Knowledge as Trade: Higher Education and WTO-GATS Regime
Today India’s higher education sector is faced with a serious threat. Instead of fulfilling its constitutional obligation to provide free and compulsory school education of quality to all children and take steps to expand and democratise higher education, the state is retreating from its responsibility. In August 2005, the Government of India (GOI) made an `offer’ to provide Market Access to higher education as a `tradable service’ under the World Trade Organisation’s (WTO) General Agreement of Trade in Services (GATS). This offer was made in spite of the conclave of state education ministers having warned against the move in January 2005, citing fears of conflict with national values and goals. If the offer is not withdrawn before the conclusion of the Tenth Ministerial Conference of the Doha Round being held from December 15- 18, 2015 at Nairobi, Kenya, it will become a commitment in perpetuity.
GATS was founded in 1995 to extend the reach of the WTO to `services’ including essential services like education, health, water etc. Education International, a global union federation representing nearly 30 million teachers and education workers worldwide, was explicit in its opposition and had called upon the WTO’s 7th Ministerial Conference “to affirm that education and other public services are basic human rights. Education must not be treated as a commodity [. . .]. GATS is a commercial agreement with the aim of expanding business opportunities for investors. By contrast, the goal of education is to serve the public interest: education advances human understanding, preserves and promotes cultures, and strengthens civil society and democratic institutions.”[1]
In order to mount a strong resistance and compel GOI to withdraw the ill-conceived offer of higher education to the WTO-GATS, we need to understand why the government made its offer in the first place and why successive regimes led by different political parties have not withdrawn it over the last ten years.
The higher education sector in India is quantitatively the third largest in the world, after the United States and China, with over 700 universities, more than 37,000 colleges, over 1.3 million teachers and 30 million students. However, India has the lowest percentage of the relevant age group accessing postsecondary education among the "emerging" and many developing economies. As India boasts one of the highest percentages of young people as a proportion of the country's total population, Its low Gross Enrolment Ratio (GER) of 19.4% gives an idea of the sheer numbers of those unable to enter institutions of higher education and highlights the gigantic steps that need to be taken if the country is to enlarge its GER) beyond the current level.
Qualitatively, the higher education sector faces an even bigger crisis. Even if one does not give much credence to the current fashion for bemoaning the absence of any Indian institutions in the global top 200 rankings, the problem is evident. As far back as the late 1960’s, it was recognised[2] that postsecondary institutions were neither growing rapidly enough to cope with the increased pressure for admissions, nor being adequately funded to allow for academic innovations and advances. A 1984 study[3] had established that whereas student intake had been increasing annually by 9% for close to half a century, funding went up by a mere 2%. When inflation was factored in, there was actually a decline of 2.9%. Falling standards and low academic attainments were inevitable, as the issue remained unaddressed over decades. Failure to appoint permanent faculty — contractual appointments currently average more than40% — is making student-teacher ratios academically non-viable. Infrastructural facilities, including adequate provision for libraries, laboratories and residential accommodation, have been consistently low and hence the failure to develop research abilities among students and sustain or evolve proper evaluation procedures and standards is not surprising. Less than 1% of those in higher education opt for research, as grants and fellowships are not provided for and are in fact being further cut (the latest is the threat of discontinuation of non-NET research fellowships). Barring some select universities, and a few elite `centres of excellence’, the higher education system as a whole has been in deep crisis for the past 25 years.
With the initiation of neoliberal economic "reforms" by the Narsimha Rao government in 1991, the process of privatisation of higher education and later the entry of 100% FDI in the sector was initiated as the state began to withdraw from directly funding higher education. There was a cumulative decline in funding as a percentage of GNP from 0.46% (1990-01) to 0.34% (2004-05) and in budgetary expenditure from 2.09% to 1.72%, which by 2004-05 was further reduced to 1.60%. In higher education alone, the decline as a percentage of GNP was from 0.46% in 1990-01 to 0.36 in 2004-05.[4] The trend accelerated over the period of the Eleventh Five-Year Plan (2006-07 to 2011-12). This resulted in opening up space for private higher educational institutions (HEI). In 2000-01 these constituted 42.6% of all HEI’s with an student enrolment share of 32.89%, but registered a more than 60% increase between 2007 and 2012 to reach 64% of all HEI’s, with a jump in the enrolment share from 54% to 59%.[5] The GER rose to 18%, up 7% from a GER of 12% at the start of the Plan.
