31 March 2017

By Adrian Weir, Assistant Chief of Staff, Unite

In this article, originally published in the Morning Star, Adrian Weir details the risks to the UK’s workforce of international free trade agreements, in particular those which include ISDS clauses, following Brexit.

After US President Donald Trump killed off the Trans-Pacific Partnership (TPP) and put the Transatlantic Trade and Investment Partnership (TTIP) on hold, can the coalition standing against the corporate power grab stand easy?

Beyond Trump’s trade representative declaring that he was open to resuming negotiations on TTIP, there are three more issues on the horizon that should concentrate our minds.

First, the ratification process of the free trade deal with Canada — known as the Comprehensive Economic and Trade Agreement or Ceta.

Second, the European Commission’s proposal to establish a Multilateral Investment Court (MIC).

And third, the recently revealed, and hitherto secret, “deep and comprehensive” free trade agreement between the EU and Japan, being referred to as Jefta.

Canada seems to have two pressing priorities: to provisionally apply Ceta on July 1 and then to ensure British ratification of the treaty before Britain leaves the EU in two years’ time.

If Britain doesn’t leave the EU before ratification by member states, it will be tied into the free trade agreement for a further 20 years.

Provisionally, application of the deal will reduce tariffs that currently exist on Canadian products, such as maple syrup and fresh lobsters.

But full ratification by member states — and in some cases regional assemblies also — will be problematic because of the inclusion of the rebranded investorstate dispute settlement (ISDS).

Although the rebranding now calls ISDS the “investor court system” (ICS), the essentials remain the same — privileged access to quasi-courts for multinational corporations to sue governments acting in the public and not necessarily the corporate interest, for example, on public services or workers’ rights, with no right of appearance for civil society organisations.

ICS is proving problematic for the European hierarchy despite the brave face of Cecilia Malmstroem, the EU’s Trade Commissioner. Although Malmstroem argues that it is only a “matter of time” before all 28 member states ratify, she has been forced to acknowledge that there is serious opposition in six or eight countries.

In France, 153 elected politicians, local and national, incensed by the government’s sleight of hand over ratification have applied to the country’s constitutional court for a review of Ceta. The court has responded with a full investigation of the terms of the treaty.

French legal opinion suggests that the ICS is not compatible with the French constitution. Giving foreign corporations privileged access to a court, a right not enjoyed by domestic corporations, is in contravention of the principle of equality before the law.

In Ireland, Sinn Fein is mobilising opposition to ICS. Matt Carthy MEP explains: “The Irish people need to have their say on the ICS in a referendum. And the possibility of ensuring this goes to a vote of the people puts us in a unique position to block Ceta in Ireland.”

Opposition is mounting again in the Wallonia region of Beligum and in Italy, Bulgaria and the Netherlands.

If full ratification stalls, what would that mean for the provisional application of the treaty? The German Constitutional Court has ruled that provisional application can be undone. Further, many countries in the European Council (not the Commission) reserved their right to undo provisional application.

Opposition to Ceta is not just a technical, legal issue. Research by Tufts University shows that for Canada, Ceta will transfer 1.74 per cent of national income from labour to capital. In other words capital will benefit from Ceta at the expense of labour, which can look forward to average incomes falling by $2,650 by 2023.

In all of the Ceta signatory countries, Tufts estimates, there will be something approaching a quarter of a million job losses.

Clearly battles over ICS on a treaty by treaty basis have prompted the European Commission to seek alternatives, to eliminate the focus of opposition.

Towards the end of last year it published proposals to establish a permanent ICS structure outside of specific bilateral treaties but each treaty could include reference to it.

Step forward the MIC. The Commission hopes that a permanent court sitting in judgement on ISDS-type issues would apply to all future agreements, if the parties agree.

The Ceta treaty contains references to the proposed new institution as does the draft EU-Vietnam free trade agreement, but of course the MIC is still very much in its early stages.

The TUC has comprehensively dismissed the MIC, noting in its submission to the Commission that the Commission’s consultation was “biased in favour of the proposal as it provides no opportunity for respondents to reject it”.

It goes on to call the MIC “unnecessary” and quotes corporate layer Cromwell Morris advising clients that ISDS type provisions give corporations “leverage to negotiate with the host government and cause it to change its behaviour more quickly.”

Rather than give corporations their own private court, the TUC raises the serious point that labour chapters in the existing EU-free trade treaties are woefully inadequate.

It points out that the South Korean government has recently trashed the Korean unions but the terms of the labour chapter in the EU-Korea free trade agreement contain no sanction mechanism if labour rights are violated. This same weak, non-enforceable approach has been included in Ceta.

The Commission’s promotion of corporate courts makes the recently disclosed Jefta all the more interesting as it would appear that the Japanese are resisting the inclusion of ICS type mechanisms in the terms of treaty.

In any future British-EU trade agreement, it will be likely that the Europeans will seek to bind Britain to the proposed MIC.

Japanese investors abroad have traditionally used the host nation’s courts to pursue any legal grievance but the European negotiators are pushing for an ICS system because it is part of the “emerging norm.”

It is not of course, it is however part of the Commission’s policy objective for all free trade agreements.

In closing, we may note that there is no improvement in the labour chapter in Jefta, only an “obligation” to implement already ratified International Labour Organisation Conventions, not to ratify any outstanding conventions, for example Japan has not ratified Convention 105 on forced labour.

It also has the same lack of enforcement mechanisms as in Ceta and the EU-Korea agreement. Because these negotiations have been conducted in secret, we do not yet know how close the treaty may be to ratification, if that’s likely before March 2019 and for how long Britain would be bound by the terms of Jefta if ratified before Britain leaves the EU.

To return to the opening question, can we stand easy? Unfortunately, the answer to that question is a resounding no!