Why this year’s Davos could be bad for our health

EU and US trade barons should enjoy the rarified air of Davos while they can. They have stormy times ahead. 

John Hilary
21 January 2014

Image: World Economic Forum

Tomorrow sees the start of the World Economic Forum, the annual Davos gathering at which the transnational capitalist class looks to the year ahead and celebrates its continuing domination of the global economy. Open only to invited guests from the highest echelons of the corporate and government elite, the event sees no need to be modest in its pretensions. This year’s forum is entitled simply ‘The Reshaping of the World’.

Two Davos participants who are definitely seeking to reshape the world over the coming year are US Trade Representative Michael Froman and his European counterpart Karel de Gucht. The two men will discuss how they can complete negotiations on the Transatlantic Trade and Investment Partnership (TTIP) by the summer of 2015, an ambitious task given the time usually taken by trade negotiations.

If they succeed, the deal will change the way in which we order our social existence forever.

The TTIP talks have been taking place, in secret, between the European Commission and the US government since July of last year.

TTIP is not a traditional trade agreement aimed at reducing tariffs on imports between trading partners. Tariffs between the EU and USA are already minimal.

Officials from both sides acknowledge that the main aim of TTIP is instead to remove regulatory ‘barriers’ which restrict the potential profits to be made by transnational corporations in US and European markets alike.

This deregulation agenda includes the removal of key social and environmental standards such as labour rights, food safety rules (including on genetically modified organisms), controls on the use of toxic chemicals, data protection laws and even the new banking safeguards introduced to prevent a repeat of the 2008 financial crisis.

The stated aim is ‘harmonising’ regulations from either side of the Atlantic. This poses a particular threat to those of us who live in Europe, as EU social and environmental standards are far higher than those in the USA. Government officials have confirmed there is no chance of any upwards harmonisation of standards through TTIP.

The only way is down.

But TTIP is not just about deregulation. TTIP also seeks to create new markets for the private sector by opening up public services and government procurement contracts to unrestricted competition from transnational corporations. This in turn threatens to introduce a further wave of privatisations in key sectors such as health and education, allowing overseas companies permanent access to parts of our social life that have previously been beyond their reach.

European public services were previously excluded from the free trade agreements of the World Trade Organisation, thanks to a special exemption engineered by EU officials in the 1990s. This ‘public utilities’ exemption has up to now allowed EU member states to maintain public monopolies in key sectors without having to open them up to competition from private providers. Without this essential protection, public services like health, education and water would have had no choice but to be thrown open to competition from across the world.

Three years ago, however, the European Commission quietly announced that it planned to abandon this exemption in trade talks. According to the Commission, protecting public services from competition was an outdated concept, and the private sector should be allowed to bid for public service contracts as a matter of course. From now on, they said, only security services such as the judiciary, border policing and air traffic control should be excluded from trade talks. Everything else is fair game.

This is music to the ears of the US government and its private sector friends, who see the public health systems of Europe as a vast and enticing business opportunity waiting to be tapped. It also fits nicely with the privatisation agenda of the British government, which has spent the last three years opening up our own public services to private companies while at the same time starving the public sector of funds.

David Cameron clearly has no need of a Transatlantic trade pact to carry out his privatisation agenda at home. The significance of trade rules is that they are binding on countries that sign up to them, and thus make it impossible to reverse privatisations in the future. Moreover, TTIP turns out to be particularly useful when it comes to rolling out the Tory agenda across the rest of Europe. British government officials have confirmed that one of their goals for TTIP is to ‘complete’ the European single market by forcing open public service and procurement contracts in other EU member states.

Resistance to TTIP’s privatisation and deregulation agenda is now building, as people become aware of the threat that the negotiations pose to so many aspects of their lives. Public health, environmental and social justice campaigners are joining forces with trade unions and consumer groups in both the EU and USA to oppose TTIP and stop the talks. Parliamentarians across Europe have voiced their concerns at the threat posed by TTIP, just as 178 members of the US Congress have written to President Obama rejecting his call for ‘fast track’ authority to press ahead with the negotiations.

And the campaign has already registered its first victory. Just yesterday it was revealed that European trade commissioner Karel de Gucht is suspending talks on one of the most controversial elements of TTIP: the investor-state dispute settlement mechanism that allows corporations to sue host states before ad hoc arbitration tribunals for actual or potential loss of profits. The European Commission is now calling for a three-month period of public consultation to reassess its position on this aspect of TTIP. But it is pressing ahead with its central deregulation and privatisation agenda regardless.

EU and US trade barons should enjoy the rarified air of Davos while they can. They have stormy times ahead. 


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