The point is that global trade is not “free” nor ever can be…
The collapse of the US-EU trade negotiations known as TTIP (the Transatlantic Trade and Investment Partnership) seems — for the time being, at least — like a victory for the people. That at any rate is the view of Global Justice Now (GJN, formerly known as the World Development Movement), whose trade campaigner, Guy Taylor, was present at the recent EU ministers’ meeting in Bratislava that appears to have delivered the coup de grâce to TTIP.
“The death of TTIP is a victory for the ordinary people across Europe,” said Taylor, adding that the victors “stood alongside trade unions, civil society groups, activists and consumer watchdogs to prevent this massive corporate power grab.”
But, as Taylor went on to say, the battle continues. The EU is in the course of the lengthy and increasingly contentious process of ratifying transatlantic free trade’s other ugly sister, CETA (the Comprehensive Economic and Trade Agreement). This is a deal between Canada and the EU which, despite being remarkably similar to TTIP, was agreed by the negotiators in the European Commission in 2014 at least in part because in the popular imagination, Canada is warm and cuddly compared to the rapacious United States.
Yet CETA features many of the same objectionable measures that grounded TTIP, notably the “investor-state dispute settlement” (ISDS) provisions, now rebadged as the “investment court system” (ICS), and the so-called “ratchet clause” which effectively prevents governments rolling back privatisation measures. ICS allows a corporation based in Canada to take an EU member’s government to a special court, outside of existing legal process, should that corporation believe that existing laws or regulations, or plans to introduce laws or regulations, are inimical to its corporate interests.
The mere threat of expensive and lengthy legal proceedings may be enough to warn off any government seeking to defend or introduce measures to regulate financial services, or protect public health or the environment. And the thing is that CETA is open to US companies with operations or subsidiaries in Canada. In August last year, the UK’s Trade Union Congress (TUC) noted that, “This is a real threat as 80% of US companies operating in the EU also have bases in Canada.”
CETA should be formally signed on 27 October, after which it requires ratification by the European Parliament and national parliaments before it become binding under international law. Despite TTIP’s rejection and the concerns of certain national governments (notably in Austria), the European Commission refuses to consider reopening the CETA negotiations.
A protest movement is already building in the face of what GJN describes as “a desperate scramble by European trade ministers to push through CETA by any means necessary.” There’s a 38 Degrees petition, of course. But even the UK government — now in favour of negotiating its own international trade deals, following June’s Brexit referendum — has argued for CETA to come into effect before the ratification process is complete. GJN’s Director, Nick Dearden, described this as “incredible”. According to Dearden, the British Government wants “to lock us into this deal so it still applies after Brexit, and no government would be able to get out of CETA without giving a 20 year notice period.”
In an article originally published on the Open Democracy website and republished on this site, Glyn Moody argues that these trade agreements are part of a project “to impose global trade standards that encourage massive deregulation and privatisation, and to place corporations on the same level as countries.” You don’t have to be paranoid to see the hand of political free marketers at work.
For trade unions, the obsessive pursuit of so-called “free trade” is particularly problematic. In effect, CETA, TTIP and their equivalents covering trade in services (TISA — involving the US, the EU and 20 other countries) and trade between the US and several countries in or bordering the Pacific Ocean (TPP), have been part of a US-led attempt at a corporate takeover of the global economy. The trading regime envisaged by these agreements is not “free” in any sense; on the contrary, it would be unbalanced, undemocratic, authoritarian and negotiated and managed largely in secret. But there is a growing resistance to this version of “free trade” among the mass of people who are not sheltered by privilege or power.
In some ways, this is a worrying development. Traditionally, opposition to free trade has been seen as a reactionary attitude. It lies behind the rise of so-called “populism” in a number of countries. The emergence of Donald Trump, the victory of Britain’s Brexiteers and the growing threats of totalitarianism and xenophobia in much of Europe, America and Asia are all evidence of an as yet inchoate right wing populism which might cohere into a 21st century form of fascism. In much of the world, the left remains unsure of how to deal with this for fear of undermining its electoral credibility.
The big corporations, meanwhile, continue to use market liberalization as an engine driving their power forward across the world. And they have done this largely at the expense of workers.
The New York Times recently examined the enigma at the heart of globalisation — that it delivers increased wealth everywhere you look, but not equally to individuals or nations.
“For generations,” according to the Times‘ Peter S. Goodman “libraries full of economics textbooks have rightly promised that global trade expands national wealth by lowering the price of goods, lifting wages and amplifying growth. The powers that emerged victorious from World War II championed globalisation as the antidote to future conflicts. In Asia, Europe and North America, governments of every ideological persuasion have focused on trade as their guiding economic force.
“But trade comes with no assurances that the spoils will be shared equitably. Across much of the industrialized world, an outsize share of the winnings have been harvested by people with advanced degrees, stock options and the need for accountants. Ordinary laborers (sic) have borne the costs and suffered from joblessness and deepening economic anxiety.”
