Master's Thesis, 2006, 97 Pages
Liberalization of Trade in Educational
Service and Its Impact on the Right to Education
University of Hamburg
Master in European Studies
I Introduction ... 6
II Institutional Frameworks and Contexts ... 9
2.1 Norms and standards of Human Rights most relevant to Liberalization of Trade in Educational Services ... 9
2.2 Liberalization of Trade in Educational Services ... 11
2.2.1 Trade in Services and Trade in Educational Services in Particular ... 11
2.2.2 The framework of GATS in WTO regime ... 13
Background, Objective, scopes ... 13
Coverage, Exemption and Modes of Supply ... 13
Structure, Core Components and Key Features ... 15
III Theoretical Framework ... 16
3.1 Trade and Welfare ... 16
3.1.1 Gains of Free Trade ... 16
3.1.2 Distributional Effect and Overall Welfare ... 17
3.1.3 Protection and Loss of Welfare ... 17
3.2 Market Failure and Government Intervention ... 19
3.2.1 Market Failure Argument ... 19
3.2.2 Theory of the Second Best and Principle of Targeting ... 20
3.3 Public Goods, Externalities and Education ... 22
3.3.1 Definition and Characteristics of Public Goods ... 22
3.3.2 Is Education a Public Good? ... 23
3.3.3 Financing and Provision of Public Goods: the Case of Education ... 25
3.4 A Summary of the Theory Section ... 28
IV Does Liberalization of Trade in Educational Services Promote or Threaten the Right to Education? ... 29
4.1.1 About the availability and accessibility ... 30
4.1.2 About State Accountability ... 33
4.1.3 About the Equity ... 35
4.1.4 About the Quality ... 39
4.1.5 About Long-term Economic, Social and Cultural Impacts ... 41
4.2 Country Case study: Examining the Impact of Liberalization in Trade of Educational Service on the Right to Education in China ... 43
4.2.1 China’s Education System and Problems ... 44
Basic facts about China′s education system ... 44
Key Problems impeding the Right to Education: Financial Obstacle and Regional Imbalance ... 46
The Growth of Private Provision ... 48
4.2.2 International Trade in Educational Service in China ... 49
International Trade Related Regulatory Environment and China′s GATS Commitments ... 49
Current Trade in Educational Services ... 50
Market Demand and Consumer Psychology: A Nation-wide Survey (National Bureau of Statistics of China, 2002) ... 51
4.2.3 Challenges and Opportunities ... 52
Access and Equity ... 52
Quality Issue ... 54
Brain Drain ... 55
V Summary and Conclusion ...
BIBLIOGRAPHY ... 60
ANNEX ... 68
Annex 1 ICESCR Article 13 and 14 ... 68
Annex 2 CRC Article 28 and 29 ... 69
Annex 3 World Declaration on Education for All, Jomtien (1990) (Part) ... 70
Annex 4 Dakar Framework For Action (2000) (Part) ... 70
Annex 5 Export of Educational Services of Some OECD Countries ... 71
Annex 6 Top 15 Leading exporters of education services (consumption abroad) at tertiary level ... 71
Annex 7 Country Share of total foreign students 2002/2003 ... 72
Annex 8 : Share of Foreign Students in World Total, OECD 2002/2003 ... 73
Annex 9 Number of Foreign Students from 6 Continents in Major Exporter/International Providers of Education (2002/2003) ... 74
Annex 10 Students Number from the major importer/receivers in 2002/2003 ... 75
Annex 11 Relative proportions of public and private expenditure on educational institutions, for tertiary education (1995, 2002) ... 76
Annex 12 Percentage of temporary residents receiving PhDs in Science and Engineering in the United States in 1996 who were in the United States, 1997-2001 ... 79
Annex 13 Relative proportions of public and private expenditure on educational institutions (1999) ... 80
Annex 14 China Educational Laws and Regulations to Relevant International Trade in Educational Services ... 82
Annex 15 Regulations of the People′s Republic of China on Chinese-Foreign Cooperation in Running Schools ... 82
Annex 16 China’s GATS Commitment Relevant to Educational Service Sector ... 93
Education is in itself a fundamental human right. As an important determinant of economic growth and human development, education also constitutes an indispensable means of realizing other human rights, particularly rights associated with employment and social security. With the unleashed force of globalization sweeping all aspects of social and economic life, national governments throughout the world increasingly understand the strategic importance of education in enhancing and maintaining international competitiveness, and its crucial role in developing economic and social viability on the long run. On the other hand, the convergent impacts of globalization also bring new impetus for cross-boarder education, and affect the shape and mode of the operation of national education systems more influentially than ever. Over the last two decades trade in cross-border education has been increasing steadily in all forms: not only the numbers of students enrolled in educational institutions outside their home country has been rapidly increasing, but also more and more education providers operate abroad, providing their educational services to foreign students who remain at home. Accelerated development of the new information and communication technologies also facilitate cross-border education and encourage new forms of educational internationalization. According to the statistics from the Organisation for Economic Cooperation and Development (OECD), export revenue related to international student mobility amounted to an estimated minimum of US$30 billion in 1998, or 3% of global services exports (OECD, 2004a)
With the rapid growth of trade in education, a number of bilateral, regional and multilateral trade agreements and regulations have incorporated provisions on trade and investment in educational services, which all together make up the legal and institutional framework shaping and regulating the liberalization of trade in educational services. Among all the relevant agreements and regulations driving the liberalization process, the General Agreement on Trade in Services (GATS) under the World Trade Organization (WTO) regime provides the first multilateral framework for international trade and investment in services, including educational services.
