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WTO and Nepalese Higher Education

WTO and Nepalese Higher Education: Problems and Prospects Narayan Prasad Kafle PhD Scholar Kathmandu University School of Education
1. WTO and Higher Education The General Agreement on Trade in Services (GATS) is among the World Trade Organizations (WTO) most important agreements. The accord, which came into force in January 1995, is the first and only set of multilateral rules covering international trade in services. It has been negotiated by the Governments themselves, and it sets the framework within which firms and individuals can operate. The GATS has two parts: the framework agreement containing the general rules and disciplines; and the national schedules which list individual countries specific commitments on access to their domestic markets by foreign suppliers (WTO 2001). Although internationalisation is not at all new to universities and higher education policies, the
forces and tensions understood by the umbrella concept of globalisation constitute a dramatically different environment for higher education institutions and policy makers to operate in. The changes to which higher education all over the globe increasingly is exposed, are complex and varied, even contradictory, and the comprehensive concept of globalisation are far from clear and well defined (Van Damme, 2001).

The realities of globalization, including innovative information and communication technologies, the market economy, new trade agreements, international mobility, and in particular the knowledge society, have been powerful forces of change for many sectors-especially higher education (Knight, 2007).

WTO and Nepalese Higher Education

The World Trade Organization (WTO) deals with the rules of trade between nations at a global or near global level. It is an organization for liberalizing trade and a forum for governments to negotiate trade agreements and to settle trade arguments. It also operates a system of trade rules. The WTO began life on 1 January 1995, but its trading system is half a century older. Since 1948, the General Agreement on Tariffs in Trade (GATT) had provided the rules for the system. The WTO agreements cover a wide range of activities such as agriculture, textiles and clothing, banking, telecommunications, government purchases, industrial standards and product safety, food and sanitation regulations and intellectual property. Under the WTO agreements, countries cannot normally discriminate between their trading partners. Imported and locally produced goods should be treated equally. The same should apply to foreign and domestic services, and to trademarks, copyrights and patents (Subedi, 2004). Education has been considered as one of the trades in the WTO. It has been argued that the accession of membership to WTO will be very helpful in the development of a country like Nepal. The total share of developing country in the international trade increased from 19 percent in 1971 to 29 percent in 1999 because of the accession to WTO. It has also been argued that the membership to WTO has assisted the member nations to reduce poverty. Whatever the results, Nepal has been a bonafide member of the WTO on 23 April 2004. Nepal applied for the membership on 17 February 1997 (Wagle, 2005). Wagle (2005) opines that to get entry into WTO is to declare one free to compete in the global market and education is one of the major items of world trade now. The General Agreement on Trade and Services (GATS 1995) was one of the agreements signed under the purview of the World Trade Organization (WTO) in 1995. The central idea of GATS is that progressive liberalization of trade in commercial services will promote economic growth in

WTO and Nepalese Higher Education

WTO member-countries. These commercial services are as diverse as entertainment, ecommerce, and education. The Doha declaration of November 14, 2001 mandates membercountries to submit initial requests for specific commitments in these diverse services by June 30, 2002, and is expected to make initial offers by March 31, 2003. One important issue that will form part of this negotiation process is the trade in educational services (Deodhar, 2002).
Whether one supports or denounces GATS, it exists as an international legal agreement of the WTO endorsed by 149 countries in the world. Education is one of the 12 sectors of GATS and higher education is one of the five sub-sectors (WTO, 1998). The emergence of WTO provisions has universally converted the educational affairs from its traditional notion of service to commodity and the philosophical foundation behind this idea is non-other than the cost recovery approach. With the growing liabilities of the governments into other sectors rather than education is diverted, the states seem taking its support back from education and making it a commodity, an item that is kept on sale like a good. Its implication is that now education is at the hands of those who can afford to it. GATS is often seen as the catalyst for the increased growth in commercial higher education between countries. But is it? Many educators would argue that GATS is responsible for these new developments. But, others would contend that the opposite is true by pointing out that one of the consequences of increased private for-profit education at national and international levels has actually led to education being a multi-billion dollar business and thus a profitable sector to be covered in trade agreements. (Knight, 2006b) Academic mobility (students, programs, providers) is considered by many as a huge commercial business and is expected to increase exponentially as the demand for higher and continuing education escalates. (Larsen et al, 2002) Sharma (2005) in connection to Indian perspective declares that Higher education in India is being de facto commercialized and accredits different factors for such commercialization including socioeconomic politics adopted by successive governments, particularly since mid-eighties, the ideological commitments of the ruling class, proactive role of the judiciary, vested interest of the business houses, the failure of the