Goodman reported a typical worker, a Dutch docker or longshoreman at Europe’s largest port in Rotterdam. “More global trade is a good thing if we get a piece of the cake,” the docker, Patrick Duijzers said. “But that’s the problem. We’re not getting our piece of the cake.”
Duijzers’ employer, APM Terminal, is part of the Maersk Group, a giant Danish conglomerate with a poor reputation for labour relations, particular in its Latin American and Chinese operations. Maersk is aggressively responding to global competition by replacing older workers at its Rotterdam terminals with robots. On the 24 April, 2015, APM officially opened its latest terminal at Rotterdam, Maasvlakte II, the world’s first fully automated container terminal.
Over the last three decades, Duijzers’ union, FNV Havens — the dockworkers’ union within Holland’s major union federation — has lost more than a third of its members. Membership currently stands at 7,000 and, after 13 years of industrial peace, in early 2016 more than 3,000 dockworkers belonging to FNV Havens and CNV Vakmensen (the division for professionals in the Dutch Christian union federation) went on a 24-hour strike against the threat of continued automation.
According to Motherboard, a news website within the Vice stable, “FNV Havens claims that 800 jobs are at risk with the introduction of new automated container terminals, which automate some or all of the functions of ship-to-port cranes, stacking operations, or the use of automated guided vehicles. In response, the union wants assurances of job security in place for the coming years.”
The dispute lasted until July 2016, when agreement was reached two days before a global day of action for dockworkers under the slogan “Defend Dockers’ Rights”. The day of action was organized by three international dockers’ organizations: The International Dockworkers’ Council (IDC), International Transport Workers’ Federation (ITF) and European Transport Workers’ Federation (ETF).
“In our industry,” said Jordi Aragunde, IDC general coordinator, “shipping lines are grouped into alliances and port operators join forces to develop uniform strategies to achieve the same goals in all ports of the world. We are now united workers who want to respond to our own needs.”
Although it took over a year to negotiate the agreement, the unions have won all their demands. According to an ETF press release: “The agreement ensures that port workers with a permanent employment contract on 1 January 2015 are guaranteed job security until June 2020. Pre-retirement schemes have been agreed upon, so that older workers will work with reduced working time, while younger colleagues will have job guarantee. Mechanisms to ease the exchange of workers amongst the terminals will also be implemented.” All that remains is to win the same terms across the whole container sector.
This development is important because it represents a small but significant action by global unions within one of the most economically vital sectors of, perhaps, the most significant of all globalised industries — transportation. Globalised trade simply couldn’t exist without globalised transportation, and globalised trade is what CETA, TTIP, TISA and TPP are about.
Economic development has always progressed unevenly, simply because of the variation in the natural endowment of nations. Globalisation has certainly levelled the playing field and enabled poorer countries to climb the economic ladder as they inherit older industries while newer technologies and a growing emphasis on services transform the economies of the world’s richest countries. But while corporate profits have grown across the world, albeit unsteadily and unequally, the distribution of income has shown increasing disparities between rich and poor and between the developed and developing worlds.
In a globalised economy, labour itself is a tradable commodity, and one that typically represents the costliest element of any enterprise. As the dockers and other transport workers have discovered to their cost, businesses are increasingly able to find cheaper workers abroad, and either export the work to them, or import them to where the work is. And they are equally able to automate work, so that human labour is no longer necessary. Globalisation makes this sort of thing more critical to business success and it makes it easier to do, but the way in which globalisation has been introduced and managed has helped the global rich at the expense of the vast majority of the world’s population.
The gap between rich and poor worldwide — no matter how rich or poor the countries they live in — has widened since the 1980s, thanks in large part to the adoption of trade liberalization, the privatisation of state-enterprises, and the implementation of so-called “structural reforms” (or “adjustments”) by the International Monetary Fund (IMF) within the developing and developed world. These have had the effect of strengthening corporate interests and leaving the majority of workers across the world relatively worse off and without the social welfare programmes that once supported them.
The authors of a 2015 article in the Harvard Business Review, titled “The Future and How to Survive It”, observed that “The start of the profit boom coincided with the spread of deregulation and privatization around the world. That trend first took hold in Western countries and moved on from there; in the early 1990s India, China, and Brazil all undertook varying degrees of privatization. The movement introduced private-sector competition to vast swaths of global business, from automobiles, basic materials, and electronics to infrastructure industries such as telecom, transportation, and utilities — all of which had a strong legacy of state ownership. In 1980 those infrastructure industries, most of which were tightly regulated, generated more than $1 trillion in revenue. By 2013 they were generating more than $10 trillion, two-thirds of which was open to private-sector competition.”
The article is based on data from 16,580 publicly listed companies and 11,400 privately owned companies, each with annual revenue of more than $200m. From 1980 to 2013, the total operating profit of these companies, after tax, grew 30 percent faster than global GDP, and now represents almost a tenth of global GDP, up from less than one thirteenth of GDP in 1980. “North American and Western European companies now capture more than half of global profits,” according to the Harvard Business Review. “North American firms increased their post-tax margins by 65 percent over the past three decades; today their after-tax profits, measured as a share of national income, are at their highest level since 1929.”
