The trade deal's time may have passed
The Trans-Atlantic Trade and Investment Partnership (TTIP) – the big EU-US trade deal currently under negotiation – may have run into an insurmountable obstacle yesterday. Not in Europe, where opposition has been growing among unions and civil society groups, but in the US, as a result of a vote in Congress on a completely different trade deal between the US and its Pacific neighbours.
Last night the US Senate voted on what is known in the global trade world as ‘Trade Promotion Authority’ (TPA). Also known as ‘fast-track’, TPA would allow the US administration to negotiate a trade deal within a mandate set by Congress, but with the details hammered out with the other trade deal signatories. Congress would then get a straight yes-no vote on the entire package without the scope to propose changes.
It’s generally believed that without that authority, the US Trade representative Mike Froman wouldn’t be able to finalise a deal with other countries, because they would know that whatever they agreed with him, Congress could unpick. So the Trans-Pacific Partnership (TPP) is in trouble – and everyone expects the same to be true of TTIP when that reaches the same stage in Congress later this year or next.
Tea Party Republicans have often expressed concerns about the power TPA would give their mortal enemy in the White House, but it was friendly fire that led to TPA being voted down in the Senate. All but one Democratic senator voted against, meaning it didn’t reach the threshold needed to pass (the Democrats don’t have a majority in the Senate any more, but they do have an effective blocking minority when they all act together).
It failed to secure their support because up and coming left-wing senators like Elizabeth Warren, and veteran independent socialist senator Bernie Sanders, managed to persuade their more conservative colleagues that the deal would be bad for the US middle class (what our politicians call ordinary hard-working families). They also showed that it would, in particular, give special treatment to foreign investors through Investor-State Dispute Settlement (ISDS) – which is of course hugely controversial in Europe too.
A major issue for TPP in the US labour movement is concern about currency manipulation – especially but not exclusively by the Chinese government – allowing unfair competition that would see more manufacturing jobs shipped overseas. But the poor record on workers’ rights in many countries on the Asian side of the Pacific Rim is also a worry, as it artificially reduces the cost of goods imported into the US, on the backs of low wages, forced and child labour, and the life-cheapening impact of poor health and safety.
While inadequate workplace standards disadvantage the American worker one way, ISDS unbalances the system by favouring the wealthy corporates, who can use secretive tribunals to secure huge compensation payments for actions taken by democratically-elected governments that could harm future or just expected profits.
And although ISDS has been part of international agreements since the 1950s, their use has been growing exponentially, with nearly a tenth of all ISDS cases (p.6) since they were invented being settled last year alone. Even worse than the eye-watering sums involved, though, is the chill factor that ISDS causes. Although the most famous of all ISDS cases – Philip Morris’ case against Australia over plain packaging for cigarettes – has actually not yet concluded, its very existence persuaded the New Zealand government to abandon its own plans for plain packaging without even finding out the result.
So, with the Senate rejecting the fast track TPA that everyone says is needed for TPP to be agreed, what chance does TTIP – already increasingly unpopular in Europe, as TUC opposition to the deal shows – have?
The UK coalition government adopted ‘calm down dear’ as its response to union concerns about the possible impact of TTIP on the NHS and worker, consumer and environmental standards. Now that Sajid Javid and Francis Maude are the ministers in charge, expect a more bullish approach to TTIP.
But they may find its time has passed – the next test will be the European Parliament’s international trade committee report, due to be debated at the end of May. And the opposition to ISDS, deregulation and the further liberalisation of public services is growing here, as well as in Washington DC.
Owen Tudor is the head of European Union and International Relations at the TUC
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