The Global Sell-out of Higher Education: WTO and the University of Texas

September 8 and 9, 2003, two days prior to the World Trade Organization’s
(WTO) meeting in Cancun, Mexico, students from around the globe
converged on the Universidad Nacional Autonomous de Mexico (UNAM)
to discuss the impacts of the WTO and other neoliberal policies
on higher education. These students gathered to organize resistance
to privatization of their education, deregulation, increases of
tuition, and slashed university services and to defend popular and
accessible education for all. 

1994 the World Trade Organization was formed out of the last round
of GATT (General Agreement on Trade and Tariffs). Both the WTO and
its predecessor are global rules-based institutions where member
countries negotiate trade agreements. It was not until the WTO was
created that services were covered under a multilateral agreement.
Until that point, trade agreements existed to reduce tariffs and
non-tariff trade barriers for goods that were produced in one place
and sold in another. Some services, such as transportation and financial
services, have historically been traded, but others such as healthcare
and education, have generally been exempted or seen as too localized
to be traded. With NAFTA serving as a precedent, select countries
within the WTO are now targeting those sectors. 

of the WTO current agreements is General Agreement on Trade in Services
(GATS). GATS covers every conceivable kind of service with few exceptions.
One exception found in Article I (3) excludes “services supplied
in the exercise of governmental authority.” In other words,
only services provided solely by a government, using only government
funding, could receive exemption. Yet since most places have some
private universities and, at least part of public university funding
comes from private money, the exemption is impossible to make for
public education. The framers of GATS are acutely aware of the fact
that no bright line exists between public and private sectors. Kurt
Larsen, of the Organization for Economic Cooperation and Development
in Paris, says of the distinction, “It’s something that
is not very clear,” because “trade people don’t want
that to be very clear” (International Herald Tribune,
2/18/03). As a result, such rules can be defined or manipulated
to eliminate such exemptions. 

motive behind the ambiguous language can be traced back to the interests
that are actively promoting neoliberal policies and those that have
the most to gain from those policy implications. The European Commission
describes GATS as “first and foremost an instrument for the
benefit of business,” not as an agreement for the benefit of
the quality of education for the public. 

applies to services in two ways. The first is called the National
Treatment Principal whereby there is a general set of obligations
that apply to all WTO member countries. Essentially, this principal
means that there should be no favoritism for a national provider
as opposed to a foreign one. If implemented and applied to higher
education, the U.S. could not favor a state public university over
a foreign private school. If a state subsidized its public university
then it would either have to subsidize the private school as well
or it must eliminate state support of education altogether. The
role of the state is no longer to ensure the common asset of education,
but to facilitate its auctioning off to foreign multinationals.
The elimination of state subsidization is unlikely though—even
the WTO is not certain as to “whether higher education can
be profitable for private investors without public subsidies.”
Thus, a scenario could develop where states privatize public universities
and subsidizing both private and once public universities, thereby
simultaneously socializing costs and privatizing profits and control. 

countries are allowed to choose which sectors of education they
want opened up to international competition. To this extent, GATS
is a bottom up agreement as opposed to a top-down imposed agreement,
like NAFTA or the proposed FTAA, but there are provisions for allowing
continued negotiations on opening up sectors and liberalization.
The implication is that countries are supposed to open up progressively
more sectors to GATS. Some countries and corporations believe the
current system is operating too slowly and they support a top-down
agreement to accelerate the process. In either case countries are
“locked-in” and cannot go back on their commitments. 

has the power to penalize nations by reversing laws and regulations
that do not abide by the agreement, thereby depriving nations of
their sovereignty to legislate in the public interest. “Final
authority will rest with the GATS Disputes Panel to determine whether
a law or regulation is, in the memo’s language, ‘more
burdensome than necessary’” (The Observer, 4/15/2001). 

