Trump as defender of democracy

George Monbiot in The Guardian

He gets almost everything wrong. But last weekend Donald Trump got something right. To the horror of the other leaders of the rich world, he defended democracy against its detractors. Perhaps predictably, he has been universally condemned for it. 

His crime was to insist that the North American Free Trade Agreement (Nafta) should have a sunset clause. In other words, it should not remain valid indefinitely, but expire after five years, allowing its members either to renegotiate it or to walk away. To howls of execration from the world’s media, his insistence has torpedoed efforts to update the treaty.

In Rights of Man, published in 1791, Thomas Paine argued that: “Every age and generation must be as free to act for itself, in all cases, as the ages and generations which preceded it. The vanity and presumption of governing beyond the grave is the most ridiculous and insolent of all tyrannies.” This is widely accepted – in theory if not in practice – as a basic democratic principle.

Even if the people of the US, Canada and Mexico had explicitly consented to Nafta in 1994, the idea that a decision made then should bind everyone in North America for all time is repulsive. So is the notion, championed by the Canadian and Mexican governments, that any slightly modified version of the deal agreed now should bind all future governments.

But the people of North America did not explicitly consent to Nafta. They were never asked to vote on the deal, and its bipartisan support ensured that there was little scope for dissent. The huge grassroots resistance in all three nations was ignored or maligned. The deal was fixed between political and commercial elites, and granted immortality.

In seeking to update the treaty, governments in the three countries have candidly sought to thwart the will of the people. Their stated intention was to finish the job before Mexico’s presidential election in July. The leading candidate, Andrés Lopez Obrador, has expressed hostility to Nafta, so it had to be done before the people cast their vote. They might wonder why so many have lost faith in democracy.
Nafta provides a perfect illustration of why all trade treaties should contain a sunset clause. Provisions that made sense to the negotiators in the early 1990s make no sense to anyone today, except fossil fuel companies and greedy lawyers. The most obvious example is the way its rules for investor-state dispute settlement have been interpreted. These clauses (chapter 11 of the treaty) were supposed to prevent states from unfairly expropriating the assets of foreign companies. But they have spawned a new industry, in which aggressive lawyers discover ever more lucrative means of overriding democracy.

The rules grant opaque panels of corporate lawyers, meeting behind closed doors, supreme authority over the courts and parliaments of its member states. A BuzzFeed investigation revealed they had been used to halt criminal cases, overturn penalties incurred by convicted fraudsters, allow companies to get away with trashing rainforests and poisoning villages, and, by placing foreign businesses above the law, intimidate governments into abandoning public protections.

Under Nafta, these provisions have become, metaphorically and literally, toxic. When Canada tried to ban a fuel additive called MMT as a potentially dangerous neurotoxin, the US manufacturer used Nafta rules to sue the government. Canada was forced to lift the ban, and award the company $13m (£10m) in compensation. After Mexican authorities refused a US corporation permission to build a hazardous waste facility, the company sued before a Nafta panel, and extracted $16.7m in compensation. Another US firm, Lone Pine Resources, is suing Canada for $119m because the government of Quebec has banned fracking under the St Lawrence River.

As the US justice department woke up to the implications of these rules in the 1990s, it began to panic: one official wrote that it “could severely undermine our system of justice” and grant foreign companies “more rights than Americans have”. Another noted: “No one thought about this when Nafta implementing law passed.”

Nor did they think about climate breakdown. Nafta obliges Canada not only to export most of its oil and half its natural gas to the US, but also to ensure that the proportion of these fuels produced from tar sands and fracking does not change. As a result, the Canadian government cannot adhere to both its commitments under the Paris agreement on climate change and its commitments under Nafta. While the Paris commitments are voluntary, Nafta’s are compulsory.

Were such disasters foreseen by the negotiators? If so, the trade agreement was a plot against the people. If not – as the evidence strongly suggests – its unanticipated outcomes are a powerful argument for a sunset clause. The update the US wanted was also a formula for calamity, that future governments might wish to reverse. But this is likely to be difficult, even impossible, without the threat of walking out.

Those who defend the immortality of trade agreements argue that it provides certainty for business. It’s true that there is a conflict between business confidence and democratic freedom. This conflict is repeatedly resolved in favour of business. That the only defender of popular sovereignty in this case is an odious demagogue illustrates the corruption of 21st-century liberal democracy.