Although under current regulations, private and FDI funded HEI’s must function as "not-for-profit" institutions, private funding in higher education is not philanthropic in character any more. It has increasingly become "investment" oriented and this means that students are now paying significantly higher costs for the education they receive. Individual private expenditure had risen by 10.8% in 2005-6. Poorer sections were hardest hit with a rise of 12.4%. The outcome has not been purely economic in character. The investment oriented approach has altered the purpose of higher education and hence the nature of knowledge itself. Education is viewed not only by private education "providers" but also by parents and students as a means to recoup their investments in the sector. Returns drive the former, but students are also lured towards higher-end placements in the job market and hence towards courses that facilitate this process. Like current policy makers, students, parents, media and society at large have now become accustomed to regarding higher education as a “private good” where the user-pays principle, however painful, appears to be appropriately applied.
The development of GATS constantly enlarges the scope of the liberalisation regime and prevents reworking of even those trade agreements that may prove to be detrimental to a country’s and its peoples' interest."
These are serious issues. Restricting higher education — on the one hand, by limiting access to those who can afford it and, on the other, by endorsing an instrumentalist view of the nature of knowledge — directly impacts the character and structure of higher education in India.
Yet policy makers have appeared indifferent to these disturbing repercussions. The failure of the state to meet its constitutional obligation to provide free and compulsory elementary education for decades, even after the implementation of an inadequate and discriminatory Right to Free and Compulsory Education Act (2009), is blamed on a supposed inherent inability of the state to provide adequately for education. Secondly, the responsibility for declining standards particularly in higher education is placed at the doorstep of fee controls and reservation policies, both state regulatory policies which have opened up some avenues for the marginalised and underprivileged. The solution offered by policy makers, government, media pundits and even sections of the intelligentsia is that the "market" alone can pull the education sector out of its present crisis. Raising the bogey of state responsibility and state regulation as the root cause of the problem has resulted in the central feature of the "reforms" process being the blatant promotion of unregulated privatisation in the entire education sector.
The role of the World Bank (WB) and other international agencies including the WTO has been significant in these developments. After WB announced in 1994 that higher education was a "private or quasi-private good" that merited no state subsidies (Higher Education: The lessons of experience. WB Report p3), the Finance Ministry in 1997 aggressively advocated subsidy cuts for what was dubbed a “non-merit good”. In 1998 MHRD minister Murli Manohar Joshi stated that those who were able to enhance their individual market value by accessing higher education should be prepared to pay their own way and not expect government to fund it. Limited scholarships and liberal loans could be provided for the less well endowed. In 2000, the University Grants Commission (UGC) Chairperson Prof. Nigvekar presented the position paper, “Trade in Higher Education: Impact of GATS on higher education, research and knowledge system in selected contexts in Asia and the Pacific region”, at UNESCO’s second regional meeting. According to the UGC website, he declared that knowledge had become a “tradable commodity” and that there was “little if any empirical evidence that GATS and the trade in education service per se is compromising national systems of higher education.” The Ambani-Birla Report[6] was released the same year. With its companion Model Act 2003 prepared by the UGC, it was a blueprint for restructuring higher education on the model of market-oriented enterprises promoting corporate values. Its agenda had to be shelved because of strong opposition from teachers and students organizations. However, its principal recommendations continue to provide the framework of `reforms’ for restructuring higher education.
Although a new government with Manmohan Singh as Prime Minister took office in 2004 and higher education was now termed a “merit 2 good”, which could receive limited subsidies, the pace for trade in higher education was accelerated. In 2006 the Commerce Ministry under P. Chidambaram issued a circular that higher education as a “tradable service” under GATS would benefit students who spend large amounts of money for a foreign-based education if foreign universities were permitted to open campuses and offer courses in India. The country it was argued would also save large foreign exchange outflows. However, this position was dangerously simplistic even when viewed from a purely commercial angle.
A country’s degree of development is strongly related to the establishment of commitments on liberalisation in education. The three leading higher education liberalisers (Australia, United States and New Zealand) are all net exporters. Developing countries on the other hand are almost all net importers of higher education. Coming under GATS will have the effect of imposing one model of education — private, commercial and import-oriented — on developing countries. Secondly, not only would educational institutions in these countries face great difficulties in gaining access to global educational markets, but trade liberalisation would also weaken their own national systems within the country due to foreign competition. Additionally, trade liberalisation as envisaged in GATS would introduce considerable complexity and limitations in domestic regulation and financing of educational systems, which would immediately effect national/local authority and negatively impact educational access. Interestingly, GATS Mode 4 (presence of natural persons across borders) is the only mode for which the developed countries are less "open to trade" than the rest. The claim here is that this would be incompatible with their immigration policies. In contrast, developing countries want to see advances in this mode, as their comparative advantage in the trade in services lies mainly in the export of "human resources". Specifically, developing countries like India see this trade mode as being an important source of income received through monetary transfers made by their workers abroad.
