WTO: Corporate power at work



Britain is home to a particularly influential services industry lobby, which operates through an organisation called "International Financial Services, London (IFSL)". It is more than just another corporate pressure group; it constitutes a veritable corporate-state alliance in which senior British government officials sit together with their business "counterparts".

Two IFSL working groups, the Liberalisation of Trade in Services (LOTIS) Committee and the High-Level LOTIS Group, aim at influencing ongoing negotiations on the liberalisation of trade in services in the World Trade Organisation (WTO).

Based upon internal minutes of LOTIS Committee and High-Level LOTIS Group meetings between August 1999 and February 2001 uncovered by Corporate Europe Observatory, the GATSwatch research paper "Liberalisation Of Trade in Services: Corporate Power at Work" gives an unprecedented insight into the day-to-day working of this alliance.

Within the LOTIS Committee and High-Level Group, the distinction between public and private has become completely blurred. The LOTIS structures provide a private forum where government and business discuss strategies for ongoing WTO negotiations. The minutes also reveal that government officials have allied with business in planning a campaign to defeat civil society opposition against the WTO services negotiations.

Corporate lobbying was decisive for the coming into being of the General Agreement on Trade in Services (GATS), one of the so-called Marrakesh agreements concluded at the end of the Uruguay Round in 1994.

The 1994 GATS Agreement covers a wide range of economic activities (including services as diverse as banking, water supply or catering). For the services industry, the 1994 GATS Agreement was only a first step towards full-blown market opening for trade in services. In the beginning of the year 2000, WTO negotiations on extended liberalisation of trade in services, nicknamed "GATS 2000", were launched.

LOTIS Committee meetings are held every two to three months, with an average attendance of 15 private sector representatives and five public servants from the Treasury, Department of Trade and Industry, Foreign and Commonwealth Office, Bank of England and Financial Services Authority.

In April 1999, the LOTIS Committee was supplemented with a so-called High-Level LOTIS Group, consisting of "17 chairmen or chief executives from banking, insurance, the securities industry, law, accountancy, information and shipping... [and] also boast[ing] a strong Whitehall presence in the form of senior figures from the Treasury, the Department of Trade and Industry and the Foreign and Commonwealth Office."

The High-Level LOTIS Group was set up by Andrew Buxton, then Barclays Bank Chairman and President of the British Bankers Association. As Buxton commented, "With the establishment of High-Level LOTIS, the City will be able to put its views at the highest level — and with the added punch... It is an important building block in ensuring maximum private sector input to the forthcoming [i.e. GATS 2000] negotiations."

Since its launch in April 1999 the High-Level LOTIS Group has met five times. In comparison to LOTIS Committee meetings, less time is spent on information exchange, while the focus lies on strategy discussion.

The close links with key trade people in the British government provides the LOTIS Committee with privileged access to information and the policy-making process itself.

Whereas even Members of the European Parliament have to guess the outcome of the secretive Article 133 Committee's discussions on trade in services talks, for example, the LOTIS minutes testify how the London financial services industry lobby is briefed in detail by negotiators.

As well as successfully seeking to get GATS 2000 negotiations started quickly, the IFSL also turned its attentions to the opponents of the WTO and GATS.

The first post-Seattle LOTIS Committee meeting [following the collapse of WTO talks in November 1999] saw Charles Haswell, a "career diplomat on secondment from the Foreign and Commonwealth Office", presenting an outline for an IFSL campaign "to get the message across more effectively about the benefits of free trade".

Haswell stressed the necessity of "a very wide ranging campaign and a combined effort between government and private sector. Not all NGOs would be turnable and this was enabling certain governments with protectionist tendencies to hide behind them."

Concrete plans for "Anti-GATS Counter-measures" were discussed at the LOTIS Committee meeting on February 22, 2001. The committee decided to publish the "Questions and Answers" part of a paper on "the 'civil society' NGOs campaign against the GATS", prepared by LOTIS secretary Alistair Abercrombie, on the IFSL web site.

The notes of the discussion at the LOTIS Committee meeting of February 22 reveal a most controversial collusion between government officials and corporate LOTIS Committee members in the planning of "anti-GATS counter measures":

"Matthew Lownds [Foreign and Commonwealth Office] welcomed the private sector's help in countering the anti-GATS arguments. He noted that the campaign by the World Development Movement in particular was leading to a broadening of concerns. If business was to help convince the public, a case was needed based on the development-related benefits which the GATS can bring. He also pointed to the need to coordinate business responses to the NGOs allegations.

"Malcolm McKinnon [Department of Trade and Industry] said that the pro-GATS case was vulnerable when the NGOs asked for proof of where the economic benefits of liberalisation lay.

"Christopher Ehrke [Linklaters & Alliance] said that his firm was very willing to be involved in the exercise...

"Matthew Goodman [Goldman Sachs International] said that the exercise should be taken forward in close consultation with the WTO Secretariat, which had already produced some useful material on the matter."

True success for such a campaign requires access to the media. But, as it turns out, that poses no problem for LOTIS: the media are in the plot:

"Henry Manisty [Reuters] wondered how business views could best be communicated to the media. In that respect, his company would be most willing to give them publicity."

LOTIS secretary Neil Jaggers then presented a proposal for an IFSL research project that was intended to "counter the NGOs anti-GATS campaign and partly to convince developing countries to open their markets".

Having no access to minutes of LOTIS meetings after February 2001, it remains unknown what happened with these plans for LOTIS "anti-GATS counter measures".

[Erik Wesselius works for Corporate Europe Observatory. The full report is available from the GATSwatch website, <http://www.gatswatch.org/LOTIS/>. GATSwatch is a joint project of Corporate Europe Observatory and Transnational Institute.]

From Green Left Weekly, November 7, 2001.
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