International bulletin TTIP may 2015

International Bulletin May 2015

TTIP TTIP is an attempt to render all economies legally subject to the big business drive for maximum profit and to establish a structure for world trade that will penalise developing countries.

The Trans-Atlantic Trade and Investment Partnership (TTIP) between the US and the EU was launched by President Obama in February 2013. Preliminary work had been undertaken by the Trans-Atlantic Economic Council which had been formed in 2007 by multi-national companies based in both the EU and the US. The negotiations are taking place in a series of closed-door meetings which began in 2013 and are likely to continue into 2016.

They involve direct consultation with big business lobbies.

The general objective is to eliminate any remaining forms of state interventions in the market and to enable companies to take legal action, in a supranational commercial law court, if they are prevented from entering services such as education and health which are supplied publicly.

The TTIP is a sequel to the Trans-Pacific Partnership (TPP) initiated in 2009 as part of Obama’s ‘pivot to Asia’.

The TTP brings together countries around the Pacific Rim that together control 40 per cent of world trade. It does not include China and is widely seen as an attempt to contain Chinese influence – and to set legal protocols that China would ultimately be compelled to accept.

In June 2013 an editorial in the Financial Times put such containment as also the long-term strategic objective of Trans-Atlantic Partnership: ‘The shift to Asia of the centre of gravity cannot be stopped but a Grand Deal would be likely to delay the impact on the Atlantic’s region’s influence. By integrating markets now, the US and the EU, through their combined magnetic power, would secure their ability to set market standards through the rest of the world’ (FT, 18 June 2013).

A key part of this ‘setting of market standards’ would be to make illegal the forms of state and quasi-state ownership, subsidy and strategic direction that has been a key element in Chinese growth – as well as some other members of the BRICS alliance. A further feature, written by Geoffrey Dyer in Washington, spelled this out: ‘the broader US strategy for the region centres on the Trans-Pacific Trade Agreement. The aim is to establish new global trading rules setting higher standards for intellectual property rights, state subsidies and environment protection’ (FT 14 March 2015) Between them the EU and the US control 46 per cent of world trade.

The Investor State Dispute Clause The most contentious issue has been the Investor State Dispute Clause. In February 2014 French trade minister Nicole Bricq and the leader of the German Social Democrats Sigmar Gabriel both stated that they found the clause unacceptable. The main business newspaper in Germany, Die Zeit, leaked the key section of the draft treaty containing the clause the same month: http://www.zeit.de/wirtschaft/2014-02/freihandelsabkommen-eu-sonderrechte-konzerne.

In March 2014 the EU announced a 90 day period of ‘public consultation’ postponing negotiations till June 2014 and after the EU elections.

With the appointment of new Commissioners in September-October there was renewed conflict within the EU. At the beginning of October the outgoing EU Commission, headed by Atlanticist Barosso, published its hitherto secret negotiating brief in order to deflect opposition. This stated that the inclusion of the ISDS clause would depend on a ‘satisfactory solution’ being found that protected government rights to regulate ‘in the public interest’.

On 21 October 2014 the US Ambassador to the EU Gardner intervened in favour and fourteen EU governments issued a statement calling for the inclusion of the ISDS clause on 21 October. These were headed by Britain, Ireland, Portugal, Spain, the Czech republic and smaller eastern European states usually aligned to the US. More recently in February 2015 Sigmar Gabriel, representing the German Social Democrats, has reversed his position and stated that he would accept the ISDS clause as long as arbitration was in a public court. This change of position is likely to influence social democrats in other EU countries. The ‘public court’ would almost certainly be bound by the pro-market legal code of the EU Court of Justice.

The ISDS clause is a direct threat to public services and to labour conditions. It already exists in a number of bilateral free trade treaties and has been used in • Australia by Phillip Morris to pose a legal challenge to the government’s plain packaging law • Egypt by the French company Veolia to challenge the imposition of a minimum wage • Germany by the Swedish energy company Vattenfall to challenge government environmental regulations that a) make coal fired power stations less profitable b) seek to phase out nuclear power • Slovakia by private health insurance companies when the government reversed its predecessors privatisation of health services in 2006 The BMA and Unison have warned of the dangers to the NHS especially in England where the Tory’s Health and Social Care Act has resulted in 75 per cent of contracts going to the private sector. There remains no guarantee that that NHS would be exempt. The EU’s lead negotiator Ignacio Bercero

stated in a letter dated 8 July 2014 that would be ‘unlikely’ that the clause would affect the NHS – which indicates that it well could.1 This February 2015 the EU Trade Commissioner Cecilia Malstrom wrote to Lord Livingston (UK trade minister) giving an assurance that: ‘Member States are free to change their policies and bring back outsourced services back into the public sector whenever they choose to do so, in a manner respecting property rights (which in any event are protected under UK law)’.2 The clause ‘in a manner respecting property rights’ is the key qualification.

