The General Agreement on Trade in Services: An Impact ... - CiteSeerX

The General Agreement on Trade in Services: An Impact Assessment for Higher Education in the UK

Alex Nunn Research Officer Association of University Teachers UK [email protected]


Abstract: There has been much public debate surrounding the General Agreement on Trade in Services and the World Trade Organisation more generally. Of specific importance for Higher Education has been the debate surrounding the effective privatisation of public services. In the contemporary domestic political climate of the Private Finance Initiative and Public Private Partnerships and a context of relative decline in the employment structures of Higher Education this debate is central to an understanding of the future of employment, academic freedom, student access and the social role of Higher Education in the future. This report reveals that the General Agreement on Trade in Services may well pose a significant threat at all these levels. Specifically this may impact on the following seven policy areas already of interest to the Association: decreasing public funding, casualisation, decreasing professional autonomy, quality, academic freedom, intellectual property rights and student access. It presents a summary of the Agreement itself and the debate surrounding it before conducting an in-depth Impact Analysis of the Agreement with regard to Higher Education in the United Kingdom. It should be used to identify and develop policy positions toward the General Agreement on Trade in Services among the Higher Education Trade Union community and to stimulate debate in the wider European Education Trade Union arena and within Education International.

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Contents: 1. Introduction 2. Context 3. What is the WTO, What is the GATS? 4. What is the Debate? 5. Sources of Pressure of the Commercialisation of Higher Education 6. General Impact Trends of Commercialisation 7. Impact on HE Employment 8. Impact on Academic Freedom and Intellectual Property Rights 9. Impact on Student Access to Higher Education 10. Impact on the Social Role of Higher Education 11. Possible Policy Responses 12. Conclusions Introduction This paper sets out an analytical and qualitative assessment of the likely impact of the extension of the General Agreement on Trade in Services (GATS) to the UK Higher Education (HE) sector. It also contextualises these within an analysis of the broader political, social and institutional sources of pressure for trade liberalisation through time. It is based on a number of interrelated assumptions: • That despite the press and media attention devoted to the World Trade Organisation (WTO) over recent years the general public is still largely in the dark about the likely practical impact of initiatives within the WTO such as the GATS. • That because most of the press and media interest is devoted to mass protests, the public ambiguity regarding WTO initiatives is best addressed by practical considerations of their effects in particular sectors in their domestic social context. • There is a need to deepen the public debate surrounding GATS rooted firmly in specific sectoral examples. As a result the primary objective of this report is to develop an understanding of the practical implications of the inclusion of UK Higher Education (HE) in the GATS framework. To do this accurately the report will situate the analysis within the broader context of the management of public services in the late 20th and early 21st century.

Context The last thirty years have seen advanced industrial economies undertaking rapid economic and social restructuring. This has involved a shift away from large scale industrial production toward newer industrial sectors. These have often incorporated large elements of new technology, either in the product itself (ie computers, mobile phones etc) or in the techniques of production (hi-tech mechanisation and automation). There has also been a move, particularly pronounced in the UK, toward the production of services rather than goods. The service sector is wide and varied and incorporates anything from retail sales, cleaning and health care to banking, insurance and design.

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The role of ‘knowledge aspects’ of production have become of particular importance. This means the idea or specific design of a product or the techniques and skills involved in its production. This has been complimented by a trend toward situating highly labour intensive aspects of production outside the West European and North American core of the global economy, a trend facilitated by technological developments in transport (air freight and shipping) and communications (telephones, internet) and in trade liberalisation. This industrial restructuring has been further complimented by changing institutional and social practices. Of primary importance here has been the so-called ‘roll-back’ of the state apparatus. This means the reduction in the growth of public spending on welfare, health and education as well as the privatisation of previously nationalised industries such as British Steel and British Telecom in the UK. State roll-back, privatisation and the attraction of investment for new industrial sectors have involved a marked restructuring of the labour force. State roll-back and privatisation led to large increases in unemployment in the early 1980s. The transition to new industrial sectors also increased unemployment as old industries such as steel or ship manufacture declined. This also undermined collective bargaining through trade unions as these new industrial sectors tended not to be unionised in the same way as their predecessors. Indeed governments often passed anti-trade union legislation to ensure that this was the case believing that the bargaining power of trade unions over wages and terms and conditions deterred potential investors in these new sectors. These developments were repeated to a greater or lesser degree throughout the advanced industrial world. They also came to be espoused by major international institutions such as the International Monetary Fund (IMF) and World Bank (WB). Indeed these organisations began to demand such reform, usually referred to as neo-liberal, in return for their assistance. This meant that many developing countries also had to pursue similar restructuring programmes, including state roll-back, privatisation and the restriction of trade union bargaining power. Often the IMF and WB would actually design these policies themselves. Over time a raft of international agreements developed and expanded both inside these institutions and outside them which centralised the importance of neo-liberal restructuring policies making them almost universally applied. Free trade which is seen by the proponents of neo-liberal restructuring as a necessary part of neo-liberal restructuring had always been difficult to negotiate as it required the completion of a complex and intertwined web of deals between individual countries on specific goods and services. These negotiations had been carried out under the auspices of the General Agreement on Tariffs and Trade (GATT). The realisation that this mechanism was slow, cumbersome, did not include the new service sectors and that it was poorly developed in comparison with the framework of monetary, financial and development agreements, led many prominent business lobby groups and policy makers to attempt to develop a comprehensive, rules-based institution to oversee the expansion of free trade. The result was the creation of the WTO in 1995.

