Free your minds to see benefits of free trade

January 2, 2004

Opening universities to competition through Gats offers advantages to everyone, argues J. R. Shackleton

Senior academics and politicians have lined up with the usual anti-globalisation suspects in fierce opposition to the General Agreement on Trade in Services, which is, in principle, applicable to higher education.

But look at it from the consumer viewpoint. Higher education increasingly involves students and their families in large financial commitments, overwhelmingly undertaken to improve job prospects. The "commodification" of higher education is here to stay. It is important, then, that people are given an appropriate range of choice, quality assurance and a fair and open pricing system. For many goods and services, competition and free trade can help achieve these outcomes. Yet big barriers to free trade in higher education services remain.

Governments everywhere have considerable, often excessive, control over universities. They restrict staff recruitment and student mobility, refuse to recognise other countries' qualifications, impose racial or ethnic quotas. They offer subsidies that are far from transparent, impose political tests and bar foreign competitors. Some refuse to allow women to study. In some countries, appointments to academic posts are made by corrupt means, and examiners can be bribed to pass students. Even in more benign higher education environments, such as the UK, governments can be incompetent, meddling and intrusive.

Gats offers a voluntary framework within which countries can seek liberalisation and offer commitments of their own. It does not imply a free-for-all: it is about multilateral rules and disciplines that can assist markets to work better. In higher education, liberalisation through Gats might allow mutual recognition of qualifications, the licensing of overseas providers to operate in a country or the extension of subsidies to a wider range of institutions and individuals.

This last suggestion has provoked vociferous criticism in the UK.

Academics, like producer groups everywhere, tend to fear competition. But if our government's primary concern is with encouraging more people to acquire higher qualifications, why should our "world-class" universities not face some real competition? Or, for that matter, why should undergraduates not be allowed to take the subsidy they would obtain here (about £3,000 a year) as a contribution to their fees at a US, Australian or Japanese university? Many smaller countries already pay fees for undergraduates studying abroad. More liberalisation and competition would force universities to think about how to respond to students' choices rather than trying to anticipate the whims of here-today, gone-tomorrow politicians.

Despite the possibilities, Gats has so far had little impact in higher education. Given the post-CancNon pessimism over world trade negotiations, this is unlikely to change in the short run. Most governments have been unwilling to reduce their grip on higher education and have used academic collywobbles to justify their position. Modest proposals such as that to allow Norwegian universities access to South Africa have been denounced as imperialistic, even though poor countries would probably gain most from having good international providers as an alternative to driving students abroad. New Zealand's proposal to reach international agreement on licensing recruitment agencies - which would also improve the position of students from countries with poor information and dodgy middlemen - also seems to have fallen on deaf ears.

The European Commission, which negotiates on Gats for the European Union, has ruled out any multilateral commitments to liberalising higher education in the current negotiation round. This is despite ten EU members having asked for some commitments and requests to be made. Instead, Europe's universities have put their faith in the bureaucratic Bologna Agreement - with its emphasis on a government-driven, rather than consumer-driven, agenda. It may do little harm, but such regional accords have a tendency to divert trade rather than expand it. Just as the EU protects its farmers through the Common Agricultural Policy, so Europe's academics may come to be seen as protected through Bologna.

Today's students will work in an expanding and ever-changing world market for jobs and services. They need skills and qualifications that have world currency. They will rightly insist on being able to access the best quality education, just as they want the best computers, cars and healthcare. Gats can potentially support their aspirations. Far-sighted academics ought to embrace rather than resist it.

J. R. Shackleton is head of Westminster Business School. A longer exposition of these arguments can be found in the current issue of World Economics .

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