There was much rejoicing this week over the photo of Trump being harangued by the other G7 leaders. But when I saw it, I thought: “The stitch-ups engineered by people like you produce people like him.” The machinations of remote elites in forums such as the G7, the IMF and the European Central Bank, and the opaque negotiation of unpopular treaties, destroy both trust and democratic agency, fuelling the frustration that demagogues exploit.

Trump was right to spike the Trans-Pacific Partnership. He is right to demand a sunset clause for Nafta. When this devious, hollow, self-interested man offers a better approximation of the people’s champion than any other leader, you know democracy is in trouble.

Trade is the lifeblood of humanity. Closed doors lead to closed minds

Will Hutton in The Guardian

For 70 years, the US and Britain have underwritten the open global trading system, partly because of a stubborn and correct belief in the merits of free trade, partly out of self-interest as beneficiaries of globalisation and partly because, strategically, it spreads democracy, peace and capitalism.

They have spearheaded successive rounds of tariff cuts and multilateral trade deals and stood by, first, the General Agreement on Tariffs and Trade (Gatt) and its successor, the World Trade Organisation, to keep the system honest. They have cut regional trade bargains, promoted the European single market and, above all, kept their markets open despite other countries, notably China, gaming the system for their own narrow advantage.

The consensus in both countries was that the wider gains transcended any localised pain. No longer. The Americans voting for the anti-trade, America first Trump have consigned all that to history and the unintended consequence of Brexit will mean the same for Britain. The system that underpinned our collective prosperity is about to be trashed.

It brought national and international benefits, including an avalanche of inward direct investment into both countries, powerful international financial and business service sectors, rising global living standards and the economic and democratic transformation of Asia. But both countries’ manufacturing sectors have taken disproportionately heavy hits. Drive round the ailing industrial towns of south Yorkshire or Ohio and compare the economic and social landscape with that of Düsseldorf, Munich, Shanghai or Shenzhen. Decade of consistent manufacturing trade deficits have exacted a cruel toll.

This year, working-class voters across America and Britain’s rotting industrial heartlands delivered their verdict. No more plants moving abroad. No more closures because of cheap imports. No more sales of great companies to foreigners. No more stagnating blue-collar wages. No more immigration. It may be that there are jobs and great prospects aplenty in the burgeoning tech and service sectors in the big cities driven by global trade, but they don’t care. They are hurting and nobody has taken decisive action to help them. The votes for Trump and Brexit mark the end of an era and a new dark age of closure, protectionism and nationalism.

Leading Tory Brexiters will insist that this is a travesty of their position; they want Britain to access more global trade and not be imprisoned, they crazily claim, by the confines of the slow-growing European Union and its bureaucratic inability to cut aggressive trade deals with the rest of the world. They live in a dreamland if they feel that the rest of the world is more committed to free trade than Europe, while EU membership did not hold back Germany from being among the world’s major exporters.

In any case, apart from the promised closure of borders to immigrants, that is not what their voters want, as Nigel Farage always better understood than any of his Tory allies he cordially despises. Working-class voters in south Yorkshire and the West Midlands want the same as their counterparts in Pennsylvania, Michigan and Wisconsin. After all, it was those three states, with their tiny 100,000 vote margin, which gave Trump the electoral college votes for victory. He might be a billionaire, but he is, or at least styles himself, a “blue-collar billionaire”. Blue-collar (post-)industrial workers don’t benefit from free trade and immigration, as he has consistently said for 18 months, in the teeth of opposition from the Republican mainstream who remain free traders. His movement, as he called it, wants to stop both.

‘Build that wall” – along the US-Mexican border – was one of the most insistent chants at his rallies, along with the forced deportation of 11 million illegal immigrants. But more importantly for the international trading system, Trump wants to withdraw from the North American Free Trade Agreement (Nafta) between the US, Canada and Mexico, which he casually dismisses as the “worst trade deal in history”. He also wants an immediate halt in negotiations for both the Transatlantic and Trans-Pacific trade agreements and unilaterally he wants to impose swingeing 45% tariffs, against the rules of the World Trade Organisation (WTO) from which he is prepared to “walk away”, on Chinese imports, which account for half of the US’s trade deficit. Thirty-five per cent tariffs are promised on Mexican imports. The remaining 20 free-trade agreements the US has signed are to be reviewed or abrogated. Cumulatively, the impact would be devastating, killing multilateralism by exposing the already enfeebled WTO as helpless, inciting Chinese and Mexican trade retaliation and destabilising the entire global system of trade and finance.