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What is the WTO, What is the GATS, and how does it work? Essentially the WTO performs two broad functions. First, it provides the mechanism for the negotiation of free trade agreements which apply equally to all its members rather than the old complicated system of lots of replicated deals. Second, it institutionalises those free trade agreements in a set of codified international trade rules and enforces their implementation through its ‘dispute settlement mechanism’ which acts like an international court and rules on matters related to trade on behalf of its members. The GATS is just one of the many trade agreements within the WTO and which the WTO is empowered to enforce. The GATS is specifically targeted at trade in services. However, there are many different services and ways of producing, selling and consuming them so the GATS itself is a very complicated and large framework agreement covering approximately 160 different service sectors. As with all agreements in the WTO the GATS is intended to undergo constant 'progressive liberalisation'. Article XIX sets down that "…members shall enter into successive rounds of negotiations, beginning not later than five years from the entry into force of the WTO Agreement and periodically thereafter, with a view to achieving a progressively higher level of liberalisation. Such negotiations shall be directed to the reduction or elimination of the adverse effects on trade in services of measures as a means of providing effective market access…" (Article XIX: 1). The process of 'Progressive Liberalisation' involves both extending the agreement's rules to cover ever more service sectors and increasing the level of liberalisation in service sectors already covered by the agreement. This is achieved through negotiations in the Council for Trade in Services. These negotiations are among a package of permanently ongoing negotiations that were not halted with the high profile failure to launch a compromise new trade round at the Seattle Ministerial Meeting in November 1999. Effectively two levels of liberalisation are administered by the GATS. The first is of a general nature and is applicable to all services. There are several important principles which guide these 'General Obligations': • Article II - Most Favoured Nation: This has been the central principle of international trade policy in the post-war period. It means that members are obliged to offer the same trade terms to services and service providers of all members to that which they offer to the most favoured member. Essentially it prohibits discrimination between foreign service providers from other member states. There is however an exception if such a discriminatory or more favourable "measure is listed in and meets the conditions of the Annex on Article II exemptions" (Article II: 2). However, even these are not permanent and are due for removal from 2004 onwards. • Article III - Transparency: This principle is intended to promote open access to all service providers to information related to trade related services, especially with relation to market access. Members are obliged to "publish promptly…all relevant measures of general application which pertain to" the operation of the GATS

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agreement (Article III: 1). They are also obliged to "promptly and at least annually inform the Council for Trade in Services of the Introduction of any new, or any changes to existing, laws, regulations or administrative guidelines which significantly affect trade in services covered by its specific commitments under this Agreement" (Article III: 3) and to "respond promptly to all requests of any other member for specific information" related to services trade. Indeed members are obliged also to set up enquiry points to facilitate such transparency (Article III: 4). This has two functions. First is to provide accurate and up to date information on market opportunities and the second is to provide for international scrutiny information about laws, regulations and practices which may be considered to be in breach of principles and obligations of the GATS. Article V - Economic Integration: This Article is intended to tie other trade liberalisation initiatives within other bodies, such as regional liberalisation projects, to the global multilateral trade system as embodied in the WTO. Article V sets down that GATS "shall not prevent any of its members from being party to or entering into an agreement liberalising trade in services between or among the parties to such an agreement" provided that the agreement is consistent with WTO liberalisation in the sense that it is non discriminatory. As such this taps into the contemporary debate in international politics and economics surrounding the relationship between regionalisation and globalisation. This measure is firmly intended to cement a complimentary relationship between these two projects. Article VI - Domestic Regulation: Although this article is within the General Obligations section of the Agreement it is ambiguous in nature with some of its conditions applicable only to Specific Commitments. The most relevant aspect of it with regard to HE is paragraph 4 which ensures that domestic regulations such as "qualification requirements and procedures, technical standards and licensing requirements do not constitute unnecessary barriers to trade in services" (Article VI: 4). There is ambiguity then as to whether this particular requirement is of a General or Specific nature. In addition members may be obliged to put in place "judicial, arbitral or administrative tribunals or procedures which provide" service providers from all members with the opportunity to question domestic regulations to this end. This is intended to reinforce the non discriminatory nature of domestic regulations so that they do not interfere in the operation of the market in international service trade. Article VII - Recognition: Although less authoritative and well developed this article provides further mechanisms for the establishment of mutual recognition between members of "education or experience obtained, requirements met, or licenses or certifications granted in a particular country" (Article VII: 1). It also seeks to ensure that this will not be developed in a discriminatory manner between members. In combination with Domestic Regulation commitments this is intended to facilitate both labour migration and cross border supply by circumventing traditional barriers to recognition of foreign nationals qualifications (formal or otherwise) to perform specific tasks, usually professional services where standards have been rigidly upheld such as healthcare provision or training.

In addition to these General Obligations are more substantial Specific Commitments in particular service sectors. This is the so-called 'bottom up' approach because Specific

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Commitments are submitted by member states themselves for liberalisation. Again there are several important principles which guide these Specific Commitments: • Article XVI - Market Access: In the first place Market Access refers to the relationship of General Obligations to Modes of Supply (see below). However, it also refers to specific commitments to provide market access with regard to those modes of supply and to specific service sectors or sub-sectors, such as Education and then Higher Education. It lays down a detailed list of measures that Members are prohibited from applying once an unrestricted Specific Sectoral Commitment has been made. These include: a) limitations of the number of service providers according to a variety of measures b) limitations on the volume of service transactions by aggregate value or simple numbers c) limitations on the number of natural persons that may be employed or the use of employees abroad in the exercise of delivering the service. d) limitations on the legal or organisational forms granted access e) limitations on the participation of foreign capital • Article XVII - National Treatment: This Article obliges members to give service providers from all member states (in accordance with MFN - see above) treatment not less favourable than the treatment offered to domestic providers in service sectors or sub-sectors offered as a Specific Commitment (Article XVII: 1). These qualifications can be on the basis of mode of supply. This Article again attempts to facilitate competition and to prevent discrimination in favour of domestic suppliers thereby promoting international trade. • Article XVIII - Additional Commitments: This Article states that members may negotiate extra commitments not categorised as either Market Access or National Treatment as Specific Commitments. These might include "those regarding qualifications, standards or licensing matters" (Article XVIII). Specific Sectoral Commitments are recorded in a member's Schedule. Schedules record the Market Access, National Treatment and Additional Commitments according to the Modes of Supply that the member is willing to offer them in (Article XX). Limitations to Market Access, National Treatment and Additional Commitments may also be logged in the Schedule so long as they are consistent with the rest of the GATS, in particular the General Obligations. Importantly, though, once a commitment has been made in a particular Service Sector or Sub Sector it is difficult to reverse and doing so requires both the giving of notice and the provision of negotiated compensation for loss of Market Access, National Treatment and / or Additional Commitments according to the Modes of Supply (Article XXI). The GATS agreement stipulates that there are four Modes of Supply for service sectors: § Mode 1 Cross Border Supply: This is the provision of services from one country to another for instance via telecommunications or by mail. Distance Learning either through traditional means or via new media such as the internet are good examples.

