International Trade Department

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G8 - outcomes to the G8 summit, Gleneagles July 2005

On trade, G8 Heads recognised the importance of a successful outcome to the World Trade Organisation (WTO) Doha Development Agenda (DDA) to generate growth and create the conditions for development. They stated their commitment to substantially improving market access, eliminate all forms of export subsidies by a credible end date, and to substantially reduce trade-distorting domestic support. They also recognised that least developed countries face specific problems integrating into the international trading system and stated they will work to ensure there is appropriate flexibility in the DDA negotiations to allow poor countries to decide, plan and sequence their overall economic reforms in line with their country led development programmes.

In the Africa communiqué the G8 agreed to increase their support for trade related capacity building to assist developing countries take advantage of the new opportunities from a positive conclusion to the Doha Development Agenda. We must now ensure that the commitments made at Gleneagles are implemented, and that we build on them at the UN Millennium Review Summit in September and the WTO Ministerial in December.

G8 news pages

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General Agreement of Trade in Services (GATs) and Water

The GATS provides the framework for multilateral World Trade Organisation (WTO) negotiations between countries on liberalisation of trade in services. It contains the commitment for a continuous liberalisation through periodic negotiations. The GATS aims to increase international trade by removing any control and restrictions such as fiscal policies, standards, conditionality, environment protection, or laws which maintain the public monopoly on some services.

Water distribution falls within the scope of the GATS, however this does not imply that developing countries need to commit their water sector. In a number of developing countries, large numbers of poor people are not connected to any proper system of water supply and are therefore forced to purchase water from vendors at high cost. Many more people, particularly in rural areas, take water from rivers and streams, with the risk that the water may be contaminated with water-borne disease. In this case some World Trade Organisation (WTO) members may decide to involve the private sector in the funding and/or provision of their public services in order to increase investment and relieve over-stretched resources.

However the GATS as a discipline does not require privatisation or deregulation of public services like water distribution. 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. If any country does not wish to liberalise vital services like water supply, nothing in the General Agreement on Trade in Services (GATS) forces it to do so - and to date no members have made commitments in this sector. 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.

The GATS offers opportunities by which countries can limit, condition or even suspend any commitments that they have made. Nothing in the GATS can prevent countries from regulating their water sector or pressure them into a specific public or private service delivery model. If governments do decide to commit their water sector, nothing will affect their sovereign right to set levels of quality, safety, prices or any other policy objective as they see fit.

DFID has committed over £174 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, including funding the United Nations Conference on Trade and Development (UNCTAD) to develop tools to assist developing country delegations in Geneva in the GATS negotiations. DFID has published a Water Action Plan to help achieve the Millennium Development Goals for ending poverty.

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General System of Preferences (GSP)

GSP is a system whereby developed countries charge below normal tariff rates on imports from developing countries. The European Union recently agreed a new GSP regulation. The new scheme is designed to be simpler, more transparent and stable. The new scheme incorporates 300 additional products mostly in agriculture and fisheries and of interest to developing countries. There is also a new scheme for vulnerable developing countries who can receive preferential access to the EU markets if a number of international conventions on good governance and sustainable development have been ratified and effectively applied.

Last updated: 4 October 2005

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