Trade Agreements

What are the challenges raised by TTIP and TISA etc? What are the underlying political issues for the union movement? What are our alternatives?

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Re-engineering the power of capital through trade agreements

6th July, 2016 / Ciaran Cross / guest blogger

On the third day of our Summer School at GLI, John Hilary from the UK organisation War on Want confronted the tricky relationships between trade unions in their approaches to the international free trade agenda.

Free trade agreements

Polanyi's classic work "The Great Transformation"

Polanyi’s classic work “The Great Transformation”, first published in 1944

Over the past decades, we have witnessed the widening impact of free trade agreements (FTAs) on labour and society, and a profound shift in the balance of power between capital and labour. As such, the issue of trade policy and relations between countries has become absolutely critical to our understanding of this balance of power, as has the need to find “alternatives for a future not subordinated to capital.”

John provided a potted history of just how this shift in the balance of power has occurred. “Distinct decisions taken at the global level have created trade and investment agreements and sculpted the international economic architecture.” In the terms of sociologist and political economist Karl Polanyi, the effect of FTAs has been the “disembedding” of the economy from social needs and public goods, freeing up corporate actors from any social or environmental objectives beyond their own profit motives.

Trade union responses

However, there are deep divisions within the trade union movement regarding the appropriate response to this problem. In particular, John pointed to the rift between the European unions and those of the Global South, and their respective responses to the European Union’s trade policies. The “standard response” of trade unions in the Global South has been to reject these FTAs as instruments which hand greater power to corporations, limit the power of labour, and foster privatisation and neoliberal economic policies. Unions in the South have mobilised to resist economic partnership agreements and bilateral agreements with the EU on these grounds.

John noted, however, that the European trade union movement has been prone to regard the “interests of workers as tied to interests of EU capital.” The European Trade Union Confederation (ETUC) has largely supported the EU’s free trade agenda. The ETUC has made some criticisms, argued for a fairer balance between labour and capital, but remained largely supportive of the EU’s basic approach for over 20 years.

Among other examples, John pointed to the statement of trade unions on the Non-Agricultural Market Access (NAMA) negotiations at the WTO (the so-called NAMA-11) and their success in uniting international resistance to the WTO agenda. As a result, the ITUC shifted and supported the NAMA-11 position. But the ETUC continued to back a position in support of “free trade with social clauses”.

TTIP, CETA & TPP: the new generation of trade agreements

Support for FTAs with “social clauses” – i.e. unenforceable labour and environmental provisions – has lost much legitimacy with the realisation of the weaknesses of these clauses in practice.

John Hilary's booklet on TTIP (click to download)

John Hilary’s booklet on TTIP
(click to download)

But the question has re-emerged with the “demise” of the WTO Doha Round, and as a new generation of FTAs has begun to be negotiated: the Transatlantic Trade and Investment Partnership (TTIP), the Comprehensive Economic and Trade Agreement (CETA) and the Trans-Pacific Partnership (TPP).

This new generation is not about tariff barriers to trade, but increasingly “about the re-engineering of the relationship between society and capital… in favour of capital”. They attempt to do this through three main processes: deregulation (removing regulatory barriers to trade), privatisation (liberalising markets for services), and corporate power (through privileging foreign investors over public policy goals). Social clauses are unlikely to do much to hinder these objectives.

Building resistance & alternatives

John concluded by hinting at alternatives which the trade union movement needs to prioritise in order to create strategies for resistance: the inclusion of binding social clauses; producing an alternative trade mandate representing social ideals; establishing internationalism as a core principle, in order to reverse the competition between workers across the world; and looking at the alternative models already being experimented with in the Global South.

John stressed the need to begin asking more profound questions: Is increasing trade and investment a good thing per se? What about the environmental impacts of this increase? And does the labour movement finally need to address the critique of economic growth and capitalism that has long been present in other movements on the left?

These are important questions, but we should be probing even further. For one thing, “deregulation” is an increasingly inadequate way to describe the construction of a new transnational regulatory regime – which is effectively what the thousands of pages of legalese in TTIP, CETA and TPP aspire to do.

TTIP meme

TTIP meme

Also, as has become common in popular discussions around “investor-state dispute settlement” (ISDS) and international economic law, some of the conflation of the WTO-regime with the ISDS system is more likely to spread confusion, than produce creative solutions. It is perhaps helpful to recall that the investment law system raises a number of issues, which are not only limited to the issues of transparency and independence in arbitration, or the right to regulate in the public interest – issues which have dominated the European debate over ISDS.

Historically, the call for a New International Economic Order (NIEO) in the 1960s and 1970s, constituted a much more comprehensive challenge to the inequalities of capital and investment flows, resource extraction and international law-making. Much could still be learned from the (albeit unsuccessful) demands of that era.

In the same vein, a critical approach to the mantras of “foreign investment”, “economic development” and “growth”, could not be more important. The international financial institutions (the World Bank and IMF) have been central in promoting policies underpinned by these concepts, across the global economy. As a result, they have played a key role in legitimising the weakening of labour rights in the name of national economic policies driven by growth and foreign investment throughout the world.

There is a real, pressing need to unpick the de-politicisation of these mantras if – as John suggests – the trade union movement aspires to build genuine alternatives with which to resist the investment law regime and the free trade agenda.

Links

Websites

War on Want

Articles/Resources

Heather Horn, Pope Francis’s Theory of Economics: A case for the pontiff’s debt not to Karl Marx but to Karl Polanyi, The Atlantic, Nov 26th, 2013

IUF, Trade Deals That Threaten Democracy, 2014

John Hilary, The Transatlantic Trade and Investment Partnership (2015 Update), War on Want, March 2015

Margaret Somers and Fred Block, The Return of Karl Polanyi, Dissent Magazine, Spring 2014