Download Trade Liberalisation and Tertiary Education

Trade Liberalisation and Higher Education
by A J Calderon and J Tangas,
RMIT University
Australia
http://www2.rmit.edu.au/departments/planning/ircu/ircu_home.php
26th EAIR Forum, Barcelona, September 2004
Institutional Research Consultancy Unit
International Trade in Education - Context
• Value of annual trade in HE estimated at US $30b
• Investment in education enhances national competitiveness
and increases opportunities to attract foreign direct
investment
• 2m students worldwide involved in formal education
outside their own country
• International market for education services is expected to
triple in size over the next 20 years
• Movement of students overseas for the purposes of study
(consumption abroad mode of supply)
Institutional Research Consultancy Unit
International Trade in Education - Context
• Universities setting up branch campuses in other countries
(commercial presence)
• Education has becomes a key focus of the GATS
• Education is a key focus of bilateral agreements and
regional agreements
• Leaders in export of education services are developed
English-speaking countries
• Australia is the third-largest international student
destination in the English-speaking world behind the US
and the UK.
Institutional Research Consultancy Unit
Significance of GATS to Australia
• Services account for the majority of economic activity in
Australia
• Trade balance is likely to suffer in a world carved up into a
series of regional free trade agreements
• Australia’s small population size is a major disadvantage in
the negotiation of bilateral free trade agreements
• Major education exporter and sees its interests being best
served in an untrammeled international education market
Institutional Research Consultancy Unit
Key Principles of GATS
The key principles of GATS are threefold:
• The Market Access
• The National Treatment
• The Most Favoured Nation principle
Institutional Research Consultancy Unit
Key Principles of GATS
The GATS classifies trade in services into four numbered
modes:
1. Cross-border supply (such as distance education)
2. Consumption abroad (such as a student travelling abroad
to study)
3. Commercial presence (such as foreign branch campuses,
or foreigners partnering with local providers)
4. Presence of natural persons (such as lecturers travelling
temporarily abroad to teach)
Institutional Research Consultancy Unit
Key Principles of GATS
Some of the barriers to the four modes of supply identified by
DEST include:
• Cross border supply: Importation of educational
materials (textbooks and software to support distance
education), blanket non-recognition for this mode of
supply.
• Consumption abroad: Host economy employment rules,
visa requirements, foreign exchange requirements.
• Commercial presence: Limits on ownership, rules on
twinning arrangements. Presence of natural persons
(such as lecturers travelling temporarily abroad to teach).
• Presence of natural persons: Visas and immigration
requirements.
Institutional Research Consultancy Unit
Australia's Education Related
Commitments Under GATS
• Market access: to allow foreign providers access to the
Australian market
• National treatment: not to discriminate between local and
foreign providers
• Cross border supply: Learning via distance education sourced
from abroad can be recognised in Australia. No restrictions to
recognition based on source country
• Consumption abroad: Australian students' overseas learning can
be recognized. No restrictions on choice of institution based
country to which a student travels
• Commercial presence: Foreign providers can establish a
presence in Australia. Australia has not committed, in order to
preclude government funding going to foreign institutions
Institutional Research Consultancy Unit
Government Procurement
• Subsidies and grants are excluded from the services chapter,
along with services supplied in the exercise of governmental
authority;
• Australia has not entered into national treatment agreements
in relation to public education, and has committed to the
protection of all public research grants in all sectors.
Institutional Research Consultancy Unit
Australian Regulations
• Regulatory framework to formalize processes for approvals
and recognition of foreign providers operating in Australia
• National protocols for higher education approval processes
• Establishment of the Quality Agency
• Australia was the first non-European country to ratify the
Lisbon Recognition Convention
Institutional Research Consultancy Unit
Outside GATS: Major Regional and Bilateral
Agreements
• The European Union (EU), consisting of 25 member countries as of
2004, a population of 500 million and an aggregate GDP in excess of
US$8,800bn
• The North American Free Trade Agreement (NAFTA), encompassing
the US, Canada and Mexico, an aggregate population of 411 million
people and GDP of US$11,100 billion
• MERCOSUR, comprising Argentina, Brazil, Paraguay and Uruguay
• SAPTA, comprising Bangladesh, Bhutan, India, Maldives, Nepal,
Pakistan, Sri Lanka
• ASEAN FTA, comprising 10 countries, a population of 548 million and
a GDP of US$646 billion
• ACP-EU, comprising approximately 70 countries in Africa and the
Caribbean
Institutional Research Consultancy Unit
Outside GATS: Major Regional and Bilateral
Agreements
Other emerging RTAs include:
• Free Trade Area of the Americas,
• United States and Central America,
• ASEAN + 3 (China, Japan, Korea),
• ASEAN-Japan Comprehensive Economic Partnership,
• Japan-Mexico, under negotiation,
• Japan-Korea, Joint Study Group established,
• EU –MERCOSUR, under negotiation,
• EU-Mexico, under negotiation.
