Dr Christopher Ziguras

Monash Center for Research in International Education

Faculty of Education, Monash University

Abstract: This paper examines the impact of the General Agreement on Trade in Services (GATS) on transnational higher education in four countries – New Zealand, Australia, Singapore and Malaysia. GATS is administered by the World Trade Organisation (WTO) and is a framework in which governments commit to liberalizing trade in services in a particular industry. Transnational education refers to education that is delivered by an institution based in one country to students located in a different country. Two of the countries considered, New Zealand and Australia, have made commitments under GATS to allow relatively unrestricted cross-border provision of education in their countries, while the other two countries, Singapore and Malaysia have made no such commitment. There is currently considerable activity in renegotiating countries’ commitments to GATS as part of the millennium round of WTO negotiations, and simultaneously bilateral free trade agreements are being proposed between countries in the region. In this context, this paper examines the practical impact that GATS has had on these two countries that made commitments regarding educational trade, and the likely impact that similar commitments by the governments of Malaysia and Singapore would have on the higher education systems in those major importing countries.

Discussion about international trade in higher education has become distinctly polarized in recent years, as proponents and opponents of trade liberalization focus their attention on the millennium round of negations over the General Agreement on Trade in Services (GATS). The World Trade Organisation (WTO) is leading efforts to liberalize trade in services through GATS, which is the first multilateral agreement to provide member countries with legally enforceable rights to trade in services . Countries that join the GATS process make a commitment to ongoing liberalization of trade through periodic negotiations. GATS came into force in 1995, and the first major round of renegotiations of countries’ commitments (the millennium round) is currently taking place.

Supporters of freer cross-border provision of higher education are optimistic about future liberalization and see the GATS framework as one means of achieving this . The United States is actively promoting further liberalization of trade in education services, asserting that the presence of foreign education providers ‘increases the variety and amount of education services available to WTO members’ . Accordingly, the US has argued that countries’ policies on transnational education should ‘be reviewed and the restrictions liberalized to the greatest extent possible’ . Such deregulation is in the interests of nations that export transnational education, such as the United States, Britain and Australia. The Australian government has likewise signaled its intent to ‘pursue negotiations on education services in order to encourage liberalisation commitments from WTO members and greater market access to sectors of our trading partners’ .

Meanwhile, opponents of educational trade see the GATS as increasing the power of multinational institutions at the expense of public education providers and democratic control over education policies. The WTO has been widely criticized for its disinterest in the non-marketable values of the spheres of activity it seeks to marketize. The Association of University Staff of New Zealand, one of the few countries that has committed fully to free trade in higher education, lamented that the WTO treats education:

Anti-globalization protest movements began a series of high-profile demonstrations against global trade meetings by blockading a WTO meeting in Seattle that was to launch the millennium round of GATS negotiations. Protesters see the WTO as an anti-democratic body of world economic governance whose decisions are made in secretive negotiations in the interests of global capital. Importing nations have been less vocally critical of GATS, but have been understandably hesitant commit to opening their education sectors up to market forces. Public sector organisations and trade unions have seen GATS as leading to increased pressure in favour of privatisation of education .

This paper examines the way in which GATS commitments impact on transnational higher education in four countries – New Zealand and Australia (education exporters that have made commitments under GATS), and Singapore and Malaysia (net importers of education that have not made commitments under GATS). These four countries have a history of close involvement with each other both in educational provision and in trade, and together allow for an illustration of the impact on free trade agreements on higher education in four quite different but closely-interconnected nations. ‘Transnational education’ refers to education ‘in which the learners are located in a country different from the one where the awarding institution is based’ . Previous analyses of GATS’ impact on transnational higher education has been as polarized as the political debate has been. On one side, governments and pro-trade lobby groups have produced assessments of what they see as the major barriers to free trade in higher education, in order to clarify their priorities in future negotiations . These studies are very generalized surveys, and avoid making reference to specific barriers or consequences of removing them. On the other side of the divide, there is no shortage of alarmist accounts, warning that the WTO is aiming to destroy public education on a global scale . These accounts are similarly vague, in that they tend to make dire predictions without providing concrete case studies of past or future consequences of GATS commitments in particular countries.

Education is one of 12 service sectors covered by GATS. Within each sector, governments make voluntary commitments to allow trade in that particular service. The first objective of GATS is to promote transparency by encouraging governments to clearly explain the nature and extent of the measures they use to regulate trade in a particular sector. Most of the initial commitments were submitted by individual countries around 1995, and in most cases simply elaborated current policies rather than making new commitments to liberalization. Although these ‘standstill’ commitments did not liberalize trade, they did meet one of GATS’ objectives by clearly identifying measures affecting trade and making further restrictions difficult . By 2000, only 28 of the WTO’s 125 member states had made commitments in the education sector.

