London Londres

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London - Londres

• 7 -- VII -- 2005

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International Trade of Higher Education

• The GATS

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Three main focuses

• The globalization of higher education
• International trade of higher education
• The GATS

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Globalization

• Social phenomena. (Inevitable and unstoppable)
• Information and communication technologies
• Global information
• Global economy
• Global trade

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How the Globalization affects universities?

• Globalization effects on the universities will
  be more drastic than industrialization,
  urbanization and secularization combined. It is
  the biggest challenge the University has faced
  for more than a century and a half. (Castells)
  

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What is Higher Education?

• Merchandise
• Commodity
• Public service
• Public good
• Service
• National value

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Modes of supply and emerging models
Professors Mobility
Transnational University
Branches
Students OCDE (2000) 1.6 M students
Virtual University
Internacional University
Internet E-learning (2002) 2500 MM US
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What is GATS?

• The General Agreement on Trade in Services is
  the first ever set of multilateral rules covering
  international trade in services.
• Agreement (WTO status equivalent UN)
• General (140 members)
• Trade
• Services

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When the GATS was created and why?

• At the end of the 2nd. world war and with the
  objective of promoting the international trade
  GATT (General Agreement on Tariffs and Trade) was
  created in 1947. After the famous Uruguay Round
  from 1986 to 1994 it was decided the
  transformation of GATT to WTO (World Trade
  Organization) and an agreement for the
  liberalization of services (GATS) was adopted.
  Negotiations began 5 year later (2000).

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Main categories of trade in education

• Cross border supply. Includes any type of course
  provided through distance education or internet,
  testing services or education material which can
  cross national boundaries (does not require the
  physical movement of the consumer)
• Consumption abroad . Mainly involve the education
  of foreign students (require movement of the
  consumer to the country of the supplier)
• Commercial presence. Foreign universities,
  institutions or investors in another country
  (provider establishes facilities in another
  country)
• Presence of natural persons. Ability of people to
  move between countries to provide educational
  services.

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Where are European Universities today?

• International relations
• Trade
• Internet
• Trends
• Students

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Internationalization of higher education

• European joint programs
• Technical and Administrative Staff
• Professors
• Students

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Differences between internationalization and
globalization of HE

• Economic
• Geographic
• Information and Knowledge

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Key difference

• Internationalisation
• Can be shaped and influenced by Higher
  Education Institutions (e.g. mobility, joint
  curricula, consortia)
• Globalisation
• An external macro socio-economic process,
  hardly to be influenced by Higher Education
  Institutions

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Previous references of trade in Higher Education

• Languages
• B A Schools
• Internet Materials

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Teaching in Internet

• Graduate and Postgraduate courses
• Continuous education (Long life learning)
• Specific training courses

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USA references

• Internet Trends
• Colleges and universties are the most wired
  community on the Web 83 of all higher
  education institutions and 100 of universities
  are online.
• College students represent the single largest
  nongender-based online demographic, constituting
  24 of the total number of adult Internet users.
• College students spend approximately 105 billion
  annually, online 1.5 billion, its expected to
  almost triple to 3.9 billion by 2002.

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Other references

• African Virtual University
• 2001, 24.000 students since 1997, from 17
  countries
• 2003 restructured shared site by 34
  universities
• RMIT Melbourne latest program provider
• Tengtu China 12.000 schools connected early
  2003
• networking 6 million students
• 2002, 19 of corporate training in US was
  on-line
• Globally 150 billion industry by 2025

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Other references

• Tertiary distance education worlds fastest
  growing sub-sector
• Canada 500.000 students many on-line
• Asia has 3.5 million students (2000) China
  Central Radio and TV University has 1.5 million
  enrolls over 100.000 each year
• 30 of all tertiary courses in Russia are
  distance 26 in Turkey 37 in Thailand
  Europe approx 900.000

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Trends in HE

• Use of ICT for domestic and cross border HE
  activities.
• Rapid increase of for-profit entities providing
  HE domestically and internationally.
• Increasing cost and tuition fees paid by students
  of public and private institutions.
• Need of public institutions to seek alternative
  sources of funding.

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Trends in HE

• Ability or inability of governments to fund the
  increasing demand for HE
• The fact that the business of transnational HE
  was alive and active before the GATS.
• The increasing of private providers is
  questioning the quality of the programs.

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How will students influence the demand?

• Dramatically
• According to the information reported by Merrill
  Lynch (USA investment house) the number of
  students in 2025 will be around 160 millions
  which is the double of students in 2002.

