Official Journal of the European Union

CE 70/36

(2004/C 70 E/041)


by Bill Newton Dunn (ELDR) to the Commission

(10 April 2003)

Subject:   GATS and privatisation of water services

The EU is now targeting 109 poorer countries with ‘requests’ to privatise their water services.

One problem with external corporations providing water services in developing countries is that this essential service is an important stage of development in a country, and one of the key indications of a decent government. There is therefore often great opposition, sometimes violent, to privatisation of water, which would be an irrevocable commitment.

If some of these countries are to open up their public services to overseas corporations, are they being given the best possible advice about how to introduce safeguards so that their services are not primarily run for profit?

And can the Commission give an example of where privatisation of water in a developing country has proved to be beneficial?

Answer given by Mr Lamy on behalf of the Commission

(23 May 2003)

The Community's General Agreement on Trade in Services (GATS) requests have been submitted to 109 World Trade Organisation (WTO) partners in July 2002. Of these 109 WTO members, the Community has requested commitments for environmental services from 54 developing countries and transition economies. The Community's requests on environmental services do also cover water collection, purification and distribution services, together with waste water management services.

In this context, the Commission is of the view that the primary responsibility for ensuring that access to water and waste water services for all parts of the population in an efficient, and equitable manner rests with governments. In many cases, the provision of these services will be done by the public sector. It is important to clarify that the Community's requests do not ask the privatisation of public undertakings, and do not intend to push governments into that direction.

The Commission agrees with the Honourable Member that an effective and appropriate regulatory framework is key to providing water related services, in particular when governments decide to involve the private sector in the provision of essential services such as water distribution.

The Commission is, however, of the view that involving the private sector in efforts, together with government and civil society, to improve water and sanitation services in particular in developing countries, and to strengthen investment and management capabilities, is one possibility to improve the provision of these services. However, it is clear that before deciding on a particular solution (including those involving the private sector) there is a need to objectively examine all the options, in order to select the most appropriate one, and to put in place adequate regulatory frameworks and establish monitoring mechanisms to ensure the protection of public interest. Liberalisation of trade in water related services in the context of WTO could be used as an instrument to facilitate infrastructure investments, strengthen water management capabilities and foster technological development, taking into account developing countries' administrative capacities and regulatory framework.

In the end, it is up to each government to decide upon its objectives and how it wants to achieve them, and the Community will not try, via its GATS requests, to influence these policy choices.

The Community is, in the context of its development cooperation programmes, actively supporting developing countries in the improvement, and reform, of their water distribution and waste water management. The Commission has for example proposed the establishment of a European Union Water Fund, with a budget of EUR 1 billion, to help give people in the 77 African, Caribbean and Pacific (ACP) signatory countries to the Cotonou Agreement access to safe drinking water and adequate sanitation.

With regard to experiences of individual countries in the reform of the water sector, there is a wide range of very useful information available, in particular from the Organisation for Economic Cooperation and Development (OECD) which has worked intensively in this area, as well as donors such as the worldbank which have cooperated with individual beneficiary countries in the reform of the water sector.