Transforming trade, out of the ashes of Brexit

by
18 November 2016

As Brexit and Trump alter international relations, campaigning for trade justice is more important than ever, argues Nick Dearden

 

TRADE is about power. That is why, in post-Brexit Britain, and with Donald Trump in the White House, our trading relationships will be of paramount importance. They will define the UK’s approach to issues such as immigration, food, finance, and the protection of public services.

Many campaigners have spent the past two years trying to defeat the Transatlantic Trade and Investment Partnership (TTIP), the United States-European Union deal that threatens to extend further the power of big business over our laws. The campaigning appears to have succeeded: TTIP looks like a dead man walking (and has done for some time, certainly well before Mr Trump attempted to exploit the issue during his election campaign). But campaigning for trade justice remains more important than ever.

No one understands the relationship between trade and power better than the British. We built our wealth trading slaves from Africa. We destroyed the economy of India, one of the most prosperous regions of the world, by undermining its textile trade. We forced mass opium addiction on China, and decimated the population of Ireland under the rubric of “free trade”.

The global trading system remains skewed towards richer countries. Decades after the fall of European empires, many poorer nations remain locked into providing the low-value materials that richer countries use to build real wealth.

 

THERE is also, however, a growing realisation within rich countries that trade is not always an unquestioned good. Some areas of Europe and the US have been impoverished by the ability of corporations to “offshore”: to find cheaper labour or lower standards elsewhere. That has led to a backlash against the global trade system, which was reflected in the US presidential campaigns of Mr Trump on the Right, and of Bernie Sanders on the Left.

The backlash against the global trade system has taken aim at a series of so-called “new-generation” trade deals, including TTIP. These deals have almost nothing to do with reducing tariffs — the traditional free-trade agenda — but, rather, seek to remove “regulatory barriers to trade”. It turns out that these regulatory barriers include things that we often like, such as laws against antibiotic use in meat, minimum-wage legislation, rules to stop the creation of dangerous financial derivatives, and governments’ ability to support their own farmers.

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These corporate trade deals turn every aspect of society into a gigantic marketplace — and they set up mechanisms to enforce that vision. Most of them include special legal panels open only to foreign corporations: special “corporate courts” that can be used to sue governments for taking action that damages corporate investment.

This allows big businesses to sue governments for damaging their profits. Cases to date include tobacco corporations’ suing Australia for putting cigarettes in plain packaging, and Uruguay for increasing the size of cigarette health-warnings; a waste-water company’s suing Egypt for increasing the minimum wage; an energy company’s suing Germany for improved health-and-safety standards on a coal-fired power station; and an oil corporation’s suing Canada over a moratorium on fracking.

This corporate court system is one of the main reasons that TTIP forged one of the biggest pan-European campaigns in many years. More than three million citizens signed an anti-TTIP petition in 12 months. Hundreds of local authorities passed “TTIP-free zone” resolutions. TTIP is, in the words of the EU’s Trade Commissioner, Cecilia Malmström, “the most toxic acronym in Europe”.

 

EU MINISTERS have been falling over each other to call a halt to TTIP in recent weeks. This is a tremendous success for campaigners. But we suspect that TTIP is being sacrificed to save another free-trade deal that is also under threat: the Comprehensive Economic and Trade Agreement (CETA) between Canada and the EU.

CETA is just as dangerous, and has been dubbed by campaigners “TTIP by the back door”. CETA’s corporate court system would allow thousands of US corporations with subsidiaries in Canada (as well as Canadian multinationals) to sue European governments in the same way as TTIP.

CETA was signed by the Prime Minister of Canada, Justin Trudeau, and senior EU officials on 30 October, although it will not come into force until it receives the approval of the EU Parliament and the parliaments of each member state. This could be as early as next year.

The British Government is still hoping to implement CETA before a Westminster parliamentary vote takes place on the deal, so that it can come into force before Brexit. This would make it easier to lock the UK into CETA after Brexit has been completed. Defeating it is a matter of urgency.

Of course, these deals are just the tip of the iceberg. After Brexit, Britain will need to sign dozens of trade deals to replace those that the EU has, until now, signed on our behalf. Unless we remain in the European Economic Area (EEA), that will also include a trade deal with the EU itself. The Government seems to be increasingly sceptical of remaining in the EEA, putting us on a path towards a “hard Brexit” that leaves us with no close arrangement with the rest of Europe.

We know that the British Government wants to sign the third TTIP-style deal on the table, the Trade in Services Agreement (TiSA). This is a super-privatisation deal that includes all services, from finance to telecommunications, and from transport to energy services, health care, and education. From what we know about the negotiations, the deal will include a “ratchet” clause which would make renationalisation of services such as railways virtually impossible.

It also threatens to prevent tighter financial regulation, obstruct governments’ giving preference to renewable energy over fossil fuels, and remove certain categories of immigrants from receiving labour rights. So TiSA must also be stopped.

 

CAMPAIGNERS for social justice must, however, go beyond simply opposing deals, and lay out a compelling vision of an alternative trading system.

In the short term, the best way to maintain decent standards of regulation is to remain close to the EU, probably in a Norwegian-style relationship that allows us to join the single market. Crucially, this would ensure continued freedom of movement of people within Europe, a starting-point for the wider freedom of movement of people at a global level.

This is important if we believe that our passport (or lack of one) should not dictate the sorts of lives we can live. While we might want limits on the ability of money to move around the world, the right of people to travel, live, and study should be an important part of building a more equal world.

But this is damage limitation. If we want to transform the global economy, we need to go deeper, debunking the whole idea that trade is always and everywhere good.

As a first step, we should insist that all trade deals are subject to environmental and human-rights commitments — and make this enforceable. Corporate courts must be scrapped, and replaced with a system that would allow individual citizens whose rights are impinged by corporations to achieve restitution. Such a system is already being discussed at the UN — and is currently opposed by the UK.

Trade can also encourage the transfer of skills and technologies rather than, as at the current time, create private monopolies through rigid intellectual-property laws. The Fairtrade movement has proved that products made in better conditions can find a good market by using decent labelling.

We could go further, and make trade easier for those who produce goods in decent conditions: for instance, by giving better access to our markets to those products made in working environments where trade unions are recognised and living wages are paid. We could also enforce better labelling of such products, in contrast to the current trade deals that threaten to make labelling — of GM products, for instance — less transparent.

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THERE is significant work to do to develop these models, and this is urgent. The alternative is not carrying on as normal. If we fail, the far Right in the US, Europe, and Britain will fill the space with their own project of economic nationalism.

President-elect Trump is already talking along the lines of “beggar-my-neighbour” trade policies, similar to those that were so prominent in the 1930s: deal with your own economic problems by shifting them on to other countries, by, for example, fuelling tariff wars, or protecting industry and then dumping its goods on other markets.

The urgent task before us is to develop economic models that are open, international, collaborative, and local and democratic. Such models must tap into the concerns of those who voted for Brexit, while preserving the internationalist outlook of those who wanted to remain.

 

Nick Dearden is director of Global Justice Now.
A prayer pack on trade justice for Christian groups is available at www.globaljustice.org.uk.

 

Key terms:
TTIP: the Transatlantic Trade and Investment Partnership — a US-EU deal.
CETA: the Comprehensive Economic and Trade Agreement — a Canada-EU deal.
TPP: the Transpacific Partnership — a deal between Pacific Rim countries, including the US and Japan.
TiSA: the Trade in Services Agreement — a deal between 50 countries, including those in the EU, which focuses only on services.

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