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Students in USA(2003)

• Total in HE
  15.756.000
• Postgraduate students (14) 2.219.400
• Foreign students (PG) (17) 377.300

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Percentage of tertiary foreign students

• Switzerland 17
• Australia 13
• Austria/U.K/Belgium 11
• Germany 9
• Demark/France/Sweden 6
• USA 3
• Spain 1

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Students in European Union

• EU (15) 12.563.000
• EU (15 10) 15.207.000
• Students mobility (15) 290.000
• within EU(2.3 ) (1510) 350.000

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Other references

• Over 1.6 million international tertiary students
  abroad in OECD countries in 2001
• Over 580.000 in USA approx 35 of world total
  (6,4 inc from 2000) 6740 in top 20 US business
  schools
• Other significant share of global market include
  UK (14) Germany (12) Australia (9)
  France (8)
• UK in 2001, students from China increased by 67
  from previous year 31 increase from India
• New Zealand 300 growth between 1999 and 2002

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Is there a relation between globalization and
international trade?

• Yes
• How will this affect the higher education?
• Positive view
• Negative view

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Positives values

• Innovation
• New providers
• Greater student access
• Increased economic gain
• New hybridization and fusion of cultures through
  mobility of people

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Negative aspects

• The threat to the role of government
• Public service / Public good
• Quality of education
• Homogenization of culture

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Supports to the trade

• Business of transnational education was alive and
  active before the advent of GATS.
• Education is in a large extent a government
  function and the agreement do not seek to
  displace the educational system and the right of
  governments to regulate and meet domestic policy
  objectives

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Critics to the trade

• GATS is a very new instrument and it is too soon
  to predict ..
• The whole question of the protection of public
  service is very uncertain and potentially at risk
  by the narrow interpretation of what means..
• Any subsides given to domestic providers must
  also be given to foreign providers.
• If a foreign provider establishes a branch in a
  country this must permit to all WTO members the
  same opportunity and treatment.

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Structure of GATS

• First part. Framework containing the general
  principles and rules.
• Second part. National schedules with the list of
  countries specific commitments on access to
  their markets by foreign providers.
• Third part. Annex that detail specific
  limitations for each sector.

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Subsectors in Education Services
Primary
pre-school and other primary education services
general secondary, higher secondary, technical
and vocational secondary, and technical and
vocational secondary education services for
handicapped students
Secondary
post-secondary technical and vocational and other
higher education services
Higher
education services for adults who are not in the
regular school and university system and includes
education services through radio or television
broadcasting or by correspondence
Adult
education services at the first and second levels
in specific subject matters not elsewhere
classified and all other education services that
are not definable by level
Other
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World Bank. Trends in Lending
Primary Secondary Education
Vocational post-secondary education / Tertiary
education
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Enrollment in Private Higher Education ( of
total)
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What other services related to higher education
are included?

• Language testing
• Student recruitment
• Quality assessment of programmes.

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What we think about this related services?

• Technological services.
• Quality assessment of programmes.
• These are areas where international trade may
  grow very quickly under consulting formulas.

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Typology of Barriers to Trade as identified
by USA, New Zealand, Australia and Japan
Barriers to trade
Examples and modes of supply concerned
Prohibition for foreign providers

• No possibility for foreign supplier to offer its
  services (all modes of supply)

Administrative burden and lack of transparency

• Domestic laws and regulations unclear and
  administered in unfair manner (all modes of
  supply)
• When governmental approval required for foreign
  suppliers, extremely long delays encountered
  when approval denied, no explication given, no
  information about necessary improvements to
  obtain it in the future (all modes of supply)
• Denial of permission for private sector suppliers
  to enter into and exit from joint ventures with
  local or non-local partners on a voluntary basis
  (modes 1 and 3)

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Typology of Barriers to Trade as identified
by USA, New Zealand, Australia and Japan
Barriers to trade
Examples and modes of supply concerned

• Subsidies for education are not made known in a
  clear and transparent manner (all modes of
  supply)
• Repatriation of earnings is subject to
  excessively costly fees and / or taxes for
  currency conversion (all modes of supply)
• Excessive fees / taxes imposed on licensing or
  royalty payments (modes 1 and 3)

Fiscal discrimination
Accreditation / recognition discrimination

• No recognition of titles delivered by foreign
  providers (all modes of supply)
• No recognition of foreign diplomes (mode 2)
• No accreditation delivered nationally for foreign
  providers (modes 1 and 3)

Technical discrimination

• Restrictive use of national satellites or
  receiving platforms
• Restrictive use of satellites dishes

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How the GATS affects the Bologna process?

• If we want a European HE area that is
  characterised by the fluid mobility of students
  in terms of geographical, economic and social
  equity it looks very difficult to follow the
  GATS model
• The debate between competitiveness and
  cooperation is crucial in the EU area.
• Employers should be deeply involved in the HE
  space construction according to the Bologna
  process.

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What universities and universities associations
said?

• The 2002 Porto Alegre Declaration, which was
  signed by Iberian and Latin American associations
  and public universities is radically opposed to
  international trade in education.
• The Joint Declaration on Higher Education and the
  GATS, signed by four associations representing
  5.500 American, Canadian and European
  universities, rather than coming out against
  international trade, call for a freeze on WTO
  negotiations on educational services.

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How much money are we talking about?