GATS divides the delivery of services across borders into four modes of supply: consumption abroad, cross-border delivery, commercial presence and movement of natural persons. Governments commit to each of these modes of supply separately, so they may place restrictions on some forms of delivery but not others.

Consumption abroad is trade in which the consumer travels abroad to the country where the to the supplier is located, as students travel abroad to live and study in another country for a number of months or years. Historically, this has been the most common form of international education and the OECD estimates that in 1998, 1.31 million foreign tertiary students were studying in OECD countries .

Cross-border delivery is trade in which the provider and recipient of a service remain in their own countries, such as transnational distance education. Teachers and students are able to remain in their own countries and communicate through post, fax and the Internet. Because the educational institution is operating from outside the student’s country, it is difficult for governments to regulate this form of education, and most place no restrictions on this form of international education. Governments can only really regulate this form of education through postal or communications regulations, which is uncommon.

Commercial presence describes trade in which a foreign provider delivers services in the consumers’ country, which in higher education typically involves a local partner organisation or a branch campus delivering a foreign program. There has been significant growth in this form of transnational education, particularly in Asia, and this growth is projected to continue .

The movement of natural persons refers to people traveling across national borders to deliver services, such as lecturers traveling abroad to teach students enrolled in a transnational program. These usually take the form of immigration restrictions, which often stipulate the types of foreign workers that are allowed to be brought in by a foreign corporation to provide a service, and the maximum duration of their stay. Governments are usually motivated by a desire to see their own citizens employed in preference to foreign nationals, whereas multinational organisations value the ability to move their workforce between branches in different countries. In higher education, transnational providers move lecturers and senior administrative staff between campuses in various countries. Regulations governing the movement of natural persons usually do not differ between sectors of the economy, so employees of educational institutions are often treated in a similar manner to employees in any other service organisation by governments that have committed to GATS .

At its most basic level, GATS attempts to enable greater international trade in services by enhancing the transparency, or clarity, of existing measures affecting trade. GATS also strives to prevent two forms of discrimination that impede commercial activity . Firstly, governments should not discriminate between incumbents and new entrants into a market (be they domestic or foreign). That is, they should ensure market access. Secondly, governments should not discriminate between domestic and foreign service providers. This is referred to as the national treatment principle. When governments commit to not restrict market access, they agree not to protect existing education provider from competition from new entrants. The government is agreeing not to limit the number of providers, the number of students they may enroll, the legal form of new entrants (cooperative organisation, for-profit company, statutory organisation, etc.) or limit foreign ownership of providers. This erodes the ability of the state to control the growth of the private sector, which is a particular concern in poorer countries in which the public sector educational institutions are unable to meet demand, but private sector growth may fuel inequalities. When governments commit to GATS’ national treatment provisions, they agree to treat foreign providers no worse than the way they treat domestic providers. If a foreign provider wishes to provide educational programs, they should not be discriminated against in approvals processes, financial viability tests, quality assurance requirements or recognition of qualifications. Governments cannot discriminate in favour of locally owned or locally based providers.

These principles are relatively straightforward, but they become more complicated in that measures taken by a government may inadvertently impact more on foreign providers. The GATS agreement states that ‘measures relating to qualification requirements and procedures, technical standards and licensing requirements do not constitute unnecessary barriers to trade’ . It is open to argument whether such measures as requirements for specific local content in courses, or for the presence of a local staff on boards of management, or for teaching in a certain language could be challenged by another member of the WTO as disguised trade restrictions .

In the following case studies I will describe each country’s level of commitment to GATS, the nature of private and transnational higher education, how current regulatory frameworks for transnational higher education relate to GATS market entry and national treatment principles, and the implications of a fuller commitment to GATS. I will focus the discussion on issues on which there has been public opposition to some element of the current regulatory framework, or to the likely effects of GATS.

In 1995, New Zealand made a full commitment to both market access and national treatment for private higher education in cross-border supply and commercial presence. New Zealand also made cross-industry commitments on movement of natural persons, which allow senior managers and specialists employed by foreign educational institutions to enter and work in New Zealand for specified periods . This made New Zealand one of the most liberalized nations for transnational higher education.

GATS has been a high-profile political issue in New Zealand, most notably in media services. A conservative government made GATS commitments in 1994 that were opposed by opposition parties. The Labour Alliance government was subsequently elected in 1999 with a platform of introducing local television content quotas, but has been unable to implement these policies because they are in violation of the previous government’s GATS undertakings. GATS commitments can be withdrawn or modified once they have been in place for three years, although affected governments can seek compensation either through monetary payment or through the replacement of the commitment with another of equivalent value. Thus it is easier to commit to liberalisation of trade than it is to reintroduce protectionist measures, leading to a ‘ratchet effect’ in which pro-trade political parties can introduce commitments when in office that their more protectionist opponents are stuck with when they are later in government. The higher education union has been actively opposing GATS, arguing that it similarly constrains future governments’ education policy options.

