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TTIP: a view from the centre left

TTIP: a view from the centre left

In his State of the Union address in February 2013 President Obama announced that he was opening talks with the European Union with the aim of signing a Transatlantic Trade & Investment Partnership (TTIP).

TTIP seeks to be a free trade agreement covering two of the world’s largest trading blocs; the TTIP zone would cover a region accounting for 60% of global GDP, 33% of world trade in goods and 42% of world trade in services.

However, by July of this year the future of the deal has started to look very uncertain. The Toronto Globe & Mail, quoting German sources, said:

Germany is to reject a multi-billon free trade deal between the European Union and Canada which is widely seen as a template for a bigger agreement with the United States … If the deal with Canada is rejected “then the one with the United States is also dead”, added the [European Union] official.

Although made light of by Dennis Novy in and LSE blog three key issues are proving to be key mobilising issues against TTIP for the centre left in Britain and Europe:

  • the threat to the National Health Service and other sections of the public sector that may be opened up to the private sector leaving a future Labour Government with no legal right to take back into public ownership
  • the quasi-judicial process of the Investor State Dispute Settlement under which multinational corporations may sue nation states whose laws are deemed incompatible with free trade
  • opening up European markets to US Frankenstein foods – hormone enriched beef, chlorinated poultry and genetically modified cereals and salmon.

From 2014 campaigners, including the TUC, have been working for the exclusion of the ISDS from the treaty. In a letter to treaty negotiators the campaigners said:

ISDS is a one way street by which corporations can challenge government policies, but neither governments nor individuals are granted comparable rights to hold corporations accountable. 

In the same article TUC General Secretary, Frances O’Grady, is quoted as saying: “these clauses could thwart attempts by a future government to bring our health service back towards public ownership”.

Novy argues that “… not surprisingly, ISDS is also an issue where a great deal of misinformation is inserted into the public debate” but there are many examples from around the world where such procedures included in trade agreements have been used against the nation state.

These include $22 million paid in fines by the government of the Slovak Republic after it reversed the liberalisation of its health insurance and the as yet unresolved case of big tobacco suing the federal government of Australia after its introduction of plain packaging for cigarettes.

In 2013 the International Trade Union Confederation, the European Trade Union Confederation and the US AFL-CIO union federation wrote to the trade deal negotiators about health care procurement and unfavourably comparing what could come from TTIP with the US-Korea free trade agreement (KORUS):

It is imperative that these trade and investment agreements result in increased savings for patients and national budgets instead of further enriching a few pharmaceutical and medical corporations. Public health, as well as access to affordable medicines and healthcare, are human rights that should be strengthened, not undermined, by trade arrangements. 

The proponents of the TTIP argue that there will be economic winners on both sides of the Atlantic; Michael Froman, US lead negotiator argues, using CEPR data, that the TTIP would generate annually an extra €120 billion, or an extra €545 annually in extra disposable income for an average European family.

However, such economic benefits are treated with some scepticism. When the North American Free Trade Agreement was signed in 1994 200,000 new jobs were promised to US workers but in the event there was a net loss of 680,000 jobs as manufacturing headed due south and set up new plants on the Mexican side of the border - the Maquiladora.

The US unions have certainly learned from this episode. The AFL-CIO argues that:

Unfortunately, experience has shown that despite rosy predictions by the US International Trade Commission (ITC) and various free trade advocates about export and job growth, promised gains from NAFTA-style agreements generally fail to pan out … In each case the estimates of job creation by the ITC, experts and Democratic and Republican Administrations were wildly inaccurate … As a result the AFL-CIO will be closely monitoring developments in the TTIP discussions. The Administration must abandon the corporate driven, NAFTA style model and adopt an entirely new approach … 

Judith Kirton-Darling then at the ETUC has made the point, in late 2013, that the European Commission is making grand promises on jobs but has not yet carried out the econometric analysis to back up such claims:

We know that the Commission is trumpeting 2.2 million jobs which could result from the current FTA negotiations. But currently we lack a comprehensive sustainability and employment impact assessment. The Commission has only just completed the tendering which means the analysis won’t be completed until the end of next year (2014), despite the fact that text will already be on the table from the start of the year”. 

However, for TTIP sceptics it may be any chapter in the treaty on labour rights that will be a major cause for concern. This concern is well founded because often any labour rights chapter is incorporated as a non-binding appendix to free trade treaties rather than part of the substantive text. For example, free trade agreements signed between the US and Colombia that contained such a non-binding labour rights chapter – but trade unionists are still assassinated in Colombia, attributed to state supported para-militaries. While the free trade deal gives Colombian business access to US markets, Colombian trade unionists have little or no redress in the US to pursue these extreme labour rights breaches.

The background for the US unions is that twenty-four (of fifty) states are “right to work” states, local legislation passed under the under the Taft Hartley Act of 1947, to outlaw any form of union membership agreement (closed or agency shop) between unions and employers.

Not surprisingly therefore Owen Tudor of the TUC has warned us: “… an opinion column in the Wall Street Journal … explains … Congressional Republicans are only willing to agree TTIP if extending EU labour standards … to the US is ruled out in advance.”   US Trade Representative, Ron Kirk, has said that the agreement would seek “substantial progress on … addressing liberalisation in areas of service investment, labor and the environment …”

Many in the US trade unions see a labour chapter in the TTIP as opening the possibilities of having a European style worker dialogue with employers. George Kohl of the Communication Workers of America optimistically arguing: “now we get to benchmark against a more progressive economy and raise up labour engagement here in the United States, we hope that the trade discussions would make improvements to how corporations treat their workers here.”