• Global expenditures on education services exceed
  2.3 trillion .
• The OCDE in 2001 estimate the value of the
  international trade in HE in 1999 en 34 billions
  in 1995 was estimated in 30 billion . USA
  with 33 was clearly the first supplier followed
  by Australia and UK. In 1995 HE was on fifth
  place of most exported services in USA.

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How much money are we talking about?

• Public expenditure on education continues to grow
  faster than total government spending, but not as
  fast as GDP. OECD countries spent an average of
  5,5 of their GDP. (Source Education at a Glance
  2002)
• Investment house like Merrill Lynch predict that
  public education will be globally privatized over
  the next decade and say there is an untold amount
  of profit to be made when this happens.

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Five Mayor Exporters ESUS million 2000
Prevalence of English speaking countries
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What countries have shown interest?

• USA.
• Education to a large extent is a
  government function, but most countries permit
  private education. The proposal envisions that
  private education will continue to supplement,
  not to displace, public education
• New Zeeland
• HE sector is vitally important to all
  countries. Reduction of barriers to trade in HE
  does not equate to erosion of core public
  education systems and standards.
• Australia
• Governments must retain their sovereign
  right to determine their own domestic founding.
• Japan
• It has become extremely important for each
  country to improve the quality of education and
  research. Primary interest should be improving
  quality

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Where are we?

• The last negotiation round was open in Doha in
  December 2001
• Participants shall submit initial requests for
  specific commitments by 30 June 2002
• Participants shall submit initial offers by 31
  May 2003
• March 2003. Possible trading partners meetings
  and discussions
• Improved offers before spring of 2004
• 2005. GATS negotiations conclude

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Experiences in other countries

• Malaysia (Invitation to foreign universities to
  establish under a clear regulatory framework)
• South Africa (Branch of Australian Universities)
• Canada (42 of the universities are actively
  involved in the export of HE services)
• Belgium (HE must be out of GATS)
• Rumania (In 10 years, 1/3 of the students are in
  private universities)
• Cameroon (1/3 of the students from secondary have
  no place at state universities)

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Quality and Accreditation

• Free trade is not trade in the absence of quality
  standards
• Increasing transnational education and new legal
  trade rules require more attention to quality
  assurance and accreditation of cross border
  education programs and providers.
• Authority for QA, regulation and accreditation
  for cross border education must be guided by
  stakeholders of education and not left to trade
  officials or market.

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Quality and Accreditation

• Recognition of academic titles and certificates
  across countries is directly related to the
  issues of quality and accreditation
• Accreditation and quality services labelled as
  Other in GATS may be the key of the
  international trade

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Some key features

• a. Students mobility
• b. Freedom for mobility and recruitment of
  professors.
• c. Capitals mobility. Investments and benefits
  expatriation.
• d. Technological compatibility for transmission
  and reception through the satellites and national
  informatics networks.
• e. Difficulties in translating degrees into
  national equivalents and corresponding legal
  consequences
• f. Quality assurance

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Potencial Donors
Public Funds
Public University
Others
Private Funds
Investment in Companies
DOMESTIC MARKET
Tuition Research
Non Profit Institutions
Research?
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Conclusions

• At present, the idea that there is a global
  concept of education in the world, is something
  that in a way or another everybody accepts with
  nuances or sustantial discrepancies but at the
  same time with the recognition of the fact.
• It would be a mistake to expect that the Doha
  negotiation Round would either stop the trend
  towards internationalisation, nor would an
  agreement dramatically accelerate the trend.

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Conclusions

• The Bologna's process could be affected by the
  evolution of the international trade in HE that
  is taking place at these moments and by the
  interpretation and development of GATS.

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Conclusions

• Some universities and governments have the idea
  that the rules of international trade are not
  applicable to the sector of education. The low
  cost of tuition fees for HE is incompatible whit
  the principles of commercial services.
• Education is a multi-faceted undertaking
  characterised by a multitude of convergent and
  divergent interest of multiple stakeholders. It
  cannot be limited only to consideration of free
  choice and price efficiency criteria.

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Conclusions

• The higher educations world market will affect
  and increase the mobility of the main agents that
  would have the opportunity to establish and
  develop their activities in different countries
  in a more easy way than until now

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Conclusions

• The advantages of a free HE market may fall in an
  unbalance way on the side of globalizators.
• Even if there are some positive effects for
  less developed countries, the benefits will
  mainly go to the agent that provides the service.
• A balance has to be achieved between legitimate
  requests for consumer protection and sovereignty
  rights by governments.

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Conclusions

• The national authorities for Trade and Economy
  are the only official representatives at the GATS
  negotiations. Sectors concerns (as HE) are not
  directly represented.
• It is of the utmost importance that Ministers of
  Education have full information about the
  process analyze the specific national needs and
  agree with the official representatives the
  proposals and political actions for HE within the
  GATS.

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Conclusions

• Quality must be among the main objectives for
  future trade in HE.
• Higher Education authorities, agencies,
  students, professors and the university community
  as a global, should demand the quality
  improvement of the overall system. Not just from
  the point of view of the mobility and the fees
  but mainly the quality of teaching and research.