In July 1999, over a quarter of a million students were enrolled in New Zealand’s 39 public tertiary education institutions, while only 33,000 students were enrolled in formal courses in more than 400 private training establishments .

Despite New Zealand’s 1995 commitment to open market access, this has not resulted in any growth in the number of private higher education providers. Since 1990, private providers have had to register with the New Zealand Qualifications Authority (NZQA) in order to enter into contracts with government agencies and, as a result, the number of registered private providers grew rapidly from 0 to around 800 between 1990 and 1994. Just over half of all registered private tertiary education institutions offer formal courses of longer than one week’s duration, with the others either holding a registration but inactive, or, more commonly, offering short courses in such areas as industry or corporate training, computer applications or first aid . Since 1994, the number of registered private higher education providers has remained relatively constant around 800 . GATS’ lack of impact is due to the fact that there was little restriction on market access before 1995, and in this sense, New Zealand’s was a ‘standstill’ commitment rather than a new liberalization.

Since January 2000, private and public institutions have received the same level of tuition funding from the government for courses in the same category, however this has only led to a slight growth in the number of private providers, with around 30 new registrations, or four per cent growth . In 1999, only 130 private institutions were recognised by the Ministry of Education as eligible for tuition subsidies, ‘in that they were offering programmes of study leading to qualifications equivalent to Level 3 or above on the National Qualifications Framework’ . Only six of these offered degree and/or postgraduate level study in 1999 . In conclusion, since GATS came into effect, however, there has not been a dramatic growth in the size of the private sector. There are still no private universities or foreign universities operating in New Zealand, and none on the immediate horizon, and the number of other private higher education providers has not increased substantially. It would seem that the factor most affecting future growth is the level of public funding to the private sector. Private institutions receive funding both from Skill New Zealand (the government body responsible for workplace training), which funds private institutions to provide transition and skill enhancement training and from the Ministry of Education, which subsidises students in higher-level qualifications . The private tertiary education industry receives similar levels of funds from each of these sources, around NZ$17 million in 1999 .

In 2000, the New Zealand government passed legislation limiting the number of public universities to eight (primarily to prevent an Auckland polytechnic from becoming a university), but the government placed no limit on the number of private universities . Under New Zealand’s GATS obligations, the government cannot restrict the number of private universities or colleges, or the number students enrolled. The NZQA has the power to grant approval to local or foreign institutions to use the title ‘university’, and once the new university’s courses are accredited by the NZQA, they are eligible for the same level of tuition subsidies as public universities. This situation, in which the government is attempting to shape the growth of higher education but has no power to restrict the number or size of private sector institutions, has drawn criticism from the Association of University Staff of New Zealand (AUSNZ). Former AUSNZ president Jane Kelsey, a prominent opponent of GATS, pointed out that under the government’s new policy, ‘no new public universities could be established, but private or foreign institutions could effectively set up and operate like fully state-funded universities’ . Having long predicted such problems for public education, the AUSNZ has since 1998 had a policy to oppose:

The union blames New Zealand’s GATS commitment for this situation in which government funds both the public and private sector, and squeezes the public sector to cut costs, while having very little control over the size of the private sector. The public institutions and unions are understandably concerned about their level of funding, considering that between 1980 and 1999 real Ministry of Education funding in 1999 dollars per enrolled full-time student fell by 2.3 per cent per year . It is clear that changes to these funding arrangements have contributed to changing enrolment numbers in the private sector , however, the decision to offer subsidies to the private sector is not mandated by GATS as the union implies, but is completely within the power of the national government to decide.

The GATS agreement states that market access and national treatment provisions do not apply to ‘laws, regulations or requirements governing the procurement by governmental agencies of services purchased for governmental purposes and not with a view to commercial resale or with a view to use in the supply of services of commercial sale’ . This means that education bought by the government is not subject to GATS, even if the government only pays for, or subsidises, part of the cost of a course and the student must cover the remainder. Governments can fund whoever they like with no regard for their ownership status, whether government owned or private, locally or foreign owned. However, the 1995 agreement does include a statement that ‘there shall be multilateral negotiations on government procurement in services under this Agreement within two years from the entry into force of the Agreement Establishing the WTO . The proposed negotiations have not progressed, but have led critics to suspect that the WTO seeks ‘to require governments to make public funds allocated for public services directly available to foreign-based, private service corporations’ . A recent WTO communication from the United States’ responds to this concern by explicitly recognizing that education is to a large extent a government function and that US proposals to liberalize trade in education treat the private sector as supplementary to, rather than displacing, public provision .

Applications by foreign providers seeking to establish a commercial presence may be subject to review by the Overseas Investment Commission, for example, if they are investing more than NZ$50 million or acquiring land worth more than NZ$10 million .

