Colleges, Fighting U.S. Trade Proposal, Say It Favors For-Profit Distance Education

A little-known proposal by U.S. officials to remove international trade barriers to higher education has infuriated many college leaders,

ALSO SEE: Sample Barriers to Trade Education Trade Timeline The full text of a U.S. proposal to the World Trade Organization seeking to start negotiations on trade barriers that affect higher education (requires Adobe Acrobat Reader, available free).

who say federal policy is being unfairly set by for-profit-education providers, including distance-education institutions. The college officials say the proposal could end up undermining many institutions' independence.

At the center of the dispute is a U.S. document submitted a year ago to the World Trade Organization under the terms of the General Agreement on Trade in Services. It asks WTO member countries to begin formal negotiations to reduce barriers that keep colleges, adult-education centers, and training services from offering courses to students in other countries.

In general, the document (requires Adobe Acrobat Reader, available free) calls for the removal of a series of "obstacles" to colleges operating in other countries. These obstacles include special taxes, outright bans on higher-education services from foreign institutions, restrictions on online instructional material from abroad, long delays in government approval of foreign programs, and difficult requirements for foreign academics entering and leaving countries. While removing such obstacles would, in theory, enable all kinds of American colleges to operate more easily abroad, the document emphasizes job-related programs and testing services, areas in which for-profit providers have more ambition abroad than do most traditional colleges. In addition, the proposal says the United States "is willing to consider" easing trade restrictions for higher education and training, as 21 countries already did in the Uruguay Round of international agreements, which took effect in January 1995. The United States is purposefully coy about its commitment to freer trade in higher education because, officials say, revealing too much too soon to its trading partners could jeopardize its negotiating clout.

Australia and New Zealand submitted higher-education proposals similar to those in the U.S. document. In effect, these broadly worded proposals start the clock ticking on negotiations over higher-education concerns, which are among many trade issues waiting to be discussed. Trade experts say higher education would have come to the fore sooner or later in any case.

The General Agreement on Trade in Services was established in January 1995 as a legal framework for countries engaged in trade negotiations in a broad range of service sectors, including higher education. Under the GATS negotiation schedule for services, the next step will be for countries to make specific requests of their trading partners by June 30 to open their markets. By March 31, 2003, countries will present offers to open their markets. The goal is to conclude the negotiations in three years, and have a single treaty that would be ratified by government bodies, such as the Senate in the case of the United States.

So far, no country has made a specific request of another country concerning higher education.

Complex Regulations

Several distance education providers say the U.S. proposal is necessary to remove obstacles to international education. Some foreign countries impose tariffs on incoming satellite feeds, for instance, or create complex recognition regulations that effectively shut out course providers based elsewhere.

But opponents say such problems can be handled through existing channels, and that the government should not seek to have GATS applied to American higher education. The most outspoken critics of the U.S. trade proposal are the American Council on Education and the Council for Higher Education Accreditation. The groups, which largely represent nonprofit institutions, say such a treaty could drive a wedge between public and private institutions in the United States and threaten developing countries' efforts to create their own educational systems.

The groups also say the proposal is perceived by some countries as an effort to "Americanize" higher education worldwide. And the groups argue that the trade agreement could expose American colleges op-

erating abroad to punitive tariffs by other countries if the United States became mired in a trade dispute unrelated to education. In the widely reported banana-trade war between the United States and Europe, for example, the WTO favored the United States, which then imposed tariffs on a variety of European goods, including cheese and handbags.

"One of the reasons American higher education is among the best in the world is because of the autonomy of institutions," says Fred M. Hayward, executive vice president of the Council for Higher Education Accreditation. But in a trade agreement, he adds, "there is always a pressure to centralize decision making and authority." The council represents about 3,000 accredited colleges and 60 recognized accrediting agencies in the United States.

And Terry W. Hartle, senior vice president for government relations at ACE, says this country's decentralized higher-education system means that the federal government cannot make commitments to foreign governments about American colleges, even public ones. "Because public education is under state governments, we don't think the [U.S.] Department of Education can tell states, This is how you should do it."

Opponents of the trade proposal fault the Office of the U.S. Trade Representative, the federal agency charged with negotiating global trade agreements, for offering it. They say the trade office has been too heavily influenced by the National Committee for International Trade in Education, a nonprofit organization based in Washington.

Some of their criticism is directed at Marjorie Peace Lenn, that committee's executive director and a member of a group that advises the U.S. trade representative's office on trade agreements. Ms. Lenn organizes conferences for educators about globalization in higher education and promotes international standards for professions and for assessing the quality of education.

The International Trade Administration, a division of the U.S. Commerce Department, early last year cited the National Committee for International Trade in Education as the U.S. government's "advocate on matters of international trade policy" concerning education and training. Pressed for details about barriers to trade in education, U.S. trade officials often refer a questioner to Ms. Lenn. And Ms. Lenn embraces the status; a Web page for her trade-in-education committee says the group is "the organized voice" for American education, training, and testing in regional and global trade agreements.

