LOTIS Committee

The LOTIS Committee is a committee of the International Financial Services London lobby group.

Liberalisation of Trade in Services: Corporate Power at Work

Based upon internal minutes of LOTIS Committee and High-Level LOTIS Group meetings, the GATSwatch research paper 'Liberalisation of Trade in Services: Corporate Power at Work' (by Erik Wesselius, Corporate Europe Observatory) shows how senior UK government officials work closely with their business 'counterparts' to promote the interests of the UK financial services industry. The minutes also reveal how earlier this year these government officials have allied with business in planning a campaign to defeat civil society opposition against the WTO services negotiations.

Read the paper online: www.gatswatch.org/LOTIS/LOTIS.html

A summary of Erik Wesselius' research paper Liberalisation of Trade in Services: Corporate Power at Work"

GATS

GATSwatch.org brings you news and critical information on the GATS 2000 negotiations and the global campaign to 'Stop the GATS Attack.' Website: www.gatswatch.org/index.html

Why the UK supports GATS Corporate Watch Newsletter, 26 November 2001 [1]

Frequently asked questions about GATS Posed and answered by the UK Department of Trade and Industry. DTI website

The LOTIS Committee is described as 'an independent body' that invites Government officials 'as observers'. DTI also reassures that 'business groups are as important a lobby as NGO's'.

Brief responses to the arguments the Government formulates in defence of GATS. University of Warwick website

Organisations concerned about GATS University of Warwick website

Liberalisation of trade in services

One of the most significant developments in recent years, in terms of trade and investment, has been the progressive liberalisation of services. This liberalisation has been facilitated by regional and multilateral agreements. The only multilateral agreement to date, the General Agreement on Trade in Services (GATS), seeks to establish a multilateral framework of legally-binding rules governing the conduct of world trade in services, including transportation and distribution services, such as airlines and retail stores; consumer services, like hotels and fast food chains; public services, such as education, health care and sanitation; repair services, as in car mechanics; financial services, such as those offered by banks, insurance companies, etc.; and public utility services, such as electricity, water, gas, and telecommunications. Basically, transnational corporations and banks -the major promoters and beneficiaries of the expansion and internationalisation of services- have designed GATS. GATS -coming into force in 1995- transformed services into another highly profitable category of commodities which transnational corporations are eager to control and exploit.

However, the concept of services includes such diverse activities that they are impossible to address uniformly in any multilateral agreement. But more important, GATS undermines a country's ability to manage its basic services in the public interest. Public services should go beyond a strictly economic notion, because people’s quality of life and health depend on them. All people should have the right to universal access of basic services such as clean water, health care and education. The increasing private involvement in essential public services undermines this right.

UK Government's support for GATS

The UK, as the world’s second largest exporter of trade in services, strongly supports the GATS negotiations. By convention, the European Commission acts as lead negotiator and speaks on behalf of EC Member States in the WTO on the basis of positions agreed with all EC Member States. Following the Inter-governmental Conference in Nice in December 2000, which will lead to a new Treaty of Nice after ratification by all Member States, the scope of the European Community’s common commercial policy is being extended to cover trade in services. The Department of Trade and Industry (DTI) claims the UK is playing an influential part in the development of the European Community's negotiating objectives and priorities.

Lord Leon Brittan -former EU Trade Commissioner- has played a central role in the push for liberalisation of services. On 7 February 2001, Leon Brittan became Chairman of the LOTIS Committee of International Financial Services London (IFSL), a lobby group representing the UK financial industry. In his new position Lord Brittan was responsible for lobbying the European Commission on talks over liberalisation of services in the WTO (GATS 2000) that had just entered a second stage.

The LOTIS structures provide a private forum where government and business discuss strategies for ongoing WTO negotiations on liberalisation of trade in services. This allows the UK financial services industry an unjustified control over large parts of the UK trade policy agenda. While it is useful and justified for governments to take business concerns into account when formulating trade policy, privileged co-operative arrangements between business and government as embodied in IFSL/LOTIS do not belong in a truly democratic policy-making process.

Introducing GATS and lobbying by the services industry

The breakdown of the World Trade Organisation's (WTO) 1999 Ministerial Conference in Seattle thwarted corporate dreams of a broad push for global trade and investment liberalisation. No WTO Millennium Round was launched in Seattle. But government negotiators, backed by active corporate lobby groups, managed to salvage part of the Millennium Round agenda. In the beginning of the year 2000, WTO negotiations on extended liberalisation of trade in services, nicknamed 'GATS 2000', were launched. 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 GATT Uruguay Round in 1994. As a result of this corporate influence GATS is geared towards serving the interests of transnational service industries, instead of being for the general benefit.

Opposition

The corporate-driven agenda of the GATS 2000 negotiations is being confronted with a rapidly mounting opposition. Citizens' groups around the world see the WTO services negotiations as the greatest threat to democracy to come from an international economic agreement since the Multilateral Agreement on Investment, defeated in October 1998. The proposed GATS disciplines on domestic regulation, for example, threaten to subordinate social and environmental policy goals to the commercial advantage of transnational corporations. And there is considerable concern that GATS rules could in future be applied to public goods such as education, health and water -- key services which should be kept outside the scope of the WTO's free trade agenda.

