Will transatlantic trade treaty really boost wages and growth, asks TUC

As Davos trade negotiators announced they would 'consult' over one part of the controversial deal, the TUC met them to ask if the deal would really benefit ordinary people - or just offer up our public services to multinational investors.  

Owen Tudor
29 January 2014

The Transatlantic Trade and Investment Partnership (TTIP) has been rising up the political agenda over the last year. Rose-tinted articles about how it will restore growth to a sluggish Europe, and boost household incomes by €545 a year have given way to concerns from trade unions, green groups, ordinary citizens and campaigners about its impact on rights at work, food safety and public services, especially the NHS.

Meanwhile trade negotiators from Washington and Brussels have been beavering away behind closed doors, and in private meetings with big business, occasionally addressing mass meetings of ‘stakeholders’.

On 17 February, the lead negotiators, EU Trade Commissioner Karel de Gucht and US Trade Representative Mike Froman, will meet in Washington DC for a stock-take. In March President Obama will visit Brussels to meet Commission President Barroso.

International trade can play an important part in creating jobs and raising wages but it isn’t a miracle cure, and trade deals designed to boost trade can cause problems as well as opportunities. The TUC demands that TTIP delivers more and better jobs on both sides of the Atlantic, and that reductions in tariffs (already relatively low by global standards) feed through into improved standards of living. A sensible trade deal would focus on maximising the benefits while minimising the losses and compensating the losers.

But instead of concentrating on jobs, wages and the cost of living, TTIP advocates seem more interested in eliminating regulations, liberalising public services and finding new ways for private investors to make money.

One of the major battles currently being fought is over Investor-State Dispute Settlement (ISDS) mechanisms. These would give foreign investors access to special tribunals to compensate them if government decisions treated them worse than domestic investors or cost them money.

The case against these Investor tribunals has been set out many times recently: the main objection is that it restricts the policy scope of democratically-elected governments (as much by scaring them off courses of actions as making those actions unacceptably expensive). For trade unions at the moment, our main concern is that Investor State Dispute Settlement would stop a future government restoring NHS services to the public sector.

When the TUC’s head Frances O’Grady met Commissioner de Gucht in Davos, the Commissioner had just announced that the Commission would consult on the investment chapter of the trade deal, including Investor-State Disputes Settlement. This is unusual, given how secretive such negotiations are, and it’s a step forward. But of course we still have to win the argument, both through our formal response to the consultation and our ongoing campaigning.  

De Gucht has said publicly that he accepts that a full-on Investor-State Dispute Settlement system would be unacceptable. That it mustn’t constrain the policies governments can pursue, and that the cases shouldn’t be heard in secret.

But this is precisely how ISDS is being used by investors under other trade agreements, and it is precisely why they want it included in this one.

ISDS would undermine ordinary people’s rights. We need to push negotiators to accept that an ISDS restricted enough to be accepted by the people is not worth having.  

The UK and US have traded investments for over two centuries without such provisions, and it doesn’t seem to have deterred the trans-Atlantic flow of money. Ireland has never signed a bilateral treaty including ISDS, and South Africa has announced that it will review every treaty it has signed that includes such mechanisms.

The TUC wants ISDS removed completely from the deal, and we are supported by Socialists, Greens and others in the European Parliament, as well as consumer groups, environmentalists and trade unions across Europe and the USA.

We need to build alliances to mobilise US public opinion. The last thing we want is for US negotiators to concede on EU pressure over ISDS but demand something just as bad like access for GM foods in return. We need American public opinion to help us protect the NHS from further incursions by US health corporations, and we are working with the American trade unions to that end.

ISDS would entrench the sell-off of public services which will result from the Health and Social Care Act. But the NHS is also under threat from attempts to use TTIP to extend private sector competition even further into public services. Higher education, local government and US ‘Buy America’ policies which ensure public bodies source goods and services locally, are all under threat.

We want the provision of public goods excluded from the deal. And we also demand that de Gucht makes good on his promise that TTIP will not lower any regulatory standards either.

Our opponents claim that we are not ‘ambitious’ enough on trade, and that there are massive gains to be made from a deal that goes far beyond tariff reductions into deregulation, liberalisation and investor protection. But unions are asking the key question: massive gains for whom?

On the contrary, we are ambitious. Our ambition is to see a TTIP that protects our rights to health and decent work, extends workers’ rights secured in Europe to the USA, and boosts growth by increasing wages and creating higher skilled jobs.



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