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§ Mode 2 Consumption Abroad: This is where consumers or their property move into another country to obtain a service. This would include exchange and foreign students in addition to UK students travelling abroad to study. § Mode 3 Commercial Presence: This is where a service provider sets up an establishment in another country to supply a service. An example of this is foreign banks setting up branches in another country. In terms of HE it would include overseas institutions setting up branch offices in other countries and also the establishment of entirely new institutions by foreign nationals, either of a profit making or non profit making nature. Current domestic regulations make this difficult because the UK Government restricts degree awarding powers. § Mode 4 Presence of Natural Persons: This consists of persons from one country entering another to supply a service. This has long been a common practice in UK HE where many academic and other staff are citizens of other countries. The impact of liberalisation under each of these Modes of Supply will be analysed in the Impact Analysis section. What is the Debate? Debate about the GATS has largely focused on two issues. The first is concerned with Government's right to regulate investment in services. The second concerns the future status of public services such as education and health care. The WTO and GATS defenders claim that public services are exempt from the agreement under Article I(3): "For the purposes of this agreement: b) 'Services includes any service in any sector except services supplied in the exercise of governmental authority; c) 'a service supplied in the exercise of governmental authority' means any service which is supplied neither on a commercial basis, nor in competition with one or more service suppliers" Article XIII on Government Procurement also appears to offer some cover for public services which sets down that both Market Access or National Treatment: "shall not apply to laws, regulations or requirements governing the procurement by governmental agencies of services purchased for governmental purposes and not with a view to commercial resale or with a view to use in the supply of services for commercial sale" Critics and campaigners have argued that this exemption is narrow and does not effectively exclude most public services. In particular a high profile discussion paper from the Ministry of Employment and Investment of the Government of British Colombia in Canada has argued that: "most so-called public services -- which are normally provided through a complex mixture of public and private suppliers, or which frequently include certain commercial aspects…would thus fall outside the protective exclusion" (Ministry of Employment and Investment, Government of British Columbia 2001: 7).

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An assessment of the impact of the GATS on public library provision by a representative of Sack Goldblatt Mitchell for a variety of library associations and trade unions in Canada also questioned the applicability of 'Government Procurement' exemptions for vital public service sectors: "Although there is no authoritative WTO definition of the term, procurement is usually considered to be limited to the purchasing of products and services by governments and government agencies for their own consumption, direct benefit or use" (Shybman 2001). The ambiguity and weakness of these protections were also underlined by a legal opinion from the international law firm Gottlieb & Pearson: “services supplied in the exercise of governmental authority have to meet both criteria of being supplied neither on a commercial basis, nor in competition with one or more service suppliers to be exempted from GATS. Even after defining these conditions, the exclusion for services supplied in the exercise of governmental authority remains unclear and subject to possible conflicting interpretations” (Gottlieb & Pearson 2001: 13). Education International also dispute the effectiveness of such protections for public services despite correspondence and meetings with WTO staff (Education International 2001). It is clear that the UK HE sector does include both provision on a commercial basis and in competition with one or more suppliers (HESA 2000: 6 - 9). Thus the scope of the GATS allows liberalisation to be extended to UK HE. Moreover, HE institutions in the UK often offer their products for sale or in competition with like commercial providers, especially through distance education and with the introduction of tuition fees it may even be argued that the total teaching product of UK HE is produced with a view to commercial 'sale' or 'resale'. The WTOs most forceful rejections of criticism often centre on the popular charge that it coerces governments or enforces liberalisation upon them. Indeed a recent article and letter from Mike Moore the Director General of the WTO to the General Secretary of Education International (EI) stated this argument (Moore 2001a and 2001b). In this regard the formal arrangements in the WTO are quite clear. It is an organisation of member states who negotiated its framework and who continue to negotiate liberalisation within it. In the case of the developing world though, it is less clear whether these states have as much leverage as more powerful advanced states within the WTO. This is so because of a number of reasons including the sheer cost of maintaining an effective bureaucratic negotiating and legal team in Geneva and at other meetings, the guiding principles of the WTO may be shaped by ideologies that are heavily partial or because other benefits such as bilateral and multilateral aid, official and private debt reduction and rescheduling, technical assistance and trade and investment agreements may be informally linked to WTO level liberalisation.

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In the case of many advanced market economies it is clear that their governments are simply in favour of advancing liberalisation to areas of the existing or previously public sector as part of the continuation of the extension of the market which marked the era of state roll-back. It will be argued below that the UK government falls into this category for a number of reasons (see Sources of Commercialisation of HE) including its high profile Private Finance Initiatives and Public Private Partnerships in managing the public services. The United States and New Zealand have already submitted HE as an area that they would like to see liberalised (US Trade Representative 2000, Council for Trade in Services 2001). While it may not be cogent to understand the WTO in itself as initial designer of global trade rules, it does enforce them. In many ways the importance of GATS and other WTO rules is that they effect a project of 'locking-in' specific trade policies into a legally binding rules based framework which, once established, is nearly impossible to alter, except by the agreement of all member states. The WTO is also empowered to enforce its rules through the Dispute Settlement Mechanism. Advocates argue that this creates an independent tribunal free from political interference. Critics however, argue that this tribunal acts according to heavily biased rules and involves the ceding of large amounts of sovereignty to an un-elected and unaccountable body. It is simplistic then to see the WTO as mere designer of trade liberalisation. More sophisticated debate, then, needs to centre on the impact of liberalisation itself, how this is linked to commercialisation and a wide range of social, political and economic goals.

