The GATS and public funding

It has been suggested by some NGOs with a special interest in the area of public services – for example, by Education International and Public Services International in a joint publication of June 1999 – that the implementation of the GATS might result in the abolition of public funding for national institutions, on the ground that it undermines free trade. Such concerns are unfounded. There has never been any proposal, or even debate, in the WTO services context concerning the abolition of public funding: WTO Members could certainly never agree to that. (In their subsequent publication, dated September 2000, PSI made no reference to this issue. We very much appreciate the cooperation with PSI which made it possible to clarify this point.)

In so far as subsidies are concerned, at present the GATS contains no specific rules. However, a country providing a subsidy to national but not to foreign suppliers of a service committed in its schedule must have entered a national treatment limitation to that effect.

The GATS has no implications for the funding or subsidy of services provided in the exercise of governmental authority. Negotiations are under way on subsidies "with a view to developing the necessary multilateral disciplines" to avoid distortive effects on trade. Whatever disciplines are developed will not apply to governmental services, because these are simply outside the scope of the GATS.

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