The Hindu Business Line : Education and GATS

India's offer to WTO members in the area of higher education refers to the position taken by it on the limitations on market access under four modes. The problem, however, is not with GATS, since it is India that decides what to offer or not in terms of free and restricted imports.

THE General Agreement on Trade in Services (GATS) sets out under the auspices of the World Trade Organisation (WTO) the framework for multinational free trade offers and negotiations on services. This August , India expanded its offers in additional sectors/sub-sectors. In seven sectors — business, communication, construction and related engineering, financial, health and social, tourism and travel, and transport services — offers were made and subsequently expanded. The newly-added sectors are distribution, educational, environmental and recreational, cultural and sporting services. The revised offer is conditional on other WTO members making substantive and satisfactory offers in sectors and modes of supply where India has indicated its interest. In addition, India can withdraw, modify or reduce any part of the offer at any time on or before the conclusion of the on-going services negotiations. To fully understand what India has on offer in the education sector and to appreciate the implications, the following background information should be kept in mind. Under GATS, a service exporter may be permitted to do so under one of the four channels or `modes of entry'.

Mode 1 refers to cross-border trade. Here services flow from the territory of one WTO member into that of another, thus crossing national frontiers. For instance, banking or engineering or even medical services may be transmitted electronically or by regular mail.

Mode 2 refers to consumption abroad, where the consumer physically goes abroad and purchases a service as in the case of a tourist or one who goes for a medical treatment or for education.

Under Mode 3, or commercial presence, a service supplier of one member establishes, for instance, a branch office or agency to deliver, say, banking, legal or communications services.

Finally, in Mode 4, or movement of natural persons, the service demanding country allows a foreign national to enter and provide the service. This is merely to facilitate temporary migration and not to seek a job or stay permanently.

A country offering sectors or sub-sectors under each mode can provide for full commitment (with no limitations), commitment with limitations or no commitment (unbound), which essentially means that the particular mode is not allowed.

Commitments generally involve two sets of obligations on the part of the member making the commitment — general and specific. The former includes the most-favoured nation (MFN) and transparency obligations. Under MFN, each member is obliged not to discriminate against any of its fellow WTO members.

Transparency calls for members to identify and publicise all rules and regulations affecting trade in services. The specific obligations are concerned with national treatment (non-discrimination between foreign and domestic service providers once the entry of foreigners is allowed) and market access (no discrimination among service suppliers, except quantitative and legal restrictions, which are scheduled).

On the recent Indian offerto WTO members in the area of education services, though the sector includes primary, secondary, higher, and adult and other educational services, the offer refers to higher education only.

The offer, in fact, is pertinently in the nature of the position taken by India on limitations on market access under each of the four modes as stated in the box.

It is important to recognise that what is on offer pertains to higher education and not primary and secondary, where (at least in theory) values such as patriotism, adherence to truth and non-violence, communal harmony, are taught. As for the offer on higher education, what are the pros and cons? A major fear could be that foreign institutions and programmes of dubious quality may mushroom and take the Indian students (and gullible parents) for a ride.

The problem, however, is not with GATS, since it is India that decides what to offer or not in terms of free and restricted imports. Under Mode 1, cross-border trade of education can happen via electronic or regular mail. E-learning has begun to take off and foreign institutions will definitely like to take the plunge if Indian offers are firmed up with countries matching them. If anything, trade in India should work to our advantage.

Foreigners may, in fact, market our programmes. Under Mode 2, the Indian offer simply affirms what has been going on for decades: Our students going abroad for higher studies.

The villain really is Mode 3, commercial presence. Here, the offer itself is written with safeguards. Now, if the regulations are weak and the regulators inefficient, there is no point blaming the foreigners. It is impossible for an American or a Chinese teacher to come into the country and offer tuitions since Mode 4 is unbound. The Indian offer is simply a deft move in an essentially give and take GATS. It is especially useful in the context of the coming Sixth WTO Ministerial Conference to be held in Hong Kong, in December 2005 where, among other things, the agenda included the preparation for the final stages of negotiations in services.

If participation in a relatively freer educational services trade allows competition in higher education in a realistic sense and leads to quality enhancement in the domestic private and public institutions, it is an advantage. If it helps our institutions to be at the forefront in setting global standards, it is a great gain.

As for protestors at home, it is best they debate and discuss the sort of regulatory mechanisms that should be in place, to ward off the fly-by-night operators — both domestic and foreign. It is appalling to see institutions obtaining great ranks and accreditations simply because they possess money power to take full page ads and construct huge buildings, though devoid of faculty of the right quality and quantity.

Limitations on market access

Mode 1 (cross border trade): None. However, service providers would be subject to regulations, as applicable to domestic providers in the country of origin.

Mode 2 (consumption abroad): None

Mode 3 (commercial presence): None. However, fees to be charged can be fixed by an appropriate authority and this does not lead to charging capitation fees or profiteering. Also, service providers are subject to regulations, already in place or to be prescribed by the appropriate regulatory authority. In the case of foreign investors having prior collaboration in India, FIPB approval would be required.

Mode 4 (movement of natural persons): Unbound

(The author can be reached at bhanoji@gmail.com)

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page

Stories in this Section
India calling

Cotton/sugarcane: The pricing conundrum in Maharashtra

Core incompetence?

Cross-holding between NTPC and BHEL — A solution to many problems

Education and GATS — What India has to offer

Labour laws, unions and BPOs

Food adulteration

Poor service

FDI in telecom