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International treaties that loom against the rights of the working class (I): TTIP

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Rebelión | 7 January 2015

Freely translated by Anoosha Boralessa in April 2015; not reviewed by nor any other organization or person.

International treaties that loom against the rights of the working class (I): TTIP

Vidal Aragones

The context of negotiations, the origins of the TTIP and its new model of labor relations

In the final stage, a classic argument used to justify reducing employment rights is the need to put an end to the social effects of the crisis and to create jobs. Nothing is further from the truth. The treaty making process for the TTIP (the English acronym for the Transatlantic Trade and Investment Treaty) started prior to the crisis and responds from an economic and labor perspective to two elements:
- First, to the classic policy of increasing the profits available to big capital through increasing the level of exploitation of the working class
- Second (prior to the collapse of a good part of the speculative economy) the entry of multinationals into the productive sectors of the economy where until now their level of participation was curtailed.
These are essentially public services.

The crisis of the model of production of neoliberal globalization is transformed in bourgeois political action aimed at maintaining their profits levels by reducing labor cost: lower wages; reducing the compensation on contract termination; favorable conditions to modify all employment conditions etc. In the first phase, this has come from the hand of job-destruction: a significant reduction in a historic generation of workers including those in important sectors benefitting from fair working conditions. With this strategy, they now do not choose to increase the levels of unemployment (currently 20 – 25%) but to transform quality work into temporary work. They will want to transform three positions of high quality employment into four temporary jobs, thereby increasing profits and positioning the level of unemployment at 15% in the next decade.

The content and significance of the TTIP and its direct and indirect impact on labor relations

From a labor rights perspective, we could say that three key features define the TTIP: opacity, private intervention in regulation and the privatization of the dispute resolution body.

The European Commission’s website defines the TTIP as follows:

“The TTIP aims at eliminating trade barriers between the United States and the European Union (through the abolition of customs, unnecessary regulations, restrictions on investments etc) and to simplify the sale of goods and services between these two areas. Eliminating these barriers will lead to economic growth, job creation and price reduction.”

Once we have reviewed its content, we need to analyze its specific impact. First, the TTIP does not actually address customs but all guarantees and controls involved in exporting and importing goods; this means, eliminating administrative controls and guarantees on products. Second, it is unclear if its reference to the obligation to set common standards for labor laws, refers to minimum standards or the highest standards. Reference is simply made to the International Labor Organization (ILO)’s “decent work” concept and not to ILO Conventions. Also, there is no treaty provision on inviolability or non-retroactivity that will require maintaining some minimum rights. In a context where EU states reduce rights and where the majority of trade unions fail to opt for mobilization, it can set us up for a loss of employment rights. If we observe half of the 133 ILO conventions ratified by Spain, these are very far from the 14 ILO Conventions ratified by the US. This would have a clear effect on the domestic law, resulting in a race to the bottom when applying the TTIP. This would thus transform the mandate for creating a common legal framework into a loss of rights.

We must take that into account. The first draft of the Bolkestein Directive has already tried to. It facilitates the possibility of applying the laws of the country of origin if an enterprise does not have its office where it provides services and simply shifts its personnel. This would imply that the applicable laws would not be law of the EU member state but the labor laws of the individual states belonging to the United States. Most US states do not have a minimum wage, the right to collective bargaining or the right to strike.

In this article we do not address this because it is dealt with in another chapter. However one of the overriding objectives of the TTIP is that public services will be completely privatized (TiSA is the enforcement plan for this). This objective could be achieved through the Minimum Cost Guarantee. It must be recalled that this has already been partly incorporated in the legal framework governing local entities that is in force in Spain.

Investment agreements and the ISDS: the privatization and the deprivation of justice

We talk of opacity because a good number of the documents in the negotiation process are confidential (by way of example, the Commission Note of May 26 2014, which has already been leaked). That said, others have been made public. The EC Commission Information Note of November 2013 is an example: this defined new pathways for implementing investment agreements: one is “to clarify and improve investment protection rules” and another is to “improve how the dispute resolution system functions”. This does not mean that the new law will be able to develop “the concept of indirect expropriation.” In practice this would imply that you would have to provide economic compensation to an investor in a sector or activity where labor rights or taxes will be increased or simply because the recovery of public ownership or management will be opted for. These three situations would take into consideration damage to investment which should be compensated by the state.

