Plenary – Trade Agreements




Free trade agreements: “a battle about power and we have to win it”

8th July, 2015 / Chris Jones / guest blogger

On Wednesday morning the GLI International Summer School heard from John Hilary, the director of War on Want, who gave a talk on the threats posed by new corporate-fuelled free trade agreements such as the Transatlantic Trade and Investment Partnership (TTIP), the Trans-Pacific Partnership (TPP), and the Trade in Services Agreement (TISA).

John Hilary [Photo: Khalid Mahmood]
John Hilary
[Photo: Khalid Mahmood]
He provided a simple summary: “free trade agreements are fantastic if you’re a transnational corporation, and pretty rubbish if you’re anyone else.” Or, as a Nicaraguan farmer once said to him: “free trade for them means putting us in chains.”

The proposed new agreements are the descendants of IMF- and World Bank-imposed structural adjustment programmes in Africa and south-east Asia in the 1980s and 1990s; and the 1994 US-Canada-Mexico North American Free Trade Agreement (NAFTA). These removed trade tariffs that protected countries’ national economies from international competition. As transnational corporations were able to access economies previously closed to them, countries were de-industrialised, workers were de-skilled, and thousands of jobs were lost. In those that remained, conditions went “down, and down, and down.”

These programmes can be seen as a “practice run” for the new round of trade agreements that will cover not just the global south, but the whole planet. John went on to look in more depth at the content of TTIP and the political issues that surround it. TTIP is being negotiated between the EU and the US, but it is vital to understand it as it forms the “template” for all future trade deals around the world. John emphasised the importance of trade unions taking a political, opposition stance to TTIP and its counterparts.

TTIP: “maximum profits for business”

One key problem with the negotiations on TTIP and its counterpart agreements has been secrecy. Almost all the in-depth information on TTIP that has been released to the public has come through leaks, rather than publication by the EU or US authorities. Thanks to those leaks it has become possible to analyse the proposals and draw up detailed criticisms.

“free trade agreements are fantastic if you’re a transnational corporation, and pretty rubbish if you’re anyone else.”

While previous corporate free trade projects such as structural adjustment programmes, NAFTA, and the Doha round of World Trade Organisation negotiations sought to remove trade tariffs, TTIP and its counterpart agreements go “much further”. They are concerned with harmonising regulations (which are considered as “barriers to trade”).

The new agreements go “behind the border”, John argued, essentially saying that “we want to re-engineer your society so that business can operate as it wishes”. The goal is “maximum accumulation of capital, maximum accumulation of profits for business,” without having to bother with social, environmental, health and labour protections.

There are three main pillars to TTIP:

  • Removing “barriers to trade” and deregulation: in practice this means lowering labour, social, environmental and health standards to the lowest possible level. For those in Europe, lowering these standards to US levels poses a threat to the right to paid holidays, minimum wage (let alone living wage) laws, food standards, bans on dangerous chemicals, and more.
  • Privatisation of public services: TTIP would facilitate the privatisation of public services, and due to its inclusion in an international treaty, any privatisation facilitated by TTIP could not be reversed by the decisions of national governments. International law takes primacy over national law.
  • Investor-state dispute settlement (ISDS): the further extension of the ISDS mechanism, which allows companies to sue states in secret courts if they take decisions that would affect their future profitability (such as attempting to renationalise privatised public services).

John went into significant depth on these issues during his talk, and many of the same arguments and examples he gave can be found in a joint War on Want/Rosa Luxemburg Stiftung publication.

TTIP and trade unions

One key point made in the talk was that organising resistance to TTIP and other trade deals amongst trade unions has not been easy. While it should be obvious to the international trade union movement that these deals are a bad idea, John said, many unions remain in favour. He argued that: “the internationalism that binds together labour movements in different countries has been shattered by trade agreements, due to different positions on free trade.”

The top level of the European Trade Union Confederation, for example, has said they are in favour of TTIP. Their argument is that free trade agreements work in favour of their members in countries such as Germany and Sweden, with strong manufacturing bases and export industries. The agreement is not likely to be so positive for those not working in these industries.

ETUC’s positions highlight the different approaches that trade unions can take to political issues. ETUC are taking what is known as an “instrumentalist” approach, where unions do whatever it takes to get a better deal for their members. However, unions can also adopt “expressive” approaches to issues. This approach prioritises the higher values of the labour movement, especially at an international level. As John said, maybe TTIP would be beneficial to a welder in Germany – but what about the impact on workers everywhere else?

ETUC has historically been in favour of free trade agreements and the European Commission’s free trade agenda in general. At its congresses in 2007 and 2011, ETUC reaffirmed its support for the EC’s trade policy. Rather than oppose free trade agreements, they have tended to try to soften the blow by “making them a bit nicer round the edges”.

Whether ETUC’s position can be reversed remains to be seen, but their 2015 congress could mark a crucial turning point. All European trade unions are now against TTIP, with the exception of those in Denmark, Sweden, and Finland. The looming disaster of the EU-US treaty has made trade unions in Europe and the United States recognise “what everyone else in the world has been facing for the last 30 years,” John told the audience.

Despite the threat posed by TTIP and its counterparts to labour, health, and social rights; environmental standards; and democratic sovereignty itself, it also presents an opportunity for the trade union movement. It provides the possibility for unions to come together with other groups and organisations, and move beyond opposition towards advancing a positive political agenda.