It is significant that, contrary to common belief, quality suffers as a result of liberalisation. Developing countries usually lack suitable infrastructural, legal and technical mechanisms to evaluate the quality of private international (or domestic) higher education services. Internationalisation of education in many developing countries has led to the multiplication of ‘diploma-mills’ or "garage-universities", terms that indicate the low quality of education provided. The Task Force 2000 report of the World Bank and UNESCO pointed out that even prestigious universities set up sub-standard centres in less developed countries. Finally, GATS commitments would accentuate the brain drain problem, which afflicts countries of the periphery rather than developed metropolitan centres.
However, during the past decade, measures have been rapidly undertaken to commercialise the higher education sector in India and create conditions favourable for making the transition to the WTO-GATS regime. The seven higher education Reform Bills, which have been brought before Parliament from 2010 onwards, were clear in intent. Although they could not be passed by the previous government, they will most likely be brought into effect by the present one as they aimed at making Indian HEIs compatible with the United States model, and putting in place the legal framework required by the WTO-GATS trade regime. A series of ill-conceived `reforms’ have been hastily imposed in universities and colleges with no policy deliberations or national debate and little regard for the absence of adequate infrastructural facilities and faculty strength. No reviews have been undertaken either to remove anomalies or reassess the decision to implement these "experiments" which include: semesterisation at postsecondary level; imposition of choice based credit system (CBCS); four year undergraduate program (FYUP); grade-point system; contractualisation of faculty positions; and Rashtriya Uchchatar Shiksha Abhiyan (RUSA) and Central Universities Act 2013 which aim at standardising India’s diverse HEIs in terms of structure, uniformity of syllabi and accreditation. It has only been repeatedly claimed that such reforms would enhance student `choice’ and `mobility’.
Due to the commercialisation of services the architecture of GATS is more complex than the architecture of trade agreements on goods. Four modes of trade in services have been demarcated. These are: (1) Cross-border supply: provision of a service at a distance. In the case of education, this mode includes e-learning or and other distance learning programs. (2) Consumption abroad: the consumer-student travels to another country to access the service. (3) Commercial presence: the service company sets up a subsidiary abroad. For example, a university sets up a campus abroad. (4) Presence of natural persons: a professional (researcher or teacher) travels to a foreign country to provide a service. Markets may be opened in one or more of these modes.
This offer was made in spite of the conclave of state education ministers having warned against the move in January 2005, citing fears of conflict with national values and goals. If the offer is not withdrawn before the conclusion of the Tenth Ministerial Conference of the Doha Round being held from 15th – 18th December 2015 at Nairobi, Kenya, it will become a commitment in perpetuity.
The liberalisation of services stipulated by GATS means establishment of commitments on opening trade with reference to two important clauses:
National Treatment (NT) ensures that foreign providers benefit from conditions of treatment that are "not less favorable" than those given to domestic institutions or companies. Foreign suppliers cannot be discriminated against. National Treatment for foreign and domestic corporate education providers could mean that governments either provide similar infrastructural, financial, tax and other facilities to ALL higher education institutions or else withdraw these from public funded institutions. It is claimed that limitations can be specified for “public services” which could include (a) subsidies and grants; b) requirements on nationality or residency; (c) qualifications, licenses, standards; (d) requirements on registration and on authorisation. However, the conditions for determining what can be regarded as a “public service” provided “in the exercise of governmental authority” are unclear and open to contestation. Public services would have to be extended without any fee whatsoever and would also not be in competition with any private players. With this definition only absolutely free educational institutions could claim exemption. That would not leave uncontested the claims of the increasingly hybrid higher education sector in most countries, including India. Further, public services could be defined as being “in competition with” private players by the mere presence of non-governmental providers.
Market Access means the elimination of all barriers (in the form of rules, regulations laws, etc.) that hinder the entry of foreign services providers into the domestic market. Limitations that maybe established or eliminated in liberalising Market Access must be listed in a country’s schedule as follows: (a) number of services suppliers that are allowed access; (b) Value of transactions or activity; (c) Total number of service transactions or total sum of service production; (d) Total number of natural persons who may be employed in a sector or by a specific supplier; (e) Specific type of legal form or personality of suppliers; and (f) Establishment of specific percentages of participation for foreign capital or the total value of foreign investments.