"I'm not quite sure who anointed her the spokesman for higher education in this area," says Sheldon E. Steinbach, vice president and general counsel of the American Council on Education. Even though Ms. Lenn's group does not represent a broad spectrum of colleges, he says, no other group in higher education was dealing with the issue, so "she stepped into a vacuum."

The group's list of sponsoring institutions includes Temple and George Washington Universities, established nonprofit institutions that are aggressively exploring overseas ventures, some of which are commercial. And it also includes many professional organizations, such as the Accreditation Commission for Acupuncture and Oriental Medicine; some nonprofit distance-learning institutions, such as University of Maryland University College; and accrediting groups for traditional colleges, like the Accrediting Council for Independent Colleges and Schools, which are recognized by the Council for Higher Education Accreditation.

Roadblocks Abroad

The push for the trade proposal is due in large part to technological advances such as e-mail, instructional software, and Internet video and audio transmissions that make it possible for educational institutions to reach students far beyond their physical headquarters. GW Solutions, a for-profit arm of George Washington University that offers business-related distance-education courses, has run into a variety of technology-related roadblocks, says Ted Christiansen, GW Solutions' assistant vice president for business development.

Some countries hit CD-ROM's with import tariffs, as if they were used only for entertainment, even though many of them contain academic courses, says Mr. Christiansen, adding: "I think we need to recognize that education is in a different class than music or movies." And some telephone companies in Caribbean countries, such as Jamaica, impose Internet-connection fees that exceed a dollar a minute. That makes it too costly for people there to take advantage of GW Solutions' distance-learning programs, he says.

Other barriers are simply protectionist. Mexico restricts the use of its satellites to domestic institutions, and Malaysia limits the establishment of antennas altogether, says Ms. Lenn.

But Eugenio Cetina, director general for higher education in Mexico, says he has not heard of his country limiting the use of satellites. Foreign and Mexican institutions collaborate for distance education, he adds.

One of the biggest frustrations for United States-based educational institutions is that many foreign countries do not recognize them, or they subject them to convoluted accrediting procedures. The result is that degrees foreign students receive from U.S. institutions may be worthless at home.

But some countries, such as South Africa, say restrictive policies toward foreign education providers discourage money-making enterprises at a time when their nations are working to create a public education system that can redress social ills -- racial injustice in the case of South Africa.

Pamela Pease, president of Jones International University, offers China as an example of a country that discourages colleges and commercial education ventures from providing services. The university does not have a program in China that is recognized by the country's ministry of education. But Jones does not turn away Chinese students who register online for Jones's courses. "You may have to register with the ministry of education and go through a protracted, ill-defined system," she says. "Theoretically, it could be years to get through their system."

Ms. Pease and other advocates of the trade proposal also say international standards for assessing the quality of education are needed to discourage fly-by-night institutions from entering the market, provide a more-transparent accrediting process, and give students confidence in the degrees they earn.

The Wrong Approach?

But the American Council on Education and the Council for Higher Education Accreditation say the trade barriers identified by some educational interests are not major problems for their members. And they see the imprint of for-profit institutions on the U.S. trade proposal.

Mr. Hayward, of the accreditation group, says the proposal tries to appease, for example, testing providers who complain of having to pay a duty on test material, and educational institutions that complain of obstacles to getting overseas work permits for employees. He says the State Department or Treasury Department typically helps resolve such problems.

The proposal "seems like using a cannon to kill a fly," he says. Mr. Hayward says he found out about it a year ago, not through the U.S. trade representative's office, but through the Association of European Universities. In a speech he delivered to a conference of his organization in June, he said the proposal "went to the World Trade Organization without being seen by the major representatives of the higher-education community."

Mr. Hayward also worries that the proposal could favor private over public institutions, or vice versa. That's because the general principles of GATS say government services are excluded from coverage, which implies that the agreement covers private colleges but exempts public colleges. That could be detrimental to private colleges if, for example, a country decided to tax distance education, Mr. Hayward says. "Would the&distance-education offering by the University of California at Berkeley be exempt from GATS, but one offered by Stanford be subject to a tax?" he asks.

By contrast, another section of GATS implies that U.S. public colleges would be covered because it states that an exception is made for excluding government services that face significant competition from the private sector, Mr. Hayward says. Since the United States has a lot of private colleges, the WTO might assume they compete a lot with the public colleges, he adds.

He says he worries that countries struggling to build a national higher-education system could see large numbers of middle-class and affluent students enrolling in private foreign colleges -- including distance-learning institutions -- leaving poorer students behind in a decaying public higher-education system that does not receive enough financial support from its government. South Africa, which is trying to educate more black students, is particularly concerned about this, says Mr. Hayward.

