Free trade agreements are the new battering rams designed to break down countries’ ability to defend their own industries. Now the EU is negotiating – in secret – the biggest one of all, with the US. And thanks to the last Labour government, we effectively have no say about it...
When the US speaks, the European Union obeys. And so when US President Barack Obama called in his State of the Union address on 12 February this year for a free trade agreement with the EU, it took Commission President José Manuel Barroso just one day to say that talks would take place to negotiate it.
Multinationals want to be able to shift goods, services and production wherever wages are lowest and profits are highest.
Obama’s reasons were plain: “Because trade that is fair and free across the Atlantic supports millions of good-paying American jobs.” That’s nice to know. EU Trade Commissioner Karel de Gucht said it would mean “hundreds of thousands of jobs” in the EU. Cameron was quick to support it. “A deal will create jobs on both sides of the Atlantic and make our countries more prosperous,” he said. That is a lie.
The idea that allowing free movement of goods and services (and, inevitably, a fair few “essential” people as well) will create jobs all round is a fanciful mirage peddled by vote-seeking politicians. Industrialists know that’s not how it works. Free trade eliminates tariffs and opens up markets, allowing big fish to swallow up minnows. Jobs will be lost, because the multinationals are always seeking to cut costs.
Free trade agreements vary in scope, but the aim is common. It is to identify the areas of trade where tariffs will be scrapped or reduced, allowing companies easy access to markets abroad. They cover both goods and services such as banking or insurance. And they put nations in chains.
The push to negotiate these agreements arose out of the stalling of talks held under the auspices of the World Trade Organization, known as the Doha round after they started in the Qatari capital in 2001. For the past five years, these talks have effectively ground to a halt as developing countries have objected to the prospect of their home markets being taken over by multinationals.
So the favoured technique of imperialist countries has become the bilateral free trade agreement, where they can exert maximum pressure on individual nations.
The volume of trade between the US and the countries of the EU is staggering, amounting to some $2 billion a day. How much of this will be covered by the EU-US free trade agreement is not yet fully clear. The French parliament, for example, wants audiovisual and cultural industries left out, so that it can continue to insist, for example, on a certain proportion of its music broadcasts being in French.
No such demands for protection have come from the British side. Cameron called in May for the talks to cover everything possible. Nothing, the prime minister said, should be left out. “That means everything on the table, even the difficult issues, and no exceptions.”
Stay in the EU, says Washington
Extraordinarily, the US administration has been waging a campaign to keep Britain inside the European Union. Worried that its key globalising ally might leave, the head of European affairs at the US State Department (equivalent to Britain’s Foreign Office) came to London in January. “We have a growing relationship with the EU as an institution, which has an increasing voice in the world, and we want to see a strong British voice in that EU,” Assistant Secretary of State Philip Gordon told reporters. “That is in the American interest.”
On 13 May Obama also waded into Britain’s internal politics, seeking to influence debate on a referendum on the EU. He talked about “a special relationship” with Britain. The US’s capacity to partner with a Britain that is “active, robust, outward-looking and engaged with the world” is “hugely important to our own interests as well as the world,” he said.
The language is interesting. British politicians anxious to puff up their own importance often talk about the “special relationship” with the US. True, the US tends to think of Britain as a special country, because few countries since the Second World War have proved to be more subservient to its wishes. So when the US itself talks about the special relationship, it tends to be because it wants us to do something for it.
Obama’s intervention should – but probably won’t – finally lay to rest the fairy tale that the European Union is some kind of a bulwark against the nasty United States. The US likes the European Union because it creates one huge market with which it needs only one agreement. Without the EU, US imperialism would have to painstakingly, and publicly, discuss with each country separately.
When it comes to US influence over the European Union, Britain is a front door to Brussels. If Britain left the EU, that influence would be sharply reduced – yet another reason why British withdrawal would not only be good for Britain, it would be good for the peoples of Europe.
Anywhere will do
Multinationals don’t care where they make things as long as the labour’s cheap and they can sell their products anywhere. A network of free trade deals would mean they could, say, manufacture in India and sell in the US. Listen closely, for example, to Jürgen Hambrecht, boss of chemicals giant BASF and a member of the European Commission’s High Level Group on the industry, backing the agreement: “A strong manufacturing industry is essential for Europe but we don’t need subsidies. What we need is a level playing field. We will take care of our own restructuring.”
Here’s a free translation: “We don’t care where we make things, and we don’t want subsidies that will tie us down to employing workers in any specific country. We want to be able to move goods and production wherever and whenever we want. We are quite happy to sack people in Europe if that’s what it takes.”
The European Parliament reckons negotiations won’t actually be starting until July, and is busy passing resolutions about what should and should not be covered. Meanwhile US and European officials are pressing on with...negotiations. The word is that they are proceeding surprisingly quickly (though it seems also that agriculture, including the US’s GM products, has not yet been agreed).
The Commission is reported to be aiming to get the agreement negotiated this month, which would be some kind of a record (the EU’s free trade agreement negotiations with India have been going since 2007). Doubtless whatever agreement is to be reached has already been largely done, with rubber-stamping the main task facing national governments and the European Parliament.
For the time being, no one has been told what is going on in what are misleadingly called “informal” talks. According to the New York Times, US and EU officials said that even before Barroso had agreed that negotiations would take place, “they had resolved some of the stickiest issues behind closed doors”.
This kind of secretive operation is typical of trade agreements. In fact, the European Commission is currently being sued by the campaign group Corporate Observatory Europe for withholding information about the free trade negotiations with India. The Commission has been sharing all its negotiating documents with corporate lobby group BusinessEurope, for example, but not with public interest groups. Judgement is expected (from the European Court, so don’t hold your breath) on 7 June.
Setting the rules
Some of the rush is to use the deal – the biggest in the world – to set rules that the US and the EU can force other countries to follow. “An EU-US partnership can act as a policy laboratory for the new trade rules we need,” said Trade Commissioner Karel De Gucht (see Box below), referring to issues like regulatory barriers, competition policy, localisation requirements (having to adapt products to local markets), raw materials and energy. Indeed, a month after Obama’s announcement, the EU began negotiations on a free trade agreement with Japan.
One voice absent from the debate over this proposed agreement is that of the British trade union movement. The TUC has not uttered a word. Compare that with the AFL-CIO, its counterpart in the US. In a statement, the AFL-CIO noted that “in many respects, the European nations’ social programs to protect families and the environment exceed those of US laws and regulations” and said “...any US-EU agreement must not be used as a tool to deregulate or drive down these higher standards. If that is the goal, working families of both regions will pay the price.”
Driving standards from higher to lower is precisely what free trade agreements are all about. They create deserts and call them “level playing fields”. The AFL-CIO knows this, commenting that the established approach to trade has resulted in “increasing income inequality, stagnating or declining wages and unacceptably high trade deficits that are sapping economic growth”.
Silence at home
Why the silence from our trade unions? At the very least, workers should be demanding that their organisations do some research and take a close look at what is planned. Free trade agreements wreak havoc with economies. A free trade agreement with the world’s biggest economy has the potential to wreak havoc at an immense scale.
In recent years there has been some progress on this general issue in Britain, most notably at the 2011 TUC Congress in London, where a motion from the RMT calling for opposition to the largely unreported “Mode 4” part of the EU-India free trade negotiations – allowing Indian workers to come to Britain – was carried. This has led to information on Mode 4 being available on the TUC’s website, but, in truth, not yet much else.
Workers still see free trade agreements as something to be left to the politicians. That’s an attitude that will have to change if we want to keep jobs in this country. ■