In order for foreign institutions to receive public subsidies for programs they operate in New Zealand, they must register with their institution with the NZQA and have their programs quality-assured by the NZQA. At present, there is no requirement for transnational providers to meet New Zealand quality standards unless they are seeking public tuition subsidies or seeking to have their programs recognised in relation to the National Qualifications Framework. Tuition subsidies are equally available to local and foreign-based providers.

The Tertiary Education Advisory Commission (TEAC), established by the new Alliance government after its election in November 1999, concluded that foreign providers in New Zealand were actually less regulated than local private institutions, concluding that ‘transnational providers can operate in New Zealand with no restrictions other than those related to all foreign investment’ . TEAC and argued that they should be regulated in the same way as other providers:

New Zealand has a number of bilateral agreements that impact on higher education. The 1983 Australia-New Zealand Closer Economic Relations Trade Agreement has effectively meant that Australian providers have been free to operate in New Zealand . New Zealand and Australia have also entered into a Mutual Recognition Agreement and the Ministerial Declaration of Confidence in the equivalent standing of vocational education and training qualifications . These mean that qualifications issued by Australian providers operating in New Zealand would not have to be approved by the NZQA in order to be recognized, as is the case for qualifications from transnational providers from other countries.

More recently, New Zealand has negotiated a bilateral agreement with Singapore that includes commitments market and national treatment in tertiary education in private institutions . While this agreement does not give Singapore providers any more access than they had already under GATS, it does provide New Zealand’s educational institutions with the right to operate in more restrictive Singapore, which has not committed open higher education through GATS.

Australia has committed to full market access and national treatment to foreign providers of tertiary transnational distance education through cross-border supply, but did not commit so fully to commercial presence (foreign providers teaching in Australia), committing to market access but not to national treatment principles. This means that foreign educational institutions that establish a presence in Australia need not be accorded the same rights and privileges as Australian institutions. Australia also made no commitments to the presence of natural persons, thus reserving the right to restrict entry of foreign education professionals into Australia or to limit their practice in Australia. Australia’s cross-industry commitments allow senior managers and specialists entry and temporary stay into Australia, but it is unclear whether these commitments also apply to teaching staff .

There are 36 public universities in Australia and five private universities . Two of the private universities have foreign origins – Bond University, which opened in 1987, is owned by a Japanese consortium and the University of Notre Dame was established in 1989 in conjunction with its North American counterpart. In 1999, there were around 80 private providers of higher education, enrolling around 31,000 students . Universities must be established under acts of state or federal parliament, and thereafter become self-accrediting in line with procedures overseen by each university’s council or senate. The most recent figures on enrolments in private higher education in Australia do not distinguish between Australian and foreign providers, although state governments will in the future be required to collate data registered foreign providers .

In 2000, Australian governments for the first time agreed on a coherent national protocols governing market entry in higher education . All education and training organisations that issue Australian Qualifications Framework qualifications must be registered by a State or Territory recognition authority, and previously each regional government had different requirements for new providers.

The development of national approvals protocols was in part a response to the establishment of Greenwich University, which sought accreditation from a small territorial council rather than through a state or the federal government, thus bypassing the various different state and federal requirements in each state . As the federal government sought ways to block Greenwich’s accreditation, the university claimed that it was being discriminated against through ad hoc regulation, in order to protect established providers against competition from new providers. This episode highlighted the lack of nationally agreed quality standards and approval processes for new and existing providers.

In response, federal, state and territory education ministers endorsed a set of ‘National Protocols for Higher Education Approval Processes’, which are intended to guide the harmonization of the various states’ legislation by 30 June 2001. These include guidelines that each state ore territory will follow when considering recognition of new local universities and foreign higher education institutions wishing to operate in Australia . The Protocols state that accrediting bodies should employ a transparent process and treat proposals for new public and private universities equally. There are various other requirements for new providers, however these do not seek to limit the number or size of the private sector. For example, the title ‘university’ is protected under corporations law, which requires government approval for use of ‘university’ in a business name, and educational institutions that provide courses to overseas students studying in Australia must be approved to do so by the relevant state or territory government and listed on the Commonwealth Register of Institutions and Courses for Overseas Students. Tertiary education providers that are not universities must register with a state or territory government as a Registered Training Organisation if they intend to offer qualifications offered under the Australian Qualifications Framework. Training providers including private companies, industry bodies, secondary schools, community organisations and private colleges offer such accredited courses from Certificate I to postgraduate level programs.

