New Rulers Of The World

By John Pilger

There was international outcry in 1997 when the text of a secret agreement on investment was leaked and published on the Internet. Behind closed doors, the world's richest nations had been negotiating a Multilateral Agreement on Investment (MAI) which would give multinational corporations unprecedented powers over governments and local communities across the world.

Under the MAI there would be no stopping multinationals from taking over the domestic industries of their choice. Performance requirements on foreign companies would be banned.

The MAI negotiations collapsed in late 1998 in the face of international resistance from community groups, campaigners and MPs who recognised the threat it posed to democracy worldwide. Yet since that time, multinationals have been exploring new ways of opening up lucrative markets which are still closed to them. And they are taking a particular interest in the public services sector of Europe.

Trade is generally understood to mean trade in goods, whether raw commodities or manufactured products. However, the Uruguay Round of GATT expanded the scope of negotiations to include trade in services, which now account for over 20% of all world trade.

Examples of trade in services include banking, tourism or telecommunications, where a foreign company will be providing the service in question - for instance, the presence of HSBC (the Hong Kong and Shanghai Banking Corporation) on the British high street in place of what was the Midland Bank.

However, the services sector is far broader than financial services or communications. In fact, it includes the public health, education, water and sanitations services - public goods that have traditionally been seen as too important to commit to the free market.

The WTO's General Agreement on Trade in Services (GATS) commits governments to liberalisation of their service sectors. Like most WTO agreements, GATS was designed to favour the interests of multinational corporations - particularly, in this case, those of the USA.

As noted by David Hartridge, Director of the WTO's Services Division, "Without the enormous pressure generated by the American financial services sector, particularly companies like American Express and Citicorp, there would have been no services agreement."

Under the cover of current GATS negotiations, the world's multinationals are trying to expand their access to services. The USA's Coalition of Service Industries brings together the main multinationals working in the US services industry. With encouragement from the WTO itself, they have targeted the national health services of European countries as their prime objective for privatisation in the current negotiations on GATS.

In many of the world's poorest countries, privatisation of essential public services has already taken place as a result of structural adjustment programmes imposed by the IMF and World Bank. The effects of this privatisation programme have been disastrous, as the World Bank itself admits.

The introduction of school fees where there was previously free education has driven many poor families to withdraw their children from school, while hospital fees have put basic health care beyond the reach of millions.

Although they acknowledge the harm which privatisation has brought to poor communities in the Third World, the World Bank and IMF still insist on prescribing it as an economic model. Water privatisation is just one example. The World Bank notes that water in Haiti's capital Port-au-Prince costs up to 10 times as much from the private sector as it does from the public supply, and that poor families in Mauritania now have to spend a fifth of their household income on water.

Yet both the World Bank and the IMF continue to force water privatisation on developing countries. During 2000 alone, the IMF made water privatisation or full cost recovery a condition of loan agreements to 12 African countries. The World Bank has promised Ghana an extra $100 million in loans if it privatises its water supply.

The other key privatisation which threatens the developing world is the privatisation of knowledge. At the same time as liberalisation has opened up access to the markets and resources of the developing world, the WTO's controversial TRIPs agreement (on Trade Related Aspects of Intellectual Property Rights) has closed down developing countries' access to the new technology and medical advances which could greatly benefit their people.

Countries such as India, Brazil and Thailand have developed their own pharmaceutical industries over the course of many years, producing generic medicines for a fraction of the cost of brand-named drugs made by multinationals. The drug flucanazole, which is used to treat HIV-related meningitis, costs around $50 for 100 tablets in India, while the brand-name equivalents cost $700 in Indonesia and $800 in the Philippines - prices far beyond the reach of most people in those countries.

Yet the WTO aims to restrict the right of developing countries to produce cheaper drugs for their own people, forcing them instead to accept private ownership of brand-named medicines through long patents. In 1998 the WTO ruled that the Indian government must amend its national legislation in line with the TRIPs agreement to give greater rights to pharmaceutical companies' patents.

In March 2001 a group of 39 drugs companies launched a court case under the TRIPs agreement against the South African government's Medicines Act. Nelson Mandela introduced the Medicines Act in 1997 in order to allow South Africa to obtain the cheapest medicines to fight AIDS, tuberculosis and other infectious diseases. The Act requires pharmacists to prescribe a cheaper generic version of brand-named drugs wherever possible, and empowers the South African health minister to override pharmaceutical patents when public health is at stake.

With over four million of its people known to be HIV positive, the South African government is arguing that the Medicines Act is essential to the protection of public health. Yet the drugs companies contend that South Africa must fulfil its responsibilities as a WTO member and put private patents before public health. The UN has spoken out against the TRIPs agreement as a violation of human rights.