Sources of Pressure for the Commercialisation of UK HE An understanding of the debate surrounding liberalisation must be situated in the context of pressures to commercialise the HE sector. It is not always readily apparent how the two are related or what they mean in precise terms. Liberalisation here is used, in ways consistent with the definition and practice of the WTO, to mean the formal removal of legal, regulatory, bureaucratic and other barriers to trade which may include government subsidies that distort market competition. Commercialisation is used here to refer to redefinition of the product of HE as a saleable commodity and the alteration of the process of producing the HE product, in terms of both research and teaching, as a result of this. In this way commercialisation can be seen as distinct from 'privatisation' which is associated with the specific organisational, institutional and legal forms taken by the sale of previously state run enterprises and some public services, particularly by the Conservative governments of the 1980s and early 1990s. There are four interrelated sources of commercialisation of HE: 1. The continuation of the extension of the market mechanism to the public sector as a means of increasing efficiency. The commitment of the present government to the continuation of this project is most usefully demonstrated in its PFI and PPP projects to reform the public sector through the use of privately sourced funds and management expertise. In HE it can be seen through the use of the market mechanism via competition and through the attachment

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of commercial priorities to the allocation of research and teaching funding. It can also be seen in the encouragement of a managerial culture whereby financial and commercial priorities have been emphasised (HEFCE and CVCP 2000). It is perhaps, though, most illustratively exemplified in the reduction of per-student funding which has forced the HE sector generally to look toward attracting private funds and to generate revenue itself. The introduction of student tuition fees and debate about extra 'top-up' fees may be viewed in this regard. 2. An attempt to deal with a flexible labour market. The widespread industrial change highlighted in section 1 has created problems associated with a highly flexible labour market in the UK, such as unemployment (particularly amongst the young) which in turn have other social problems attached to them such as ill health, rising crime and even social unrest. The UK government, alongside other OECD nations, is attempting to address this by making education more flexible and responsive to business needs to facilitate continuous and rapid retraining and reskilling of the labour force (Newby 2000). It is hoped that this will make the UK labour force attractive to foreign capital investment. This is demonstrated through a focus on life-long learning. Attempts to make HE provision responsive to market pressure, for instance through the use of short-term funding, the encouragement of partnerships with the private sector and the increasing introduction of vocational 'transferable' skills area also examples of this in HE. 3. An attempt to facilitate 'knowledge-based' restructuring. Industrial change has been continuous and has been marked in advanced economies by a continual search for new 'high value added' sectors to offset the transfer of older labour intensive industries to cheaper production locations. Over the last few years 'knowledge-based' restructuring has represented the latest of these phases of industrial change. In particular this is seen as centring on high technology and increasingly biotechnology industries. There are a variety of levels at which this has implications for HE in the UK. At the highest of these, this includes funding for research in these 'knowledge' fields especially in partnership with the private sector (DFEE and DTI 2001). At a lower level it includes a focus on equipping workers for a variety of employment in these industries and may involve a blurring of the distinction between Further Education (FE) and HE as witnessed in the creation of the Foundation Degree. The effect of these pressures can again be witnessed by the increasing focus being placed on the incorporation of vocational skills into HE provision and its expansion. A slightly different perspective on 'knowledge-based' restructuring arises out of the intersection of industrial change, government responses to it and the dominance of the market paradigm in the organisation of those responses. Taken together these dynamics lead to education generally, and HE in particular, to be seen as a growth market opportunity which private enterprise might exploit for large and stable profit (Stokes 2001). Thus part of the new knowledge economy is simply the redefinition of its production and dissemination as a profit making opportunity in and of itself. A variety of private actors are watching the global market for education very carefully. A number of private firms are already involved in adult education and

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training through the establishment of corporate universities and through the offering of continuing for profit education in the commercial sector. Other firms are involved in strategic partnerships with Universities all around the world, especially in euniversity projects such as the high profile Universitas21 alliance (www.universitas21.org). Among these firms are household names such as Motorola, America On Line, Time Warner, Microsoft and IBM. Added to these directly interested corporations are venture capital firms such as eduventures.com who provide market intelligence to investors and seek to identify the opportunities for profitable investment in education markets. The interest of these firms was underlined in May 2001 at the World Education Market in Toronto where the liberalisation of education markets and the opportunities that it provides were a major topic of discussion for 1700 participants from 62 countries around the world (www.wemex.com). 4. Selling HE abroad Interest regarding labour market responsiveness and knowledge-based restructuring is not the sole concern of the UK government but is shared by many advanced industrial economies and even many emerging market economies, as well as regional bodies such as the EU whose Lisbon Strategy for macroeconomic growth is specifically designed to deliver "the most dynamic knowledge-based economy in the world" (EC 2001). This means that there is a global demand for the services that can provide them. Merrill Lynch estimated this demand to be in excess of US$2trillion per year. The UK government perceives that the UK has a significant competitive advantage in this area through the high reputation of UK HE and the English language: the language of international business. Moves to establish a HEFCE funded e-university and moves by individual and collaborations of HEIs to establish their own eUniversities can be seen in this regard (www.hefce.ac.UK/partners/euniv). HEIs and private enterprise are already involved in well developed initiatives intend to exploit this developing global market. The University of Pheonix is a good example of this: a private for-profit University, it offers distance education through an online interface and through branch offices all over the US to some 15,000 students (www.uophx.edu). This trend is particularly pronounced in adult business education where there is well developed competition in distance-learning between private providers and with traditional business schools. The costs and risks associated with such ventures though mean that many traditional HE providers are forming strategic alliances to facilitate their entry into the market. There are a multitude of such alliances, but the most developed and high profile of these is Universitas21: a network of 15 Universities around the world in alliance with the Canadian Electronics firm Thomsons. U21 is currently the subject of much debate about employment contracts, student access, quality and Intellectual property ownership. Its aim is to provide "a pre-eminent brand for educational services supported by a strong quality assurance framework" (http://www.universitas.edu.au/introduction.html).

