What is "progressive liberalization" ?

For public services, its a lot like progressive strangulation. Part IV (4) of the GATS "Progressive Liberalization" is composed of three Articles - XIX (negotiation of specific commitments), XX (scheduling of commitments), and XXI (modification of schedules). Its goal is represented to be “promoting the economic growth of all trading partners and the development of developing countries".

The WTO frames policy areas of all kinds, including those in areas like health insurance, water, and education primarily as "markets" which it requires be subjected to this arguably almost one-way "progressive liberalization".

GATS Article XIX Negotiation of Specific Committments - Participation in these Minesterial Conferences every two years where countries come under pressure from powerful economic players such as the US and EU to privatize more and more of their public services.

Participation in these gatherings is required of all Members.

GATS Article XX sets out the format for these commitments - which specify the modes of supply which have been committed as far as market access, national treatment , undertakings for additional commitments, and time frames within which commitments must be met.

GATS Article XXI is supposed to be how a service sector is withdrawn from the GATS coverage. However GATS Article XXI is set up to make reversal of privatization of a public service almost impossibly costly if there is any real economic activity in that sector across borders.

This seems intended to be framed as a silent trap for countries they cannot escape. 

But according to the WTO countries only commit services sectors they want to, as opposed to "negative listing" which aggressively opens - and freezes regulation in- all service sectors that aren't carved out, serving as a permanent lockdown of progress in all those areas (every service thats not excluded)

Why isnt this a huge news story?
Basically - many/most GATS rules - when taken together, are a ceding by Democrats to Republicans, in the sense that GATS and the WTO quietly block future progressive changes. TISA is likely even worse. lets also not forget that liberalization = relaxation of rules that limit large scale job losses which might otherwise occur. (offshoring/outsourcing/Mode Four, etc.)

Also, GATS rules seem to inherently block ideas like MedicareForAll and other new jobs, and/or safety net programs, unless deemed "minimally trade restrictive" and "not more burdensome than necessary"- depending on what they are - likely also time limited (or limited to the poorest countries only).

Progressives don't get a free pass on ignoring this, if they are in fact progressive.


Generally the term liberalization means increasing competition of all kinds, both by making the domestic market "more competitive" and by (permanently?) "opening the market" to international firms under the WTO's "rules based system" in a manner which ratchets in, becoming very costly to reverse over time. (This could>>would include job outsourcing/offshoring in large numbers)

With some services, however, this is problematic because of market failures. But if the sector has been opened, all regulation must be minimally trade restrictive. Meaning inadequate in many cases. At least inadequate compared to what people need and want.

Perhaps the largest contributor to improvements in the quality of life and public health in the 20th century for many people was a large increase in involvement in ensuring the public health, education and welfare by governments, a trend the WTO (and other global economic governance organizations) agenda seems determined to reverse. 

The WTO does this via what it frames as "progressive liberalization" a concept which is at the core of the WTO's "rules based system". 

"Trade Liberalization": A One-Way Street

("Trade liberalization") is the core principle of the WTO and, consequently, of the GATS. Clearly, the GATS aims to speed up trade liberalization in the services area and make it more far-reaching. In line with this principle, the agreement contemplates the possibility that, at any time, countries may introduce new commitments in their lists—irrespective of the stage of the negotiations underway. In contrast, the agreement contains hurdles to the withdrawal of commitments already established. With regard to this question, Article XXI of the GATS establishes that:

a) The members may not withdraw their commitments until three years after their undertaking,
b) The modification has to be notified at least three months in advance, and
c) the members affected by the modification may file a lawsuit by means of which it may be ruled that a country modifying a list has to compensate those parties affected. Under these rules, the GATS effectively locks in those who sign up to them (Robertson and Dale 2003).

Consequently, democratically elected governments can find themselves in a position where their policy options and regulatory capacity is conditioned by decisions taken by previous governments when the GATS was negotiated. 

(Source: "WTO/GATS and the Global Politics of Higher Education" by Antoni Verger)

Progressive Liberalization within the WTO context can also be understood in the context of being a global  "austerity regime" (description of what an 'austerity regime' is but not my conclusion adapted from Markus Krajewski "Human Rights and Austerity Programs") .