Forging such an agenda is vital, John argued. The problem with the corporate free trade agenda is that although certain agreements can be beaten – for example with the global opposition that has led to WTO negotiations being stuck since the ‘Doha round’ in 2004 – after a couple of years they come back in another form. In the 1990s OECD countries tried to put together a multilateral investment agreement which was beaten by public opposition. That led to the start of negotiations in the WTO, which has now also been pretty much put to bed. And so came the strategy of bilateral trade agreements: “one-by-one, pick [the opposition] off and pit them against each other,” is now the approach, argued John.

“we’re fed up of having to say no to these things – what about the world we want to create?”

Thus opposition needs to become a political challenge which says: “we’re fed up of having to say no to these things – what about the world we want to create?” Positive developments such as demands for sovereignty over natural resources as in Latin America; food movements such as La Via Campesina; and labour movement challenges to trade agreements need to be built upon and used as a way to challenge and overthrow the agenda to which we are constantly saying no. We need an alternative model that says “workers’ rights come first and transnational profit comes nowhere,” said John.

Questions and answers

Participants were keen to discuss the issue further, with a number of questions following the speech. Asked why governments are so willing to hand their own power over to corporations, John argued that the problem goes to the heart of “late capitalist” societies. In such a society it becomes “an article of faith or an unwritten rule that the interests of capital are the interests of your country.” When War on Want went to meet the trade minister of the UK government, they asked him the government was in favour of TTIP. The response? “It’s good for business.”

John referred to the work of Ralph Miliband – father of the ill-fated former Labour Party leader Ed – who argued that although the state and capital are always in tension, ultimately they work in partnership. And, John warned, the current round of trade agreements are supposed to change the shape of that partnership forever. While previous bilateral agreements had sunset clauses, TTIP, TPP and TISA are seen as “living agreements” – they have no expiry date and are intended to last forever.

Another participant raised the issue of the gaps between movements for labour rights, women’s rights, environmental movements, and so on, and asked: “what can we do to create more links and a global movement?” John responded by saying that there are many good initiatives taking place that can be built on, and that many movements already have global solidarity at their core. For example, unions in Sri Lanka have confronted textile factory owners and bosses in the country’s free trade zones, but a lot of the power in the supply chain lies with retailers. Thus the unions have coordinated with groups around the world who have taken action to challenge the retailers who sell the clothes, at the same time as the unions are striking.

A participant from Sweden asked whether War on Want and other groups campaigning against TTIP had made Swedish unions aware of the criticisms of the agreement. The War on Want/Rosa Luxemburg Stiftung pamphlet on the current round of trade agreements has now been translated into 13 languages, including Swedish, and John went to an event in Stockholm for a debate which included the economic adviser of Sweden’s major union confederation, the LO. The adviser put it bluntly: they are pro-TTIP. Part of the problem, argued John, is that trade unions tend not to criticise each other publicly – this is how the pro-TTIP national unions and ETUC can get away with their stance.

An Irish participant reinforced John’s point about the need to strengthen political alternatives, and referred to the ‘no’ vote in the Greek referendum, which she argued has sent “shockwaves” across Europe and in particular through social democratic parties. She asked how the people power that was expressed in the referendum can be harnessed and brought into the trade union movement, and how a social vision of Europe can be articulated.

John noted that just days before, Alexis Tsipras had been booed in the European parliament, including by social democrat and labour MEPs. He considered it “astonishing” that Martin Schulz, president of the European Parliament and a member of the Socialists & Democrats bloc, could say that the Greeks don’t have a government that represents them – despite a clear majority voting ‘no’ in the referendum! He emphasised that grassroots struggle and pressure on trade union hierarchies remains key to moving towards a positive political agenda. For example, in the UK, pressure from below led the country’s Trades Union Congress to reverse its position on TTIP. It is now opposed to the agreement.

A participant from Romania asked for more detail about ISDS: what kind of court rules in dispute settlement cases? The ISDS system, John said, is essentially a “stitch-up” that’s “completely biased in favour of capital.” Cases are heard behind closed doors and the lawyers and judges are almost all well-connected to the corporations who make use of the system. There are now about 600 cases that are publicly known about, and the record shows that either a corporation always wins or they reach a settlement with the government they’re suing, which leads to the corporation getting a pay-off before the trial.

“Free trade is a battle about power… It’s a big battle and we have to win it.”

Despite its clear flaws, the idea of a ‘reformed’ ISDS system is now being pushed by social democratic governments such as Germany, Italy and Romania, as well as social democrat MEPs (as John was talking, the European Parliament voted in favour of a non-binding resolution that approves a ‘reformed’ ISDS system). Ultimately, he said, the principle that corporate power takes precedence over national democratic sovereignty and rights is still at the heart of the ‘reformed’ system, and that principle will always be wrong.

John closed the session by emphasising his argument that the corporate free trade agenda is deeply political, and require a political response from trade unions. As he told the audience: “Remember, the principle is, this is a battle about power. Free trade is a battle about power… It’s a big battle and we have to win it.”

Further Reading

Booklet: The Transatlantic Trade and Investment Partnership, John Hilary (2015)

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