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World Trade In Education Services with Emphasis on New Zealand
Mar 22, 2003

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  • Comment Board
  • The level of liberalization of world education markets is largely unknown. While many governments have not placed restrictions on students moving to foreign markets to purchase education and training programs, many governments discourage trade in services education by discriminating between local and foreign providers. While government acknowledge growing pressures to supply skilled workers to the knowledge-based economy, governments remain wary of deregulating domestic education markets by allowing competition and private supply or providing equal access to demand subsidies to foreign and domestic providers.

    The world market for education services is lacking stable rules that can allow trade to flourish. Education remains one of the sectors where WTO Members have made few liberalization commitments to date. Roughly, 42 WTO Members have made commitments for at least one education sub-sector. Of these, about twenty-five are OECD countries. The only five OECD countries that have failed to schedule liberalization commitments in education are Canada, Finland, Iceland, Korea and Sweden. Roughly 25 of the 42 countries that have schedule commitments in education under the GATS have also included commitments in at least 4 of the five subsectors which are primary, secondary, higher, adult and other education.

    Most of the limitations imposed by WTO Member countries have been on trade in primary and secondary education, which is often defined as “basic” schooling. Higher and adult education, are among the subsectors where countries have made most “full commitments” by allowing mode 1 (cross-border supply), mode 2 (consumption abroad) and mode 3 (commercial presence). WTO member countries have imposed most of their limitations on mode 3 and mode 4 (temporary movement of natural persons to supply the service abroad), and restricted their commitments to privately funded education especially in primary, secondary and higher education.

    Most developing countries have not committed to liberalizing in part or in full their education sector. The exceptions are China, Chinese Taipei and Thailand that are among the main “importers” of educational services. These countries have made commitments to allow mode 2 delivery (through consumer presence in the foreign market) of education services. Least developed countries, which are in need of establishing a modern education infrastructure, not only have not committed to allowing cross-border and mode 2 delivering of education services, but have also abstained from making commitments to allow foreigners to establish education campus in their countries.

    In general, the countries that have made their commitments after the Uruguay Round have wider sectoral coverage than the countries that made commitments before the Uruguay Round. This can partly be explained by the fact that countries joining the WTO after the Uruguay Round have been under greater negotiating pressure to make commitments.

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