Optimists say that Trump the president will be much more cautious and realist than Trump the campaigner: his talk on trade should be seen as threats to produce more fairly balanced agreements, not a tearing up of the world system. Maybe. But there cannot be a complete divorce between campaign rhetoric and policy. He believes what he says and nobody in his close coterie is going to urge caution. Not Dan DiMicco, his senior trade adviser, who has promised a potential withdrawal, in the first six months of the Trump presidency, from every major US trade deal if it cannot be shown actively to benefit the US. “The era of trade deficits is over,” he says. “It will be: let’s talk, but otherwise we put tariffs on.”

Another intimate, Walid Phares, has said Trump will go “back to ground zero” on every trade deal, such as the one with South Korea that the president-elect described as “job destroying” and wants to revoke. Trump has already given a commitment that on day one he will declare China a currency manipulator as a precursor to introducing up to 45% tariffs on Chinese imports.

These positions are not posturing: they represent a deeply held view that the US does not need trade except on terms that put America first. The idea that successive American administrations have negotiated deals loaded in the US interest is impossible to concede. Because how else would he explain the rust belt? Equally, there can be no concession that blue-collar jobs are disappearing with or without trade because of robotisation and automation. The America of the 1940s and 50s has disappeared for ever and destroying the international trading system is not going to bring it back.

None of that cuts any ice with a demagogic populist. Trump has promises to keep to a “movement” that expects no less. The last time a Republican president and his party controlled both the House of Representatives and Senate with the same convictions on America first trade was 1928. There were warnings that introducing the Smoot-Hawley tariffs on American imports in 1930 would trigger a slump, but America first Republicans could not help themselves and the Democrats were too weak to stop them.

The Peterson Institute for International Economics in Washington predicts that if Trump raises tariffs on China and Mexico, and they retaliate, then US growth will stop in its tracks for at least two years. The prospects could be even worse if Trump goes further. Already world trade growth over the last year has been the slowest for the last 15. Even introducing the mildest of Trump’s measures must presage a further deceleration and if he goes as far as he promises – walking away from the World Trade Organisation, withdrawing from multiple trade agreements and freely imposing tariffs – then the prospect of a 1930s-style implosion is all too real.

In this context, the foreign secretary, Boris Johnson, babbling alongside other Brexiters about the opportunities for trade deals with the US is surreal. To exit the EU, the one continent pledged to open trade, in order to plunge into a world trade system threatened by collapse is the height of folly. If British voters had known Trump was going to be president in June – and known of his attitude to trade – Remain would have won comfortably. Parliament may find it has a duty to veto the application to exercise article 50 before the end of March; the referendum was only ever advisory and Trump’s attitude to trade changes everything.

One of the many tragedies of the rise of neoliberalism is that the promotion of international trade has been able to be portrayed by some on the left as part of the same portfolio of policies as austerity, privatisation and assaulting trade unions. Wrong. Trade is the essential ingredient of growth and prosperity. The rise of Egypt, Greece and Rome was because the Mediterranean promoted seaborne trade. The rise of maritime Europe after the middle ages was because of Atlantic trade. China has grown so explosively since 1978 because of its opening to trade.

Autarchy, protection and closure to immigration have always meant economic stagnation and, lacking the stimulus of other cultures and ideas, a parallel freezing of innovation and cultural vitality. Trade, exchange and intermingling are the lifeblood of humanity. Of course trade brings losers, and the rise of contemporary Conservatism, with its ferocious enmity to state action to support the incomes, skills and life chances of working-class men and women, in a period of great economic change, laid the foundations of huge anger.

It has been two rightwing demagogues – Trump and his British echo, Farage – who have been the first beneficiaries. But as this drama plays out in recession, nationalism and perhaps even forms of inter-state conflict, there will be a rediscovery of ancient verities. Trade and exchange are the foundations of our civilisation and, whatever Trump and his movement think, the more, the better.

Stop comparing the Canadian Ceta deal to Brexit – we are going to suffer much more in our trade negotiations

James Moore in The Independent


Those Brexiteers who fondly believe that Britain will be able to have its cake and eat it too as regards trade with the EU often used to like to point to Canada as a potential model for our future relationship with our former partners.

Canada, you see, was in the process of negotiating a trade deal that would have eliminated nearly all the tariffs between the two sides.

It would have thus facilitated access to the European single market for the country without it being a member and having to accept lots of Europeans turning up and looking for work in Toronto.

