In this context, these smaller economies are now highly dependent on the success of this sector to contribute to national development objectives.

Clearly then, the current negotiations on this issue are of crucial importance to the continued economic stability of these economies. While it is fair to say that many of the texts in the negotiations on this area are bracketed and therefore not agreed, the general tenure of the proposals contained in the current draft suggest the potential for serious negative implications for the region. Many of these proposals if accepted would serve to negate any benefits, which Caribbean countries might derive from the liberalisation of the services sector.

In particular, the Association of Development Agencies (ADA) is concerned about the comprehensive nature of proposals being put forward. Article 1 point 1.1 on the Scope of {Application} states that, {This chapter shall apply to all measures adopted by the Parties that affect trade in services, in all sectors and in all different modes of supply, including those stemming from the delivery of commercial services by the public sector, at the national, federal, regional or local levels, as well as those stemming from bodies in the exercise of powers delegated by the national federal, regional or local government.} This definition suggests a wide purview for the agreement, which has the potential to limit government authority and nullify the effect of domestic legislative regulation. The intent of many proposals within the draft text and some of the agreed text seem bent on ensuring that firms and trans- nationals can gain maximum leverage from the Agreement through wide provision of facilitation for investment in Most Favoured Nation treatment (MFN), and National Treatment (NT) clauses. This is especially worrisome for small and vulnerable economies who, because of weak domestic commercial sectors and national legislative regulatory systems in such areas as information technology and financial services, could face serious problems protecting the “public interest” in their national jurisdictions.

Additionally, ADA is also concerned about the proposals relating to national treatment. Indications suggest that the proposed services agreement will move away significantly from the GATS, where national treatment is limited to a specific service sector and to a specific commitment that an individual Party negotiates. The proposals in seem to suggest that national treatment should be institutionalised within the draft Services Agreement as a ‘general obligation’ applicable to all parties and to all sub-sectors and service providers. If this is agreed foreign investors and trans-national would be provided with the best of all possible worlds in this FTAA agreement, gaining MFN, NT and Market Access as ‘general obligations’ applicable across the board. Such a scenario would have disastrous implications for the small and vulnerable economies in the region, which are now in the process of trying to develop and secure “foot holds” in the services sector within their countries. This would allow foreign firms to dominate the market at the expense of the now fledging domestic operators.

The Agreement makes some attempt at including provisions for smaller economies and developing countries; this text is also however still bracketed. ADA is calling for the full adoption of the text within the draft Agreement on Special and Differential treatment and further that this be strengthened by clearly defining within the Agreement the special market access conditions to be afforded to these countries and that such definition should also be included in the Market Access Agreement.

ADA is not convinced that the exemption proposed for ‘those services supplied in the exercise of governmental authority, provided on a non-commercial basis, nor in competition with one or more service providers or supplier as defined in Article 8, will provide any protection for Caribbean Societies.

In all of the countries within the Caribbean, there are many social services that are supplied in a mixed fashion, involving the government and the private sector, such as education, health and housing. Due to the of level of development and the need to ensure that such services can still be affordable and accessible to all, governments still have to play a leading role in regulating these areas.

The IMF led structural adjustment programs which launched the first phase of aggressive liberalism in the Caribbean, encouraged Caribbean governments to move out of the social sector, with devastating consequences, including increases in poverty. This FTAA process seems set to unleash the same onslaught on the vulnerable populations on the region, with the same devastating consequences.

In this light, ADA is calling for the following:

• The guiding principles governing any negotiations on trade in services should be based predominantly on those established in Article XIX of the GATS which prescribe:

• That in respect of increasing the capacity of smaller economies and Less developing economies in trade in services within the FTAA

The Negotiating Group should without reservation adopt of all proposals under the Section Special and Differential Treatment as stated within the Draft Agreement on Services. This adoption should also include any proposals to further enhance the provisions in favour of smaller economies.