LATIN AMERICAN COUNTRIES BAND TOGETHER AGAINST WATER LIBERALISATION

Five Latin American countries announced at the World Water Forum, held from 16-22 March in Mexico City, that they were forming a "common front" against the inclusion of water-related commitments in the WTO. Representatives from Argentina, Bolivia, Brazil, Uruguay and Venezuela said that they would call on their trade negotiators to halt all negotiations on drinking water and basic sanitation at the WTO and in other free trade agreements. At the same time, activists mobilising on the outskirts of the meeting welcomed this declaration as a "victory" against the privatisation of water provision.

The World Water Forum is an initiative of the World Water Council, an international multi-stakeholder platform, which aims to raise awareness on water issues all over the world. As the main international event on water, it seeks to enable multi-stakeholder participation and dialogue to influence water policy making at a global level, in pursuit of sustainable development. The fourth Forum was organised around the theme "local actions for a global challenge" and attracted more than 11,000 participants from governments, UN agencies, intergovernmental and non-governmental organisations (NGOs), academia, industry, indigenous groups, youth and the media.

While the US has offered to open up its wastewater and water cleanup/remediation sectors to foreign service providers at the WTO, the EC has withdrawn earlier requests for the liberalisation of 'water for human use' services. A recent collective environmental services request from Australia, Canada, the EC, Japan, Korea, Norway, Singapore, Switzerland, Chinese Taipei, and the US for the opening up of selected environmental service sectors did not include water for human use, though it did include a request for the liberalisation of sewage services in the targeted countries, namely Argentina, Brazil, Chile, China, Colombia, Costa Rica, Egypt, India, Indonesia, Israel, Malaysia, Mexico, Namibia, New Zealand, Nicaragua, Nigeria, Pakistan, Peru, Philippines, Singapore, South Africa, Thailand and Turkey (see Bridges Trade BioRes, 3 March 2006).

Omar Fernandez, the head of Bolivia's Environment and Sustainable Development Committee, led the charge against trade, saying that "water should not be a part of free trade deals because it should not be considered just another commodity". These sentiments were reflected in a speech made by Abel Mamani, a grassroots activist in El Alto, Bolivia, who argued that water was a fundamental human right, should not be privatised and should be withdrawn from all free trade and investment agreements. Mamani had been involved with the seven-year mobilisation against increases in the cost of water resulting from the privatisation of water use services to water company Aguas de Illimani, whose controlling shareholder was French company Suez. In January 2005, following public protests, the contract between the company and the El Alto government was terminated.

Trade sources pointed out that multilateral, regional and bilateral trade agreements do not require countries to liberalise their water for human use sectors, and that no countries have requested or offered to do so. Instead, they suggested that the rules on foreign investment set out in investment deals might be more influential in determining governments' ability to choose whether to privatise their water provision sectors, and if so, whether privatisation can be limited to domestic companies. However, the request for the opening of the sanitation services sector, including through the collective request above, could be met with an offer from the targeted developing countries to open up this sector to foreign services providers, with or without conditions relating to the maximum price to be charged and other conditions of investment.

Arab countries point to virtual water

During a panel session on virtual water in the Arab region, Session Chair Mahmoud Abu-Zied, Egyptian Minister of Water Resources and Irrigation, defined virtual water as the water used to produce crop commodities, and explained that virtual water is 'traded' when countries import crop commodities (see Bridges Trade BioRes, 16 September 2005). He suggested that export of water-intensive products from water-rich countries to water-poor countries, and export of low-water-intensity products from water-poor countries, could contribute to increasing global productivity and efficiency in water use, thereby alleviating periodic water deficits. He noted that encouraging virtual water trade could also help water-scarce countries to achieve food security, underlining that food security does not mean self-sufficiency, but rather the ability of a government to ensure physical and economic access to food for its citizens.

In the ensuing discussion, forum participants pointed out that this trade was only practical where efficient transport between water-abundant and water-scarce countries is available. If such transport is not available, the environmental footprint of the fuel used to ship the product would outweigh the benefits from more efficient water use (see Bridges Trade BioRes, 4 March 2005). Efforts to enact domestic policies on virtual water trade, it was suggested, are held back by subsidies and price distortions by governments trying to support important constituencies and sectors. In addition, international competition on factors other than the water-intensity of products acts as a restraint to natural-resource driven trade. Nonetheless, participants tentatively expressed their support for the role of virtual water trade in preventing interstate conflicts over access to water, though some suggested that it could compromise national food self-sufficiency.
Water subsidies to agriculture a neglected, but important question

In a session on "Water for food and agriculture" on 20 March, keynote speaker Carlos Slim Helú, Chairman of Grupo Carso, suggested that overexploitation of watertables could be resolved through public-private partnerships that provide subsidies to reduce costs to different levels for different audiences. It was important, he said, to subsidise water for human consumption and to sell water at a higher cost to those who consume most and use water for their businesses. However, experts on the sidelines of the meeting pointed out that currently the case is quite the opposite: large amounts of water are used in agriculture or industry for free or little charge, while the poor living in the cities have little access and high prices for the water that remains. Trade experts suggested that this amounts to subsidisation of the agriculture or industry that can be either implicit or explicit, but that nonetheless impacts on the competitiveness of producers on international markets. However, it is difficult to say or define what the "real" price of water should be.

Additional Resources

Daily coverage of World Water Forum 4 is available at http://www.iisd.ca/ymb/worldwater4/

The World Water Forum website is http://www.worldwaterforum4.org.mx

"Water almost out of GATS", by Corporate Observatory Europe, is available at http://www.corporateeurope.org/water/gatswater2006.pdf

On the potential of virtual water trade to reduce global water use in agriculture, see http://www.waterfootprint.org/Reports/Report17.pdf

ICTSD Reporting.