Privatizing Child Care Services Is Riskier Than You Think

Article excerpt

There are many reasons to be leery of privatizing child care services. But one that is rarely considered arises from Canada's international trade obligations that seriously limit government policy and program options once private investment is permitted in the child care sector. The following analysis examines how governments may best maintain their policy options relating to early childhood education and child care (ECEC) in light of the constraints imposed by free trade agreements - in particular those dealing with foreign investment and services.

The ECEC policy context

In October 2004 the OECD released a report that was sharply critical of Canada's child care system, describing it as; "a patchwork of uneconomic, fragmented services within which a small "child care" sector is seen as a labour market support, often without a focussed child development and education role."1

As noted by one of Canada's leading authorities on ECEC, Martha Friendly, Canada's failure to keep pace with other OECD countries is a consequence of its reliance on the marketplace for development and provision of child care.2 The result has been limited public investment in child care and considerable reliance on informal care, private fees, and for-profit delivery. In comparison, most other OECD countries have progressed toward publicly-managed, universal programs focussed on the development of young children.3

This is the context in which the previous government negotiated a series of five-year Federal-Provincial-Territorial (FPT) funding agreements based on certain shared principles "quality, universally inclusive, accessible, and a developmental" [sic].4 These agreements were to be the first step in establishing a national system of early learning and child care. However, because the Liberal government declined to provide a legislative framework for its child care initiative, the FPT Agreements were entirely at the mercy of any subsequent administration that would be free to abandon the program. As we know, this is precisely what the Harper government did soon after gaining office, leaving a virtual vacuum where a national child care program should be.

The provinces, now having to rely on their own scarce resources, retreated from the commitments they had made under the FPT Agreements leaving the door open to creeping privatization. This analysis considers the consequences of allowing private investment in child care sector to grow in light of Canada's international trade commitments.

The broad reach of international trade rules

Since the advent of the first free-trade agreement with the United States in 1988, the scope of international trade and investment agreements has been substantially expanded to encompass matters of domestic and local concern, including policy, programs and law. The WTO framework now includes agreements concerning investment, services, procurement, intellectual property, and many forms of domestic regulation where these impinge even indirectly on trade or foreign investment. The same is true for NAFTA.

The explicit extension of trade disciplines to provincial and municipal governments, and other public agencies, also represents a significant departure from the historic norms of international trade law. The combined effect of these developments has superimposed broad constraints on the authority of governmerits at all levels, and many public institutions, that may be ignored only at the risk of retaliatory trade sanctions or damage awards made by foreign arbitral tribunals.

The risk of investor-state claims

Unlike the treaties they supercede, the new generation of international trade agreements are binding and enforceable. Moreover, NAFTA investment rules accord foreign investors a virtually unqualified and unilateral right to claim damages for violations of the broadly worded constraints established by these rules.5

Furthermore, unlike the state-to-state dispute procedures of NAFTA and the WTO, investor-state claims engender no element of reciprocity because foreign investors have no obligations under the treaty. …