Everything was going swimmingly until, that is, the Walloons of Belgium kicked up a fuss and threatened to derail the deal, the future of which is now hanging on a knife edge.

To get agreements like the Comprehensive Economic and Trade Agreement (Ceta) up and running requires the assent of all of the EU’s 28 member states. Unfortunately, before Belgium can add its name to the list it first has to secure the assent of six regional assemblies. The Wallonian one is worried about the impact of the deal on its farmers.

Cue a blizzard of statements, and counter statements, and threats and counter threats, as both sides face up to the fact that they may have wasted seven years of complex and painstaking work.

Critics of the EU in Britain have used the debacle to bolster the case for leaving.

But critics within the EU have tabled a rather different argument. They suggest that the problem lies with Brussels having ceded too much control over trade to national Parliaments. There is a rich irony in the fact that Britain and its Eurosceptics are part of the reason for that.

For years they preached the virtue of national vetoes and subsidiarity. No handing power to Brussels Bureaucrats!

That may now come back to bite them because it might just scupper hopes of securing a favourable trade deal with Europe.

But, but, but we buy lots from the Wallonian farmers so they won’t have a problem with us!

That was the knuckle-headed response of Brexit supporting minister Chris Grayling. We’ve heard many variants on that sort of theme in recent months.

It’s true that Grayling’s flimsy argument was given something of a boost when the entirely more substantial figure of Germany’s Angela Merkel said she didn’t necessarily see parallels between this debacle and the upcoming talks between the UK and the EU.

But what if someone does kick up a fuss when the outcome of those talks becomes known? Germany might not, despite the childish insults lobbed its way by some right wing politicians and some right wing newspapers. Germany, however, doesn’t speak for the entire EU.

Perhaps the Spanish will decide to throw a spanner into the works unless there’s some movement on the question of Gibraltar. You could hardly blame the Poles for digging their heels in given the way Britain has treated the citizens of that country who live here. Maybe the French will decide it’s time for some payback for past British obstructionism.

Hang on, I hear you say, they’re grown ups. They surely wouldn’t stoop to such tactics. They’ll want a deal that works for both sides too.

Perhaps that’s so. But would you really be confident in ruling out the risk of a repeat performance when it’s Britain’s turn?

The Canadians will manage without this deal. They’re already part of the North American Free Trade Agreement, and they have trade deals in place with other countries besides.

Britain shorn of the EU has nothing of the sort. And it has a very different international image to the one that Canada has.

You couldn’t imagine its Prime Minister Justin Trudeau not guaranteeing the rights of Europeans living in his country if the issue cropped up, or of tolerating calls for child refugees to submit to dental testing.

Goodwill and good PR are powerful currencies, and Trudeau has lots of both, in stark contrast to Theresa May’s nasty and inward looking Tory administration.

An administration that doesn’t appear to have anything resembling a strategy beyond waving its fists, stomping its feet and threatening to go home and sulk if its former European friends won’t play the game by its rules.

Soon the reality of that will start to bite. The sort of problems Canada is having with Europe may ultimately pale by comparison to the ones faced by Britain.

We’ll know who to blame when they emerge. Clue: it won’t be the Wallonian farmers or their surrogates.

Donald Trump supporters are not the bigots the left likes to demonise

John Harris in The Guardian

Last Tuesday, at about 3pm, I parked my rental car outside a polling station in the suburbs of Indianapolis, and began to talk to the droves of people going in and out. There was only one subject I really wanted to hear about:Donald Trump, and his jaw-dropping progress to being the presumptive Republican nominee.

As he said himself, a win in the state of Indiana would seal the deal, and so it proved: he got 53% of the vote, which triggered the exit of his two supposed rivals. Meanwhile, the global liberal left seemed to be once again working itself into a lather, which was easily translatable: how awful that a man routinely described using all the boo-words progressives can muster – misogynist, racist, fascist, xenophobe, or “xenophobic fascist”, as George Clooney understatedly put it – could now be a resident of the political mainstream, and a serious contender for president.

Though calling him a fascist surely demeans the victims of the real thing, Trump has some extremely grim views, and the idea of him in the White House has an obviously terrifying quality. But for those who loathe him, a problem comes when the nastier elements of his rhetoric are conflated with the supposed instincts of millions of his supporters, and familiar stereotypes come into play. “Not all Donald Trump supporters are racists, but most racists are Donald Trump supporters,” says the liberal online outlet Salon. “The unusual geographic pattern of Trumpism … corresponds to the geography of white racial resentment in the United States,” offers a contributor to the political website Vox. “They vote for him because he is a racist bigot,” reckoned one eloquent tweeter I briefly corresponded with.

