Secrecy, spin and cheap labour ’trade’ deals
Corporate Watch (UK) | March 24, 2011
Secrecy, spin and cheap labour ’trade’ deals
EU trade policy is formulated in the interests of transnational finance firms. These firms have a strong presence in the City of London, and thus much of the pressure for a corporate trade agenda comes from the UK. It is trade policy that undermines workers within the EU and especially in the UK, although all this is hidden by secrecy and spin. Without such mechanisms for hiding the truth, and if the UK public had the chance, instead, of information on the commitments being made on their behalf, there would possibly be more resistance to an agenda that has such negative implications for workers. Linda Kaucher writes.
While World Trade Organisation talks have been stalled for some years, the EU has engaged with bilateral trade deals that are much more secretive. Now, an EU-India Free Trade Agreement is being fast-tracked, although without publicity. In this agreement, the sole demand that India is making is for access for Indian transnational corporations (such as Tata, Wipro, Infosys) to be able to bring in workers from outside the EU to work in EU countries. In this way, corporations can tap into the profits to be made from the wages difference between India and the EU. The fact that this access, called Mode 4 in the trade arena, is the single demand from India in this agreement is indicative of the commercial importance of this access for the corporations involved. But to whose cost?
The EU Trade Commission has confirmed that the Agreement is essentially a UK agreement, under the auspices of the EU. Accordingly, the UK will get 85% of the ‘gain’, though this benefit, in investment opportunities, will actually be for transnational financial firms based in London. In return, according to the Commission, the UK should expect 85% of the ‘pain’, which is Mode 4, and it is UK workers who will suffer from that, as bringing in cheap labour means undercutting local workers and job displacement here.
When there are calls for information on the Mode 4 commitments that the EU Trade Commission is making, in the UK or in the European Parliament, responses are spun. There is an insistence that these are not ‘workers’ but ‘service providers’; that they are ‘temporary’ and this is ‘not migration’; and that this is a ‘trade’ issue and not an ‘employment’ issue.
But Mode 4 access is set to devastate working conditions here, especially as UK managers, across the public and private sectors, faced with having to save costs, are offered cheaper labour, or cheap onshore outsourcing. Mode 4 is a perfect fit for a context of public services cuts.
Leaked documents from another EU Member State government show that the governments of other Member States have consulted with their labour organisations, and have opted for very strict limits on their Mode 4 commitments, allowing transnational corporations to bring in only very limited numbers of ‘Intracorporate Transferees’(ICTs). There have been no such consultations in the UK on its Mode 4 commitments, only secrecy, despite the fact that the UK government, as the documents show, is willing to take the lion’s share of the EU labour access commitment - 40 percent plus. At the national level, the UK government recently exempted ICTs from any numerical limits, or caps, which fits perfectly with an unlimited Mode 4 offer at the level of international trade commitments.
Even though the Trade Commission admits that this ‘EU’ Agreement is predominantly a UK deal, it has been kept off the screen here, and the Mode 4 aspect kept particularly secret. It is notable that, when David Cameron and Vince Cable fronted a huge UK government ‘trade’ entourage to India last July, they failed to mention this deal to the UK media posse.
In February 2011, the government presented its Trade White Paper but did so simultaneous to the media diversion of Project Merlin and bankers’ bonuses. Mode 4 is only mentioned in one paragraph of the White Paper, and is couched in the spin language of ‘brightest and best’ and ‘competitiveness’. But even now, under national labour immigration provision, some of those ‘brightest and best’ ICTs are being paid below the UK Minimum Wage, with wages bumped up on paper with tax free ‘expenses’.
This key Mode 4 part of the Trade White Paper, then, went unnoticed. Only a very weak statement of support for Small and Medium Enterprises (SMEs) was picked up by the press, while there was, in fact, no such support at all. The international trade agenda, and particularly the Mode 4 aspect, privileges transnational corporations to the detriment of national firms and SMEs. Transnational corporations are privileged in bidding for contracts because of their supposed efficiency, large economies of scale and so on, as well as being transnational, which means they are more able to utilise the cheap labour mechanism of Mode 4.