The National Tertiary Education Union (NTEU) opposes Australia’s GATS commitment on the grounds that it limits the government’s ability to restrict number or size of providers, the intake into courses in private institutions, the government’s ability to restrict type of legal entity, and qualification requirements limited to quality of service issues . To this point, however, the size of the private sector has not been a significant political issue in Australia. As is the case in New Zealand, Australian unions have been more concerned with growing government funding to private institutions, who have recently been able to compete alongside public universities for various competitive research and teaching grants. However, unlike New Zealand, there are no accurate figures on the number of private providers in Australia throughout the 1990s so it is difficult to gauge whether the market access commitment has had any effect on the size of the private sector. Given that the Commonwealth’s commitment to GATS did not necessitate or result in any immediate changes to state and territory processes for recognition of new providers, it is unlikely that this measure had any appreciable effect. The GATS commitment was perhaps one of many factors leading to the recent national approvals protocols. The Australian government recently signaled that it intends to ‘encourage liberalisation commitments from WTO members and greater market access to sectors of our trading partners’, thus expanding Australian institutions’ offshore activities . Australian universities now enrol well over 30,000 offshore students, nearly 90 per cent of whom were located in Singapore, Hong Kong, Malaysia and China . Given the importance of increased access to offshore markets, compared with the insignificant number and size of foreign providers in Australia, it is clear that the Australian government is acting in the interests of Australian providers by pushing for less market entry restrictions in other countries in the region. While Australia had an overall trade deficit of $7.3 billion in 2000, its services exports produced a $479 million services trade surplus .

Australia has committed to national treatment for distance education, but not for commercial presence. According to the new national protocols for recognition of new providers, a foreign provider seeking to operate in Australia must demonstrate that: it is a bona fide institution in its own country in terms of legal and accreditation requirements; its academic standards and quality assurance arrangements are comparable to Australian institutions; and that ‘appropriate financial and other arrangements exist to permit the successful delivery of the course in the Australian jurisdiction’ . By 30 June 2001, all Australian states and territories must have processes in place for assessing foreign higher education institutions seeking to operate in their jurisdiction; in early 2000, only three states had such processes in place, and the approach taken in each case was different .

Current state policies would seem to be in line with GATS national treatment requirements. For example, in Victoria state guidelines require that:

The government will seek to establish the equivalence of local and foreign providers, by ensuring that foreign providers have similar accreditation and quality assurance measures in place as do local institutions. Qualifications obtained by providers not registered in Australia are assessed by the National Office of Overseas Skills Recognition. Where foreign institutions seek to operate in cooperation with a Victorian local partner institution, the operating entity within Victoria must demonstrate that the foreign course is of a standard equivalent to existing Australian universities and that its resources and facilities are adequate. The Victorian government may also require that courses be approved by local professional or industrial bodies . Registered foreign courses are then accepted as equivalent to Australian equivalents on the Australian Qualifications Framework. It is not yet clear whether foreign providers with a commercial presence in Australia will be subject to the scrutiny of the recently established Australian Universities Quality Agency (AUQA) as well as being subject to quality assurance systems in their home country.

The AUQA will not scrutinize foreign distance education courses offered in Australia through cross border supply rather than commercial presence . It is also not clear from the national protocols whether foreign distance education providers need to register with state or territory governments in order to be recognized in Australia. For example, according to Australia’s national treatment commitment on distance education, students enrolled in a foreign online course would be eligible for the same levels of government support as students in local private institutions, such as the Youth Allowance.

During the first round of GATS negotiations in the mid-1990s, the Australian government may have been hesitant to commit to national treatment for commercial presence because the mechanisms were not in place to deal with applications from foreign providers. Now that these processes are in place, the government may be more likely to commit to this as part of future negotiations, as this would not require any change to domestic policy.

There has been considerable discussion of foreign institutions operating in Australia in recent years, partly in response to the Greenwich University case, but also, one suspects, because the Australian higher education industry, which is highly aggressive in exploiting commercial opportunities in neighbouring countries, is in fear of other countries’ universities doing the same thing in Australia. The head of the federal government’s Higher Education Division recently warned of the possibility that ‘new suppliers with new products are emerging to threaten the present and prospective markets of Australian tertiary institutions both on-shore and off-shore’ . The Australian Labor Party (ALP) and the National Tertiary Education Union have been concerned about perceived threats to local higher education institutions posed by foreign providers. ALP opposition spokesperson on education, Senator Kim Carr warned the Australian Senate that the Greenwich University episode had drawn attention to a larger threat:

Australia was at risk from foreign ‘invaders’, ‘interlopers’ and ‘freeloaders’. As mentioned above, the NTEU has been more concerned about the GATS’ national treatment principle posing a threat to the continued funding of public universities. The NTEU has warned that ‘Commonwealth operating grants and subsidies previously confined to domestic public universities would have to be equally available to foreign providers operating in Australia, in order to comply with the National Treatment obligation’ . The NTEU here echoes the NZAUS’s criticism of GATS, but again mistakenly blames the trade agreement for domestic neoliberal policies that seek to make public funding available to private providers.