The other major plank of the TTIP is the new system of dispute resolution: the ISDS (Investor State Dispute Resolution). It would come to be an arbitral tribunal composed of three private lawyers, that would nominate one among themselves as “judge”. The purpose of this body is to allow businesses to bring legal actions against a state if they consider that their commercial interests have been prejudiced. Undoubtedly this not only breaks with any concept of the Rule of Law but it belittles sovereignty as well as the state apparatus of the Nation State. Their resolutions and awards would not be subject to appeal and would be enforceable. Up until, now we have known public courts which emanate from the apparatus of the Bourgeois state. Such courts on occasion transcend their class, the prevailing law and the correlation of forces of the movement of the working class and allow forward looking resolutions as a means of reducing the conflict between the capital class and the working class. The legal framework of the ISDS has private origins with direct intervention of the lobbyists; tribunals do not have state appointed judges; instead they comprise private lawyers and their decisions are immune from review. Further, we should be conscious that here the parties are multinationals and States and that the real losers are the working class and Stateless nations that cannot even appear in the proceedings to defend their interests.

In the case of the ISDS, we are not speaking of a coup against social rights but against bourgeois democracy itself; our legislator and judges are the representatives of the bourgeois. They ensure that when public authorities municipalize, nationalize or increase taxes or labor rights are overridden, economic compensation is paid.

The justifications for the TTIP

The London Centre for Economic Policy Research’s report sets out the case for the TTIP which consist of two very simple ideas: to increase GDP and to create jobs.

A 0.5% increase in GDP results from eliminating what are known as custom duties on goods. Such duties are fixed between 10 and 20% of the cost. Not only is the data - that customs represent that percentage of costs - incorrect, but so too is the assertion that lowering or eliminating such duties, increases GDP (the latter always depends on demand and not legal deregulation). The increase in GDP is attributable to metal sector (12%) and to processed foods sector (9%) eliminating safety controls and food controls. Eliminating guarantees and controls and reducing salaries has the effect of a drop in demand in the territories of application. The first consequence of this is a fall in consumption in EU states. The reduction of controls does not assume an increase in demand without a reduction in costs. In its turn it has a destructive effect on employment that provokes this fall in consumption. Also, the arrival of products at lower costs poses a reduction in domestic production.

As for job creation, 144, 000 jobs have been created in Spain. But we must explain that the trend will be to eliminate jobs and to transform high quality work into casual work. All “free trade” treaties have had these effects across the planet. The first studies already quantify the loss of a million jobs as a consequence of the TTIP (Tufts University). We will now proceed to explain why this is so, using Spain as a case study.

The effects of the TTIP on Spain

The TTIP can be converted into one of the great assaults not only on sovereignty of the peoples (which is illusory under capitalism) but on the Rule of Law as we have known it in recent decades. As we have already advanced, the TTIP also aims to find new markets for international bourgeois by eliminating all types of guarantees, lowering labor conditions and ensuring private management of landmark public services.

In the specific case of Spain and analyzing the peripheral nature of the Spanish economy (construction, tourism, automobile and agri-foods), we will find that some areas that have automobile and metal as their main activities (Barcelona, Valencia, Valladolid and Pontevedra) will see a fall in goods that reach vehicle markets and US products that have been manufactured under laxer labor regimes. Also, the indirect effect will be permanent pressure on decent wages in the automobile and metal sectors, something that could also occur in other sectors such as foods (on account of the arrival of cheap goods produced in the absence of labor rights and by genetic mutation). We only have to observe the effect of the elimination of a million jobs in agriculture and food in Mexico in the twenty years that NAFTA has been in force.

Now we are not speaking of the delocalization of activities but of a process of the deterioration of domestic employment conditions whereby small and medium enterprises cannot assume cost reduction. This will set in motion job destruction. Following this route, both male and female workers in big companies will see their employment conditions deteriorate.

This article does not analyze the effects of the proposals in the confidential document of 26 May 2014. But this development clearly plunders and robs public services, placing them into the hands of multinationals. Imposing the best prices as the main criteria for managing public services is a gift for big private businesses. At the same time this will imply an unprecedented process of making employment conditions worse. We only have to look at employment conditions and the workers of Telefonica 20 years ago and those on private contracts in the telephony sector today. We also have to see the quality of the service now and those that we were having with public ownership. This is why they want to guarantee that re-muninicipalizations and nationalizations are not possible.

In addition to the difficulties of knowing everything that is discussed between the US and the European Commission, are the TTIP, CETA and TISA: their means of robbing us of our public services and degrading employment conditions to maintain the profit-levels of multinationals. But above all, these are the new tactics and strategy through which the dispossession develops through mechanisms which almost deny public participation and where they generate an antagonistic subject which is difficult to identify.

We are not talking here of economic models within capitalism; we are talking of a unique model for which only one management plan is possible: impoverishing the working class and bringing to a close, expressions of formal democracy. To think that some type of freedom is to be found under the umbrella of the EU is a reactionary utopia and to preserve capitalism as an economic model is to assume social suffering.

Translator’s notes

Links referred to:
- Trade in Services Agreement (TiSA):
- ILO’s Decent Work Agenda:

 source: Rebelión