During the recent G8 Summit in Belfast, David Cameron said the time had come to ‘press ahead’ with the EU-US free trade deal, known as the Transatlantic Trade and Investment Partnership (TTIP).
Reputed to be worth trillions of dollars to the US and EU economies, background papers are being published, negotiating positions being established and recently around 50 negotiators met in offices near to the White House, to set out the framework for the talks – the largest free-trade deal ever.
The Financial Times reported that the initial talks had developed a ‘feel good factor’.
Feel good for who, though?
The TTIP agreement is being promoted as a chance to grow the EU and US economies with over 1 million jobs being created in the US and 400,000 jobs created in the UK alone. These figures are seen as largely optimistic, but the reports are that the UK’s lead negotiator Ken Clark is anxious to push on and get a deal more quickly than anticipated.
Talks of this complexity normally take a few years and in the US trade negotiations are more open than in the EU, as the US Congress, allows trade unions and other interested parties to intervene in the negotiations as talks progress.
US unions are doubly worried as they were stung badly by the NAFTA deal which paved the way for U.S. manufacturers to relocate to low-wage and union free economies such as Mexico. Although the United States and EU are comparable in terms of wages experts don’t expect mass relocation of jobs in manufacturing, unless it is US jobs moving to the ‘new’ EU countries such as Romania and Bulgaria.
The TTIP aims to remove the tariffs on goods traded between the EU and US; harmonise rules on trade, business and environmental standards; open markets in the service sector, such as transport, to delivery from outside; open up access to government procurement markets and eliminate preferential treatment to local suppliers; and introduce investment protection provisions which will allow investors to challenge state actions which they perceive as threatening to their investment.
Potential gains of an agreement include for the UK a €119 billion increase in GDP of EU equal to €545 in disposable income each year for a family of four in the EU and a €95 billion a year increase in GDP of USA and that EU exports to the US could rise by 28 per cent, particularly of automotives by as much as 148 per cent.
It is also predicted that between 0.2 – 0.5 per cent of the EU labour force may have to change jobs as a result of economic restructuring caused by the agreement.
Another Centre For Economic Policy Research study of the impact of any deal on the UK economy estimated there would be more shifting of the labour force among low skilled workers rather than skilled workers – with a prediction that the largest number of jobs could be created in the automotive sector.
UK unions and the TUC have already expressed concerns about the effect any deal could have on the National Health Service being opened up to big US private health companies, further de-regulation of financial services and public procurement of goods and services.
The other main and burning issue is the effect any deal could have on employment rights and Labour standards in the EU and the USA.
US unions were quick off the mark in indentifying the need to ensure a levelling up of labour standards. EU unions have expressed clear concern that any deal could drive a ‘race to the bottom’ as far as core labour standards are concerned, notably as in the USA, 24 states are now ‘right to work’ states.
The ETUC position has called for any agreement to:
enshrine core labour standards; ensure a trade union role in dispute resolution;
integrate social partners in the negotiation of the deal and monitoring once in place (ie: ‘a seat at the table’);
exclude public goods from intellectual property measures and protect the right of government to regulate in the public interest and favour public delivery of services;
exclude public services from negotiations;
make sure external investors have no right to bypass European courts;
that only services specified in the agreement can be made and make no further liberalisation in financial services;
use negotiations to coordinate action on tax avoidance, the abolition of tax havens and the creation of a transatlantic/global Financial Transaction Tax;
uphold collective agreement provisions for Mode 4 issues – mostly focusing on the rules governing the terms and conditions of personnel moving between the EU and US; exclude the cultural industries from the agreement (being pushed strongly by France);
exclude agriculture from negotiations and promote environnemental protection and EU standards.
The AFL-CIO take a similar line and highlight respect for fundamental employment rights and better mechanisms for worker consultation such as Information & Consultation Rights and European Works Councils – (the majority of EWC Agreements in the EU are with US based companies) and for protections such as the European Agency and Temporary Workers legislation.
They also call for harmonisation and stronger protection for health and safety and consumer protection and environmental protection and data protection; and as with the ETUC a seat at the table for the social partners in negotiations on TTIP.
So expect that the UK government, with its anti-European, anti-union and pro-austerity driven agenda to work hard against any extension and harmonization of employment rights in the deal.
The same goes for many company here in the UK and the EU; and in the US employers have already warned that extensions of employment rights are not on the agenda.
As Celeste Drake, trade and globalisation specialist at the AFL-CIO has said:
“We have no real fear of massive job off shoring of the kind we saw with Nafta or China, but we are worried about a race to the bottom on wages, labour rights, environmental and consumer protections. The danger is that it’s going to be corporate driven and only allow them to capture the gains”.