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Prologue
This very important document is relevant not only to the people of South America but also to people in the U.S. It deserves to be translated immediately into English and other languages. Indeed, the privatization - or shall we say, the corporate takeover? - of water resources is occurring virtually everywhere.
Here in the US, water has been traditionally managed through small local public service providers. Recently however, major transnational corporations like Suez, Vivendi and RWE have begun to acquire these companies - and faced with financial constraints, many local governments have been happy to hand over their responsibility to deliver clean drinking water. But not all. Citizens and responsive political leaders in California, Kentucky and West Virginia have begun to fight back.
The latest in these has been the attempt by RWE/Thames Water to acquire the public utility in West Virginia. Despite serious concerns raised by the State Attorney General, the public utility commission has approved the deal.
The current trend in corporate take over of water delivery first started in the UK in late
eighties. The experience there has been quite negative in terms of people's access to water, the price of water service, and impacts on human health and the environment. While public outcry has resulted in some changes, the system remains far from satisfactory.
In developing countries, the privatization of water services has been pushed as a loan
conditionality by international financial institutions such as the World Bank and the regional development banks. They insist on liberalizing even essential services in the name of efficiency, paying scant attention to the implications for poorer sections of such multinational-led privatization. This kind of privatization is under way not only in South America, but also in Africa and Asia.
Resistance movements in these countries are growing in strength and they are working towards an alternative vision as has been witnessed in Ghana, India and Bolivia. However the governments in these countries are in a bind. The loan conditionalities and the demands of the international financial institutions make it difficult for the governments to fulfill their obligations to their people.
The corporate world's unequivocal push for so-called free trade negotiations will be yet another and very powerful instrument promoting privatization of water and water services. The European Union has taken the lead in supporting the free trade of water and water services, since almost all major water corporations are located in Europe. The US government has been happy to support this approach.
At the November 2001 WTO Ministerial Meeting at Doha, a group of developed countries, led by EU and US, proposed that water services be brought under services negotiations (the General Agreement on Trade in Services: GATS) as part of "environmental services." |i| Despite assurances to the contrary, the current EC approach asks governments to accept legally binding limits on domestic regulation. (As of now, the US is not supporting this particular aspect of the approach). By March 2003, all governments are expected to submit the list of services they wish to be included in the GATS) will be of crucial importance in deciding the future of water services globally. |ii| Leaked European Commission requests from early 2002 reveal that water services are particularly targeted. When services are brought under GATS, they will be subject to the legally enforceable obligations imposed by WTO rules including the obligations not to subsidize local or national providers, which could gravely affect access to water by the poor, and to treat foreign corporations exactly the same as domestic companies.
In the Americas, the key instrument promoting water privatization to date is the North American Free Trade Agreement (NAFTA). In this trinational agreement, it is not under "services" but "investors' rights." Chapter 11 restructures democracy, sovereignty and constitutional law, affecting the powers of the three countries' federal, state and municipal governments. It broadens the concept of protecting private property, stating that no government may "directly or indirectly nationalize or expropriate an investment... or take a measure tantamount to nationalization or expropriation..." In particular, the words "indirectly" and "tantamount" are exceedingly vague. When the Mexican negotiator at the time complained that the scope was so broad it could lead to unintended effects, the U.S. responded that "the ebb and flow of arbitral wisdom would contribute to reasonably limit its scope."
Let's see how reasonably Chapter 11 has performed. Here are three cases generated under these Investors' Rights provisions in NAFTA that affect the North American water supply:
- Methanex, a Canadian company, sued the US for $970 million after the State of California moved to phase out the carcinogenic gasoline additive MTBE. Studies have identified 10,000 possible sites where MTBE is leaking into the groundwater, and cleanup costs could reach $1 million each. This case is pending.
- Metalclad is a US company suing Mexico because the State of San Luis Potosi denied a permit for waste disposal on a stream and then created an ecological preserve. The company sought $90 million from Mexican taxpayers and was awarded $16 million.
- SunBeIt Water is a US company suing Canada for "between $1 billion and $10.5 billion," after losing its effort to export bulkwater in British Columbia's court system.
The newly finalized US-Chile Free Trade Agreement is not yet available to the public, although a lawsuit filed in the US courts recently determined it must be published. A summary published on the website of the Office of the US Trade Representative |iii| suggests both the services proposals in the WTO negotiations and the investors' rights provisions in NAFTA may be part of the US-Chile FTA.
The corporations are also working through the US government to bring similar provisions to privatize water and deregulate investments through the Free Trade Area of the Americas.
Fortunately, mass mobilization by civil society in opposition to these and other measures proposed in draft texts of a potential FTAA appears to be effectively blocking progress in these negotiations.
It is crucial that citizens in every country understand the impacts of all these negotiations, in order to protect our collective rights to water as well as the larger public interest and democracy itself. The Alianza Chilena por un Comercio Justo y Responsable has done an enormous service to us all, in preparing this impressive document.
Shiney Varghese and Kristin Dawkins,
Institute for Agriculture and Trade Policy
Minneapolis, Minnesota USA
Notesi. WTO Services Negotiating Proposals, October 24, 2001 available at WTO website <htt://www.wto.org.> The document numbers are: U.S. - S/CSS/W/25; EU -S/CSS/W/38; Canada - S/CSS/W/51; Switzerland - S/CSS/W/76; Australia - S/CSS/W/112. [Back]
ii. In "GATS Handbook: WTO's General Agreement on Trade in Services" (published by Alliance for Democracy), Ruth Caplan notes that European GATS negotiators want to ensure that drinking water is included in the GATS agreement, since some of the largest water transnational corporations are based in Europe. Countries like the U.S. are considering compromise positions, where they exclude transportation of bulk water across international borders by private companies, but permit water treatment, distribution, and sewage treatment within the country. Other countries, especially in the South, "might have a very hard time resisting the pressure from TNCs [and their allies] to put public water systems on their schedule of commitments." [Back]
iii. See USTR website: http://www.ustr.gov/regions/whemisphere/samerica/2002-12-11-chile summary.pdf [Back]
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