However, whilst noting some of positive possibilities in incorporating EU labour standards in the US, particularly on information and consultation, health and safety and agency workers, the AFL-CIO has noted that, like the US, the EU is not an homogenous labour rights zone:

… it is important to note that the EU now includes Romania, Bulgaria, Cyprus and Slovakia – countries whose economies, incomes and worker protections lag behind most of their EU counterparts. In addition, Poland has been engaging in so-called “labour market flexibilities” for a generation and Hungary’s current government has likewise been intent on destroying many worker protections. American workers should be aware that some multinational corporations could be intending to use a US-EU trade agreement to move jobs from the US to these countries whose wages and worker protections do not reach the level of the rest of the EU.” 

Over and above a transposition of Euro Directives on agency workers and the like, Owen E Herrnstadt of the International Association of Machinists argues:

Negotiators should also condition each country’s participation on its adoption, implementation and effective enforcement of fundamental human rights reflected by International Labor Organisation (ILO) Conventions and jurisprudence … Negotiators should ensure upward harmonisation of labor and employment laws, regulations, policies and directives so that both regions compete on a level playing field – a level playing field that incorporates ILO Conventions. 

In pressing for the adoption of ILO Conventions and jurisprudence Herrnstadt moves the US unions onto the ground occupied, at least publicly, by the European Commission whose initial position is:

In the labour domain, the starting point for discussions should be the parties’ exiting commitments in relevant areas, including the ILO 1998 Declaration on Fundamental Rights and Principles at Work, as well as its follow up, and the 2008 ILO Declaration on Social Justice for a Fair Globalisation, which applies to all ILO members. 

The Commission goes on: “the EU considers that ILO core labour standards … are an essential element to be integrated in the context of a trade agreement.”

Although the ETUC looks across the Atlantic and raises doubts about how far the US could move towards the ILO:

The ETUC has specific concerns about the lack of ratification of ILO Conventions and violations of fundamental labour rights in the US, notably on the right to organise and negotiate collectively, and particularly but not exclusively in Right to Work states 

At the end of July 2014, the ETUC was again stressing these issues to the Americans. As well as making the point about the lack of rights to organise and bargain collectively in Right to Work states in the US, ETUC General Secretary Bernadette Ségol also underlined that:

  • trade unionists oppose the inclusion of the investor state dispute settlement (ISDS) provisions in the agreement; considering that both parties are advanced economies with well-developed legal systems, the ETUC sees no reason to create a by-pass to national courts for foreign investors
  • TTIP should include a comprehensive and enforceable labour/development chapter; the EU and US should commit to the ratification and full implementation of the core labour standards of the UN International Labour Organisation. 

But, at a fringe meeting on TTIP at the 2014 TUC Congress the International Director of the US United Steel Workers union, Ben Davis, said that the US would not ratify the ILO core conventions “in our lifetime.”

Even if there were a clause in the treaty protecting labour rights, we would need to be sceptical about its effect. In the Canadian-EU free trade deal - CETA - there is a labour rights clause but it only binds the signatory States, not the corporations. And even if it did bind the companies, we have to remember that Article 28 of the Charter of Fundamental Rights of the European Union 2000 says:

workers … or their … organisations, have, in accordance with Union law and national laws and practices, the right to negotiate and conclude collective agreements at appropriate levels and, in cases of conflicts of interest, to take collective action to defend their interests, including strike action.

When tested in the European Court of Justice in the Viking and Laval cases, the Court held that the right to conduct business trumped the right to collective bargaining and the right to strike to protect a collective agreement. And in the Alemmo-Herron case, the Court ignored Article 28 in order to free an employer of the obligation to honour a collective agreement.

It does not require much imagination to grasp the outcome of a claim brought by a multi-national corporation that its profits had been dented because national laws in an EU State permitted strike action or required the company to abide by a collective agreement. This is made yet worse because such a claim would go before the non-judicial ISDS mechanism where the corporation would sue the State and no union or worker would have the right to be represented or be heard.

In the British context, it is inconceivable that the current government would sign up to enforceable ILO Conventions as British labour law, mainly enacted by the previous Conservative government, is intentionally outside of these protections - making the UK effectively a “right to work” state.

The House of Lords, in paragraph 81 of its May 2014 Report on TTIP, echoes many of the points made by the ETUC:

We … urge the UK Government and the European Commission to seize the opportunity presented by the sustainable development chapter of the negotiations to press the United States to ratify the International Labour Organisation’s core conventions. 

This call is may be slightly disingenuous as the labour law reforms enacted under the Thatcher and Major Conservative Governments of the 1980s and 1990s have taken the UK outside many of the protections offered by the ILO Conventions, particularly ILO Conventions 87 and 98 so for the Lords to call on the Government to press the US on this may be somewhat forlorn.

In its response to the Lords the Government in July made it clear that it did not "expect these discussions to cover individual implementation of ILO Conventions in either the US or EU” unsurprising as its predecessor had already opted out and went on to argue in what must be seen as a new policy development that it did not believe “that the ILO Conventions necessarily represent a universally agreed acceptance of ‘good’ labour standards.” 

If the Government is struggling to win hearts and minds for TTIP it may be because of the questionable economic benefits promised for the peoples of Europe and America, the experience of the Americans with NAFTA and the developing opposition of organised labour to ISDS and the realisation that improved labour rights may be undeliverable.