George Clooney: 'There’s not going to be a President Donald Trump'


Caricatures of rednecks and white trash are obviously in the foreground here. Worse still, such judgments are often arrived at through polling data, guesswork, and a large measure of metropolitan prejudice: in keeping with one of the most baffling failings of political journalism across the globe, too few people think of speaking to the voters themselves.

So to Indiana, where, with my Guardian colleague John Domokos, I spent the best part of five days following the Trump campaign. No one mentioned his assuredly unpleasant ideas about excluding Muslims from the US, nor his absurd proposal to build a wall between America and Mexico, at the latter country’s expense. Indeed, when I saw Trump speak at a rally in the Indiana town of Evansville, he made no reference to what he has said about Muslims, and dealt with the fabled wall in a matter of seconds.

Instead, he talked at length about two of his pet themes. First, he banged on about the free trade deals that he says have blitzed US industry as companies have moved abroad, luxuriated in newly low labour costs, and imported their wares back into the country. Second, he fed that specific story into a general sense of national decline.

‘Clinton’s enemies malign her as someone who enthusiastically supported the trade deal to end all trade deals: Nafta, in 1994, which the Carrier workers put at the centre of their predicament.’ Photograph: Mark Wilson/Getty

All of this is very real. From the dreadful state of the roads to the palpable sense of communities reeling from the military adventures that began in 2001, time spent in the US quickly reveals a country that collectively feels it has taken no end of wrong turns, and must somehow sort itself out. It is one of the more overlooked stories of the 2016 election that Trump’s views about this malaise intersect with the insurgent campaign still being waged by that great left hope, Bernie Sanders. There are, in other words, two anti-establishment figures doing their thing on either side of the political divide, with great success.

Trump calls DC Republicans to heel



But in the case of Trump, his positioning fuses with his hyperactive, barnstorming TV persona, and creates something with particularly populist appeal. The presentation is pure political vaudeville, used in the service of anti-politics: rambling (and often very funny) oratory, cartoon political incorrectness, self-obsession so extreme that it comes out looking endearingly self-parodic. But at the core are oomphy words about something built into his audiences’ daily reality: stores full of goods made overseas, and jobs that feel increasingly under threat.

His proposed solution, his detractors say, is probably beyond the reach of a president, and in the short term would presumably hit his supporters’ wallets like a hammer, but it’s simple enough: if any company dares move overseas, he’ll whack their goods with such high tariffs that they’ll soon come running back.

At the polling station, all of the above was reflected in the reasons people gave for supporting him. Just to make this clear: obviously, there are voters with bigoted opinions who think he’s their man. But equally, almost none of the Trumpites I met seemed to be the gun-toting zealots of liberal demonology: they explained voting for him in very matter-of-fact terms, usually with explicit criticism of the current political class. “Jobs, outsourcing, bringing jobs back to our country,” offered one of his supporters. “We’re getting aluminium from China – we don’t need aluminium from China. Hell, we make it right here,” said another. There was also much more nuance than you might expect. “I hate the way he talks about women, but I love the way he handles things,” one woman told me.

Indiana has one particular case study Trump talks about. In Indianapolis, a company called Carrier recently announced the imminent closure of an air-conditioning factory, with the loss of 1,400 jobs. Its operations will be shifted to Mexico. In Indianapolis, average wages are over $20 an hour, but once the move over the border is complete, pay will be more like $3. Talking to workers, it seemed that they were split down the middle, with some – like the local branch of their union, the United Steelworkers – supporting Sanders, while others favoured Trump.

Again, the latter option was often framed in terms of difficult choices, and some degree of hesitancy. A Carrier employee called Brad Stepp described his fear of the future, and why Trump represents “the lesser of three evils”. He was well aware of the absurdities of a high-living billionaire claiming to have the back of American workers, not least in the context of Trump’s recent(ish) claim that people in the US are paid too much. But he had made his choice. “We need somebody that’s tough,” he said. “If he can’t stop Carrier going, maybe he can stop other companies doing the same thing.” In the midst of all this, one character sits in a very uneasy position. Unsettled by their popularity, Hillary Clinton has been trying to echo some of Trump’s and Sanders’ pronouncements on trade and jobs. “I won’t support any agreement unless it helps create good jobs and higher wages for American workers,” she says, offering to be the president for “the struggling, the striving and the successful”. Her enemies, by contrast, malign her as someone who enthusiastically supported the trade deal to end all trade deals: the North American Free Trade Agreement of 1994, which the Carrier workers put at the centre of their predicament. In fact, politics being politics, the details of her record matter less than broad-brush appearances. And here, the story for her adversaries is a cinch. The establishment has failed; she is a card-carrying member of that establishment; ergo, she has failed too.

