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What is the potential impact of the WTO services agreement on state higher education policy?

Tennessee is known for the quality and diversity of its institutions of higher education: great public universities like Tennessee and Memphis; public community colleges like Dyersburg State and Chattanooga State Technical College; and private institutions like Vanderbilt, Fisk, and Sewanee.  Higher Education in Tennessee is not, however, isolated from the pressures and opportunities of economic globalization.

International trade in higher education services is a big business for the United States and for Tennessee.  Foreign students studying at Tennessee colleges and universities bring in substantial income to the state, not only in tuition and fees but also from their spending for housing, consumer goods and services.  Almost every college and university recruits foreign students for general enrollment, for special degree programs such as Vanderbilt Law School's LL.M (master of laws) degree program for foreign lawyers, for exchange programs such as the University of Tennessee Institute of Agriculture's exchange programs with universities in Thailand, Mexico, and Jamaica, and similar ventures.

Higher education services also can be outsourced thanks to advances in internet and information technology and new techniques in remote learning.  For-profit institutions of higher education, such as the University of Phoenix, and Australian and U.K. institutions with their 'open university" traditions are aggressively marketing higher education services employing on-line and computer automated remote learning techniques.  If back-office accounting and call-center services can with the help of information technology be outsourced to India, then why should not computer-automated and on-line foreign language classes or even masters programs in international business administration be substantially outsourced to the United States, the U.K, Singapore, China or Australia?

According to the American Council on Education:

Trade in higher education services has grown over the last few years into a global market estimated at $30 billion in 1999. The United States earned an estimated $8.5 billion from this trade in 1997, making it the country's fifth largest service export. The United States is by far the largest provider of education services, followed by the United Kingdom and Australia. In 2000, the United States proposed to add higher education services to the negotiations with other GATS members.

It should come as no surprise, then, that coverage of international trade in higher education services under the General Agreement on Trade in Services (GATS) is being actively considered by the World Trade Organization in Geneva. What might be surprising is that the United States made an offer for international regulation of higher education services under the GATS. 

These WTO negotiations and the U.S. offer to cover higher education have proved controversial, as they raise fundamental questions about the character, purpose, and value of higher education.  The most fundamental questions relate to the extent that colleges and universities are devoted to commercial values and the economic interests of all involved and how much weight cultural and purely academic values and interests ought to be given?  And, a host of questions are also raised related to how much authority over the governance and regulation of higher education, which in the U.S. are largely a state responsibility, should appropriately be ceded to the World Trade Organization.

The American Council on Education and other associations of U.S. colleges and universities oppose the current U.S. proposal to cover higher education services under the WTO General Agreement on Trade in Services (GATS). 

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