The process by which trade policy favouring the interests of transnational finance firms is formulated is a secretive one. City of London financial services firms and banks, such as International Financial Services London (IFSL), have a Liberalisation of Trade in Services Committee (LOTIS). It is in meetings of the LOTIS committee that UK Trade and Industry (UKIT) bureaucrats are told what input to take to fortnightly trade policy meetings in Brussels.
Despite the enormous bearing these meetings have on the UK economy, on UK and EU trade policy as well as on the lives of people living and working in the UK, no records of these private meetings are available. Similarly, no minutes are available from the Commission’s Brussels meetings of trade bureaucrats from all Member States. So we can only find out about our government’s input to EU policy anecdotally, via other Member States representatives.
Transnational corporations have privileged access to influence trade policy, both here and in Brussels, directly with the EU Trade Commission. Last month, the NGO Corporate Europe Observatory launched legal action against the European Commission for privileging corporations in relation to the EU-India Free Trade Agreement. A letter written by Peter Mandelson is a key part of CEO’s evidence.
Negotiations for bilateral trade deals, such as the EU-India Free Trade Agreement, are kept secret until they are effectively finalised or ‘frozen’, before the formal finalisation when the European Parliament gives its ‘assent’. However, a pattern of ‘provisionally implementing’ trade agreements before formal finalisation shows how ‘EU democracy’ is being bypassed. The European Parliament’s huge agenda means that the committee stage, in this case the EP’s International Trade Committee, is all-important. Consequently, the INTA is a key site for secrecy and tricks.
A confidante of IFSL in London is in a key vice-chair position on this Committee. In addition, ‘academic’ support from the think-tank ECIPE helps the process of having the agreements slip through. The ‘academic’ advice, which includes the denial of negative effects on EU workers, comes from London School of Economics staff that run ECIPE. The lead LSE academic from ECIPE, a ‘Mr’, is introduced to the committee as ‘professor’, which is probably more convincing for getting the Committee to agree to trade deals.
When UK Conservative MEP Sajjad Karim presented to the INTA the draft document on the EU-India FTA that would subsequently go to the European Parliament for approval, he omitted to mention the Mode 4 factor, or the fact that India would not sign up without it. Thus, the fact that this is such a key part of the deal, and that it has such profound implications for EU and especially UK workers, was effectively hidden from the Committee, which then recommended that it go forward to the EP.
An aspect of the secrecy surrounding the trade agenda generally is the impression, deliberately maintained, that ‘trade’ is mostly about goods, which obscures the importance of labour and ‘services’, which include banking, financial services and investment. Indeed, at the last big meeting on the Doha agenda in Geneva in July 2008, the report of the ‘services’ meeting was held back till the media had left Geneva. And when another Doha Ministerial meeting was proposed, WTO head Pascal Lamy specifically advised member states to avoid not only any media circus, but any mention of ‘services’ too.
Secrecy, spin and technical language are very effective in deterring media attention from the trade agenda. Even the BBC in Brussels fails to report on it, despite the overriding social effects and the underlying importance to UK domestic policy-making.
With the passing of the Lisbon Treaty, Member State parliaments lost the right to veto trade agreements. This well-kept secret in relation to the Lisbon Treaty, diminishing the role of national governments in trade dealings, further decreases the possibility of trade reporting in the UK.
The spin language of ‘competitiveness’ is widely used in relation to trade. But ‘competitiveness’ comes down in the end to the efficiency of the individual firm. The predominance of competitiveness, then, leads to a commodifying of labour that justifies using the cheapest labour from wherever. This is the Mode 4 situation we are heading into.
There is a need to cut through the secrecy, spin and deliberate complexity of trade language to expose what the deals being stitched up in Brussels, to suit transnational investors, will mean for UK workers. Trade unions are well placed to disseminate information and encourage debate on this so that it does not remain the preserve of those who benefit, while workers lose.
The long-term wariness among British unions to discuss how migrant labour is being strategically used has served to support the secrecy, and is allowing the fixing of legal commitments that will severely undermine workers’ rights, including those of future generations. Getting information to workers about these issues should be an urgent priority for the labour movement.