Singapore and Malaysia provide stark contrasts to the experiences of New Zealand and Australia. Both are major importers of transnational education, and neither have made commitment on education under GATS. Singapore’s local higher education institutions are unable to meet existing demand, resulting in a considerable demand for international education, which is met through studying abroad (most commonly in Australia, Britain and the United States) or through transnational programs in Singapore. There are two types of transnational education in Singapore, ‘external’ distance education programs and foreign university branch campuses. External programs are those that are offered in Singapore by a local institution in conjunction with a foreign awarding university. The number of such programs, and the total number of students enrolled in them, grew steadily from the mid-1980s when the first programs were established, until the 1997 economic crisis. Since 1997 there has been dramatic growth in enrolments, rising from around 13,990 students in 1997 to 25,400 in 1999 . In 1999, there were 33,722 students enrolled in local universities , so if the rate of growth experienced during recent years persists, there will soon be more students enrolled in foreign universities in Singapore than in local universities.

In 1998, around 55 per cent of students were enrolled in degree courses awarded by British institutions and 40 per cent in Australian programs, with the largest enrolments in the UK Open University, University of London, RMIT University, Monash University and Curtin University . External programs were offered by 56 institutions in Singapore , including professional associations such as the Singapore Institute of Marketing, the Institute of Banking and Finance and the Singapore Nurses Association, private colleges such as Informatics, TMC Education Group, and foreign organisation with centres in Singapore such as The British Council and IDP Education Australia.

Private institutions wishing to enter the higher education market must register with the Ministry of Education, which assesses the appropriateness of the institution’s curriculum, teachers, facilities, management and premises. Private providers are not allowed to refer to themselves as an ‘academy’, ‘college’, ‘institute’ or ‘university’, nor can they ‘conduct degree courses or run along the lines of a university’ . Singapore’s first private university, the Singapore Management University (SMU) began operation in 2000. Although not government owned, SMU was initiated by Deputy Prime Minister Dr Tony Tan, given start-up funding, buildings and land by the government, and will receive ongoing public funding . SMU has a five-year collaboration agreement with the Wharton School of the University of Pennsylvania, which will support SMU in curriculum design, teaching methodology and establish joint research activities .

It is difficult to see how the Singapore government could continue to maintain this level of control over new universities if it was to commit under GATS to place no restrictions on market entry. The Singapore government has always seen the education system as a means to shape its citizens to suit the political and economic needs of the nation, or as the Ministry of Education puts it, to ‘mould the future of the nation, by moulding the people who will determine the future of the nation’ . Singapore has long been held up as a prime example of the economic benefits of state-directed globalisation. It has managed to achieve high rates of economic growth in recent decades and is regularly assessed as being one of the world’s most globalised nations . Active engagement in a globalised economy, has strengthened Singapore’s paternalistic, interventionist state, which appears to have more direct control over the affairs within its territory than most states in less globalised economies .

Since the mid-1990s, the Singapore government has been encouraging a select group of elite foreign universities to offer programs and establish centres in Singapore. This approach began to pay dividends in 2000 with the establishment of two foreign universities campuses – INSEAD and the University of Chicago Graduate School of Business . INSEAD, an English-language business school based in Fontainebleau, France, is the first foreign university to establish a branch campus in Singapore. With the addition of Singapore to its existing campuses in the United States and Spain, the University of Chicago Graduate School of Business now claims to be the first business school with permanent campuses on three continents . The establishment of these foreign branch campuses has been celebrated by the Singapore government, which has made a point of the fact that Singapore wishes to attract a small number of elite foreign universities to establish operations.

Cross-border delivery through distance education and online courses that have no local presence in Singapore do not require approval. Foreign programs offered by a local partner institution must obtain permission from the Ministry of Education . The awarding university and the local partner must provide detailed information pertaining to the university’s capacity to deliver the course in Singapore to an equivalent standard to the degree as offered in the home country . The Ministry is adamant that ultimate responsibility for the program rests with the foreign university.

Significantly, the Ministry implies that teaching or assessment may not be carried out by the local partner, who is restricted to administrative and support functions:

While the Ministry is quite clear that local organisations are not to provide any teaching to students, there seems to be some confusion about the legality of tutorials provided by staff employed by the local partner and lectures provided by visiting academics. Lecturers employed by the Portman Management Centre, for example, ‘use tuition hours to explain key theories and concepts, discuss cases, analyse problems and critique projects by students’, according to the Centre’s principal (‘Profile of an Educationist: Dr Thomas Khoo’, Education: Singapore's Knowledge Industry Journal, June/July 2000. P.21) This would seem to be exceeding the role of the local provider as spelt out by the ministry. In some external programs run by the Singapore Institute of Management, the institute’s lecturers develop curriculum, deliver lectures and tutorials, and set and mark assessment. This is done under the supervision of a lecturer from the awarding foreign university.