These significant new trends of education in the global environment pose both challenges and opportunities to most developing countries, which would have to tackle many difficult issues in a more profound surrounding: the need to expand education in a sustainable way, inequalities of access, problems of education quality, and rigid governance structures and management practices (World Bank, 2002). It has entered hot academic and political debates and remains a controversial question whether the economically underprivileged developing countries, who are usually educational services importers in international trade, would also benefit from liberalizing trade in educational services; whether liberalization could indeed lead to a diverse, efficient and responsive education system to the knowledge economy with much broader and more equal access to education; or whether it would rather impair the states’ obligation to realize and promote the right to education.
As stressed at the very beginning, education should not be considered as a mere instrument to maintain an appropriate level of human capital for increasing labour productivity in the heated global economic competition, but first of all as a fundamental human right, which should be directed to the full development of the human personality and the sense of its dignity (CESCR, 1966), to the enhancement of human lives and freedoms. Human beings are not only the most important means of social or economic achievement; they are also its most profound end (Sen, 1998).
Such a human right perspective is, unfortunately, not always to be observed in literature by many neoliberal writers on the liberalization topic and its impact on education. On the other side, numerous articles within the general background of the global anti-free trade and anti- WTO movement could be found, holding an absolute view that trade liberalization will put the global public education in danger. Most of such articles are, however, rather based on ideological sentiments than on sound theoretical or empirical evidence. In a word, in the debate on liberalization of trade in educational services, two extreme views tend to be taken on. The liberalization proponents usually emphasize the dynamic efficiency of market but ignore the market failures, whereas the opponents attempt to prove the negative consequences for national sovereignty and social equity caused by liberalization, but often grounded on a biased interpretation of liberalization. My belief is that trade liberalization presents both challenges and opportunities, and its impact on the realization of the right to education could be rather manifold and complex. I do not take on the presumption at the first stage that the relation between the right to education and economic liberalization is conflicting and irreconcilable in the nature. To the contrary, economic development and the enforcement of human rights are not two successive processes of development, but can only be successful if regarded as interrelated tasks to be tackled simultaneously. The artificial division of human rights objectives on one hand and trade liberalization on the other should be broken down (Paech, 2003). Hence, the purpose of my thesis is not to demonstrate how liberalization of trade in educational services could potentially and realistically hinder the right of education, but to seek the coherence between the trade service liberalization and the promotion of the right to education.
Nevertheless, it is important to note the standpoint and starting point of this thesis. I agree to the recognition of the primacy of human rights over the economic objectives as the key principle of tackling the relation between trade liberalization and human rights in general. As emphasized in the recommendation placed by the UN Committee on Economic, Social and Cultural Rights, it should be made clear that ′trade liberalization must be understood as a means, not an end. The end which trade liberalization should serve is the objective of wellbeing to which the international human rights instruments give legal expression.′ (CESCR, 1999).
However, this paper is not intended to go deep into the juristic argumentation whether human rights law or trade law should take precedence in case of overlapping or confrontation, since it should always be examined and addressed in concrete cases. In this paper I will endeavor to have an interdisciplinary examination on whether education is a public good, whether it should be kept strictly under the government authority and whether liberalization of trade in educational service would lead to equal and broad access to quality education for all. Though the analysis of this paper would mainly be based on economic theories, chiefly, the theory of international trade and public goods, a human rights approach will be employed throughout the paper.
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