Public Leadership

Services Negotiations -- by Sector

States have asked USTR to make it clear that the United States does not intend to make new GATS commitments impacting public water utilities.  Letters from states and national associations have requested that the USTR explicitly exclude water utilities from the U.S. GATS schedule.  Only an explicit exclusion of water utilities in the U.S. schedule would ensure that all those activities integral to running public water utilities would remain uncommitted under GATS.  

USTR has stated publicly that drinking water supply and distribution will not be committed.  States have welcomed that public statement, while also noting that  running a public water utility implicates GATS sectors other than just distribution. The United States has already has made commitments in areas that impact on the function of utilities, such as meter reading, billing, and water-quality monitoring.  A full carve-out of water from the U.S. GATS schedule would need to supersede these existing commitments. 

In a 2004 letter to USTR, the Association of Metropolitan Water Agencies noted that

Many AMWA members also provide public wastewater services and share assets such as office space, and billing, maintenance and management personnel.  If publicly managed wastewater facilities are committed under GATS, these shared assets could be interpreted as a trade-distorting cross-subsidy and foreign governments on behalf of private sewage providers might challenge the significant savings that result from this subsidy. 

Other countries, including Canada, Norway, and the European Community included explicit reservations for public utilities--including municipal water services--in their GATS commitments.  So there is already precedent for USTR to explicitly exclude public water utilities from U.S. GATS commitments.

Also implicated in U.S. commitments are water recycling and treatment. USTR changed the language in its most recent GATS sector offer from “sewage” to “wastewater” service.  "Wastewater" covers a broader category than just "sewage."  Water authorities have asked USTR to remove any ambiguity about the scope of the services actually committed.  

Finally, the U.S. wastewater commitment in GATS is limited to services “contracted by private industry.”  What does this mean, specifically?  Would it cover services provided by municipal facilities to private industry?  Services provided by municipal facilities that are contracted out to private industry for operations and management?  Or only services between two private parties?  Authorities have asked that the current commitment be clarified so that it reads as “limited to contracts between private parties.”  This would help to  retain public management authority.  

Water in the 'domestic regulation' negotiations
The GATS 'domestic regulation' clause under GATS establishes a set of trade rules aimed at “ensuring that measures [adopted by governments] … do not constitute unnecessary barriers to trade in services.”  There is great concern that rules on 'domestic regulation' may be applied as a general obligation, and will limit the ability of public utilities to supply water efficiently and affordably.  The inclusion of these trade rules as a general obligation may result in a conflict between any number of measures taken to protect the public and the provisions of GATS.  As public water agencies increasingly contract with foreign firms for the provision of certain kinds of services, a broad interpretation of 'domestic regulation' rules could limit the flexibility of government to create innovative public-private partnerships in the public interest.   Furthermore, the general application of 'domestic regulation' rules could undermine USTR’s efforts to exclude water services from GATS.