Madeleine F. Green, vice president and director of the Center for Institutional and International Initiatives at the American Council on Education, raises a bizarre scenario should public colleges in the United States be covered by GATS. In it, the trade agreement forces public colleges to charge in-state-tuition rates to foreign students, while the colleges continue to charge higher, out-of-state tuition to students from the United States.

If the trade proposal does not clear up this and other areas of confusion, she warns, disagreements among countries could wind up being resolved through a WTO dispute panel, the norm for enforcing trade agreements, rather than by educational institutions.

ACE and the Council for Higher Education Accreditation described their concerns in a joint letter to Joseph S. Papovich, assistant U.S. trade representative for services, investment, and intellectual property at the trade representative's office.

ACE and the accrediting organization are now meeting regularly with U.S. trade officials to discuss their grievances about including the United States in a global trade agreement on higher education.

'Waking Up Too Late?'

Bernard Ascher, director of service-industry affairs for the U.S. trade office, says ACE and the Council for Higher Education Accreditation don't understand the trade agreement. He says they didn't take it seriously even though federal trade officials warned them -- long before the U.S. proposal was submitted to the WTO -- that higher education could become part of GATS.

Mr. Hartle responds: "I'm ACE's chief government-relations person, and I was never briefed about it."

Ms. Lenn, of the National Committee for International Trade in Education, says ACE and the Council for Higher Education Accreditation rejected her invitation to join discussions about globalization in education. "It's sad that the higher-education community would talk about who is allowed to be anointed when they never had participated in the discussion, but were invited from the beginning," she says.

She adds that community colleges, the Association of American Universities, and the National Association of State Universities and Land-Grant Colleges accepted her invitations. But NASULGC has endorsed a document that is highly critical of making higher education part of GATS. The AAU and the American Association of Community Colleges have not take a position on the trade proposal. However, an official with the community-college group says it shares the concerns of ACE and the accrediting group.

Mr. Ascher, of the trade representative's office, says he is annoyed by attempts to tar the trade proposal's for-profit supporters as second-class educational providers. He represents the United States in its trade negotiations over higher education.

"There's a perception that if it's for-profit it's inferior, because you're thinking only of the shareholders," he says. Groups representing nonprofit colleges "can't really prove anything like that."

"Are you going to tell Columbia and Duke and Harvard that they're cutting corners in their profit-making side?" Mr. Ascher asks. "It's almost as if there is a fear among these colleges that the nonprofit side is going to lose out."

He says a pact on higher education is needed because foreigners spent $10.29-billion a year to be educated in the United States during 2000 -- the latest year for which figures are available -- making education the country's sixth-largest export. And the figure would be higher if the United States included the value of educational services reaching students abroad through distance learning and overseas branch campuses, an expenditure the government doesn't measure.

Among the most popular courses that American institutions offer abroad are those on computers and information technology, management training, and language instruction, says Mr. Ascher.

"There is a relatively new segment of education and training that you don't hear much about," he said in a May 2001 statement prepared to explain the trade-agreement proposal to American college officials. "It is market-oriented, and it is growing."

Michael B. Goldstein, a lawyer who represents distance-education institutions, attributes the negative reaction to the trade proposal to financial self-interest. Established nonprofit institutions are faring well with their international programs under the current laissez-faire system, and a trade agreement on higher education threatens to undo that, he says.

"Right now it's an anarchic marketplace," he said. "If you have a trade agreement, it brings order to the market. Their position is, If it ain't broke, why fix it?"

Even some for-profit distance-education institutions say they encounter few international complications and that, when they do, they are able to resolve them on their own. But, Mr. Goldstein says, it's only a matter of time before colleges in the United States start seeing more protectionist trade policies abroad. Distance learning is in its infancy, with the student population still small enough that it has escaped the notice of many foreign education officials, he says.

But is the United States prepared to lower its own barriers and open its higher-education system to foreign competition? Some education experts have their doubts.

Joseph Duffey, senior vice president of Sylvan Learning Systems, which is actively establishing educational programs abroad, says the United States should not ask other countries to liberalize their policies for granting visas to American educators when the United States has restrictive visa policies. And he doubts that states are prepared to forsake their own standards for licensing and accrediting colleges in order to adhere to a common international standard that would allow colleges worldwide to set up branches in the United States.

Though Sylvan was a founding member of the National Committee on International Trade in Education, and Mr. Duffey once served on the group's steering committee, Sylvan is no longer a member of the group and has not taken a position on the trade proposal.

"I have a sense of how this country is perceived when we sit at the table passionately arguing for something -- when we show no evidence that we're prepared to do it in our own country," says Mr. Duffey. "It would be far more productive, perhaps, to put our own house in order before we sit at the international table and make these arguments."