Global Alliance for Transnational Education (GATE), an organization
of private for-profit education providers, has already produced
a list of barriers in education for the WTO. Some of these barriers
to trade include state subsidies to education, investment limits
by foreign entities, education requirements, and any form of local,
state or national standards. If these “barriers” are eliminated
then the public delivery of education could be undermined through
the reduction of state support for public education and the transference
of public subsidies to private entities. 

on social spending, although corporate subsidies appear to have
received a de facto exemption, are nothing new and neoliberal policies
have been on the offensive since the 1970s. The rhetoric of budget
crises is a common theme both giving rise to and reinforcing these
policies. Like a vicious cycle, neoliberalism attacks social services
and their funding as a way to restore corporate profits, meanwhile
crippling those services in order to rationalize their privatization.
An increasing proportion of the costs are shifted to the public,
disproportionately the middle and lower classes, which pays more
for the same service of declining quality through individual payments
for students, tuition, etc. This is has been happening to the universities
as they become more privatized and entrepreneurial. 

UT as a Case Study 

to a 2002 University of Texas study, “In 1970 tuition was $50
for any in-state student enrolled in any college or school for any
number of credit hours and total fees were $54 for anyone enrolled
at the University. In the fall semester of 2002, you won’t
get a 12-hour course load for less than $2,300.” 

spring 2003, Texas’s 78th legislature deregulated the power
to determine tuition in the University of Texas system, transferring
the power to set tuition from its own hands to that of university
governing boards; tuition caps were also to be removed. Tuition
is more than likely to increase at a much faster pace than before
when deregulation comes into effect in spring 2004. Along with the
tuition increases of the last 30 years, what is happening is summarized
by Luis Navarro, “as a conversion of a constitutionally guaranteed
citizen’s right [for a free public education] into a class
privilege combined with the ‘option’ of ‘public assistance
and charity’ [i.e., student loans]”(NACLA,
January/February 2000). These increases in tuition and the power
to set rates as a profit-making business are complemented by the
change in perception of public education from being a public good
(education as having a social role) to being a private one (an investment
in one’s future). 

UT administration increasingly views students as “consumers
of university services.” This description fails in terms of
usefulness to students who are struggling with increased school
workloads and second and third jobs. With the rise of mass higher
education in the 1950s, governments’ intentions were clear—universities
were to be the training grounds for a productive intellectual workforce. 

model of a university as primarily a site for intellectual exploration
has been discarded in favor of a factory model. Students are workers
in the university, working on unwaged schoolwork—the disciplining
and socializing processes necessary to prepare them for the next
40 years of sitting in a cubicle. Without this additional dimension
in the analysis of students it is difficult to explain efforts by
universities to graduate students faster. UT’s social role
of providing intellectual labor in Texas became apparent when a
university committee’s interim report recommended five-year
graduation limits (the Daily Texan, 9/9/03). Tuition
deregu- lation may play a role in achieving faster graduation rates. 

increases in tuition not only become necessary for the low government
subsidy, high tuition neoliberal model of higher education, but
also work to increase workload and speed up student and faculty
workloads. In the “Highlights of the 78th Legislature”
report for the UT Board of Regents, one of tuition deregulation’s
listed benefits was increased “enrollment management”—using
financial leverage on students to intensify their course loads,
push them into taking certain classes and disciplines, and maximize
the efficiency of university resources (i.e., redirecting educational
resources to those areas with the greatest commercial payoff). 

with GATS and its effect of an accelerated process of the privatization
of public universities, tuition is poised to skyrocket. Other changes
are possible as well. Academic freedom has been increasingly on
the chopping block as programs will be judged on profitability.
“Unprofitable” disciplines have experienced a rapid shift
towards increasing reliance on graduate students and part-time untenured
faculty “freed” from the protections of academic freedom.
Programs and classes that are in demand by corporations and the
military have become well funded, while others will endure austerity
and possible elimination. Such programs already suffer under the
weight of “national security” and intellectual property
restrictions (being facilitated by the TRIPS agreement in the WTO).
A corporate agenda will further reign over the university, to the
detriment of public (and individual) needs and desires. 

