The Free Trade Area of the Americas negotiators have included services as one of the many items covered by the treaty's rules. Under the FTAA, trade in services would be "liberalized" to create "certainty and transparency" for investors. In practice, this means that our health, labor, and environmental laws would be eroded, all under the guise of reducing "barriers to trade." The proposed FTAA rules would also speed up the process of deregulation and privatization already underway throughout the hemisphere, a process that is eliminating public oversight of essential services. Essentially, the FTAA rules for services threaten to launch an unprecedented corporate expansion into the lives of the 800 million people of the Americas. The FTAA would give multinational corporations vast new abilities to control our children's education, our elder's health care, our mail service, and even the water we drink. The FTAA's services agenda represents a massive increase in corporate power at the expense of the ability of ordinary people and governments to determine their future.

Services and the WTO

The World Trade Organization also wants to expand its reach into the service sector, and since 1994 WTO negotiators have been working on what is called the General Agreement on Trade in Services (GATS). According to author Maude Barlow, GATS is designed to "restrict government actions in regard to services" and to "constrain all levels of government in their delivery of services" while facilitating corporations' access to government service contracts in a multitude of areas, from hospitals to libraries.

The FTAA services rules are designed to be compatible with GATS. But the FTAA will go even farther than the WTO provisions. The FTAA rules will cover many more service sectors, and will directly impact a wider range of government regulations. The FTAA's services rules will severely restrict the ability of national and local governments to guard the interests of their citizens. The FTAA's rules on services will throw out of equilibrium the already-delicate balance between public goods and private privileges. This is a dangerous experiment that, if undertaken, will be incredibly difficult to reverse.

The FTAA's Top-Down Approach: Everything Under the Sun

Under the WTO's GATS system, the only services affected will be those that countries choose to "liberalize." If a country decides not a place a service on its "schedule of commitments," that sector will not be affected by the agreement.

The FTAA takes a more aggressive approach. The FTAA negotiators are asking for the "universal coverage of all service sectors." If a country wants to exempt a certain service sector from the FTAA regulations, it will have to negotiate with other nations to do so.

The Assault on Public Oversight

The FTAA rules on services will open the door to a wholesale assault on our health, safety, labor, and environmental laws. The FTAA rules on investment will apply to "all measures affecting trade in services taken by governmental authorities at all levels." A remark by an official with the Organization of American States helps explain what that means:

"Since services do not face trade barriers in the form of border tariffs or taxes, market access is restricted through national regulations. Thus the liberalization of the trade in services implies modifications of national laws and regulations."

In other words: To meet the FTAA requirements, countries will have to change their laws governing the obligations placed on business. The FTAA will prevent governments—national, state, or local—from passing regulations that are "more burdensome than necessary." That frighteningly vague definition will discourage governments from passing and enforcing meaningful environmental, health, and labor laws.

The FTAA service rules on transparency will also discourage national, state and local governments from approving new regulations in the public interest. FTAA negotiators want to require governments to provide advance notification of proposed regulations and to solicit comments from "interested parties." This would give corporations, which can afford the resources to track all such regulations, an easy way to put pressure on local lawmakers not to pass regulations that conflict with the companies' interests.

Even existing consumer, labor and environmental protections will be put at risk. The FTAA will likely include so-called "investor-to-state" lawsuits. These lawsuits—which already exist under NAFTA's Chapter 11—give corporations the right to sue governments for any action that may decrease the corporation's future profits. For example, if a multinational health care company feels its operations are being curtailed by local labor laws, it can sue the government for compensation. Likewise, if an oil exploration corporation believes local environmental protection laws are compromising its ability to drill for oil, the company will be able to sue the local government for lost profits.

Investor-to-state lawsuits are already being used to devastating effect:

• Metalclad Corporation vs. Mexico.

In 1996, Metalclad Corporation, a US waste disposal company, accused the Mexican government of violating Chapter 11 when the state of San Luis Potosí refused the company permission to reopen a waste disposal facility there. The state governor closed the site after a geological audit showed the facility would contaminate the local water supply. The governor then declared the site part of a 600,000-acre ecological zone. Metalclad claimed that this constituted an act of expropriation and sought damages. In August 2000, a NAFTA tribunal ruled in favor of the company and ordered the Mexican government to pay $16.7 million in compensation.

• S.D. Myers Corporation vs. Canada.

S.D. Myers Corporation, an Ohio PCB waste disposal company, successfully used a Chapter 11 threat to force Canada to reverse its ban on PCB exports—a ban Canada undertook in compliance with the Basel Convention limiting the trans-border movement of hazardous waste. The corporation successfully sued the Canadian government for $50 million in damages for business it lost when the short-lived ban was in place.

The Corporate Takeover of Public Services

The FTAA doesn't just threaten government regulations. It also raises the specter of a sweeping privatization of the public services that ordinary people—especially poor and working class people—depend on. Under the FTAA, multinational corporations will target local postal services, health care services, educational services, and utility services as they seek to expand their businesses. While the corporations win, the people will lose. The fear is that when important public goods such as health and education are managed by for-profit companies, the bottom line comes first while health standards and education suffer. Local control will be lost as crucial services come under the management of giant, unaccountable corporations headquartered thousands of miles away. And as money for public services are diverted to private companies, the poor are left to rely on an underfunded public sector or else to fend for themselves.

FTAA negotiators say that the agreement will not promote privatization of essential services. But the agreement offers no guarantee that the privatization of basic services like health care and education will not occur. FTAA negotiators' assurances rest on a clause that is nothing more than a loophole. The draft FTAA rules on services say that a government can exclude a service only when that service "is supplied neither on a commercial basis nor in competition with one or more service supplies." Those are difficult conditions to meet. Government fees for, say, prescription drugs could fall under the "commercial basis" prohibition. Also, almost no government service is a perfect monopoly—public schools compete against private schools, government clinics compete with private hospitals. This means that the door will be thrown wide open for massive multinational health care companies and for-profit educational providers to enter local economies.

