How the EU is helping to shape globalisation for the benefit of corporations
by Alexandra Strickner
The EU’s role in trade policy
Competences for trade policy have fallen under the Community umbrella since the founding of the EEC, while investment policy competences were rendered an EU matter with the introduction the Lisbon Treaty. Because of this, trade agreements on tangible and intangible goods (e.g. services or protection of investments) with third countries are the responsibility of the EU.
EU competence for trade and investment policy means that the EU Commission (specifically the Directorate-General for Trade) negotiates agreements with third countries on the basis of a mandate provided to it by the EU Council. The EU Parliament has no say in the mandate or in the negotiations. Depending on the content of the resulting agreements, these must be ratified either by the EU Council and the EU Parliament or by these two bodies plus the parliaments of the member states. The latter case applies whenever the agreements pertain to national competences. As such, the EU Commission and the EU governments are the key players in this regard, while national parliaments and the European Parliament merely have the task of ratifying the agreements. In practice, it has been shown that they almost always approve them. Realistically, the scope for rejecting a negotiated, finalised agreement is severely limited due to the immense political pressure involved.
Up until about 2006-2007, the EU sought to assert its trade and investment interests within the framework of the World Trade Organization – that is, in a multilateral fashion. In 2001, a new round of negotiations aimed at further liberalising world trade was launched in Doha, Qatar, but ended in standstill when the countries of the Global South opposed EU and US plans to adopt further liberalisation measures in the absence of significant concessions. As a result, the 2008 Global Europe Strategy saw the EU shift its focus to the bilateral and bi-regional level. The EU currently maintains trade agreements with more than 50 countries (including customs unions and extended partnership agreements) and is currently negotiating trade and/or investment protection agreements with more than 25 other countries.
For more than three decades now, European trade policy has spread its focus far beyond the issue of tariffs. Today, trade agreements serve to make the neoliberal economic order irrevocable at transnational level by using international law. The EU’s interests lie first and foremost in the opening up of export markets for the benefit of globally active European companies and in protecting EU investments through the introduction of “investor-state” regulations. The EU Commission has worked demonstrably closely with business associations to develop its trade agenda, with the result that its trade and investment policy is dominated by corporate interests. At no time in the process has provision been made for public debate, the participation of civil society actors or the effective involvement of parliamentarians at EU and member state level; rather, this involvement occurs only at a rudimentary level, when public debate has been produced through campaigns (e.g. TTIP and CETA). Both the EU Commission and the governments of member states prefer to maintain secrecy and conduct negotiations behind closed doors.
The impact of EU trade and investment policy and the demands of civil society
EU trade policy ensures that European companies (particularly EU corporations) have access to export markets for food and industrial goods. At the same time, it opens up the European market for imports. Ultimately, EU trade policy seeks to utilise international agreements to increasingly pit farmers and workers around the world against one another in the aim of increasing corporate profits. This has led to the destruction of independent production structures in many countries of the Global South and thus also to poverty, exploitation, inequality and increasing import dependency (in the food sector, for example).
At the same time, low transport costs and the reduction of tariffs on industrial goods has afforded EU citizens access to cheap consumer goods. In many cases, this has happened as a result of European companies’ outsourcing of industrial goods production to countries where they can produce more cheaply due to lower wages, less social security and lack of environmental protection. This is accompanied by increasing pressure on wages and social protection in the EU. In agriculture, the combination of export orientation and the opening up of markets has been responsible for increasing cost pressure on farmers. Together with the export-oriented agricultural policy of the EU, this is leading to ever fewer, ever larger farms.
In the services sector, trade agreements enshrine services liberalisation in international law with the aim of making it all but irreversible. The aim of these agreements is to secure market access for service companies in sectors such as water or banking. In combination with foreign investor protection and regulatory cooperation, the rights of corporations are expanded and policy space is reduced. The EU’s trade and investment policy, which is touted by EU political leaders as a major success and a central instrument for securing prosperity and shoring up the welfare state, actually serves corporate interests and the international codification of neoliberal politics in law.
Together with deregulated financial markets, the prevailing EU trade and investment approach stands in stark contrast to our own vision of globalisation, which focuses on human rights and protection of the environment. The Alternative Trade Mandate represents the work of a broad alliance of civil society actors and allies from the Global South, all of whom have worked together to formulate the cornerstones of a sustainable trade policy. Within this policy, trade and investment are a means to an end and form part of an alternative economic and social model that visualises the possibility of another Europe within the world. It is based on the utopian ideal of a good life for all.
EU trade and investment policy must be guided by these objectives and promote cooperation, solidarity and sustainable development. It can and must be an instrument for equitable distribution of global wealth, and it must enable access to resources, goods and services for all.
An emancipatory European trade and investment policy should recognise that international conventions and treaties – such as those on human and women’s rights, labour, environment and climate – take precedence over trade and investment systems. It should allow countries, regions and municipalities to regulate how goods and services are manufactured, distributed and consumed rather than simply relying on the “invisible hand” of the market. The regulation of trade relations supports the realisation of social, cultural and political human rights, and any such system of regulation should pursue its own strategies for sustainable development. In doing so, it will enable communities to support each other and work on equitable resource management systems that respect and protect the environment.
Equally important is the establishment of direct (or as direct as possible) trade relations between manufacturers and consumers. Europe must recognise the principle of food sovereignty and give countries and communities the power to prioritise their local and regional food economy over global agricultural trade. At the same time, European governments and parliaments must hold European companies accountable for the social and environmental consequences of their business activities and those of their worldwide branches.
An alternative trade and investment policy must enforce binding social and environmental regulations and create full transparency in global value chains. It should promote the exchange of ideas and the freedom of access to knowledge and know-how – through open source systems, seed exchange programmes, patent pools and other similar innovations. It should operate an open licensing policy to promote innovation in and access to medicines, excluding patents on life. True emancipatory policies serve to prevent the deregulation of financial services and the privatisation and liberalisation of public goods and services such as water, health and education. Instead, they work to improve the quality of and access to these services, such as through partnerships between public enterprises.
What can we expect from the EU?
The resistance to TTIP and CETA has shown that many citizens are rejecting the contents of these agreements and want to have a say in how they are designed. Never before has there been such a broad, EU-wide alliance against EU trade and investment policy. Yet so far, the EU institutions – the EU Commission, EU Council and the majority of the EU Parliament – have signalled clearly that they have no intention to deviate from their policies. For a shining example, one need only look at the efficiency with which pro-free-trade actors have pushed through the approval of CETA in the EU Council and Parliament. The ruling elites’ approach has indicated loud and clear that there is no political will for a serious change of course; rather, we should expect that the participation of national parliaments in EU trade and investment policy will be further reduced or even eliminated completely, with Juncker’s proposals for the future of the EU already pointing in this direction.
Faced with this balance of power, there is no prospect of enforcing an emancipatory EU trade policy in the foreseeable future – which is why social movements should continue to focus on preventing agreements like CETA, obstructing the progress of negotiations and spearheading public debate on the rules of world trade (more specifically, by promoting a central focus on people and the environment). At the same time, social movements must promote the establishment and development of specific grassroots alternatives aimed at structurally reducing the economic and political power of corporations.
Alliance for an Alternative Trade Mandate (2013) Trade: time for a new vision.