Who Benefits from Global Free Trade in Higher Education?

Created under the auspices of the World Trade Organization (WTO) in 1995, and including all 144 economies of the WTO, the General Agreement on Trade in Services (GATS) provides a framework for talks on liberalizing international trade in services. The aim of GATS is to “expand free trade in services, open markets, and facilitate economic growth” in twelve service sectors, including all levels of education; in the field of higher education the goals include “removing restrictions on market access and barriers to competition.” (American Council on Education, 2008) These restrictions include national legislation that is prejudicial to foreign providers, licensing, accreditation, and other requirements required only of foreign providers, and customs duties on educational material that crosses borders. (ibid)

Laws that prohibit foreign ownership of educational establishments or put in place burdensome visa restrictions on students (Blinn, 2009) are targeted by GATS. GATS participants take on two levels of obligation, general and specific. Among the general obligations, the ‘most favored nations treatment’ requires that nations offer equal treatment to suppliers in other participant nations; specific commitments address obligations required of individual nations in market access (American Council on Education, 2008).

Should GATS succeed in liberalizing the higher education market, the likely result would be an increase in cross-border supply of education services (such as distance education), consumption of education abroad by students traveling for education, commercial presence of institutions in foreign countries through the setting up of branch campuses, and faculty and administrators working in foreign locations. (American Council on Education, 2008)

However, the benefits of such liberalization may not be shared by all nations wishing to participate in the global higher education market. In a 2003 editorial, Philip Altbach argued that the U.S. would not become a market for foreign higher education providers (Altbach, 2003), and expressed skepticism that a higher education market resulting from GATS would be free. The lack of mutuality would be caused by certain in-built advantages in the American higher education system, notably the following:

• The highly developed nature and level of complexity of the U.S. higher education market makes it difficult for outsiders to penetrate.
• The U.S. enjoys not only the largest and most diverse higher education market – one that satisfies every market niche - but one that is widely perceived to be the world’s best.
• The U.S. leads in ancillary services such as “testing, specialized training, the control of knowledge networks (such as Lexus-Nexus) and others.” (Altbach, 2003)
• Education takes place in English, the global language of commerce, science, and technology, and a language that is learned throughout the world.
• The high quality of facilities of U.S. institutions makes competing with them very expensive for a supplier hoping to enter the market.

I generally agree with Altbach’s analysis. U.S. higher education has operated in a free market environment for many years, and the wide variety of institutions is capable of satisfying most of the demand from the U.S. market and much of the international market. Additionally, as the Open University found when it tried to establish a U.S. operation (American Council on Education, 2008), the official approval process takes place state-by-state and can be challenging, time-consuming, and expensive. Any GATS-inspired challenge to states’ rights to approve foreign players would likely meet with resistance from the states themselves. Not only is the U.S. market difficult to penetrate, but to large numbers of Americans seeking an education, there are unlikely to be compelling reasons for choosing a foreign provider. Concerns about the quality of institutions, about foreign language requirements, and about the recognition of foreign credits or degrees would likely deter sufficient numbers of students as to make the possibility of mass market penetrability difficult. A further effect of GATS would likely be to further ease the mobility of faculty, and one can predict that faculty would tend to move to situations with better working conditions – those in the developed countries such as the U.S., especially if increased demand for U.S. higher education resulted in a greater need for teachers and active recruitment of teachers from other countries by the U.S. (American Council on Education, 2008) The effect might be to increase brain drain in developing countries.

While I concur with Altbach that U.S education would be the prime beneficiary of a more liberal global higher education market, I believe his conclusions need to be modified. First, U.S. higher education is expensive, and indeed many American providers may strategically target international students because they do not qualify for scholarships and pay full tuition. Although the U.S. continues to attract the largest number of international students, its share of the international student market is decreasing, and this may be as a result of students finding what they perceive to be better value educational experiences in other parts of the world. (This could result in for-profit U.S. providers becoming more successful in international markets if they can price their services competitively.) Additionally, geopolitical changes, coupled with the difficulty many U.S. public universities are experiencing obtaining funding, and the injection of finance and other resources into higher education in other parts of the world such as mainland China and Hong Kong, may make other locations more attractive for study abroad in the future. (Clark & Sedgwick, 2005; Fischer, 2009)

A wider issue that Altbach does not address is the dominance not only of the U.S. in higher education, but of other major English-speaking countries too. In Australia, education is the third largest service export, and in New Zealand it is the fourth. (Blinn, 2009) Britain is also a major exporter of educational services. Along with the U.S., these countries are most actively attracting students to their campuses and establishing campus branches in other countries. (ibid) Hence, although Altbach focuses on the potential benefit to the U.S. of a liberalized higher education market, the bigger picture appears to be one of developed English-speaking countries benefiting at the expense of developing and non-English-speaking countries.

On the other hand, although Altbach characterizes the predicted liberalized education market as “a free market that is not free” because of America’s presumed dominance in the field, one might counter that in global free markets there are bound to be nations that specialize in certain fields. Thus, some countries dominate in oil exports, some in automobiles, others in food products, and so on. The whole point of trade is that one party can produce a good or service more effectively or more efficiently than another. Thus it should not be surprising that some nations are more successful than others at creating and exporting educational services. The U.S. can export higher education, but needs to import oil; this is natural. When Altbach complains that the global higher education market “is not free,” I feel he is missing this broader perspective on international trade.


Altbach, P. G. (2003). Why the United States Will Not Be a Market for Foreign Higher Education Products: A Case against GATS. Retrieved March 11, 2010, from http://www.bc.edu/bc_org/avp/soe/cihe/newsletter/News31/text003.htm

American Council on Education. (2008, 9.28.2008). GATS - General Agreement on Trade in Services. Retrieved March 10, 2010, from http://www.acenet.edu/AM/Template.cfm?Section=Topics&Template=/CM/HTMLDisplay.cfm&ContentID=5851

Blinn, H.-J. (2009). The Role of European Regions in the Higher Education Process of the EU. In C. F. Bonser (Ed.), Adapting Universities to the Global Society - A Transatlantic Perspective. Berlin: Lit Verlag.

Clark, N., & Sedgwick, R. (2005). International Students: It's a Buyer's Market. Retrieved March 12, 2010, from http://www.wes.org/eWENR/05july/feature.htm

Fischer, K. (2009). America Falling: Longtime Dominance in Education Erodes. Retrieved March 12, 2010, from http://chronicle.com/article/America-Falling-Longtime/48683/