The ConDem coalition has promised a referendum on significant changes to the way the EU operates. It can start with one on the proposal for a trade deal with India…
If the new government is promising referendums on significant EU treaty changes, the EU/India Free Trade Agreement currently being fast-tracked in Brussels must be the starting point. With Britain’s historic ties to India and significant Indian investment here, this international trade agreement is set to have a stronger effect on workers in Britain than in other EU member states.
The deal, which is in the interests of transnational capital and against those of the people of both India and the EU, especially Britain, is meeting resistance on a range of issues in India (see Box 1). Yet people here have been kept in the dark about the agreement and how it will affect them, particularly in terms of “Mode 4” (see Box 2), the little-known aspect of the deal which will allow transnational companies to move workers from India to the EU.
The Mode 4 aspect poses a big threat to Britain. If allowed, it will permit the huge Indian multinationals that are driving India’s negotiating stance to move a temporary service labour force around the globe, and thus to capitalise on wage differentials.
Indian companies like Infosys and Tata are now among the world’s biggest. Infosys operates within the IT sector, but Tata’s reach – it’s the largest company in India – goes way beyond IT. For instance, the mothballed Corus steel plant in Redcar is owned by Tata, which took it over and closed it. Once signed up, the so-called “intracorporate transferee” provision of Mode 4 will allow Indian transnational companies to bring temporary skilled labour into Britain. So if the agreement goes through, the Redcar plant could reopen with a workforce largely imported from India.
Box 1: Global impact on health and agriculture
Objections inside India to the proposed agreement focus on the curtailing of Indian generic medicine production, as the agreement would strengthen the intellectual property rights (patents, for example) of transnational pharmaceutical companies beyond those contained in World Trade Organization rules.
The effect will not be limited to India: the country supplies much of the developing world with generic drugs for HIV/AIDS, malaria and tuberculosis – which are far cheaper than the branded drugs produced by the transnational industry.
“The impact of this proposed agreement is truly global, as treatment will become considerably more expensive, and countries and funders may have to ration the numbers of people they can put on treatment,” said Ariane Bauernfeind, an HIV/AIDS programme manager for projects in South Africa, Malawi, Lesotho and Zimbabwe.
Farmers in India, too, are resisting the pressure for India to accept subsidised dairy production from the EU, which is happening even while India is considering a Food Security Bill. The EU is demanding severe tariff reductions from India, while leaving subsidies within Europe untouched.
The Indian banking and insurance industries are a major target for transnational financial services corporations, even though it is the domestic nature of the Indian banking system that has protected the country from the most severe effects of global recession and which also provides the rural and small customer banking in which transnational banking has no interest.
A further hugely contested area is public procurement: the Indian government is being pressured to open government spending to transnational corporations, rather than keep it ring-fenced for domestic contracting. UK public procurement is, of course, very open already.
The EU is pressing for similar bilateral and regional free trade agreements all round the world, and meeting opposition. Dairy farmers across Colombia, for example, announced a new round of protests in May demanding that the government halt the signing of their country’s Free Trade Agreement with the EU amid fears that the deal could put 400,000 farmers out of business.
The text of the agreement is set to remain secret until negotiations are completed. But the European Commission’s Directorate General for Trade, which is in charge of implementing the EU’s “common trade policy”, has admitted that India will not sign up without the inclusion of Mode 4 – indicating the significance of the potential profit for Indian companies in bringing labour into Britain, and, implicitly, with a direct relationship to the negative effect on British workers.
The European Commission acknowledges that Mode 4 is a sensitive issue for member states, but seeks to encourage it by urging business to pressure member states to accept it. The result is that unknown to us a few bureaucrats from Britain’s Business Department attend Brussels meetings and commit the futures of British workers to these arrangements. All this is going on despite Tory talk of an immigration cap.
As yet the mass media has failed to shine any spotlight on the issue of Mode 4, on this particular Agreement, or on how the trade agenda generally affects people here.
Recently elected Green MP Caroline Lucas, a long-term MEP, has had the privilege of not only representing British people in the European Parliament but also on the European Parliament’s International Trade Committee (INTA). In this unique position she has had full information on Mode 4, included in all the trade deals the EU is negotiating, yet has failed to inform the people that she has been paid to represent – despite suggestions that she should. The UK constituency she has just won, Brighton, has a relatively strong No-Borders group arguing that there should be no restrictions on movement of people between countries.
The Green New Deal manifesto included a cruel promise to young people of a million new green jobs without dealing with the fact that under existing regulations – as revealed by official figures during the election campaign – foreign-born workers have been employed in 95 per cent of the net number of new jobs created since 1997. The Free Trade Agreement on which Lucas is so silent can only accelerate that trend.
At the EU level, members of the European Parliament are active in calling for the inclusion of child labour and environmental standards in the agreement, against India’s rejection of the inclusion of such issues as “trade”. But there is as yet nothing from MEPs in regard to the effects of Mode 4 on the people that they are there to “represent”.
The need for public information and debate on the EU/India Free Trade Agreement is urgent: the EU wants the deal concluded ahead of an EU/India summit in October this year. Those who represent transnational capital know that India has not been hit as hard as the industrialised countries by the economic crisis, and want the Indian market forced open via the mechanism of an EU agreement. And here, cheap “onshore” outsourcing in Britain with Indian labour will tempt managers in both the public and private sector to cut costs by displacing British workers.
Although under the Lisbon Treaty the European Parliament is now supposed to have the last say on trade deals, the European Commission is pushing to implement the EU/South Korean Free Trade Agreement “provisionally”, before ratification. This is an ominous sign that business interests come first.
The EU/India Free Trade Agreement must be discussed in Britain, with full information, and with the connections drawn to related structures through which the key capitalist strategy of undermining workers with foreign labour is being enacted. In India the Right to Information Act is being invoked by activists. Here, considering how high the stakes are, we need to demand a referendum on it.
Box 2: Mode 4 – the secret agenda
The aspect of the “trade-in-services” agenda, known innocuously as “Mode 4”, is being included in all of the trade agreements being negotiated by the European Commission. The approach was initiated by Peter Mandelson when he was EU Trade Commissioner.
Trade-in-services includes financial services and telecommunications, which underpin all other services, goods and agricultural trade. When public services are privatised, they are usually liberalised at the same time – and become prime investment opportunities to overseas corporations. Trade agreements, effectively irreversible, provide “investor security” for investments into countries’ key and basic services.
Cross-border trade-in-services has been divided into four “modes” in the international trade agenda. Mode 1 is services bought from abroad, for instance via the Internet. It is Mode 2 when buyers move across borders, for instance students going overseas to buy study programmes. When corporations set up in another country, this is Mode 3. Mode 4 is the temporary movement of skilled service workers to another country.
The information is being effectively kept from the workers in EU member states such as Britain that will be directly and negatively affected. The texts of these agreements, including the Mode 4 element, is confidential until after negotiations are concluded, so they are kept secret from those who will be affected.
Labour liberalisation is a further dimension of trade-in-services beyond what we expect “trade” to encompass. But it is essential to recognise how encompassing this agenda is, and its effects.