This confusion over local teaching exists for two reasons. Firstly, the Singapore government has no publicly available guidelines for external programs. Each application is assessed by the Ministry of Education on a case by case basis, and the criteria used in denying or approving programs is not known to anyone outside the ministry. The second reason is that professional bodies in Singapore, such as the Singapore Institute of Management, are not required to go through the same process when they register new programs. They are required to consult with the ministry about their intentions and obtain approval from the ministry, but this is done in a less formal manner. This had led some to believe that there are different rules for professional associations and private colleges. Curtin University’s Singapore Program Manager, for example, suggests that there are different regulations applying to local professional bodies and to private colleges acting as local partners. Programs taught with professional bodies, he states, are able to use local tutors and intensive blocks of lectures provided by visiting academics from the awarding university. He understands that programs taught through private colleges are not able to use local tutors and lectures given by visiting academics from the awarding university must be described as public meetings or public lectures and attendance by enrolled students cannot be a required part of the course . The current practice is that many local partner organisations provided tutorial support to students, however sometimes these are not called ‘tutorials’ and visiting lecturers from the awarding university routinely provide intensive series of lectures, often over a weekend, however sometimes these are not called ‘lectures’.

Because of the lack of transparency in Singapore’s regulatory regime, it is difficult to know if such confusion exists because the ministry has changed its regulations over time or whether recommendations from the ministry that are communicated orally have been distorted and confused over time.

The major impact of a commitment to national treatment would be to force the Singapore government to implement transparent guidelines and processes for approving external programs and foreign branch campuses. An indication of how Singapore may deal with such a requirement is provided by Singapore’s recent bilateral agreement with New Zealand, which includes commitments to no market access or national treatment limitations in the cross border, consumption abroad or commercial presence modes of supply for all education services provided by New Zealand providers . In that agreement, the Singapore government uses recognition of university qualifications as their main means of controlling the private sector, stating that ‘specific commitments on market access and national treatment through any mode of supply shall not be construed to apply to the recognition of university degrees for the purposes of admission, registration and qualification for professional practice in Singapore’ .

Officially, ‘there is no government authority in Singapore that assesses or grants recognition to degrees awarded by overseas universities for employment purposes’. Each private or public sector employer makes its own decisions on the criteria for recruitment, including the acceptability of qualifications . Each ministry within the civil service ‘determines the acceptability of overseas university qualifications for graduate appointments’ in accordance with its own recruitment standards and criteria, but only if the qualification is from an institution that is accredited in its home country. Unlike other transnational programs, the Open University programs delivered by the Singapore Institute of Management (SIM) are explicitly recognised by the Singapore government. SIM’s promotional material states that ‘The Prime Minister’s Office (Public Service Division) has indicated that it would accept, prima facie, the Open University (UK) degrees for the purposes of employment in the Civil Service’ . SIM has very close links with government, and in 1992 the Ministry of Education appointed SIM to run the Open University Degree Programme (OUDP) ‘because of the institute’s experience in organising part-time further education programmes for working adults’ . The government states that foreign professional qualifications such as accountancy, engineering and law will be recognised in the civil service if they are accepted by the relevant professional body in Singapore . However, these ‘professional bodies’ are statutory bodies closely connected to relevant government departments, and whose list of accredited overseas qualification is gazetted by the government under the relevant act of parliament . Government departments are thus able to selectively recognize foreign programs (whether offered in Singapore or abroad) in order to regulate the supply of graduates in particular fields, but not others. Exempting this recognition process from trade agreements provides the Singapore government with some levers to influence the size of the private sector in particular disciplines.

Singapore is currently negotiating bilateral trade agreements with Australia and the United States . Unlike New Zealand, Australia is a major exporter of transnational higher education to Singapore, and a bilateral agreement including education between these two countries is likely to have a much greater impact on the nature of trade.

Malaysia has made commitments under GATS in financial and other services, but has not made an offer on educational services . In the early 1990s, due to the under-supply of places in local public universities, the Malaysian government faced a situation in which thousands of students would travel overseas to obtain tertiary education. At this time, according to UNESCO, only 7.2 per cent of Malaysians at university age were enrolled in local tertiary institutions, compared with 35.8 per cent in Argentina or 54.8 per cent in South Korea . In the 1980s there had been a proliferation of private colleges that offered students matriculation year courses to facilitate entry into foreign universities. Many colleges also had ‘twinning’ arrangements with foreign universities, through which students could complete a one year diploma or two year advanced diploma with the local college that was treated by the foreign university as equivalent to the first one or two years of the degree. The curriculum and standards of these college programs, commonly referred to as 1+2 or 2+1 programs, were supervised by the foreign awarding university, usually a British, Australian or American institution. Completing part of the degree in Malaysia reduced the expense of obtaining a foreign degree, both because of lower fees and lower living expenses for the years completed in Malaysia. Private sector provision of education has a long history in Malaysia. In 1993, when the new policy was being developed, alongside the new private higher education colleges there were around 53 Chinese independent secondary schools, 118 private secondary schools and 20 international schools (catering primarily to the children of expatriate workers) .