Herein lies a vulnerability that should chill the liberal left to the bone. Five days after I got back from Indiana, polls suggested that the presumed contest between Clinton and Trump will be much closer than some people imagine. For those who yell at him and his supporters from the sidelines, that news ought to give pause for thought: before it’s too late, maybe it’s time to stop hysterically moralising and instead try to understand not just how mainstream US politics has so awfully failed, but how it might somehow be rescued.

What is TTIP? The controversial trade deal proposal explained

Julia Kollewe in The Guardian

The EU claims it will create millions of jobs and bring down the cost of living – but others say it is a threat to public services such as the NHS
 

An anti-TTIP banner is held aloft at a rally before the G7 summit in Munich in June. Photograph: Wolfgang Rattay/Reuters



If you are not yet familiar with the acronym TTIP it is likely you soon will be. TheTransatlantic Trade and Investment Partnership is a proposed trade agreement and the subject of an ongoing series of negotiations between the EU and US aimed at creating the world’s biggest free trade zone spanning the north Atlantic.

It would dwarf all past free trade deals: the European commission reckons it could boost the size of the EU economy by €120bn (£85bn) – equal to 0.5% of GDP – and the US economy by €95bn – 0.4% of GDP.

It would create several million jobs dependent on exports, Brussels says, while consumers would enjoy cheaper products and services. The average European household of four would be around €500 a year better off as a result of wage increases and price reductions, according to the study commissioned from the Centre for Economic Policy Research in 2013.

The plan is to cut tariff barriers – levies imposed to control cross-border trade – to zero and other non-tariff barriers by 25-50%. The study insists this is a realistic prospect. The business sectors that would benefit most include industries based around metal products, processed food and chemicals, and especially the motor industry.

In the UK (and elsewhere), the main beneficiaries would be big businesses, as smaller firms are less likely to trade outside Britain. The UK could benefit to the tune of £10bn, which means the average household would be £400 a year better off.

The main aim of TTIP is to reduce regulatory barriers to trade, in areas ranging from food safety law to environmental rules and banking regulations. Opponents argue it will water down important EU regulations.

Food safety has become a major stumbling block in the negotiations as both sides prepare for the latest round – the 10th – which takes place from 13 to 17 July in Brussels.

The talks have been conducted largely in secret, but opposition to TTIP is growing on the ground. More than 2 million people in Europe have signed an online petition against the proposed deal. Campaigners have been outspoken about TTIP’s potential dangers and have painted it as a threat to European democracy.
In Britain, MPs on the all-party business, innovations and skills committee havedenounced the government’s firm support for TTIP amid fears for the NHS and other public services.

Concerns are mounting that TTIP could lead to more privatisation, with the prospect of US corporations providing vital UK public services such as transport, education, water and health.

As highlighted in this Guardian video, another major concern is whether standards will drop. For example, the EU bans cosmetics tested on animals but the US does not. Another question is what happens if EU countries want some protection, for instance Italy for its Parma ham, and the UK for its pork pies.
One of the most controversial elements of the trade proposal is the Investor State Dispute Settlement (ISDS) provision. ISDS provisions have been included in many trade deals since the 1980s, to encourage overseas investment in poorer countries. It means private investors can ask a tribunal of international arbitratorsto judge if a government has treated them unfairly – and can get compensation.

Over the past decade some big, mainly American companies, such as tobacco conglomerate Philip Morris, have used ISDS to claim rights. The provision would in theory allow private investors to sue governments for the loss of future profits due to decisions made by national parliaments. Critics say it could be used to attack the UK’s NHS by making privatisations of specific services harder to reverse.



-----

TTIP: the key to freer trade, or corporate greed?

Some say the US/EU trade deal that could be agreed this year will open up markets and promote UK growth. Others fear it will drive down wages and promote privatisation

Philip Inman in The Guardian


Cheap American olive oil could, in a few years’ time, be sitting on supermarket shelves next to the Tuscan single estate varieties loved by British foodies. At present a prohibitive tariff on US imports effectively prices them out of contention.