It is clear then that there is a link between liberalisation and commercialisation. Liberalisation under the four modes of supply identified in the GATS is of crucial

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importance to allow the exploitation of the developing global market for HE. Thus the pressure for liberalisation is a direct result of the commercialisation project in HE. The General Impact Trends of Commercialisation While liberalisation at the level of the GATS is most certainly linked and complementary to the commercialisation of public services, it is not necessary for the commercialisation project to proceed. As is argued above, international trade accounts for only one aspect, albeit a major one, of the commercialisation project. It is possible to witness some existing general trends in this project within HE and the public services more generally. The reorientation of research funding toward short-term, competitive project-based grants and the system of measuring performance through the Research Assessment Exercise is already having a profound effect on HE employment and the quality of research and teaching. The proliferation of Fixed and short-term contracts is one example of this. Others are the increasing bureaucratic workload as competitive funding and performance measurement entails administrative burdens in the form of grant applications and submissions, time management submissions, as management seeks to ensure the success of the Institution as a whole in a context of increasing competition for funding. The commercial priorities attached to funding both by private sponsors and funding councils also restrains academic freedom and the short term view taken by RAE encourages the production of more superficial research and the generation of isolated research communities through the measurement of quality through citation indexes. Teaching also suffers as stress, and workload increases restrict time for teaching, which is increasingly seen as less valuable than research. That said, the redefinition of students as consumers, through the introduction of tuition fees, rigorous if substantively vacuous quality assurance inspection and the intrusion of a more labour market focused approach to teaching is also seriously effecting the quality of HE teaching. The effect of commercialisation can be seen even more starkly in other public service sectors, particularly through the operation of PPP and PFI. These schemes for funding and managing the public sector involve borrowing money from the private sector to build and run public services and offering lucrative long term contracts for the operation of public services. It is claimed by that these projects often involve rates of interest higher than those available to the government themselves, asset stripping, artificially high prices and late delivery (Pollock 2000, Public Finance 2000). Further, there is the suspicion that part of the incentive for private suppliers is that they can employ less staff at lower rates of pay than can their public sector counterparts who operate in highly unionised contexts and are enmeshed in rigid pay bargaining structures (Centre for Public Services 2001). The Impact of Liberalisation on HE Employment It is impossible to separate the impact of liberalisation from these broader commercialisation developments. It is also impossible to predict the definite numerical or statistical implications of broad developments or even specific policies in terms of employment because of the multicausal and interrelated nature of employment where an increase or decrease in employment or changes to its structure could be the cumulative result of any number of independent and interrelated variables. However, it is possible to

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highlight broad changes in employment structures that have been related to liberalisation in other sectors. This section will attempt to highlight and identify the direction these broad trends may take in terms of the number of jobs, terms and conditions and status of employment. Employment structures will be effected differently or via different dynamics according to liberalisation under General Obligations and through the four Modes of Supply under Specific Commitments. There are though some general aspects of competitiveness that apply to all Modes of Supply and to both General and Specific Commitments. Language The emerging world market for education, including HE is dominated by English language provision. English is seen as the language of international business and therefore the language of choice for individuals, firms and governments seeking greater integration and competitiveness in the global economy. Taken in conjunction with the already relatively high reputation of UK HE this is the major reason for the UK government believing the UK to have strong competitive advantage in this area. This means that there may initially be increased demand for the product of UK HE in a global market. This may lead then in the short term to an increase in the number and terms and conditions of jobs in certain, export friendly sections of the HE workforce. It does not mean though that this will be generalised throughout the system and is likely only to further entrench the divisions that exist between the majority of the academic workforce and so called 'high-fliers'. Moreover, in the longer term it is unlikely that this would be a prolonged shift. This linguistic competitive advantage is short term in nature. Just as growth in world demand initially stimulated employment levels in manufacturing, the spread of English speaking, through the near universal adoption of English language education, will quickly mean that education provision can be sourced anywhere to take advantages of cheaper production costs (chiefly wage rates) than available in traditional native English speaking locations.

Mode 1: Cross Border Supply The development of distance learning, especially through technology enhanced media such as the internet or satellite digital television offers the possibility of sophisticated cross border supply of HE. Several e-universities already operate such systems (see above). Perhaps the best working example of this at the moment is the UNESCO sponsored African Virtual University which supplies online and video HE teaching to 22 HE institutions in Africa with some material supplied across borders and even continents (from Washington) (www.avu.org). In an advanced market context this obviously threatens to intensify the competitive dynamic between suppliers of HE. As has been seen in heavy industry, where such an intensification exists there are obviously pressures to reduce costs, often through siting labour intensive aspects of production (in this context teaching or aspects of research) in cheaper production zones, mainly determined by the social value of labour (the average wage rate for a particular task in a specific social setting). Strategic alliances between HEIs in this regard, such as U21, represent both attempts by HEIs to cope with such competition through consolidating risk and

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resources in this global market, and offer substantial opportunities for rationalisation. There may at some future point be no need then to replicate the full range of teaching across all the alliance members since lecture content (especially for introductory modules) could be supplied centrally through the alliance system. It may even be the case that as brand image becomes ever more important in attracting high-value customers there is pressure to source all teaching provision (in terms of lecture content) from a small group of high profile individuals within the alliance through flexible electronic delivery. The need for face to face contact is often held up as a barrier to the development of technology enhanced distance learning. However, through the adoption of this organisational form, face to face contact could be maintained with institutions offering a branch office service in support of the global brand. Furthermore, reservations about the quality of technology-driven lecture delivery may also be overstated. Technological development, dissemination and usage is now at a level where such scepticism may begin to be misplaced as sophisticated versions of electure delivery offer substantial advantages over traditional lecture methods, especially where large numbers are involved. Boxmind, an e-learning provider, have a working web-based platform which allows interactive audio lectures accompanied by video streaming, supporting visual media (such as photographs and diagrams), a scrolling lecture text and online links to documents related to the lecture material to be simultaneously displayed (www.boxmind.com). Such a platform offers substantial advantages such as flexibility, cost and learning efficiency and enables the student to take their time to fully understand the substance of the lecture at their convenience. Added to this is the likely impact of interactive digital television which may allow similar advantages. The implications of such developments, in cross border trade of HE, for employment levels are huge. Technology-enabled rationalisation in this way would obviously reduce significantly the number of 'lecturer hours' required. Moreover, the structure of employment would be effected as many academics would see their responsibilities shift away from lecturing to tutorial and pastoral support. As is already being witnessed through short-term and market based funding allocations, this would lead to the further adoption of fixed and short-term contracting as a means of maintaining market responsiveness and downgrading risk and cost profiles for the institution. In terms of research, cross border supply offers substantial opportunities for collaboration and sharing resources. However, liberalisation is not occurring in a benign context but one of dynamic market based competition. Again the effects of this can already be seen in the commercial priorities attached to finite research funding. The result is that research agendas begin to take on commercial goals and be tailored toward satisfying some aspect of market competition. A central aspect of market competition is cost and as argued above with regard to teaching, it is possible that research could be situated in geographical locations where the social value of research skills is cheaper and then traded across borders as a service in a similar way to traditional goods. Mode 2: Consumption Abroad

