Opportunity will knock if educators embrace change.
“Looking for an accredited degree? Call Education Brokers Inc. Save thousands on your education. Let us shop the education market for you and find the best fit at the best price.”
Sounds too far-fetched? Maybe not.
Driven by deep cuts in their budgets, educational institutions have little choice but to become bottom-line driven. Unwittingly, these recent private-sector initiatives have created the tipping point that will transform Canada’s education industry from public-sector institutions to private-sector businesses.
The implications for public education resulting from the General Agreement on Trade in Services (GATS) are significant but not threatening for educators prepared to provide educational services using private-sector business models. Those who continue with the old public-sector mental model will not be here long.
Many Canadians are unaware that, since January 2000, members of the World Trade Organization (WTO) have been negotiating for increased market access to Canada’s financial and business services and communications, construction, transportation, distribution, tourism, and travel-related services. The negotiations are scheduled to conclude in January 2005.
Increased access and deregulation in these sectors are imminent. We have already seen the significant changes that resulted from deregulation in the telecommunication and banking industries. These changes will be just as profound and far-reaching.
Although it would seem that provincial and federal governments have not contemplated having education included under the provisions of the agreement, I believe individual educational institutions and certain provincial governments, driven by bottom-line considerations, have opened Pandora’s box. It is now impossible to maintain the barriers to entry that prevent foreign educational institutions from entering and competing in Canada.
To have “exclusionary status” under GATS, the educational services that Canada supplies must be in the exercise of government authority and must not be supplied on a commercial basis or in competition with other service providers.
Consider the facts.
* In spring 2002, the British Columbia government introduced Bill 34, an amendment to the British Columbia School Act. The act authorizes school boards to incorporate for-profit school district business companies. They encourage public-sector provincial school boards to accredit other schools abroad and issue B.C individually.
High school diplomas start and run their offshore schools, provide educational consulting services, and continue to market their curriculum to increase revenues.
* As of spring of this year, ten school districts have incorporated for-profit school district business companies.
* Provincial school boards are actively opening offshore schools in China and trading educational services abroad by establishing a commercial presence in these schools.
The Ministry of Education will certify them, and the instructors will be approved by the B.C. College of Teachers. The graduates will receive B.C. high school diplomas.
At the time of writing, the Education Ministry had certified four offshore schools, enabling them to deliver the provincial curriculum. In addition, three candidate schools are expected to be permitted within the next six months, and a further 17 applications are under review.
The floodgate is open.
There are Canadian-chartered, freestanding degree-granting institutions in B.C., Alberta, Ontario and New Brunswick. In addition, there are Canadian-chartered, university-affiliated, degree-granting colleges in B.C., Saskatchewan, Manitoba and Ontario. Public post-secondary and private post-secondary institutions compete for customers. As a result of this constitutional shortcoming and the failure to speak as one voice, I believe all degree-granting, post-secondary education is now subject to GATS.
If I am correct, then education will be regulated by GATS. GATS requires that two obligations be fulfilled. First, external and internal providers must receive universal treatment by all three levels of government; and second, all educational providers must have market access. This means that domestic and non-domestic educational suppliers must be treated the same.
In theory, this would mean American universities such as Harvard, Wharton and others could set up across the street from leading universities in British Columbia and Alberta and demand the exact same subsidies and supports that our home institutions receive from the federal, provincial and municipal governments.
The WTO has produced a background paper titled Education Services: Background Notes by the Secretariat. The paper identified the five main categories of educational services subject to GATS, based on the traditional structure of the sector. The sectors are primary education, secondary education, higher education, adult education and other educational services.
The paper also defined what is considered “trade-in education.” This includes:
* Cross-border supply, such as educating using the Internet.
* Consumption abroad – Canadian students studying abroad and foreign students attending home institutions.
* Establishing a commercial presence through joint ventures internally and externally.
* Commercial presence – Canadian institutions providing services in other countries outside Canada in joint ventures.
* Providing people to host countries, such as teachers working abroad.
On all counts, it leads one to conclude that Canada has been increasingly involved in educational services to the extent that they are now commercialized. This view is different from that held by the federal government. Its website states that Canada has protected services such as health, public education and social services from GATS by not taking on any sector commitments.
Unfortunately, the evidence does not support this statement.
Canada will be under increasing pressure from other nations, particularly the United States, to allow market access and provide universal national treatment for educational services. In 1996, the U.S. was a world leader in educational and training services exports and generated $7.5 billion in revenues.
Once again, it would seem that the federal government has its head in the sand to take the position that GATS will have no impact on education. The reality is, Canada’s public educational services are increasingly competing for educational dollars. Canada will be forced to liberalize its market access to other nations’ academic institutions, and those institutions will be entitled to the same support and treatment as the home institutions.
So what should Canadian educational institutions do?
When presented with a turbulent ecosystem, there are three ways educators can respond. They can:
* React: In a reactive mode, one responds to events as they happen. This is a defensive strategy and is unlikely to lead to fresh opportunities. Nevertheless, it is a strategic posture that might be used from time to time. Anxiety and stress are hallmarks of this position.
* Anticipate Change: Whenever possible, look ahead for eddies and whitewater rapids and prepare for that “future” to arrive. This is a defensive strategy against forces outside your control. It can sometimes produce opportunities.
* Lead Change: This means initiating the market, controlling the industry, setting the standards for the rest to follow and creating competitive forces to which others have to respond. Be the first to market, the technology leader. Have the attributes to shape customer preferences.
With great change comes great opportunity. This issue should not be seen as a threat to Canadian educational institutions.
Rather, it is a wonderful opportunity to be exploited. Canada has world-class educational institutions, world-class educators and a recognized brand, and the global marketplace has an appetite for our product.
Instead of continuing in a state of denial and adopting a reactive global strategy, let’s be who we say we are – global traders. Let’s believe in ourselves. Let’s embrace private-sector business models. Let’s lead change and be among the first in the global education industry.
Note: This article was originally published in 2005.
