Talk to the hand? Photo by Oli Scarff
#TTIPleaks show the UK government is actively choosing not to protect NHS and public services
Some have been using the Greenpeace leaks of negotiating texts from the EU-US trade deal known as TTIP to claim Britain should leave the EU to escape damaging trade rules being imposed on us by shady Brussels negotiators. But disturbingly, what they actually show (adding to evidence we had from texts already publically available) is how successful Britain has been in getting its way in shaping the deal so far. We’re just shaping it the wrong way.
The British government has long been calling for TTIP to be as ‘ambitious’ and liberalising as possible, which is clearly reflected in the current EU negotiating texts. Quite simply, if the UK government wanted to protect our public services in TTIP, it could. It just doesn’t want to.
I list below what the UK government should be calling for when it goes into the room with TTIP negotiators in Brussels to address the gaps in protections for public services currently contained in the EU’s negotiating texts.
Trade unions from across the EU and USA have made clear their concerns that if these texts make it into the final deal, TTIP would introduce a regime where governments only regulated public services as much as they thought they were able to get away with without being challenged by foreign investors or foreign governments, and businesses would be given greater powers to overturn regulation.
Other countries have already been successful in getting the deal altered to protect key sectors. The French government successfully got audio-visual services excluded from the deal – and last week said that if the deal doesn’t protect regulations and high standards they will block TTIP.
Rather than telling the public they are wrong about threats to public services, as David Cameron did again last week, the government needs to take action to get real protections written into TTIP and corporate privileges taken out. Otherwise the government cannot hope to convince the public that it is seeking a deal that protects our interests.
5 things the UK government needs to call for in TTIP texts to protect public services:
Note: This is by no means a complete summary of all the problems in the TTIP texts or unions’ only concern with TTIP. Threats to labour standards, health and safety and the environment, are among some of the other reasons we oppose the deal, as you can see here. If you are interested to read more detail of the texts, I encourage you to delve deeper here and here.
1) Government monopolies should be allowed in all public services, no matter how they are funded
The ‘market access’ section of the services chapter contains something called a ‘public utilities exemption.’ Market access covers the extent to which a country is able to run monopolies, control the number of service providers or staffing levels in a certain sector.
While in theory the public utilities exemption is designed to allow governments to keep such controls over public services, the wording of this exemption is vague (see footnote 1 on p.119 here). This means interpretation is likely to be based on the public utilities exemption used in the WTO which defines them as ‘services supplied in the exercise of governmental …supplied neither on a commercial basis nor in competition with other suppliers’.
This would not cover a large number of public services in the UK including that have been subject to significant degrees of outsourcing, such as health, transport and social care. This means that a future government that chose to renationalise these services, or in other ways control the number of service providers or regulate staffing levels would risk being challenged by the US government for breach of their market access obligations.
2) We need a complete carve-out for public services from the deal
TTIP takes what in trade-speak is called a ‘hybrid’ list approach. Part of this means that countries need to list which services they want to be excluded from ‘national treatment’ obligations which guarantee foreign service providers will not be discriminated against. For public services to be comprehensively protected in a hybrid list system, countries would need to list every single service involved in the delivery of public services, both publically and privately funded. In TTIP, however, countries have failed to provided comprehensive lists of their services, which means many public services are locked into liberalisation (read: privatisation) commitments by this chapter.
Traditionally trade deals took what was called a ‘positive’ list approach, where only the services that will be opened up for liberalisation are listed. This means you have certainty about all the services that are protected, which is why unions are calling for TTIP and all trade deals to take a positive list approach to services.
However, when they came to start negotiations on TTIP, EU governments that were in favour of increasing privatisation of public services, like that of the UK, held sway and TTIP adopted the ‘hybrid’ list.
Here’s one example of the dangers in the hybrid list approach. On p.89 of the services chapter here you can see the UK government has not listed ‘privately funded hospitals’ (whereas other countries including Sweden and Malta, referred to in the text as ‘SE’ and ‘MT’, respectively, have). This means any future government that introduced regulation which would affect hospitals receiving private funding –such as rolling back the Health and Social Care Act (2014) – could be challenged by the US government as a case of ‘discrimination’ against US companies providing privately run hospital services.
Even without action being taken by the US, the threat that such action could be taken in the future may make governments think twice before trying to introduce certain regulations that might affect hospitals receiving private funding.
There are a whole number of other services (such as education, transport and prison services) that the UK government also has not listed comprehensively enough in Annexe 1 or 2 of the services chapter to be protected. This means the chilling effect may constrain regulation or government control of many of our public services.
Furthermore we know from the EU Commission that TTIP will contain ‘standstill’ and ‘ratchet’ clauses which will prevent liberalisation commitments made in Annexe 1 of this chapter from being rolled back.
Anyone who suggests the threat of governments being challenged is unlikely should consider that (1) there has never been a trade deal concluded yet with a hybrid list system so no one can say for sure that public services are protected, as this recent EPSU/AK study points out. Taking a ‘wait and see’ approach is reckless and wrong.
And (2) when it comes to public services in the UK there is a real risk of US corporate lobbies using their power to challenge UK government actions, as they invest so heavily in them, as an LSE study showed.
They could make this challenge either directly through the Investment Court System (discussed below) or by getting the USA to take a case on their behalf against the UK. Indeed corporate lobbies have in the past pressured countries to take up cases for them. For example, after lobbying by the tobacco industry, Ukraine challenged Australia at the WTO for its plain packaging rules on cigarettes. If the US was successful in challenging the UK it would result in the UK being forced to withdraw its policy or face trade sanctions by the US.
3) Special courts for foreign investors should be scrapped
The Investment Court System (ICS) described in the investment chapter (here) has been proposed by the European Commission to replace the notorious Investor-State Dispute Settlement (ISDS) mechanism in TTIP.
Despite making some reforms, the ICS system contains many of the same threats as ISDS, however, and still provides a special court for foreign investors to claim their rights that is denied to any other group.
While some argue that unreliable judicial systems in some EU or US states justify such a court, unions are clear that in such instances the drive should be to improve domestic legal systems to be more accountable and address corruption. How else can we encourage more democratic systems to emerge?
ICS would give investors’ lawyers leeway to sue governments for compensation for any action that is bad for business. This is partly due to the very broad definition of ‘indirect expropriation’ (on p.9) and ‘fair and equitable treatment’ (on p.4) of the investment chapter which can be used by lawyers to interpret a whole range of government actions, such as introducing regulations or increasing wages as a breach of investors rights.
The consequence of ICS, combined as with the UK government’s inadequate listing of public services in the services chapter (discussed above), is likely to be a ‘chilling effect’ on policy. Governments may calculate they cannot afford to compensate investors that might be successful through an ICS case, and decide against policies they might have otherwise introduced to improve the quality of public services or the conditions for workers.
4) Social criteria should be protected in public procurement
The chapter on government procurement indicates TTIP would make it harder for social criteria (such as only choosing suppliers that pay a Living Wage) to be used by local authorities in their procurement policies. On p.26 of this chapter it states:
‘Where a procuring entity establishes that a tender is abnormally low because it does not comply with environmental, social and labor law…the tender can be rejected on that ground alone only after consultations with the supplier where the latter is unable to prove…that the evidence supplied does not satisfactorily account for the low level of price…’
This suggests ample leeway is being built in for suppliers to deny that it is due to bad employment practices that their prices are so low.
There is also a threat that TTIP may follow in the path of the EU-Canada agreement known as CETA and significantly lower the threshold at which government contracts need to be put out to competitive tender. The chapter doesn’t state what level thresholds will be set at, but this is something to watch.
5) Establish a real role for unions in protecting regulations and workers’ rights
Since the outset of negotiations on TTIP, the US and EU have discussed the idea of establishing a process of regulatory cooperation to promote rules that would align the EU and US regulatory systems better after the deal is done.
While presented as a process for technical standardisation, the TTIP texts indicate this process could be used to drive deregulation which would affect the quality and safety of public service delivery.
The regulatory cooperation chapter says that TTIP will set up a process which will ‘reduce unnecessary burdensome…regulatory requirements’. Meanwhile the text on ‘Good regulatory practices’ states TTIP would require countries to examine:
‘non-regulatory alternatives (including the option of not regulating), if any, that would achieve the objective of the regulatory act.’ (p.4)
A report by Corporate Europe Observatory has detailed how US corporate interests have already pressured the EU to suspend regulations on environmental safety and data protection and the heavy involvement of corporate interests in the process of establishing regulatory cooperation in TTIP .
Taken with the language in the chapter on regulatory cooperation, there is a clear signal that corporate interests could use the deal to increase pressure on governments to cut regulation they regard as ‘burdensome’ but we know is vital to protect workers such as regulations on hours of work or health and safety.
Unions must be given the same weight as business in any process of regulatory cooperation or evaluation and any process must be underpinned by respect and effective enforcement of core labour standards.