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Education is not a Commodity for Trade

by Edelgard Bulmahn Wednesday, Sep. 01, 2004 at 11:08 AM

"Educational policy can and must bring light into globalization.. The world is no longer as simploe as in biblical times when the traders could be simply chased from the temple. Education must remain master in its own house.. Education is not a commodity.."


The World Trade Organization Discusses the Import and Export of University Services

By Edelgard Bulmahn (SPW)

[This article published on October 27, 2002 is translated from the German on the World Wide Web, Edelgard Bulmahn is a German education minister and editor of spw.]

Relatively unseen, an international education market is developing that promises great profits and exerts massive pressure on traditional state institutions like universities…

The World Trade Organization (WTO) is now negotiating whether and to what extent education should be counted in the4 services needing relaxed market access. The European commission awaits a German position. This article of the German education minister Edelgard Bulmahn (SPD) ties liberalization to strict conditions. The state has the last word regarding financing and quality assurance of the universities and must remain “master in its own house”.

Globalization or globalization critics could be good candidates for the word of 2002. Globalization opens up opportunities. Nothing seems more desirable than global peace and global prosperity. However globalization also carries threats. The 2001 Nobel Prize winner Joseph Stiglitz analyzed this in his bestseller “The Shadows of Globalization”. For him, a reform of the World Bank, the International Monetary Fund and the World Trade Organization is the key for more justice between the North and the South and more prosperity for everyone. His openness for the importance of forces beyond financial- and economic policy is impressive. Economic ministers should not be the only persons heard in the WTO.

Technical spokespersons with their global interconnections like environmental policy, health policy, development policy and increasingly education- and research policy must also be heard in the new comprehensive round of negotiation introduced with the WTO ministerial conference in Doha that emphasized the GATT agreement (trade in goods), GATS (services) and TRIPS (intellectual property rights) administered by the WTO. Under German pressure, the EU education ministers grappled with this problematic at the end of May 2002.

The negotiations on the GATS agreement stressing more liberalization in world trade with services have produced great anxiety about the penetration of commercial interests in the international education world. The education International of unions spoke out critically in July 2001 in Jomtien, Thailand and in March 2002 in Montreal. Rectors and other university representatives from the US, Canada and the EU warned of an undermining of education in September 2001. Organizations like attac are heard increasingly. With the US government, the OECD presented the first worldwide forum on trade with educational services on May 23/24, 2002 in Washington, DC. Additional meetings will follow. The worries are understandable. This dialogue in the OECD is valuable, important and far-reaching. The nature of education is at stake. What should be the role of private educational institutions? What pressure can financially strong foreign suppliers apply on the education of a country? How can international trade agreements influence education?

These are not new questions. The fathers and mothers of our constitution guaranteed the right to establish private schools. At the same time, they set education under the supervision of the state. The German university law allows the founding of private universities. Vocational education is largely determined by the non-governmental private sector. A flourishing market with private commercial suppliers has developed in continuing education alongside communal public institutions.

On one side the relation between public and private education suppliers is seen as predatory competition in areas beyond continuing education. On the other side, clear dividing lines do not mark this relation. Public-private partnership is a slogan in the debate around civil society and lifelong learning accepted by all political camps. That this problematic is discussed on the plane of a world trade agreement is also new.


The GATS agreement took effect on January 1, 1995. Education services are included as one of 12 mammoth service sectors. This agreement represents another step in the process of liberalizing world trade initiated in 1947 and creates a mechanism for the increasingly important international trade with services. Five years after the GATS-agreement came into effect, a new round of negotiations began with the goal of gaining greater and more balanced liberalization commitments from all WTO members (144 countries). Following the preliminary negotiations since the beginning of 2000, the WTO ministerial conference in Doha in November 2001 agreed on a concrete negotiation timetable for the service negotiations. These trade negotiations should be concluded by January 1, 2005.

The role of the member states in the negotiations on GATS is comparatively strong. Each member state has a vote. Decisions are made in consensus. Obligations for liberalization are only valid as they are explicitly identified in the respective country-oriented schedules. Horizontal obligations exist for all service areas and special obligations for individual sectors and their sub-groups.

Thus liberalization obligations can be negotiated in a very targeted and differentiated way in relation to market access, domestic treatment and individual services. Within education services, liberalization commitments can be refused for primary- and secondary schools. However all restrictions on market access of foreign suppliers in continuing education can be annulled.


The demands on specific countries will be first clarified in bilateral negotiations between the respective partner countries. These negotiations will be conducted confidentially for tactical reasons. After these numerous, time-consuming individual bilateral negotiations, the most important basic principle of the WTO regulations, the most-favored obligation, is applied. Advantages that one WTO member grants another are valid for all other WTO members.

Education may not be left to trade. The internationalization of education possibilities has other motivations than those of trade. Regulations and arbitrations in the scope of GATS can and should have only a little window of opportunity in education. The organization of education arising out of the culture and history of the respective member states must be freely redeveloped. State subsidies for educational institutions must be limited to national institutions or – in the case of the European Union (EU) – to institutions of special legal entities. This must also be true for stipends for education.

Finally, the educational authorities of the member states must have the last word in all questions of quality assurance. This is also the demand of university rectors and education unions.