WTO and Nepalese Higher Education State funded education system due to gradual withdrawal of the State in responding to the needs and requirements of the people and growing choice of the elite, neo-rich and affluent sections for the private sector institutions both local and foreign. At stake in the World Trade Organization (WTO) negotiations on trade in educational services is how the country is itself going to think about 'education' in the coming period. Serious concerns arise therefore also regarding the consequences of GATS based opening of the higher education system (Abrol, 2000). In short, GATS has served as an important wake up call. It has forced the education sector to carefully examine two individual but related issues. The first is the significant growth in cross border education (both commercial and non-profit) that is happening irrespective of trade agreements. The second is the reality of new multilateral trade rules such as GATS and their impact on domestic and cross border higher education. Let us begin with the general overview of the GATS provision in reference to education so that it will be pretty easy later on to attempt to assess the possible consequences of it in Nepalese educational endeavours. Thus different literatures mention different aspects of WTO and GATS provisions on Higher Education in particular and express a mixed sort of opinions regarding what effects it might cause in the nations that have agreed to its provisions. 2. Services Covered by GATS The GATS core document enlists a total of 12 services that come under its scrutiny. They are: a) Business services b) Communication services c) Construction and related engineering services d) Distribution services e) Educational services f) Environmental services g) Financial services h) Health related social services 4

WTO and Nepalese Higher Education i) j) Tourism and travel related services Recreational, cultural and sporting services

k) Transport services and l) Other services not included elsewhere.

The coverage of GATS services is so minute and comprehensive that it leaves no service apart from its undertaking. Education service is one of the most important services recognized by GATS and it is enlisted as service coverage number five. The last point of the service list is so futuristic that it foresees any service that might emerge in the days to come still will not be out of the encompassment of GATS. 3. GATS and Education Service Category of education service 1.Primary education: Cross border Consumption abroad supply Commercial presence Children attending classes Twinning abroad (frontier towns) arrangements Presence of natural persons Teachers travelling to foreign country to teach 2.Secondary education: Students attending Twinning Teachers travelling to foreign country to teach Branch or Teachers travelling to

summer school/ language arrangements courses etc. abroad

3.Higher education: E-education; virtual universities

Students studying in another country

satellite campus; foreign country to franchising; twinning arrangements teach

WTO and Nepalese Higher Education 4.Adult education: Internationally Attending classes abroad Branch or providing Language schools Teachers travelling to

satellite schools; foreign country to franchising; twinning arrangements teach

5.Other education:

Teachers travelling to foreign country to teach

Education service being one of the most important services under GATS and WTO provisions is to be considered equal to other services. Thereafter, despite the claims of the states that education is a matter of the state liability and they treat it as service in true spirit, the signatories of GATS and WTO including Nepal (in 2004) have acknowledged it as a commodity and have agreed to barter it like any other production items such as construction and business items. GATS provision has envisioned education service with five different categories and explained it in reference to four different modes of consumption. As displayed in the above exhibit the concern for the Nepalese academics is in the category 3 and 4 of the GATS provision. In these two references, all the modes of consumption are active and it becomes more a commodity than a service. Though Nepals agreement with GATS in reference to education is not active in terms of Primary and Secondary Education, the rest viz. Higher Education and Adult Education shall be directly affected from the date of activation of GATS provision in the year 2010. This means as an education service entrepreneur one can invest to other WTO nations that have signed to it and any nation or the foreign investors can come to Nepal to invest for the Higher and Adult Education without any restriction. Xu( 2009) has very carefully detailed the four modes of education supplies and their

possible consequences in reference to China in particular which seems very much relevant in Nepalese perspectives as well. The following text shall detail different modes of supply of education as versioned by GATS and elaborated by Xu.

WTO and Nepalese Higher Education

a) Cross-boarder Supply With respect to cross-border supply, many education materials from foreign suppliers of education services will enter every WTO member nations domestic education market, including various types of teaching books, audio-video teaching and learning materials, teaching equipment and computer teaching software. This will have a strong impact on every WTO member nations textbook publishing industry, audio-video publishing industry, teaching equipment manufacturing enterprises and the software industry. They will have to face the direct competition from foreign education services b) Consumption abroad With respect to consumption abroad, foreign suppliers of education services will strengthen their contention for each WTO member nations education market, trying to attract more students to their countries to receive education services. On one hand, massive domestic students studying abroad has made each WTO member nation, especially developing nations, suffer from loss of talents and outflow of capital and has had a great impact on its domestic education services. On the other hand, each WTO member nations suppliers of education services can also enter into international education market to participate in the competition and recruit overseas students. c) Commercial presence With respect to commercial presence, on market access, foreign suppliers of education services can establish joint schools with each WTO member nations counter-part or wholly-owned schools. They can set up joint schools with one WTO member nations education service institutions either through introduction of foreign educational resources or in the form of capital investment. With the rapid development of Global economy, the demand for education is increasing steadily. A lot of foreign suppliers of education services have entered WTO member nations domestic education services market, trying to seize the education market. These

