1. Institutional Research Consultancy Unit 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 26 th EAIR Forum, Barcelona, September 2004

2. 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)

3. 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.

4. 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

5. 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

6. Institutional Research Consultancy Unit 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) Key Principles of GATS

7. 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.

8. 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

9. 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.

10. 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

11. 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

12. 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.

13. 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)

14. 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

15. 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

16. 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.

17. 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

18. 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.

19. 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

20. 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.