And once the door is opened for multinational corporations to enter a certain market, there is no way of closing it if elected officials feel that the presence of the multinationals is eroding basic standards. According to the FTAA's "market access" rules for services, once a country agrees to let a foreign company into a certain service sector, multinational corporations must be granted virtually unrestricted entry into that country. If government officials later determine that the presence of multinational corporations is harming the environment or eroding social protections, there is nothing they can do. Once there is a private school or private hospital in a community, the floodgates are open.

Major multinational service corporations are eager to expand into Latin America, and in fact companies such as American Express, Citicorp and Enron have aggressively lobbied trade negotiators to speed up the "liberalization" of services. Financial corporations are eager to take over local banks in the region, while energy companies see a bonanza in the privatization of public utilities. For-profit education and health care companies, meanwhile, see a chance to increase their profits by marketing their services to the more affluent segments of the population that already use private hospitals and send their children to private schools. According to the New England Journal of Medicine, for-profit health care companies are starting to make inroads into the Latin American market.

Many people in the hemisphere's poorer countries fear that the quick introduction of giant foreign firms could lead to corporations swallowing up essential public services. The FTAA's services rules contain a clause called "national treatment" that declares that foreign companies must be treated the same as local ones. National treatment will prevent governments at any level from giving preference to local companies. For example, a municipality will not be able to attempt to bolster the local economy by promoting local businesses because that would be "unfair" to the multinational corporations.

The national treatment requirements will grease the privatization agenda by making it harder for governments to subsidize services. If a government tries to support a public hospital or a public school with local tax monies, multinational corporations will be able to challenge those subsidies by arguing that they violate the rules mandating that all services providers be treated the same.

This is already happening. UPS has filed a NAFTA Chapter 11 lawsuit against the Canadian government saying that Canada's support of its postal service, Canada Post, represents a barrier to trade. UPS is seeking $160 million in damages from Canada, claiming that the government subsidy has prevented UPS from effectively competing for the express mail market. According to The New York Times, the "complaint contend[s] that the very existence of the publicly financed Canadian postal system represents unfair competition that conflicts with Canada's obligations under NAFTA. Critics worry that if the tribunal upholds the U.P.S. claim, government participation in any service that competes with the private sector will be threatened."

But it's not just postal systems that are at risk. The FTAA threatens to greatly accelerate the planned privatization of the world's dwindling water supply.

The FTAA's Threat to Our Most Precious Resource—Water

Even without the FTAA, the privatization of public services is already well underway in Latin America, thanks to the International Monetary Fund and the World Bank. As part of the structural adjustment conditions attached to the loans they give, the IMF and the World Bank have directed poor countries to sell off many of their publicly controlled services. In Mexico, the phone system has been privatized. Under pressure from the IMF, Guatemala, the second poorest country in the hemisphere, has sold off its telephone and electric companies, its rail service, and its postal system. Nicaragua has privatized its health and education systems.

As discussed above, under the FTAA this privatization process will likely accelerate. And the FTAA will further open the door to the privatization of one of the world's most important resources—water.

The world is facing an acute water shortage. Already, more than 1 billion people lack access to clean drinking water, and 30 countries are struggling with water scarcity. As the world's population grows, the problem will likely get worse. It is estimated that by 2025 as much as two-thirds of the world's population will be suffering from water shortages or absolute water scarcity. Once considered a human right, water is increasingly being viewed as a valued commodity. As Fortune magazine has noted, "water will be to the 21st Century what oil was to the 20th." The website of a Canadian water company, Global Water Corporation, makes the same point more bluntly: "Water has moved from being an endless commodity that may be taken for granted to a rationed necessity that may be taken by force."

Major multinational corporations are eager to turn scarcity into profit and to make water, like oil, a commodity you will have to pay dearly for. Water privatization is already a $400 billion dollar global business, and multinational corporations are hoping to use international trade and investment agreements such as the FTAA to increase their control over the supply of water.

Under the FTAA, if a locality is charging residents for water—and therefore, according to the FTAA's definition, offering the service on a "commercial basis"—any multinational corporation will be able to enter that market and compete for the water services. Because of the FTAA's "national treatment" requirements, the local government will not be able to give preference to local service providers who may have a greater commitment to the area and who it may be easier for the community to oversee. And, as with other services, once the door is opened there is no way of closing it. For example, if a Chilean company were granted the right to export water from the country's glaciers, US multinationals would then have the right to help themselves to as much of the Chilean water as they wished.

The experience of Cochabamba, Bolivia provides a glimpse into what can happen when this essential resource is privatized. In 1999, Cochabamba, Bolivia's third largest city, sold its municipal water utility to a multinational consortium as part of a World Bank-sponsored privatization program. When the multinational corporation took control of the water system, rate hikes were quickly instituted. Some bills doubled, and many ordinary workers were facing water bills that amounted to a quarter of their monthly income. The rate increases soon led to a public backlash, and the city was convulsed by street protests and demonstrations. During the protests, security forces opened fire on the crowd. A 17-year-old student was shot in the face and killed. The multinational water consortium soon withdrew from Cochabamba.

While the Cochabamba episode reveals the popular opposition to water privatization, other experiences have shown that resistance to water privatization will not be tolerated. In 1991 the Canadian province of British Columbia passed a law banning the export of water. A California corporation, Sun Belt Water Inc., has challenged the law using NAFTA's Chapter 11 lawsuit, claiming that the law represents trade barrier. Sun Belt is seeking $220 million in compensation in lost profits from the Canadian government.

Indeed, as Global Water Corporation has noted, water is now something that may be taken by force.