The TTIP’s impact on labour rights: the chronicle of an anticipated disaster

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Translated by Anoosha Boralessa (Jan 2016). Not reviewed by www.bilaterals.org or any other organization or person.

The TTIP’s impact on labour rights: the chronicle of an anticipated disaster

Author: Adoración Guamán, 8-12-14

Social dumping and a regulatory race to the bottom are the first consequences that are forecast, of we know so far of the TTIP – the Free Trade Agreement between the United States and the European Union.

Before these new bargains on labour rights, political and trade union forces have to respond clearly and decisively to achieve social awareness and mobilization on the Treaty.

The seventh round of the TTIP negotiations took place two months ago. The information we have on this future trade agreement continues to be scarce and profoundly bias. Its unquestionable impact on worker rights on both sides of the Atlantic is kept hidden and gagged.

Faced with social pressure last October, the EU declassified the document with which, in June 2013, the Council gave the Commission the mandate to“officially” begin negotiations with the US (as early as 2005, negotiations actually had been taking place without much transparency). This document provides the Commission with the authority to negotiate with the US an agreement to increase the two-way flow of trade and investment between them, with the following three objectives:
• Eliminating barriers to trade, both tariff and especially non–tariff barriers (regulations applicable to manufacturing goods and services);
• Seeking to harmonize the two systems for “regulating” manufacturing (that is, harmonizing state laws that cannot be abolished); and
• Drafting common laws to be later shared at the international level.

Regarding labour rights, the document refers exclusively to the obligation on parties to include in the agreement mechanisms to support promoting decent work and to implement the fundamental standards of the International Labour Organization, without further specification. Other than this document, we cannot find a specific reference to labour rights in any EU publication.

The declassification of scarce information has been followed by a huge campaign by European Institutions to promote and justify the Treaty. A series of reports indicate advantages and economic growth that would ensue following the signature of the agreement with the United States; they indicate that total trade liberalization would generate billions of profits for both economies. Specifically, it is declared that 80% of the earnings that the agreement would achieve, will result from reducing “costs” imposed by “red tape and regulations”, the liberalization of trade in services and the public tendering. This shows that the primary objective of the agreement is not to reduce customs but to reduce the regulations safeguarding rights, including labour rights.

This propaganda campaign is being questioned in different scientific environments that indicate in turn, further questions for which economists committed to the TTIP do not have the response:
• Who is going to benefit from this generation of income?
• What impact will the measures on public services have on the well being of the population?
• Can the TTIP lead to the erosion of labour rights?

Let us focus our attention on the final question. It must be recalled that signing a free trade treaty multiplies the incidences of cross border service delivery and transnational mobility of business. This puts different labour law frameworks and different levels of protection of rights into regular contact. This situation would not be problematic if it fulfilled the following two conditions:
• First the treaty must include common standards on labour rights (minimum salary, maximum working day, collective rights, etc);
• Second, and independently of the first condition, the treaty will include a clause of inviolability or non-retroactivity that will require States not to change their labour standards.
If neither of these conditions is satisfied, experience tells us that, when disparate labour regulatory frameworks come into contact and capital is allowed to freely choose their business location or the place where services are delivered, two phenomenon invariably result, in the EU context; social dumping and a regulatory race to the bottom.

Social dumping is a business strategy to slash social costs by shifting production to a state where labour rights (normally those relating to wages) are not so well protected. However, it is possible that businesses only shift their workers to provide services in a state with higher standards; but by maintaining the conditions of work in the home state, they are thus in a better position on social costs than the local, domestic businesses. On the other hand, regulatory competition is a phenomenon that occurs when, in a situation of disparate regulation, described above, governments claim to attract foreign businesses by lowering labour rights (lower wages or facilitating dismissal).

All these phenomena form part of the EU reality. For sure, to control, minimally, social dumping and to silence critics of the EU social deficit, different measures have been adopted, which have had little effect. Despite this, the phenomenon of regulatory competition has been converted into a strategy deployed by international financial authorities, established today through different mechanisms of economic governance in the EU. The result is evident. One only has to observe the worsening of disparities on labour and social issues in the EU, with Greece, Spain, Portugal and Ireland heading unemployment, job insecurity, poverty and exclusion.

In light of the foregoing, to evaluate the impact of the TTIP on labour rights, we must taken into account two conflicting premises:
• First, economic integration in the European context has had negative consequences for most male and female workers, especially in the South. This is so even though EU member states – at least until the last round of enlargement – share similar traditions on recognizing social and labour rights;
• Second, with the TTIP, two systems are going to come into contact, fundamentally opposite on the issue of recognizing and protecting labour rights, namely, the North American system and the European system (true for at least the majority of the EU states). A quick look at the number of ratifications of ILO conventions gives us an idea of the disparity: Spain has ratified 133; France, 125; Germany, 85; and the United States, 14, which does not include conventions on trade union freedom.

Faced with this situation, some propose the route of requiring the future Treaty to include non-retroactive clauses, recognition of labour standards, a carve-out for labour issues from the jurisdiction of the special dispute resolution system, etc. However, none of these clauses – in the doubtful case of integration - would avoid the future race to the bottom on labour rights. The EU experience has thus demonstrated it. Stopgaps do not fit in the TTIP, not on labour, environmental or health issues. Our only option to maintain our rights, is head on and decisive opposition from the peoples of Europe to demonstrate (which they have already done in respect of the false European Constitution), that all deception has its limits. Carrying out campaigns such as ATTAC, faced with the treaty is now a priority to sensibilize social majorities and to achieve a sustained movement that challenges the anti-democratic and antisocial TTIP. Once more, the response must come from the streets and be assumed as the vanguard of the battle by the political and trade union forces that defend people’s rights.

source: El Diario