transformation of university research is an excellent example. In
1982, the Bayh-Dole Act, which allowed universities to obtain licenses
to inventions financed by government support, passed the U.S. Congress.
Since then patents granted to universities have radically increased.
Yves Engler wrote in Z Magazine that for the year
2000, universities were granted “3,273 patents; 269 were granted
in 1979.” They are using these patents to make money—“universities
collected $1.1 billion in royalties from [the] 13,000 patents they
hold” (Boston Globe, 4/28/2003). But this development
is not the treasure trove it may seem to be. The money going in
to fund the research is much, much greater than the returns. According
to an Austin-American Statesman article, July 6, 2003,
“Universities [across the nation] spent $27.6 billion on research
in 2001.” In effect, publicly-funded higher education serves
as an indirect subsidy for corporate research for which the fruits
can be privately reaped—the public funds and produces the research,
but doesn’t own it. Taxpayers and students pay to have their
fat sold back to them.

is no exception to this trend. From the same Statesman article,
UT “earned more than $4 million from its licensing fees”
in 2002. While plenty of tax money goes to support such research
by paying for researcher salaries, new buildings, equipment, and
other supports, none of the licensing fees goes into general revenue
for the university. In the same article, of that tech transfer revenue,
“half is shared with the professors who create the ideas and
half is kept by Nichols’s office [the UT Office of Technology
Transfer]. By law, all royalties must be used to further technology
transfer.” UT and universities are turning more and more to
technology transfer as a way to generate revenue, while funding
for education continues to languish.  

universities spin off companies or license technology to private
corporations from research financed through public funding, they
use public financial capital to prop up private beneficiaries. “Roughly
two-thirds of the nation’s academic institutions hold stock
in start-up companies that sponsor research performed at the same
institution” (Wall Street Journal, 1/22/2003). The University
of Texas System has gained increased flexibility in controlling
its own financial capital that enables it to do this. The creation
of the University of Texas Investment Management Company (UTIMCO)
in 1996 was a first for a public university; it’s a private
company with control over public funds. UTIMCO invests in venture
capital to support new university spin-offs through investments
in funds such as Austin Ventures, if not through direct investment. 

Noble, science historian and critic of these policies, says, “Universities
are getting out of the education business like U.S. Steel got out
of the steel business,” (Newsday, 10/8/89). What little
the state does provide is increasingly geared towards commercializable
research, since administrators are under the mistaken assumption
that it will generate more funding for education. With state subsidies
being attacked by austerity and agreements such as GATS, these trends
will only increase. 

the case of outright privatization, which is the aim of GATS, UT
may become a kind of corporate logo. It is already trademarked with
draconian consequences for student groups who attempt to use UT
in their name or use the longhorn logo. UT may go multinational
if it becomes a private institution, since it will have nothing
holding it down in Texas. 

might not be so far fetched. Although higher education has a hard
time physically moving its capital around (except for distance learning),
according to Robert Ovetz, a professor of Globalization and Ecology
at the New College of California, “It can move financial and
human capital to countries, which have been forced to privatize
their education systems and take them over the way Bechtel failed
to do with a municipal water system in Bolivia in the late 1990s.” 

stage has already been set for UT to expand abroad in the same way,
swallowing up foreign systems of higher education. A bill passed
during the 78th Legislature, SB 1652 (omnibus deregulation), gave
UT the authority to own, operate, and manage facilities outside
Texas. If countries open up their education systems under GATS,
then potentially UT could move in and take over foreign education
if it thought it would be profitable. 

September 8, 2003, the UT Board of Regents met with the U.S. ambassador
to Mexico, Antonio Garza, on matters relating to education and healthcare.
As the largest provider of both in Texas, UT would be positioned
to manage, operate, and own institutions of higher education and
healthcare in Mexico. GATS would set the stage for such a takeover. 


developments do not go unopposed. An international campaign led
by GATSWatch aims to “take education out of GATS” by carving
it out of the agreement the same way national security has been.
Students around the world have done analysis and education detailing
how neoliberal globalization is affecting them and others. These
processes that threaten public education are operating at a global
level and students will need to organize, operate, and challenge
them globally as well. 

on a deeper level, students will need to organize against these
policies by also constructing a university based around their needs
and desires. Instead of being passive cogs manipulated by outside
forces, they will need to see themselves as central to the operating
of this machine, UT Inc.

Nick Schwellenbach
is a history senior at UT-Austin and works with the activist group
UT Watch.