LOTIS and the UK trade policy agenda

Within the UK government, the Department for Trade and Industry (DTI) is most actively involved in the IFSL/LOTIS corporate-state alliance. While IFSL is relatively open about the involvement of government officials in its efforts to promote the liberalisation of trade in services, the DTI maintains a total radio silence on this point. The DTI web site remains completely silent on the department's involvement in IFSL and its subsidiary LOTIS bodies. This silence is explained by the controversial content of the recently uncovered minutes of LOTIS Committee and High-Level LOTIS Group meetings. In the period covered by the minutes (April 1999 - February 2001), officials from several UK government departments - in particular from the DTI, Treasury and Foreign & Commonwealth Office - participated actively in LOTIS Committee and High-Level LOTIS Group meetings, sharing information and discussing strategy with their corporate 'partners'.

LOTIS roots and move to a higher level

The origins of the Liberalisation of Trade in Services (LOTIS) Committee date back to the early 1980s. Right from the start there have always been close links between the LOTIS Committee and the UK government. LOTIS Committee meetings are held every 2-3 months, with an average attendance of 15 private sector representatives and 5 public servants from the Treasury (HMT), Department of Trade and Industry (DTI), Foreign and Commonwealth Office (FCO), Bank of England (BoE) and Financial Services Authority (FSA).

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 & Commonwealth Office." Andrew Buxton, then Barclays Bank Chairman and President of the British Bankers Association set up the High-Level LOTIS Group. 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."

The Buxton-Brittan Link

The High-Level LOTIS Group was modelled on a very successful prototype. In the Spring of 1996, Andrew Buxton (Barclays Bank) and Ken Whipple (Ford Financial Services) has set up the so-called Financial Leaders Group, comprising over forty Chief Executive Officers (CEOs) of major banks, investment banks, insurance companies, and trade associations, predominantly from the EU and the US. The Financial Leaders Group (FLG) was to provide momentum to the deadlocked negotiations on a WTO Financial Services Agreement. The crucial role of the Financial Leaders Group in the WTO Financial Services negotiations, especially during the final phase in December 1997, has been widely recognised.

EU Trade Commissioner Sir Leon Brittan, who had been negotiating the WTO Financial Services Agreement on behalf of the European Union, was very excited by the Financial Leaders Group's role in bringing the WTO Financial Services negotiations to a successful conclusion. In 1998 he invited Andrew Buxton to create a similar structure, to involve European services industry leaders in (preparations for) the upcoming GATS 2000 services negotiations. The European Services Network, consisting of a European Services Leaders Group and a working level Policy Committee, was launched at an official meeting hosted by the European Commission in Brussels, in January 1999.

All three high-level pressure groups, formed by Andrew Buxton - the Financial Leaders Group, the European Services Forum and the LOTIS Committee and High-Level LOTIS Group - worked closely together in the run-up to the 1999 Seattle WTO Ministerial Conference. In March 2001, it was announced that former EU Commissioner Sir Leon Brittan, now Lord Brittan of Spennithorne and vice-chairman of investment bank UBS Warburg, would succeed Andrew Buxton as chairman of the High-Level LOTIS Group. Eric Wesselius illustrates with various examples how -in the LOTIS Committee and High-Level LOTIS Group- relations between public and the private sector officials have become so close, that even insiders sometimes lose sight of the distinction between public servants and corporate lobbyists.

Privileged access for LOTIS

The close links with key trade people in the UK government provides the LOTIS Committee with privileged access to information and the policy-making process itself. At a regular LOTIS Committee meeting, UK government officials or, occasionally, European Commission officials provide corporate LOTIS members with information on recent developments within the EU's Article 133 Committee (Services), the Council for Trade in Services and the services-related Working Groups at the WTO in Geneva. Internal EU papers and draft papers submitted to Committee on Trade in Services by other WTO Members are distributed among LOTIS members on a regular basis.

LOTIS and the Seattle WTO Ministerial Conference

The 1999 WTO Ministerial Conference in Seattle was supposed to deliver negotiating guidelines and modalities for the GATS 2000 negotiations. Thus, the months leading up to the Seattle Ministerial were a busy time for key service industry lobbyists like Andrew Buxton. As co-chair of the Financial Leaders Group, chairman of the European Services Leaders Group and chairman of the High-Level LOTIS Group, Buxton grabbed every opportunity to convey the corporate demands for GATS 2000 to government negotiators. Despite all these efforts, the Seattle Ministerial was not exactly the lobbying success that Buxton and his LOTIS fellows had hoped for. But they were quick to pick up the pieces. In December 1999, Buxton wrote a letter to UK Trade Secretary Stephen Byers, in which he asked the government to argue for a quick start of the GATS 2000 negotiations "without waiting for movement in other areas." This was the beginning of a fruitful relationship between Byers and Buxton.

Concluding remarks

The close links and close co-operation between business and government in International Financial Services, London and its LOTIS Committee and High-Level LOTIS Group, Erik Wesselius concludes in his research paper, explain why UK government policy on trade in services, and in particular the preparations for the GATS 2000 negotiations, are so biased towards a corporate market-opening agenda. While it is useful and justified for governments to take business concerns into account when formulating trade policy, privileged co-operative arrangements between business and government does not belong in a truly democratic policy-making process.

Read the full paper at: http://www.gatswatch.org/LOTIS/LOTIS.html

People

• Nicholas Bayne

External links

Gregory Pallast The WTO's Hidden Agenda, CorpWatch 9 November 2001

David Cromwell The Public Threat to Private Power MediaLens.

World Development Movement WDM Campaign on GATS vindicated by uncovered minutes