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Liberalisation under this Mode of Supply would largely underline existing practice in many cases as student exchanges have traditionally been commonplace. In this sense its effect would be to undermine further immigration controls globally with regard to HE students. The major impact, perhaps, would be in relation to Mode Three (see below) where institutions may seek out attractive global locations for study based upon market pull and production costs, raising the possibility of 'holiday camp' education at the top end of the market. Mode 3 Commercial Presence This is perhaps the most sensitive aspect of liberalisation and would allow foreign owned HE providers to establish a Commercial Presence in this country. A good example is that it would allow, for instance, the University of Phoenix to establish an operation in the UK with an actual physical presence in direct competition to existing suppliers. An HE provider establishing Commercial Presence would then be subject to national laws and regulations. However, the application of National Treatment obligations would mean that foreign suppliers would have to be accorded treatment 'not less favourable' to their domestic competitors. This, then would mean the possibility of foreign owned HE providers being eligible for Funding Council and other government sourced finance on an equal basis to that accorded to existing domestic institutions. The private or public ownership of such an institution would be of little consequence. Although this is a controversial aspect of the GATS because it resembles an investment measure and invokes similar responses to the now defunct Multilateral Agreement on Investments (MAI), given the state of market development it may only impact at lower levels of the HE market. This is dependant on the tiering of the HE market referred to above, but in this case would lead to such institutions being located in geographical areas of high youth unemployment and attracting government incentives for foreign investment. Where Commercial Presence might be established though the effect would be very similar to that of foreign owned supermarkets being attracted by new demand. Indeed similar to this, it may be that in that instance such institutions would actually create jobs, although the same competitive dynamic would be at work and as a result the net effect is likely still to be a downward pressure on terms and conditions. Again the same technology enhanced opportunities for rationalisation and mechanisation of the teaching process would be available which could, in the long run, counteract such job creation. Mode 4 Presence of Natural Persons Like Mode Two, in many ways the effect of such liberalisation would merely extend existing practices. UK HE has long played host to foreign born academics. However, in this case, particularly in the early period, in advance of the full development of Mode One supply initiatives it may lead to a flooding of the labour market by academics from areas of the world where academic labour is cheaper. In this sense the effect may be similar to that thought likely to be the result of Eastern enlargement of the European Union. Indeed it is highly likely that should this Mode of Supply and especially Article VII Recognition Obligations be applied to UK HE, the former communist states of

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Eastern Europe and the Soviet Union could become a source of migrant academic labour as a result of the high level of academic training in those countries as a legacy of the communist period. Such an influx of labour may have a similar effect to labour migration in other sectors and other geographical areas: to lower or at least slow the rise in wages and terms and conditions by exceeding demand with highly flexible supply. Obviously this area has to be subject to debate on moral matters other than mere economic rational arguments. Collective Bargaining The impact if liberalisation on collective bargaining is of fundamental importance. Liberalisation through all Modes of Supply threatens to fragment collective bargaining arrangements by undermining the national basis of employment. The proliferation of direct employers (although not necessarily ultimately related to the number of firms involved in the market) at local, national and international level might mean that Collective Bargaining Agreements through University and Colleges Employers Association (UCEA) would become limited in application throughout the sector. Aggregate Impact on Employment The impact of these specific pressures resulting from liberalisation under the various aspects of the GATS needs to be assessed against other impacts and trends in the academic labour market. The industrial strategy of 'knowledge-based' restructuring traced above is likely to lead to pressure to expand the academic labour force to cope with higher levels of envisaged student access to address initial training and constant reskilling requirements. Therefore the aggregate impact on numbers of jobs might be mixed, although there is no reason why in the long run the opportunities for rationalisation and effective mechanisation would not dominate this trend too. What is easier to assess is the likely impact on the structure of academic employment. Both the expansion to greater numbers through the 'knowledge-based' restructuring industrial strategy and liberalisation promote trends already underway toward managerialism, casualisation and the downgrading of professionalism and individual autonomy in the academic work force. Of particular importance will be Quality Assurance as a result of the imperative to establish a good brand image in order to compete globally. Given that Quality Assurance has been so far associated with those trends toward managerialism, excessive bureaucracy and declining individual professional autonomy in the sector it is likely that this will be enhanced. Impact of Liberalisation on Academic Freedom and Intellectual Property Rights The impact of liberalisation on Academic Freedom is of fundamental importance for labour and broader social issues. In terms of individual professional autonomy, academic freedom is a cornerstone of HE. The link between liberalisation and increased cost awareness and commercialisation potentially undermines that cornerstone. This is particularly so in light of trends, already underway, toward centralising commercial aims in research funding priorities. As HEIs gain formal commercial backers and indeed private suppliers enter the market individual academic freedom may be sacrificed to broader financial need.

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The impact of liberalisation on intellectual property rights is one of extreme ambiguity and the status of Intellectual Property in the WTO regime, especially through the Trade Related Intellectual Property System (TRIPS) is fluid. However, there are some worries related particularly to online providers where academics (and indeed teachers at secondary and primary level) provide content as part of a one-off fixed-term contract. Material then replicated by that academic in another capacity may well, be subject to copyright restrictions from the online supplier.