The same clause could also be used by multinational firms providing educational services demanding access to school funding. They could be used to require their enrolled students to be eligible for student loans.

Environmental Standards The House of Commons Environmental Audit Committee 9th report 18 March 2015 declared itself not satisfied that the TTIP did not pose a threat to environmental standards.3 The US wants access to the EU for GM foods and a harmonisation of food standards to the (lower) US level permitting hormone- injected beef and chlorine-washed chickens.

Government claims on job creation and economic growth challenged The UK government claims that TTIP will create a million new jobs in the EU and be worth £100b for the UK economy. The Commons Business Employment and Skills Committee in March 2015 found these claims unproven.4 Research by Robert Scott on the North American Trade Agreement (involving the US, Canada and Mexico and initiated in 2003) indicates a loss of over 600,000 jobs in the US as well as a lowering of wage levels.5 Major context: the decline of US trade dominance The negotiation of the TPP and TTIP take place in the context of the breakdown of the World Trade 1 http://trade.ec.europa.eu/doclib/docs/2014/july/tradoc_152665.pdf 2 http://trade.ec.europa.eu/doclib/docs/2014/july/tradoc_152665.pdf 3 http://trade.ec.europa.eu/doclib/docs/2014/july/tradoc_152665.pdf 4 http://www.parliament.uk/business/committees/committees-az/commons-select/business-innovation-and-skills/inquiries/parliament2010/ttip1/

5 http://www.epi.org/publication/nafta-legacy-growing-us-trade-deficitscost-682900-jobs/

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Organisation’s ‘Doha’ round of negotiations on the global liberalisation of trade. This is at least partly because of the growing influence of China and the BRICS states and their political ability, in alliance with other developing countries, to challenge US dominance within the World Trade Organisation. In these circumstances both the EU and the US have both negotiated regional and bilateral trade treaties within their own spheres of influence. The EU has negotiated trade treaties in the Mediterranean and Africa; the US the North American Free Trade Area with Mexico and Canada. All have generally involved clauses that require partner countries to privatise services, end the protection of manufacturing and provide investing corporations with resort to special courts to protect their rights to trade and their intellectual property (i.e. to prevent technology transfer).

The US and the EU see the BRICS alliance as having the future potential to change the legal framework for world trade relations in ways that benefit developing and emerging economies and limit the freedom of US and EU companies.

Supplementary context: US attempt to enhance corporate dominance within the EU The current TTIP negotiations take place in the context of a major influx of US corporate and financial capital into Europe. Eurostat statistics show US capital flooding into the EU. In 2013 the US exported 303 billion euros into EU countries in 2013 —as against EU capital export to US of 159 billion.

Part of this is speculative. $66 billion of US loans were made to EU banks in 2013. This year the rate doubled to $70 billion in the first half (Financial Times 4 June 2014). The June 2014 report of the Bank of International Settlements warned of dangerous levels of financial speculation. The other part of the drive is the direct takeover of EU-based companies.

The Bank of America Merrill Lynch reported in June 2014 that major US corporations had $1,300 billion available to fund corporate merger raids into the EU. Levels of merger and acquisition are at a record high. These economic compulsions to export capital for higher rates of profit, inherent in finance capital, are the basis of inter-imperialist rivalry.

strategic move by the main imperialist blocs to contain the rise of China and the BRICS countries.

At the same time it is important for the trade union movement to avoid being drawn into positions where they are supporting ‘their imperialism’ against rival imperialisms: supporting French and German big business against the Investor State Dispute clause or supporting the City of London (and the US) in demanding the exclusion of financial services.

Campaigns need also to a) expose TTIP as part of the drive against the BRICS b) show it is framed within the big business and anti-working class assumptions of the EU. EU Fiscal Compact rules currently demand the slashing of public sector provision by between a quarter and a third across most EU countries by 2019. Unless this is opposed, EU Austerity regulations will destroy (i.e. privatise) the public sector long before any ISDS clause comes into force.

The TU movement and the Left needs to ensure that any campaigns equally feature the threats posed by the EU Fiscal Compact, the EU 2020 programme and ECJ legal judgements.

Current campaigns against TTIP include: http://www.waronwant.org/campaigns/tradejustice/ttip World Development Movement www.wdm.org.uk/...campaign/transatlantic-tradeand-investment-partnership Unite has a policy of outright rejection – which was adopted by the 2014 TUC Unison has an anti-TTIP campaign and other unions are developing policy – though often as an alternative to developing policy against the EU. Unite has a policy of outright rejection – which was adopted by the 2014 TUC.

TTIP: a threat to working people - but EU austerity a more immediate threat The TTIP threatens the public sector in EU countries.

It would exert further downward pressure on wages and conditions, would make attempts to assert democratic control over national economies even more difficult and, internationally, represents a 3

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