Institutional Research Consultancy Unit
Australia's Free Trade Agreements
• Australia-United States Free Trade Agreement
• Singapore-Australia Free Trade Agreement
• Australia-Thailand Closer Economic Relations Free Trade
Agreement
• Trade and Economic Framework between Australia and the
People's Republic of China
• Australia- New Zealand Closer Economic Relations
Agreement (ANZ-CER)
• AASEAN Free Trade Area (AFTA)-Closer Economic
Relations (CER) Closer Economic Partnership (CEP)
Institutional Research Consultancy Unit
Issues for Higher Education
• Quality of domestic education capacity
• Capacity of their domestic public institutions and whether
they are able to meet optimum demand
• Extent to which the private provider sector is developed
• Costs of publicly provided higher education
• Domestic regulatory environment
• Domestic resources available for higher education to meet
any gap in demand
• “Transferability” of locally generated education in terms of
language and culture
• Capacity of the student population to access education
through the consumption abroad mode
Institutional Research Consultancy Unit
Emerging patterns in trade in higher
education
•
•
•
•
•
•
•
•
Government funds to institutions continue to decline
More private revenue from student tuition
More revenue from commercial activities
Build expertise in alternative revenue streams whilst reducing operating
costs
Countries with a mature private provider market have an advantage
Countries which have maintained a public service model of HE
provision will have to do some catching up
Countries that resist transformation of their HE systems retard market
integration in a globalised context.
Danger that global market integration will reduce the traditionally
collaborative spirit in institutional interactions
Institutional Research Consultancy Unit
Emerging patterns in trade in higher education
• Accreditation standards are powerful regulatory tools for
governments to maintain, but it can be seen as overly
restrictive barriers and seek to have them weakened in
negotiations of FTAs
• English is the lingua franca of the international education
market
• Language is relevant to the increased cross-border supply or
distance education, it can be seen intrusive in cul cultural
sovereignty
• Countries that are able to deliver teaching programs in
English will retain a competitive advantage, particularly in
relation to a commercial presence
• US is the dominant owner of copyright across the world.
Institutional Research Consultancy Unit
Emerging patterns in trade in higher education
• Choices open to developing countries in a liberalising world
in education services
• Distinction between public and private provision
• Heightened global competition for students and institutions
to gain competitive advantage
• Some developed and developing countries are faced with a
gap in domestic provision
• The emergence of the “regional hubs’ of higher education
provision - combines more than one mode of supply of
services
Institutional Research Consultancy Unit
Trends and Possibilities for Australian Tertiary
Education Providers
• Greater regulation of offshore provision through alliances with foreign
private providers
• Greater competition internationally and domestically in wholly on-line
distance education programs from USA private providers
• Increased Study Abroad activity, both inbound and outbound
• Potential for alliances with offshore institutions for provision of
programs in Australia to domestic and onshore international students
• Little easing of Australia's student visa regime for onshore students, as
Australia has made no commitments relating to the presence of natural
persons
• FEE-HELP may be directed to foreign institutions
• Government will encourage further domestic private provision in VET
and ultimately in higher education.
Institutional Research Consultancy Unit
Impact of International Regulatory Framework to
Australian Tertiary Education Providers
• Australia well positioned to compete in a more liberalised
global education market
• Opportunities for expansion in offshore markets should
outweigh the threat of increased domestic competition
• Government procurement is outside GATS but unclear
whether research funding of institutions and funding of
student places would be included
• Competition for international students is intensifying as
current suppliers of students are becoming exporters and
other are increasing offshore activities
Institutional Research Consultancy Unit
Impact of International Regulatory Framework to
Australian Tertiary Education Providers
• Australia constraints on capacity to enrol more onshore
students means future expansion will be offshore
• Potential impact on quality of education if institutional
capacity not addressed
• Greater student mobility and recognition of professional
qualifications.
Institutional Research Consultancy Unit