Let me emphasise from the outset that the GATS cannot force any country to privatise any service. The former Director General of the World Trade Organisation, Mike Moore, set the position out very clearly in his book "A World Without Walls": "The WTO is not after your water. GATS does not require the privatisation or deregulation of any service. Any individual commitments would not affect the right of governments to set levels of quality, safety, price and other policy objectives as they see fit, and the same regulations would apply to foreign suppliers as to nations. It is, of course, inconceivable that any government would agree to surrender the right to regulate water supplies, and WTO Members have not done so."

You ask why, against that background, the EU has requested commitments in water related services from developing countries under the current GATS negotiations. The GATS negotiations are conducted on a request and offer basis, in which one WTO Member makes a request and the requested Member considers how to respond with an offer of a market access commitment. All the requests tabled, in whichever sector and from whichever WTO Member, reflect industry interests of one kind or another. But requests are no more than that. A country to which a request has been addressed is not obliged to meet the request, whether fully, partially or even at all. A country will only make a binding GATS commitment if it sees advantage in doing so. And, given the binding nature of commitments, no WTO Member will agree to a request that is not in their national interest - indeed, we have seen ample demonstration of this from developing countries themselves. Almost all of the 41 initial offers tabled so far in the current negotiations reflect liberalisation that has already taken place, rather than new market access offers.

GATS commitments are meant to be binding, just as obligations assumed under any international treaty, for instance in multilateral environmental agreements. This is just as important for developing countries which are seeking to rely on commitments by developed countries as the reverse.

GATS commitments are not irreversible. The mechanism in Article XXI of the GATS allows a country to modify or withdraw a commitment after only one year. Critics of this modification mechanism have focused on the provision for compensation to be paid. Any affected WTO Member may request negotiations with a view to reaching agreement on "any necessary compensatory adjustments". But crucially it depends upon the affected Member demonstrating the extent to which it is affected. If it cannot demonstrate this, there would be no justification for compensatory adjustment. 

Other ways in which governments can modify and withdraw commitments are:

• by invoking the general exceptions article, Article XIV, of the GATS where it is necessary to take a measure to protect major public interests, including safety, human, plant or animal life or health, national security or public morals
• by seeking a temporary waiver under Article IX of the WTO Agreement
• by suspending commitments in the event of serious balance of payments difficulties.

DFID has committed over £160 million since 1998 to help developing countries to develop and implement appropriate trade polices, including policies on services. We have provided support on services both in Geneva and at country level. DFID is funding the United Nations Conference on Trade and Development (UNCTAD) support to developing country delegations in Geneva in the GATS negotiations. In India the UNCTAD programme that we support assists trade policy negotiators, policy makers and other stakeholders to further understand development and trade related issues. This includes work on the area of services. Studies under this project have been useful in informing the Government of India's negotiators and policy makers in WTO negotiations. 

It is vital that countries understand the potential future impact of market access commitments in order for them to develop complementary domestic policies. DFID in cooperation with UNCTAD and the World Bank is funding an extensive programme of research, based on sector and country studies, which will help to inform the impact assessment efforts of developing countries in the GATS. 

DFID's overall aim in the water sector is to enable poor people to lead healthier and more productive lives by increasing their access to safe drinking water supply and appropriate sanitation. DFID believes there is an important role for the private sector to play in helping to achieve these targets, through providing investment and sharing technical expertise and more efficient management practices. Where the private sector is involved, we seek to ensure effective regulation, targeted incentives and appropriate tariff structures, including subsidies for the poorest, if required. Public sector institutions should be effective and accountable in order to manage and regulate the water sector; DFID works therefore with these institutions to increase their capacity. 

Please note that DFID has published a Water Action Plan , which sets out how we will be taking forward the water agenda to contribute to achieving the Millennium Development Goals.

I hope this is helpful.

HILARY BENN
SECRETARY OF STATE FOR INTERNATIONAL DEVELOPMENT