Finally, GATS includes principles that are not subject to negotiation. This includes general obligations and disciplines, such as the Most Favored Nation (MNF) (article II) and Transparency (article III). The Most Favored Nation rule stipulates that each member will immediately and unconditionally assign service suppliers of a foreign country a treatment “no less favorable” than that given to service suppliers of any other member country. The transparency obligation requires that a country guarantees that service suppliers will be provided with access to information related to trade in services (laws, regulations, rules, etc.) This obligation ensures that foreign service providers exert significant influence even over domestic regulation.
On paper, GATS only obliges member countries to participate in negotiations on trade liberalisation; it does not oblige them to liberalise their services during negotiations. Negotiations are based on the method of demand-offer. Member countries demand of other countries that they liberalise those sectors where they have exportation interests. In response, other member countries present offers of liberalisation that can be modified depending on the evolution of the negotiation process itself. Irrespective of the development of the negotiations underway, countries can introduce new offers on their lists. The round is completed when all members present a definitive list of offers that will be integrated in the GATS as a part of the new liberalization commitments of the member countries. However, GATS places hurdles to withdrawal from commitments which have already been established (article XXI). As a result, the development of GATS constantly enlarges the scope of the liberalization regime and prevents reworking of even those trade agreements that may prove to be detrimental to a country’s and its peoples' interest.
GATS identifies “the existence of government monopolies” as the biggest barrier to trade. The assumption is that when government monopolizes a would-be `market’ where the services could be provided by the private sector, such services should be either outsourced or privatised. However, this is particularly damaging to essential services like education and health and represents the means by which these sectors are being rapidly privatised in India and across the world.
The GATS liberalisation agenda does threaten the universal or equitable provision of basic services. This is why critics of the WTO-GATS regime focus their objections on the role of international "market" players/corporations in restraining and limiting the role of nation-states as providers and regulators of crucial services like education and health for their citizens. Corporations, domestic or foreign, seek profits out of the sale of education, health, water, power etc. As a result those who lack purchasing power lose out. There is also a real threat to national regulatory and legislative sovereignty when decisions relating to how basic services are to be organised and delivered are effectively removed from the public sphere of social and political institutions and are left in the domain of trade agreements and investor rule-making. Citizens would no longer have the democratic right to decide how services, crucial to their well-being, are to be regulated.
The democratic deficit further deepens as a system of trade governance serving the interests of powerful corporations drastically reduces the space for debate, dissent and resistance in determining choices that affect society as a whole. The sheer physical range of the WTO-GATS trade regime (currently 161 countries) favours an increase in the power of huge multi-national corporations (MNCs) that are dominantly from the developed world. While drastic reductions are demanded in the regulatory powers of national governments the regulatory power of the MNC’s are becoming virtually unlimited. Trade pacts/commitments are designed to deter countries from changing trade policies, even when their people unequivocally want to withdraw from a policy having negative impact. The Greek referendum, with 61% of the people opposing "austerity measures" but to no avail, is a prominent example.
In India’s higher education sector GATS regulations threaten the constitutional policy of reservation for Scheduled Castes and Tribes who have been oppressed and discriminated against for centuries as a result of religious and social sanction. An important form of affirmative action, reservation would be considered as a `discriminatory’ practice in a regulatory framework determined purely by commercial interests and trade in service provisions. In fact this emphasises the limitations of the exclusively market perspective of the WTO-GATS and shows how inadequate it is to cope with the foremost social issues of equality and social justice.
The method of negotiation adopted by the GATS regime does not lend itself to public scrutiny and openness as the direction in which negotiations may go is determined by how closed-door give-and-take parleys proceed. For example, was the decision of the GOI to place higher education on the GATS list in a “revised offer” after expiry of the deadline for making offers prompted by the promise of a concessionary period for further negotiations regarding agricultural subsidies?
The gravity of this secrecy was highlighted by the Wikileaks exposure in April and July 2014 of the Trade in Services Agreement (TiSA). The absolutely secret negotiations organized under the banner of the Really Good Friends of the Services are taking place outside the WTO-GATS framework since 2012 and are already into their 13th Round! These plurilateral negotiations between 32 countries including the United States of America and the European Union are aimed at strengthening the corporate character of the international trade regime and then imposing it as a fait accompli on the rest of the world. Already there is pressure among some bureaucrats and academicians that India too should join the TiSA negotiations rather than being forced to accept whatever is agreed among the existing countries. However it is also true that Uruguay and Paraguay have recently walked out of the negotiations.