The shocking thing about this is that in the same period income and wealth inequalities have grown immensely. The figures we have from the US demonstrate that for every decade from the 1940s to the 1970s inclusive, the income share of the richest 10 percent of the US population declined slowly but remained at less than a third of total domestic income. Since the 1980s, that share has leapt to half.
What has happened to wealth inequalities is even more emphatic. According to current figures quoted by the US Center on Budget and Policy Priorities (CBPP), “The top 10 percent of the income distribution received a little less than half of all income, while the top 10 percent of the wealth distribution held three-quarters of all wealth”.
Citing figures calculated by Emmanuel Saez and Gabriel Zucman, the CBPP notes that “these data show a long historical decline in the concentration of wealth from the late 1920s into the late 1970s. Concentration at the top has increased markedly since then, driven by a rising share of wealth at the very top.”
The OECD confirms that despite the growing wealth of countries like China and India largely as a result of trade, a similar pattern of growing inequalities can be seen in almost all countries of the world. “In recent decades, the economic rise of countries like China, Brazil and India has reshaped the global economy,” according to Brian Keeley’s 2015 publication for the OECD, “Income Inequality: The Gap Between Rich and Poor”.
“Among its most striking effects,” according to Keeley, has been “the sharp fall in the number of people living in absolute — or dollar-a-day — poverty and the emergence of a new middle class. But poverty hasn’t gone away. Indeed, in many emerging and developing countries, relative poverty is proving stubbornly resistant and inequality, too, is widening.”
Trade has clearly had an impact on national and individual wealth across the globe. It has undoubtedly extended markets in some goods and services and helped create jobs and even industries in countries that might otherwise have remained greatly impoverished. But its impact has not been uniform, and it has enriched giant corporations, their shareholders and senior employees more than it has enriched anyone else. The point is that global trade is not “free” nor ever can be.
In 2001, the IMF wrote: “Opening up their economies to the global economy has been essential in enabling many developing countries to develop competitive advantages in the manufacture of certain products. In these countries, defined by the World Bank as the ‘new globalizers,’ the number of people in absolute poverty declined by over 120 million (14 percent) between 1993 and 1998.”
But even as recently as April 2016, the IMF’s “World Economic Outlook” highlighted the key role of “structural reforms” in aiding economic growth. Typically, these “reforms” will include privatisation of publicly owned enterprises, removing employment protections and domestic content requirements, reducing tariffs, opening domestic markets to competition and, inevitably, entering “preferential” trade agreements.
“TUC briefing on CETA“, TUC, London, 2015
Pia Eberhardt, Blair Redlin, Cecilia Olivet and Lora Verheecke, “CETA: Trading Away Democracy (PDF)” Corporate Europe Observatory (CEO), Global Justice Now, Euroepan Federation of Public Service Unions (EPSU) and 21 others, London, September, 2016
“Making Sense of CETA Policy Alternatives”, Ottawa, 25 September, 2014
Glyn Moody, “Troubled TTIP isn’t the only ‘trade’ takeover busting our sovereignty”, Open Democracy, 20 January, 2015, Also available here
Peter S. Goodman, “More Wealth, More Jobs, but Not for Everyone: What Fuels the Backlash on Trade“, NYT, New York, 28 September, 2016
Jonathan Keane, “Automated Ports Have Dockworkers in the Netherlands Threatening Strikes“, Motherboard/Vice, Amsterdam, 26 January, 2016
“Dockers to take action to promote contribution to global economy“, ITF, London, 1 July, 2016
ETF, “Agreement on Job Security Reached at Port of Rotterdam“, FNV Havens/ETF, Rotterdam, 7 July, 2016
Richard Dobbs, Tim Koller, Sree Ramaswamy, “The Future and How to Survive It“, Harvard Business School, Boston, October, 2015
Emmanuel Saez, “Striking it Richer: The Evolution of Top Incomes in the United States (PDF)” (Updated with 2015 preliminary estimates), University of California, Berkeley, 30 June, 2016
Chad Stone, Danilo Trisi, Arloc Sherman, and Emily Horton, “A Guide to Statistics on Historical Trends in Income Inequality“, Center on Budget and Policy Priorities, Washington, 30 September 2016
Jesse Bricker, Alice Henriques, Jacob Krimmel, and John Sabelhaus, “The Increase in Wealth Concentration, 1989-2013”, Federal Reserve Board, June 2015,
Emmanuel Saez and Gabriel Zucman, “Wealth Inequality in the United States since 1913: Evidence from Capitalized Income Tax Data (PDF)”, Quarterly Journal of Economics, Vol. 131, No. 2, May 2016,
Brian Keely, “Income Inequality: The Gap Between Rich and Poor“, OECD, Paris, 2015
“Global Trade Liberalization and the Developing Countries”, IMF, Washington, 2001
“World Economic Outlook“, IMF, Washington, 6 April, 2016
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