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EU-US trade deal will intensify race to the bottom

Corporations like Monsanto, Nestle, Toyota and the big pharmaceuticals are amongst the world’s most powerful economic actors hard at work promoting an increasingly complex web of bilateral deals aimed at opening up trade and driving down wages and conditions.

Their ultimate aim is a transatlantic deal between the European Union and the United States. For the time being, they will be satisfied that after four years of negotiations, the EU and Canada have signed a multibillion-dollar trade pact that will integrate two of the world's largest economies.

The deal removes some of the barriers impeding the expansion of the global corporations, and makes the Canadian marketplace the only one of the rich G8 countries with open borders to both the North Atlantic Free Trade Area and the European Union. The EU has recently completed smaller agreements with South Korea and Singapore.

The big prize for the corporations is a Transatlantic Trade and Investment Partnership (TTIP) between the United States and the EU. A second round of talks scheduled for early October was one of the casualties of the US government shutdown. It is far from clear whether they will restart during the US Congress self-imposed three-month extension of its power struggle over government spending.

Signing a deal is considered as second best to the World Trade Organisation’s failed Doha round of negotiations. Though informal Doha talks continued last week in Bali, differences over agricultural imports effectively brought the process to a halt in 2008 after seven years of unresolved conflicts between developed nations led by the European Union, the United States and Japan, and the major developing countries – India, Brazil, China, South Korea, and South Africa.

On Monday, the three member states of the Russian-led Customs Union involving Belarus and Kazakhstan agreed with India to start preparations for their own free trade agreement, even whilst negotiations between India and the EU, started in 2007, remain stalled since a meeting earlier this year. 

Whatever the obstacles presented by national interests, the internal and external pressures on corporations to expand their operations in search of cheaper labour and bigger markets are irresistible. A new study from the Seattle to Brussels Network (S2B) reveals the corporate forces at work pushing for the proposed EU-US deal and warns of the likely damaging consequences for basic rights, workers and the environment.

Despite the ritual claimed objectives of jobs and growth, the experience of the 1994 North American Free Trade Alliance – the world’s largest trading bloc linking Canada, Mexico and the United States – is precisely the opposite. US president Clinton promised 20 million US jobs. The result? A net loss of almost a million and a downward pressure on wages as jobs followed investment across the border to Mexico.

Harmonisation of EU-US regulations will be designed to ensure a race to the bottom. America’s refusal to ratify key International Labour Organisation standards and conventions would almost certainly be replicated in Europe, adding to the intensity of conditions resulting from the recession. In the name of “restructuring”, an EU-US deal would increase pressure for the adoption of US anti-union “right to work” laws.

In order to boost transatlantic trade, TTIP would remove environmental protection – including the European “precautionary principle” approach – through the proposed “mutual recognition” between EU and US environmental standards.

TTIP would ensure the progressive concentration of even greater economic powers in the hands of large agribusinesses at the expense of consumers and farmers, says S2B. Recently agreed restrictions on fracking could be overturned. National encouragement favouring local production would be outlawed. Resistance to GM foods would be defeated. S2B warns of the proposed deal:

What emerges then is an understanding of TTIP as the political project of a transatlantic corporate and political elite which, on the unfounded promise of increased trade and job creation, will attempt to reverse social and environmental regulatory protections, redirect legal rights from citizens to corporations, and consolidate US and European global leadership in a changing world order.

They’re not wrong.

Gerry Gold
Economics editor
23 October 2013

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