But a groundbreaking trade deal could lower the $1,680-a-tonne tariff on US olive oil to match the $34 a tonne the US charges on imports from the EU. Or the tariffs could disappear altogether. Either way, Greek, Spanish and Italian olive farmers must fear the Transatlantic Trade and Investment Partnership (TTIP), a deal that aims to create a level playing field between them and massive US agri-businesses.

Trade deals were once seen as a panacea for global poverty. In the 1990s, the World Trade Organisation was formed to harmonise cross-border regulations on everything from cars to pharmaceuticals and cut tariffs in order to promote the free flow of goods and services around the world.

There was always a fear that, far from being a winning formula for all, lower tariffs would favour the rich and powerful and crucify small producers, who would struggle to compete in an unprotected environment.

The effects of the North American Free Trade Agreement (Nafta), signed by the US, Mexico and Canada in 1993, appeared to justify that fear: it became in later years a cause celebre for anti-poverty campaigners, angered by the plight of Mexican workers. Not only were they subjected to low wages and poor working conditions by newly relocated US corporations – and, as consumers, to the relentless marketing power of Walmart, Coca Cola and the rest – but the major fringe benefit of cutting corruption remained illusory.

This year the US hopes to sign what many believe will be Nafta’s direct successor – TTIP. Should it get the green light from Congress and the EU commission, the agreement will be a bilateral treaty between Europe and the US, and, just like Nafta before it, outside the ambit of a gridlocked WTO.

Supporters say it will be an improvement on its predecessor because the main proponents are a liberal US president and a European commission that considers itself concerned with workers and consumers. Why, the commission asks, would 28 relatively affluent member states with concerns about high unemployment, stagnant wages, welfare provision and climate change agree to a charter that undermines workers’ rights, attacks public services or reduces environmental regulations?

TTIP is also billed as an agreement between equals that allows both sides to promote trade: it is claimed that the UK’s national income could be raised by £4bn-£10bn annually, or up to £100bn over 10 years. That amounts to a 0.3 percentage point boost to GDP, which would have pushed this year’s expected 2.4% growth to 2.7%.

  An anti-TTIP demonstration in Berlin this year. Photograph: Wolfram Steinberg/EPA

But it strikes fear into the hearts of many, who believe it to be a Trojan horse for rapacious corporations. These corporations, hellbent on driving down costs to enhance shareholder value, spell the end for Europe’s cosy welfare states and their ability to shield fledgling or, in the case of steel and coal, declining industries from the harsh realities of open competition.

TTIP has been compared to the 1846 Corn Law abolition, which either swept away protectionist tariffs that impoverished millions of workers, or protected a vital source of food and led Karl Marx to ask: “What is free trade under the present condition of society?” His answer was: “It is the freedom which capital has to crush the worker.” Is that the case with TTIP? Here are five key factors to consider.

Health and public services

From the moment TTIP became part of President Barack Obama’s growth strategy, critics have feared that he little realised the expansionary intentions of US healthcare companies or was too distracted to care. The concern relates to the prospect of EU countries, under pressure from rising healthcare costs, handing over major parts of healthcare provision to the private sector. Once services are in private hands, say critics, TTIP rules will prevent them being taken back into state control.

Since these fears were voiced, trade negotiators have excluded provisions that would have allowed firms to sue governments for the loss of health and public services contracts once they expired. This allows the UK’s rail franchise system and the contracting-out of health services to continue under time-limited contracts.

But the US private health industry, which is the largest in the world, views a Europe struggling with the needs of an ageing baby-boomer generation as ripe for the picking. For this reason alone, contracting out the distribution of drugs, the supply of medical devices and the provision of vital services could prove irresistible.

Dispute resolution

A little known facet of every trade deal is a separate form of arbitration for the businesses covered by the agreement, allowing them to avoid the civil courts. As such, the investor-state dispute resolution (ISDS) gives foreign investors the power to sue a government for introducing legislation that harms their investment.

Famously, it was used by big tobacco to sue the Australian government when it introduced plain cigarette packaging. Before and after the scandal, other governments have come under legal challenge from corporations concerned that public policymaking is denying them revenues.

In spring 2014, UN official and human rights lawyer Alfred de Zayas called for a moratorium on TTIP negotiations until ISDS was excluded. He warned that the secret court tribunals held to settle trade disputes were undemocratic. Their reliance on a small group of specialist lawyers also meant that arbitrators sitting in judgment were the ones who at other times represented corporate clients.

