RESPONSE ON WATER CLASSIFICATION IN "COMMUNICATION FROM THE EUROPEAN COMMUNITIES AND THEIR MEMBER STATES GATS 2000: Environmental Services" S/CSS/W/38 March 6, 2001 Submitted by Alliance for Democracy Center for International Environmental Law, Friends of the Earth, Institute for Agriculture and Trade Policy Public Citizen Submitted to Mr. Christopher Rosettie, Director Multilateral Services and Investment Affairs Office of the United States Trade Representative In response to your request for our comment on the proposed water classification by the European Communities in the above-referenced document, we would like to take this opportunity to share our concerns regarding water services in GATS and to provide initial comments on the EC proposal. Since time has not permitted as broad a consultation as we would like with concerned civil society organizations, we may wish to make additional comments in the future. While recognizing the benefit of those environmental services that have clearly positive impacts on the environment and the contribution made by the private sector to such functions as the prevention, remediation and clean-up of water contamination, we strongly oppose the liberalization of public water supplies. In taking this position, we are mindful of the following: * Water is fundamental to life and therefore is a "right" not a "need." * Fresh water is becoming increasingly scarce in many regions of the world. * This shortage has created a potential market estimated by the World Bank to be worth close to $800 billion. * Some major players in the private sector have responded by advocating the commodification of fresh water supplies, including drinking water. We believe that it is of utmost urgency that the world's supply of fresh water be protected and access to it be guaranteed on a fair and equitable basis to all the world's peoples. We believe that this is the proper role of the public sector and that governments should decide the allocation of water within countries and negotiate the sharing of water across borders. Comments on S/CSS/W/38, 3/6/01, page 2 of 2 Further, given the lack of assured protection of public services in GATS Article I.3 regarding the exemption of "services supplied in the exercise of government authority" due to the requirements that such services be "supplied neither on a commercial basis, nor in competition with one or more service suppliers" and due to the lack of definition of key terms such as "commercial basis" in GATS, it is our position that the only way to ensure that GATS does not erode peoples' right to water is to carve out the extraction, collection, distribution of water and transportation of bulk water from GATS with reference to both domestic and cross-border functions. This carve out should apply not just to the classifications used in the market access negotiating process, but also to provisions in GATS that may apply horizontally such as Article VI.4. It is also our position that municipal and other public water and sewage treatment services should be carved out of GATS. Reliance on Article I.3 (b)(c) is not sufficient protection. Additionally, there should be a carve out for bulk water which should apply irrespective of whether members consider the transportation of bulk water falling under environmental services or other sub-sectors, such as transport services. With specific reference to the European Communities' proposal on classification of water for human use under environmental services, collection and distribution should be removed. Distribution through mains should remain a public function. Collection could include the withdrawal of water from bodies of water and the extraction from groundwater and aquifers. In this regard, we do not believe that the EC's qualification in footnote 5 of their proposal on environmental services offers sufficient protection for ensuring the sound management of ground and other water resources. While we are not arguing at this stage that water purification and waste water services for commercial and industrial users should be removed altogether, we are concerned that private ownership of water and sewage treatment services could have downstream and upstream consequences for public water supplies. For instance, if a liberalized market encourages large industrial and commercial users to use private facilities, the embedded capital costs for the public system will be spread out over a smaller base of users, thus increasing costs of water for small businesses and households. Thank you for requesting our comments. We look forward to further interchanges. Ruth Caplan Alliance for Democracy 202-244-0561 phone 202-537-6045 fax:
