Wednesday 3 December 2014

Tendency To Inflict Profit

TTIP (Transatlantic Trade and Investment Partnership) is a far reaching trade deal currently being negotiated between the EU on one side and the USA on the other. It covers a very wide range of sectors and includes much debate on methodology, not least on ISDS (Investor State Dispute Settlement).

There are two narratives about TTIP. The first is that it is a great opportunity to enrich both sides of the negotiation by sweeping away a lot of unneeded regulation and harmonising conditions for companies on both sides of the Atlantic so that business can proceed with less obstruction and less cost, thereby benefiting both sides. The second is that it is an instrument designed to ensure the domination of private and unanswerable corporations over the lives of the citizens of all the countries involved, and to keep secret the means whereby decisions are made and paid for.

One of the reasons why there are two such distinct narratives is that the negotiations are being conducted in conditions of enormous secrecy. A certain amount of light has been shone due to tireless efforts by information campaigners on both sides of the Atlantic to hold their supposed servants to account and to be clear about what they are doing. A great deal is still being done in secret, to the extent that reassurances have to be issued from time to time that one thing or another, most notably the NHS, is or is not being negotiated about. Supporters of TTIP have begun to say it's a very transparent process now. One said to me recently it's one of the most transparent ever; I asked him for minutes of the meetings between EU officials and corporate lobbyists. I'm still waiting.

Free trade is a great thing, provided that it is transparent, equally weighted and subject to the right regulation. One thing that free traders tend to forget is that, while markets can do without over-regulation, they cannot in fact exist without regulation in some form. If somebody reneges on a contract, who enforces it? The regulators. We also need to bear in mind an issue which has become more and more apparent during the coalition government, that markets do not in fact do everything well. The East Coast railway line failed in private ownership and made a profit under public ownership, but is being privatised again because the doctrine our governments live by these days says it must be better in private hands. The NHS, which for decades delivered the same quality of care and health outcomes as the USA system did for approximately half the cost per head, now finds its costs rising, not just because medicine is more expensive and people who have thing wrong with them live longer, but also because of the cost of managing an extraordinarily bureaucratic system designed solely to ensure that private companies get their slice of the cake. I have seen estimates ranging between £10 billion and £30 billion as the cost just of running the competitive tendering system before any money has been spent on patient care.

Keeping stuff out of the hands of free trade where appropriate is as valid as enabling trade to be free where it works. The problem with TTIP is that it is not about free trade as it stands, but much more about corporate domination, to the extent of actually being anti free trade, and certainly antithetical to the interests of citizens and consumers. TTIP might just about be palatable without ISDS. With ISDS it is a monster.

ISDS is a mechanism whereby states and corporations can have disputes settled behind closed doors, and by expert arbitrators. It has become a preferred mechanism for doing business despite the ability of courts in all developed countries and most developing countries to make transparent decisions based on local and international law and taking the needs of citizens into account. Perhaps that is precisely why ISDS is a preferred mechanism. Its most insidious effect is that woven into its fabric is an option for corporations to charge countries for work they have never done.

Take an analogy for a minute. Suppose I do some work for a company for a while, and then they decide to take the work in house. I take the company to a tribunal and argue that they owe me at least three years worth of the contract they have taken away from me. And the tribunal agrees with me. You would say that was a daft idea, bonkers. And I agree. But that is exactly what ISDS allows companies to do to countries. Here are some examples of exactly this kind of daftness being forced on sovereign countries by the agreements they signed up to. This is not just stupid, it holds a gun to the temple of the entire market system. For capitalism to work, businesses need to be subject to the disciplines of the market. If they do not supply what the market wants, or do not supply it at the right price, they subside and other companies rise in their place. Not any more. If they do not supply what the market wants, they simply sue for their profit anyway. This is one reason why we are beginning to see articles with titles like “Why free traders might oppose TTIP”. ISDS is the main ingredient that makes TTIP a monster. Strip it out, and we might, just might, be able to discuss a deal that enhances free trade to the benefit of consumers. But even then, I am not sure.

Efforts have been made to reassure us lately that the NHS is not up for grabs in the TTIP negotiations. Mark Pack quotes Sal Brinton and Lord Livingston. I hope he and they will forgive me not being reassured. It has taken a great deal of effort to get even this minimal degree of reassurance about negotiations which remain about as secret as they can get. I'm a bit fed up being told things are OK without being able to see that things are OK. Health is part of the package, and it is very difficult indeed to see agreements being reached to allow European countries access to the US health market without them being allowed access to all of ours. And ISDS is still in place. Should the government wish to deprivatise any part of what has already been privatised, the threat of being sued is enough to stop them. The Tory party has already done its best in its confused way to privatise the NHS as much as it could, and if in power again it would no doubt try to do more; and those privatisations, because of the pernicious effects of ISDS, will be irreversible. A lot more work needs to be done, and a lot more scrutiny applied. 

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