De Zayas feared that smaller states would find themselves in the same position as many governments in trade disputes, suffering huge legal bills and long delays to public policy reforms. He was joined in his mission by NGOs and, most importantly, by MEPs in Strasbourg.

As a first concession, the US side agreed to prohibit “brass-plate” firms – those that exist only by name in a county, without any employees or activity – from suing a government. This aimed to prevent a repeat of the Australia incident when the Ukrainian arm of tobacco firm Philip Morris, effectively a brass-plate entity, spearheaded the attack on plain packaging.

  European commissioner Cecilia Malmström has proposed an international court of arbitration to settle investor disputes. Photograph: Emmanuel Dunand/Getty

Many EU politicians said this concession was too easy to circumvent, leaving corporations in a powerful position. So Europe’s chief negotiator, Swedish commissioner Cecilia Malmström, hatched a scheme for an international court of arbitration – an open public forum instead of the private court system. Even her critics said it was a bold move, and unlikely to be accepted by the Americans.

Washington has countered with proposals for a more transparent ISDS court, with live-streamed meetings and the publication of all documents. Not enough, says de Zayas, who wrote recently: “Alas, countless ISDS awards have shown a business bias that shocks the conscience. To the extent that the procedures are not transparent, the arbitrators are not always independent and the annulment procedure is nearly useless, ISDS should be abolished as incompatible with article 14(1) of the ICCPR [International Covenant on Civil and Political Rights] which requires that all suits at law be decided by independent and competent tribunals under the rule of law.”

The two sides have yet to formally discuss either proposal: under deals between the US and Japan and the EU and Canada the issue was barely mentioned, but it is now expected to be among the most contentious.

Regulations

Michael Froman, the US chief negotiator, described the task of harmonising regulations as follows: “For years the US and EU have accepted each other’s inspection of aeroplanes because it was obvious they would not be able to check all the planes landing in their jurisdiction. We seek to expand this practice to other areas.”

So how would Froman apply this to the fact that American cars will still be left-hand drive, restricting their use on British roads? He argues that the cost of imported cars, research and development and testing can still benefit from the harmonisation of regulations on either side of the Atlantic.

Yet there is nothing US food regulators would like less than to accept processed foods tested by EU officials who failed to spot the horsemeat scandal.

And EU regulators are duty bound to reject GM foods, after sustained protests by Europe’s consumers in direct conflict with US farmers. Washington claims it will accept the science when it applies to regulations, which supports GM foods being accepted by the EU as part of TTIP, just as it is part of the WTO agreement.

Tariffs

Dispensing with tariffs seems like a straightforward process compared with tackling complex regulations. Under TTIP, tariffs on goods and services should disappear, though it is expected that some will only be reduced, and others may take years to go the way of history.

Under the Trans Pacific Partnership (TPP) recently agreed, but not yet implemented, between the US, Japan, Australia, Vietnam and other East Asian countries, all goods, from pork to cars, are covered.

A good example of how long it can take for tariffs to come down is found in the case of the 2.5% rate slapped on Japanese car imports to the US: this will start to be incrementally lowered 15 years after the agreement takes effect, halved in 20 years and eliminated in 25 years. In return, Japan will, among other things, lower its tariff on imported beef from 38.5% to 9% over 16 years. A similar programme could be possible under TTIP, with olive oil tariffs lowered over 25 years.

Labour standards and workers’ rights


Japanese trade unions supported the TPP deal, and unions in Europe are expected to follow suit with TTIP. They accept that labour protection rules lie outside the scope of a deal, and that their governments can therefore continue to implement minimum wage legislation and other supportive measures without being sanctioned.

But unions, where they exist, tend to represent workers in successful industries, which naturally welcome access to wider markets. Workers in weaker areas of the economy could find their jobs coming under pressure from harmonised regulations, lower tariffs, or even just exposure to a US rival with a work ethic that denies most employees more than two weeks’ holiday a year.

TTIP is important to the UK government because the US is our biggest market for goods and services outside the EU. It’s seen as especially important for small and medium-sized businesses, which appreciate the lack of language barrier. Britain also has a trade surplus with the US: we export more than we import, which helps counterbalance the country’s huge trade deficit.

Such is the momentum behind the talks that a deal could be agreed by the end of the year, and go before Congress and EU parliaments in 2017. Both sides claim to be making good progress. But the dispute over ISDS and protests from farmers could yet quash Obama’s hopes for US olive oil sales.