The fact that the working agenda of the Nairobi 10th Ministerial Conference is yet to be communicated has led to the suspicion that the Doha Round will be allowed to lapse with no settlement on its `developmental’ agenda items, like agriculture, which are crucial for developing countries. The development provisions and special conditions listed in GATS for developing countries are not repeated in the leaked core text of TiSA. A totally fresh set of issues generated during plurilateral negotiations would then appear to be imposed internationally.
The terms of the TiSA are harsher than the existing GATS framework.
- Before any commitment GATS requires that a country positively lists/offers a particular sector. TISA stipulates that unless sectors are explicitly excluded by limitation, everything is included. This places a country’s future regulatory capacity at risk of error, omission, unforeseen or unforeseeable conditions, or even a highly liberalising government which can be used to bind the hands of successor governments.
- The definition of `public services’ was already unclear and contestable under GATS. There can be no “discrimination” through public funding and subsidies in favour of public services that are also provided commercially. TiSA demands that any exceptions for health, education, environment, public order and morality etc., are to be established as a defence against a complaint by a service provider and are subject to difficult and time-consuming tests. These have proved to be ineffective safeguards in the WTO.
- The "Necessity test" makes it incumbent on a government to prove that it took the "least restrictive measures" to secure public services. For example, it would have to show that universalisation of essential services, like education or health, is not more "burdensome than necessary".
- Since TiSA presumes that all services, and all ways of supplying them (unless explicitly excluded) are covered by its rule, a "Stand still" clause makes NT and MFN clauses draconian in character. Present and even future trade decisions would have to be determined by past agreements, with any given country, that are already in place. So not only are countries bound by their historical past, but also no trade-restrictive revisions can be made in future even if it is felt that they would be socially beneficial. This makes the TISA agreements virtually irreversible.
- A `Ratchet’ provision further ensures that any future liberalisation of a sector or de-regulatory measures would automatically become part of TISA in terms of NT. Therefore, even "experiments" with TISA de-regulations could not be reversed.
- The leaked Transparency draft reveals that corporations are now demanding not only access to laws, regulations, and rules, but prior access to such information and a “reasonable opportunity” to comment on them before the relevant government body which must respond by providing the rationale for the rules. In this way foreign corporates would be able to directly intervene in domestic policy-making in the host country.
- Investor-State Dispute Settlement (ISDS) Mechanism. Under GATS the fear of being slapped with crippling compensatory payments already intimidates governments from rescinding earlier commitments. TiSA proposes to strengthen the defence of the corporate "right to profit" by allowing corporations to directly sue and bring host countries before an elite, secretive three-person court. If the proposal goes through, countries could perhaps sometimes avoid losing but could never really ‘win’ before such a court. In such a situation governments would be unable to defend the constitutional rights of the people even if they wanted to.
It is clear that the WTO-GATS framework is fundamentally undemocratic. The terminology employed is one of negotiation and consultation but the goal of privatising and de-regulating public services, of subordinating people’s rights to the unrestrained pursuit of profit: a goal that cannot be achieved “democratically”. The productive, socio-cultural and intellectual activities which are the life activities of all communities are fragmented into a series of “services” that are privatized and provided by, or outsourced to, corporate entities. The GATS lists all of these as tradable commodities, making every aspect of human life activity the target of closed-door commercial negotiations. Through a regime of trade agreements, which is today trying to control almost 90% of these services, the WTO-GATS makes it possible for the control over our lives, societies and governments to pass into the hands of the corporations. The leaked TiSA documents leave no room for doubt as to the intent and direction of such “agreements”.
Higher education is a critical area for the success or failure of this enterprise. Since the neoliberal push towards privatisation and commercialisation of education has gained momentum over the past three decades, there has been a concerted effort to bend course structures and syllabi towards acquiring market-oriented skills and managerial competences focused on “learning aims and outcomes”. Critical thinking, which allows one to challenge and radically alter basic assumptions, is being downgraded. The economic crisis engendered by the jobless growth model of development is being used not to oppose the model itself but as the reason for moulding students into a labour force that is being tailored more and more narrowly to meet market needs.
Bringing knowledge as a tradable commodity and education as a tradable service within the GATS regime is a crucial step in this process which must be resolutely opposed. The Indian government must immediately withdraw the offer to commit higher education to the GATS. The policy of privatising and commercialising education and other essential public services must be reversed and the struggle for popular democratic control over the provision and regulation of these basic rights must be strengthened and expanded.
(The author, one of our regular columnists, is also a Member Presidium, of the All India Forum for the Right to Education (AIFRTE)