In 1995, the 20 per cent of Malaysian students who were studying abroad cost the country around US$800 million in currency outflow, constituting nearly 12 per cent of Malaysia’s current account deficit . While part of the solution was to increase the capacity of public universities , the government saw the local private sector as the key means of reducing this currency outflow and in the long term of transforming Malaysia into a net exporter of higher education .

With the passage of the Private Higher Educational Institutions Act 1996, the government formally began to encourage the private sector to play a complementary role in the provision of higher education. As a result of these measures, by the end of 1999 the proportion of young Malaysians between 17 and 23 years of age in higher education had increased dramatically to 22 per cent, with 167,507 enrolled in public universities and an estimated 203,391 in private institutions according to government figures . By 2000, there were 11 public higher educational institutions, seven new local private universities, three foreign university branch campuses, and more than 400 private colleges approved by the Malaysian government . New private universities and branch campuses of foreign universities may only be established following an invitation from the Minister for Education. This allows the government to restrict the number and type of private universities, and is quite clearly at odds with the GATS market entrance principle.

Private colleges, and universities that have been invited to apply, must register with the Ministry of Education, and then apply to the Ministry of Education for permission to conduct each course of study or training program. These applications are assessed by the Lembaga Akreditasi Negara (LAN) to determine whether courses meet minimum standards. Institutions must provide separate documentation for each course of study, including detailed information concerning teachers, subjects, facilities, management system and rationale for providing the course . Most private colleges offer their own certificate and diploma programs, in addition to local and foreign matriculation programs, degree courses awarded by local universities , and degree programs awarded by foreign universities. Most degree programs require students to spend the final year of study at the awarding university. In 1998, the Malaysian government granted approval for some private colleges to offer foreign university courses that would be taught entirely in Malaysia by college staff (sometimes with the participation of foreign university lecturers). These ‘3+0’ programs, as they are called, were allowed for a five-year trial period in response the Asian currency crisis, which made it impossible for many students to complete the final year(s) of their course at overseas .

Once established, foreign universities’ branch campuses are subject to the same regulation as local private universities, and no substantial distinction is made in the legislation between other local and foreign private educational institutions. The Malaysian government has been concerned about the cultural impact of private higher education, with its foreign and generally instrumental curriculum, and has stipulated compulsory subjects in the national language, Malaysian studies, moral and Islamic studies . These compulsory subject requirements have been applied to all students in private sector institions, regardless of the national origins of their course of study. Foreign universities that have been invited to establish a campus in Malaysia must establish a Malaysian company to operate the campus, and this company must have majority Malaysian ownership. LAN approves courses in the same way, regardless of whether the course is delivered by a local private university, a foreign university branch campus or by a local private college. Foreign programs must also be accredited in the university’s home country, and foreign professional programs must be recognised by the relevant professional association in the home country.

The presence of a large number of foreign programs in Malaysia has brought the expected trade benefits, and Malaysia is already making progress in its quest to become a net exporter of higher education by 2020 . There has been a rapid growth in the number of international students studying in Malaysia, jumping from 5,635 in 1997 to 22,849 in 1999 . The vast majority of these students are enrolled in transnational programs in private sector institutions. However, Malaysia may in future years seek to reduce its dependence on foreign universities by treating local private providers preferentially. Committing to GATS national treatment principle would open the possibility of compensation claims if a future Malaysian governments were discriminate in favour of local courses over transnational programs.

Clearly, there are very different issues facing exporting and importing nations as they confront trade liberalisation in education. In major exporting countries such as Britain, the United States and Australia, and to a lesser extent New Zealand, the private higher education sector is small, while public institutions are adept at exploiting commercial possibilities, both at home and abroad. These countries higher education institutions are located (commercially and culturally) close to the power centres of global capitalism, and have the resources to be able to compete with foreign institutions that establish operations within their borders. In importing countries, the situation is very different. Private higher education sectors in these countries are often quite large, and focus on marketable programs while the public sector teaches courses oriented towards the government’s national development priorities. Governments commonly have plans for higher education that differ from the direction in which market forces will push providers, and these discrepancies are becoming increasingly common in countries where transnational private higher education proliferates. While importing countries rely on transnational higher education to meet labour market needs, nation-building governments often see international education as a form of culturally subversive Western cultural domination , and therefore seek to keep their regulatory options open. Importing countries are likely to follow exporting countries down the path of liberalization of trade in higher education services. However, given their concern with shaping the growth of the private sector, they will most likely seek to include mechanisms into their trade commitments that allow them to retain the ability to steer the development of the private sector and to be selective about which foreign providers they permit to establish commercial presence.