The initial situation for the EU in these negotiations is somewhat comfortable. In the Uruguay round that ended in 1995, special commitments in education limited to certain privately financed educational services were accepted by the EU and EU0member states on one hand that went further then in the US, Australia and Japan. On the other hand, the community lodged reservations in the historical commitments that left untouched the state monopoly in educational and national decisions on subsidies to particular institutions or persons. In the agreement, several clauses prevented conflicts from occurring in the area of education export with the appeal to GATS. The statement in the preamble to the GATS-agreement is very important: “The special needs of developing countries should be recognized in acknowledging the right of members to regulate services in their sovereign territories, in introducing new regulations to reach their national political goals and in exercising this right in light of their imbalanced regulations in the service area.”

With this reference to the national regulatory authority for services, the important clarification was made that the WTO does not understand itself as a standard-setting organization. As often emphasized by Washington in the conference, education standards and quality assurance are matters of education itself. The Bologna process in Europe and the conventions of UNESCO and the Council of Europe on acknowledging university graduations limited in the past to the greater European area are examples of that guaranteed independence. The EU is suppressing liberalization demands for education against other states. Surveys in Germany and in most member states of the EU have not led to special import restrictions in this area in the scope of GATS. For Germany, more liberality could effectively export education services to foreign students and other education participants through the new immigration law. Ultimately we only seek agreement with partners in other countries with education offers. This is true in any case for public educational offers and the offshore offers of German universities abroad that the German education ministry could promote. This necessity of cooperation with parties exists in the area of continuing education where a genuine market exists and in independent long-distance instruction.


Nevertheless education questions will play a role in the negotiation process. Demands for further liberalization in education are included in a July 1, 2002 White House report. In the Washington conference of American government representatives, the expectation was often expressed that other states should go further in their liberalization in the area of education services. On this background, the US, Australia, Japan and New Zealand brought general proposals and reflections on the educational sector when the GATS-negotiations were approaching. The US lists hurdles for the market access of private education providers from the general prohibition on foreign offers to inadequate freedom for franchising while emphasizing that their proposal is not directed explicitly to primary- and secondary schools and does not question the sovereign task of preparing education offers. Vocational education and testing are proposed concretely as special areas for education services.

The Australian proposals go in the same direction. New Zealand wants to set education offers like language courses or special continuing education outside state organized education in a list explicitly including the market of education services. The area of marketed possibilities in education is described precisely. The Japanese proposal focused on the quality demands of education that brought the Japanese recognition from the education representatives in the OECD conference in Washington.


The negotiation process is opened. The EU is a chief negotiator for its member- states that bring their positions to the coordinating meeting. Education services are an element of the GATS agreement in the liberalization negotiations. These services are not excluded from the negotiations. The market-friendly and the market-unfriendly partial areas should be distinguished more carefully. Clearly defining both the possibilities and limits of the GATS agreement for organizing education must be worked out in the course of the negotiations. The term “sovereign services” not subject to GATS must be clarified. This term is defined in the text of the agreement as “every service neither offered for commercial purposes nor in competition with one or several service providers.” This general definition that is also in effect for all other services is too vague for the education sector. How should private non-profit institutions be classified? Should the succession of public and private schools and universities be seen as “competition” so that public education is included in GATS’ field of application? The term competition is often used metaphorically in the education debate. This usage should not seduce us to affirm the question without hesitation. Public education is in a quality competition with private educational offers, no0t in a direct economic competition. The tail does not wag the dog.


On the background of different discussions with decision-makers in German universities, the BMBF has come to an understanding with the German education ministry that the phrase “in exercise of sovereign authority of offered services” should be clarified in the negotiations.

State financed educational institutions may not trigger subsidy claims of foreign private education suppliers according to the German negotiating position. Even if a private university with foreign support is accredited and its graduations are acknowledged, the individual state must still decide whether to support these institutions with grants or not. At the same time, the quality assurance of universities and the acknowledgment of its graduates should remain in the regulatory authority of the state.

The education world can and should make its own comprehensive agreements. This is not resolved in GATS. “Degree mills” have no place among us. The economy, science and society rely on quality education. Converting these demands is crucial. Considerable economic interests are connected with the internationalization of education. The fifth-largest US source of export revenue is from the study of foreigners in its country amounting to billion annually. The American Educational Testing Service is already active in nearly 200 countries and conducts 12 million tests annually. The Monash University in Australia acts as a commercial institution outside its borders and seeks a worldwide presence with its offers.

This is also true for many long-distance universities and other long-distance instructional suppliers. Phoenix University disseminates courses in Germany over the Internet. Microsoft, Cisco and others offer continuing education certificates on a commercial basis. An international education market is developing that naturally exerts pressure on the public offers. This market should develop under certain precautions. Measuring itself by foreign and private offers to guarantee high quality and innovation is one of these precautions. The system of accreditation and other measures of quality control like the long-distance instruction law (1976) are other possibilities for protecting consumers and citizens from frivolous education offers and employers and the general public from “degree mills”.

Education policy can and must bring light into globalization to modify the title of Stiglitz’ book. Understanding among the cultures, use of human knowledge to overcome hunger and under-development, freedom to spread education over the whole world and recruit in all parts of the world are all high goals. They may not be thrown overboard when the global orders focus on international trade with goods or services.

The world is no longer as simple as in biblical times when the traders could be simply chased out of the temple. Still education must remain master in its own house. The dream of humanity of a global peaceful coexistence through encounter and enlightenment is too precious. Individual possibilities should be realized. Education itself is not merchandise or a commodity.

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