Impact of Liberalisation on Student Access and Experience of HE The impact of liberalisation on student access and experience of HE is an important consideration and is again crucially linked to market and legislative changes connected with commercialisation. Just as these changes redefine HE teaching as a saleable service, so too students are being redefined as consumers of that service. This is of great importance for continued access to and the quality of the experience of HE. The government's plans for widening access to HE to at least 50% of all young people between the ages of 18 and 30 have been well documented. So too have the financial barriers to such a policy (Court 2001). Liberalisation may then take on the role of supplying competition for supply of that increased access as has been the case in other public service sectors, notably healthcare. Of central importance to this is the issue of quality and type of HE to be offered. As HE suppliers try to attract different parts of the market the reality of provision being differentiated on the basis of ability to pay would become a very real prospect. Current suggestions about top up fees at elite institutions is evidence of this trend already underway. Under all Modes of Supply, National Treatment Obligations may have important implications for the use of public funds for subsidising student access. The obligation to treat foreign suppliers no less favourably than domestic ones may lead to a restructuring of public finance for student access onto an individual basis. This could take a number of forms such as credit or voucher schemes to be 'spent' with a supplier of the individual's choosing. Obviously this further entrenches fear about inequality of access and the role of top-up fees. However, the association of voucher schemes with the Conservative governments of the 1980s may well prove a political obstacle for a Labour government. As such it may be that alternative schemes such as the extension of the student loan scheme to alternative suppliers appear as more attractive. Alternatively it may mean, particularly in the context of a change of that public subsidies for student access to HE will be curtailed completely, especially if liberalisation is accompanied by consolidated market supply where alliances of domestic HEIs and only a small number of private or foreign suppliers dominate the market. This is pertinent in light of present global market conditions in the technology and media industries which are leading to just such consolidation (Walsh 2001, Evans 2001, Stokes, Evans and Gallagher 2000). The redefinition of the student as the consumer of an HE product also has implications for the quality of the HE experience. HE has often been associated with a 'lifeexperience' over and above the advantage that it may award students in the labour market.

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The redefinition of HE as a product potentially undermines this by increasing the focus on labour market-related formal outcomes such as a particular qualification and grade rather than a broader educational and social experience. Impact of Liberalisation on the Social Role of HE Education generally provides an important social role. It incorporates and promotes the dominant values of society. Liberalisation threatens to undermine diversity between societies in these dominant values through a homogenisation according to the dominance of particular suppliers, based in a particular geographical and socio-cultural location. On this basis there are a host of reservations about facilitating the proliferation of English language education based on cultural grounds. Even within Europe there is considerable hostility to the dominance of the English language, especially in the largely US centred global media. This would be amplified when applied to education and when considered at the global level. Furthermore, there are important philosophical considerations, with several schools of thought stressing that thought patterns and identity are crucially related to language. As a result the market based adoption of English as the dominant language in HE is likely to lead to significant social and cultural tension and even conflict. Academic freedom, particularly in research, but also in teaching, has also provided an important social role. Independent and publicly funded research and teaching have provided a counterbalance to sectional interest groups with large research and public relations budgets such as big business. Commercialisation undermines this by restricting access to such independent funding sources and through labour market priorities deselecting broader social interests in the HE consumer (Shaker and Delorme 2000). An indepth study by the Australia Institute into academic freedom in Australian Universities found that such trends were already substantially entrenched in the HE system (Australia Institute 2001). Added to this is the instability created by a market, especially a global market, approach to HE provision. There is a large degree of contemporary debate surrounding the role of the private sector in what were previously regarded as public sector services such as health care, pension provision and education. While the relative stability of government funding for education at all levels attracts private sector suppliers the suppliers themselves cannot guarantee to match that stability in return. If substantial amounts of HE provision were sourced from the private sector in ways encouraged by liberalisation, then that HE provision would be vulnerable to market changes. The current technology and media downturn is a stark reminder that such a strategy may well lead to HE provision being restricted at times when it would otherwise make sense at a social level for it to be expanded such as periods of growing youth unemployment. Policy Responses There are a number of possible policy responses to the GATS. These are listed briefly below for consideration: 1. Reciprocal Membership: Strengthening the existing project of negotiating reciprocal membership agreements with our partners in Europe and across the

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2.

3.

4.

5.

6.

7.

8.

9.

world will strengthen our position vis-à-vis the employers who may possibly multiply in number as a result of the GATS. Coalition building: It may be advantageous for AUT to work with Natfhe and other interested HE Unions in attempting to influence policy. Initial work has begun on this, as per the Council Motion. It may also be of use to consider gaining the support of the employers on this issue - many of whom would be unable to compete effectively in a fully liberalised world market for HE (this applies perhaps even more to Russell Group institutions as they would immediately be faced with competition with other elite Universities across the world). Lobbying UK Policy Makers: MPs and Ministers could be lobbied to ask them to reject the GATS as per the Council Motion but also in the event that this policy is unsuccessful, to ask them to exempt HE from the agreement. As a first measure it may be wise to ask the DfES to conduct a full, transparent and consultative Impact Assessment of their own. This may become a model as individual policy departments are likely to be unaware of the possible impact of the GATS whose progress in the UK has been largely driven by the DTI. Lobbying at the European and World Level: The Association is already leading debate amongst the HE unions in the European section of Education International's HE committee. AUT has also made contact with an MEP over the issue. Education International itself has taken a firm stance on the GATS issue and some of our colleagues across the world, particularly in Canada and Australia have been at the forefront of highlighting the impact of the GATS on HE. Continuing these efforts is one aspect of a response. Mainstreaming the Issue: GATS is too often seen as an obscure agreement with little discernible and direct impact on the sector. By making reference to it in research and policy in our existing policy areas this can be overcome. These policy areas are outlined in the conclusion. Again initial work has begun on this. One possible major policy response is Accreditation. If the market for HE is expanded to a world scale, then quality controls too would be needed to match that world scale. It may be that in this instance accreditation is a desirable response. Extended consideration should be given to this issue. UNESCO: AUT have recently submitted opinion on a working group to consider the impact of the UNESCO declaration on academic freedom. Use of such declarations to employ a more expansive form of academic freedom to include threats and restrictions as a consequence of increasing commercial pressures should be considered as a possible policy response. Awareness raising with Local Associations and the membership: AUT should consider the possibility of producing an informative document for members either through the format of the previous Globalisation and HE document or in the form of an LA Circular. This may prompt LAs to lobby their own institutions to broaden any possible coalition in support of our position. Monitoring Legal Developments: Continued monitoring of legal developments, particularly at the European level, is necessary to keep abreast of developments relevant to the liberalisation agenda.

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10. Monitoring E-University and for-profit University projects: AUT is already involved in monitoring these developments but continued vigilance and fact finding in these areas is essential.

