
The general agreement on trade in services is an international deal to open up economies to competition from foreign firms. It was signed in 1994 by the members of the General Agreement on Tariffs and Trade, the predecessor to the World Trade Organisation.
Whose idea was it?
Decades of negotations under Gatt have reduced tariffs on goods to low levels. Western governments now want to free up trade in services, which account for a larger proportion of their economies than manufacturing. The European Union and the US are seeking gains for their highly competitive service sector firms in the next round of global trade talks in return for concessions they may have to make on cutting agricultural subsidies.
What does Gats do?
Because services are not physically traded - a company has to be near its customers - Gats is a very different agreement from anything else the WTO or Gatt has done. For foreign service firms to compete on equal terms with domestic firms means that for the first time government regulations could be subject to WTO scrutiny. Geneva rulings will apply not only to how a country maintains its economic borders but to how it controls its entire domestic economy.
Doesn't that give the WTO a lot of power over domestic economies?
The negotiators recognised extending the WTO's reach could be politically difficult so Gats is an opt-in agreement. Countries have a right to fence off any part of their domestic economy, subject to general provisions about liberalisation.