For them, "austerity is not limited to certain measures and programs adopted by a state as a reaction to a particular crisis, but a political principle institutionalised and implemented for a longer period of time"... (permanently)

..."A key element of such a regime is a continuous reduction of the proportion of the national budget which can be spent based on political discretion due to a combination of reducing deficit-spending while rejecting an increase in taxation. (using the device of protecting foreign investors) An austerity regime does not necessarily entail cuts on public spending in absolute terms, but it reduces the availability of policy space for programs which require additional funds. However, in relative terms spending for social programs and governmental services will be reduced in the long-term. In addition, an austerity regime is characterised by a fiscalization of politics which sees a focus of the public discourse on austerity as an objective of policy and not merely a goal to achieve macro-economic stability.

Public involvement in a service which is often combined with public monopolies has been viewed by the WTO as the most restrictive kind of regulation because it takes what WTO frames as a market from private hands and eliminates what it derides as a contradiction caused by requiring private interests to serve public goals.

WTO frames this as entirely bad and requires that countries move continuously towards what it describes as a more "liberal" market. Measures that violate its rules must be temporary. 

With its own Byzantine regulations it attempts to force what it describes as deregulation, creating new entitlements to the policy owned by foreign participants in a market. By use of the pretext of trade, in what amounts to a bogus "straw man transaction" it frustrates the ability of people to vote for and change policy, or at least that is the core idea. 

For making even a small investment in a market, a foreign firm gets what could become a hugely costly entitlement with only a very costly route available to that entitlement's reversal. This is their payback for enabling the dishonesty.

Liberalization can be accomplished both via the "disciplining" of domestic regulation and via "opening" of the country's markets to international trade, and once that ccurs, which can happen invisibly, WTO rules attempt to make it irreversible, creating what amounts to an entitlement owned by the foreign country (under WTO) and foreign corporation (under the US-style 'next generation' FTAs ISDS) severely restricting future government involvement unless it utilizes all providers of the service in a non-discriminatory manner.

It seems that subsidization of services in market sectors where there is a market failure, is limited to the "least burdensome" measures possible, limited in scope to only the cases where market failure clearly requires them, and the fix is supposed to be both minimal and  temporary, ideally leading to a market based solution that does not require government subsidies within a finite period of time.

(This is realistically, what is happening to the Affordable Care Act in the USA, this actually can be clearly seen from the text of the Understanding on Commitments in Financial Services). 

After then these rules (which are supposed to become more and more restrictive i.e. liberalized) may require that the only means available to reduce costs must come via market based mechanisms, if possible, (i.e. in the case of US health care, this may lead to an ever more and more punitive hierarchy of punishments ranging from higher and higher deductibles and copays (the exact opposite of what financial advisors recommend for the poor) to overseas care for the poor (when certain tiering based conditions apply. ) Note, it is currently specified in the US schedule of specific committments that US government funding is only supposed to be spent at US licensed facilities, in other words there is a carve out from GATS that prevents the offshoring of US patients currently. However, this carve out seems to be on shaky legal ground to me when viewed in the context of the GATS circular logic and especially intent. It may be there simply to prevent what otherwise would be a sort of land rush on US patients while the negotiations (which have now become TISA) continue. Indeed its my understanding that medical tourism is one of the core things being discussed in TISA.

Note the following clearly shows that GATS' focus is not lowering costs, its increasing (and the turning into bargaining chips) of international trade in areas thet traditionally have never been thought of as such especially once "public services" now "services of general public interest".

In some market sectors such as health care and health insurance, as well as higher education, water, etc, both experience and research show that increases in competition of most kinds consistently have an adverse impact on total costs, and quality, so in those market segments, privatization clearly is not a good idea.  However, it must occur because of the rigidity of the ideology does not allow otherwise, except under the most narrow of circumstances, it seems.

If nothing else, the history of the 19th and 20th centuries should have taught us, that when ideology is deemed more important than anything else, huge disasters occur.

Coming soon, the history of "progressive liberalization".