Conclusions Liberalisation of the UK HE sector under the General Agreement on Trade in Services will potentially have a major impact on the sector in terms of employment structures, academic freedom and intellectual property rights, student access and the broader social role of HE. As such this report should be seen as a pilot study identifying considerations for policy formulation with regard to the GATS and other liberalisation initiatives. These broad trends can be distilled into seven policy areas already of interest to the Association: 1. Declining Public Funding The Report finds that the value of public funding devoted to existing institutions would be further undermined by the extension of the GATS agreement to HE. This would be so by allowing foreign owned and forprofit Universities to compete directly for public funding on equal terms. The result of this would either be to cut the existing funding 'cake' into more pieces or to initiate a further and rapid reduction of public funding to HE. 2. Casualisation and Insecurity in Employment Through strengthening market priorities the GATS agreement will add emphasis to flexibilisation and short-termism in funding streams and therefore add to these existing trends. 3. Decreasing Professional Autonomy and Status Through casualisation and through increasing managerialism and reducing the majority of academic inputs to support functions. The report finds that the GATS agreement would reinforce this existing trend. 4. Decreasing Academic Quality The overwhelming focus on market priorities, in respect of teaching the labour market and in respect the market for commercially profitable research, will impact on the Quality of HE. This is already being seen in an overbearing focus on vocational and workplace skills rather than on the important critical and evaluative skills linked to a specific subject area, traditionally fostered by HE. The commercialisation of academic research seriously threatens the interest balance that publicly funded research has offered to the large research budgets of big business. The report finds that commercialisation would be given added emphasis by liberalisation under the GATS agreement. 5. Academic Freedom

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Academic freedom is seriously constrained by points 1 - 3 above. Insecurity, short-termism, declining individual professional autonomy and the pressure to make research projects and the dissemination of their findings through teaching attractive to commercial sponsors, an effect 'locked-in' and emphasised by the GATS, is seriously undermining academic freedom. 6. Intellectual Property Rights The commercialisation of HE implicit in the liberalisation project has huge implications for the rights of AUT members over the ownership of their work. Work completed in the service of for-profit HE providers would be registered as their property as they sold it for commercial gain. Especially in combination with the proliferation of short-term teaching contracts, this would create difficulties for members who then went onto work for another organisation. Potentially they could be sued for breach of copyright if they used the same or similar material again. This may even be extended to that material replicated in both research and teaching. This presents a further problem for institutions themselves when in partnership with private firms. Indeed the question of exactly who owns the material in such an operation is a currently a matter of some confusion. 7. Student Access The possibility of competition between a myriad of competing providers of HE, with minimal quality regulations, threatens student access to HE, especially through tiering provision according to the ability to pay. The report finds that GATS-type liberalisation will underline existing moves in this direction. If these impacts are to be actively resisted it is necessary that the Association addresses policy in these five areas with the context of liberalisation in mind. In addition interaction with government over GATS should reduce discussion to impact and policy areas relevant to these key touchstones of existing AUT interest.

References African Virtual University: www.avu.org. Australia Institute (March 2001), Academic Freedom and Commercialisation of Australian Universities: Perceptions and experiences of social scientist, Discussion Paper 37. Centre for Public Services (2001), Partnerships: What Future for Public Services?. Council for Trade in Services (26 June 2001), Communication from New Zealand: Negotiating Proposal for Education Services, WTO Document number: s/css/w/93. Stephen Court (10, August 2001), "A Revolution by Degrees", Public Finance.

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The General Agreement on Trade in Services: An Impact Assessment for Higher Education in the UK DfEE and DTI (2001), Opportunity For All In A World Of Change, White Paper, London: UK Government, available at: www.dfee.gov.UK. Education International (14 September 2001), "Education is not a tradable good", Press Release, 10/2001. Eduventures.com: www.eduventures.com European Commission (2001), Realising the European Union's Potential: Consolidating and extending the Lisbon Strategy, Contribution to the Spring European Council, Stockholm 24 March, available at http://europa.eu.int/comm/stockholm_council. Tom Evans (March 2001), "Venture Capitalists Seek Reality, Revenues and Rational Business Models", Education Quarterly Investment Report, Eduventures.com. Gottlieb & Pearson (October 2001), Legal Opinion: GATS Impact on Education in Canada, available at http://www.caut.ca/english/issues/trade/GATS%20Impact.pdf. HEFCE: www.hefce.ac.UK/partners/euniv. HEFCE and CVCP (2000), The Business of Higher Education: UK Perspectives, www.hefce.ac.UK. HESA (2000), Resources of Higher Education Institutions 1999/2000, Cheltenham: HESA. Ministry of Employment and Investment, Government of British Columbia (April 2001), GATS and Public Service Systems: The GATS "Governmental Authority" exclusion is narrower than it first appears may undergo urgent review. Mike Moore (August 2001a), Letter to General Secretary Fred Van Leevan, Education International. Mike Moore (2001b), Demystifying the GATS. Horward Newby (2000), Some Possible Futures for Higher Education, London: CVCP, available at: www.cvcp.ac.UK/whatwedo/speeches. Public Finance (14 January 2000), "Senior Academics attack PFI", Public Finance. Allyson Pollock (6 October 2000), "PFI is bad for your Health", Public Finance. Erika Shaker and Denise Doherty-Delrome (2000), "Higher Education Limited: Private Money, Private Agendas", Education Limited, 1:4. Steven Shybman, (May 2001), An Assessment of the Impact of the General Agreement on Trade In Services on Policy, Programmes and Law Concerning Public Sector Libraries, available at www.caut.ca. Peter Stokes, (2001), "A Global Education Market? Global Businesses Building Local Markets", Eduventures.com White Paper, May 2001, available at: www.eduventures.com/research/intl_resources.cfm. Peter Stokes, Tom Evans and Sean Gallagher (October 2000), "After the Big Bang: Higher Education E-learning Markets Get Set To Consolidate", Eduventures.com Report. United States Trade Representative (2000), Submission to Council on Services: Higher (Tertiary Education, Adult Education and Training. University of Phoenix online: www.uophx.edu.

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Mark Walsh (24 January 2001), "Online Education Companies Clicking on Hard Times", Education Week.

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