WTO and Nepalese Higher Education

institutions are very competitive in terms of software and hardware. And because of their international background, they are very attractive to the students in the age of economic globalization. Each WTO member nations suppliers of education services will have to face the tough competition and challenge from foreign education service institutions. d) Presence of natural persons With respect to presence of natural person, foreign individuals can enter into each WTO member nation as a natural person to provide education services. And this will not probably have a serious impact on each WTO members domestic education services. These foreign individuals will help each WTO member train a large number of high-level professionals, and will play a positive and facilitating role in improving the quality of each WTO members education services. In the future, there will be a substantial increase in the international flow of individuals among the suppliers of education services of around the world. And the exchange between each WTO member nations education service institutions and foreign education service institutions will also increase, so each WTO members education service institutions will become more and more internationalized. On one hand, this will help each WTO member nations education service institutions employ more talented personnel. On the other hand, the present employees of each WTO member nations education service institutions will have to face a higher demand on their personal qualities. This leads to a situation of extreme fluidity where the state as well as the education policy makers is to remain very much cautious in handling this situation in such a way that assures benefits to
Nepal from this provision. 4. Problems and Prospects Though there are still several doubts and scepticism about the possible harms and benefits that might be caused due to the implication of GATS provisions in reference to education. These hues and cries are 8

WTO and Nepalese Higher Education partly because we have not really experienced the influence of WTO impacts as it is to be executed from the year 2010. Nevertheless, on the ground of GATS provision many writers and scholars have anticipated numerous would be threats and opportunities. Wagle (2005) has prescribed a list of possible disadvantages and advantages of it in his work paper. Some of the striking problems and prospects are enlisted below. a) Problems: Infrastructural weakness Risk to present institutions due to open foreign investment up to 80% Possible more import causing threat to national economy and trade imbalance Possible displacement of national experts due to intra-corporate transferees Threat to education as state liability.

b) Prospects: Open market for diverse educational options Emergence of joint venture educational enterprises Quality enhancement with intense competition Wide market for competitive products Enhanced bilateral and multilateral relationships

In the actual performance situation these problems and prospects will appear with different facets and the readiness and preparedness of the member states determine how far these possible problems and prospects display the influence. 5. Conclusion Standing at the end of the year 2010, Nepalese Higher Education fraternity has no choice but to prepare cautiously to accommodate with the possible problems and prospects. The educational policy makers are to remain alert and learn from the practices of the countries like India where the GATS in reference to education is already in execution and it has started displaying its colours there. The national policy

WTO and Nepalese Higher Education makers should be ready to recast the Higher Education Policies and give it a shape of global standard. A special attention is to be paid to enhance the technical capabilities of our Higher Educational Institutions and the stakeholders and prepare them to use and apply ICT based pedagogy. Likewise the traditional orientation of supply based education system should be replaced by the demand based education practices. Similarly, enhancing the institutional capacities in line with the global standard only will give us the strength to compete in the open market scenario. It is the time for taking actions that can give us an edge over others so that our Higher Education becomes worth in reference to the global standard.


WTO and Nepalese Higher Education

References: Abrol, D.(2005).Commercialisation of Higher Education: Implications of the GATS 2000 Negotiations: Social Scientist, Vol. 33, No. 9/10, Debating Education (Sep. - Oct., 2005), pp. 75-89 Retrieved from: Accessed: 18/08/2010 07:18 Deodhar, D.E.(2002). Educational Services: Issues for India in WTO Negotiations. Economic and Political Weekly, Vol. 37, No. 19 (May 11-17, 2002), pp. 1791-1795. Retrieved from Accessed: 18/08/2010 07:02 GATT: Facts and Fiction : World Trade Organization, 2001 GATT (1994). The Results of the Uruguay Round of Multilateral Trade Negotiations: The Legal Texts: GATT Knight, J. (2006b) Commercial Crossborder Education: Implications for Financing Higher Education in Higher Education in the World: The Financing of Universities. GUNI. Palgrave Macmillan. Basingstoke. UK. pp 103-112 Knight, J.(2007). Implications of Cross- border Education and GATS for the Knowledge Enterprise, A Work Paper for UNESCO Forum on Higher Education, Research and Knowledge February, 2007 Larsen, K., R. Morris and J. Martin. (2002). Trade in education services: trends and issues in World Economy, Vol. 25, No 6. Sharma, V.(2005). Commercialisation of Higher Education in India. Social Scientist, Vol. 33, No. 9/10, Debating Education (Sep. - Oct., 2005), pp. 65-74. Retrieved from Accessed: 18/08/2010 07:16


WTO and Nepalese Higher Education

Subedi, R.C. (2007). WTO and Nepal Opportunities and challenges, The Himalayan Times Online Van Damme, D. (2001). Quality issues in the internationalisation of higher education, Higher Education, 41: 415-441.

Wagle, M.P.(2005) WTO and Education: A Case of Nepal, A work paper. Wagle, M.P.(2005) WTO ma Nepal ra Sikshya Ko Byapar, An Article published in the Gorakhapatra. Xu, J.(2009).WTO Members Commitments in Education Services, International Education Studies,, vol2 no.2