In part two of The Big Story, Vanessa Baird explores the costs of free trade to the environment and Global South.
Pigs that cross...
We’ve got just 12 years to avert disaster: to limit the global temperature rise to 1.5 degrees as agreed at the Paris climate summit, the Intergovernmental Panel on Climate Change (IPCC) recently announced.
Two things were highlighted that could help slow the rate of global warming: cut down on fossil-fuel usage – fast – and stop eating so much meat.
How both of these relate to international trade was graphically illustrated by British Green Party politician Caroline Lucas back in 2004 when she said: ‘Britain imports 240,000 tonnes of pork and 125,000 tonnes of lamb while exporting 195,000 tonnes of pork and 102,000 tonnes of lamb,’ indicating one of the bewildering follies of the global trading system.
Since then the number of dead animals being shipped around the globe has grown considerably. In 2017 some 32.7 million tonnes of meat was packed off to distant lands. The US, Brazil and EU were the top exporters; China, Japan and the US the biggest importers.
In theory, Britain’s exit from the EU could lead to UK citizens eating more home-grown meat – maybe coupled with a reduction in volume consumed as the price increases. But that’s not the direction favoured by the libertarian leaders of Brexit. Quite the contrary.
They talk of striking bold new trade deals with distant lands – the US is the clear favourite, but the old Commonwealth countries are often mentioned too.
In its communications, the British Department of Trade plays down the aspect of distance as it plays up the benefit of striking trade deals with non-EU countries. In the media, the topic of Trade Secretary Liam Fox’s accumulation of air-miles is a running gag, while ex-foreign minister Boris Johnson recently came back from a trip to Peru bubbling with enthusiasm at the prospect of ramping up trade with the Latin American country (only 10,138 kilometres away).
The US’s new protectionism could, in theory, reduce the need for international freight. But the Sierra Club, a US environmental group, finds Trump’s trade wars the opposite of eco-friendly. For example, tariffs on solar panels and electric cars and bikes from China will make them far more expensive – reducing uptake.
More to the point, Trump is a climate-change denier with a profound dislike of environmental regulations, which he sees as impediments to business.
Losing environmental protections
Laws passed for the social and environmental good are often described as ‘barriers to trade’.
But, as Caroline Lucas puts it: ‘One person’s “hard-won environmental right” is another person’s “trade barrier”. We are going to see a real fight now for whether or not we can defend those hard-won rights against an incredibly strong pressure to deregulate.’
Early in 2018 Prime Minister Theresa May gave her assurance that, on Britain’s exit from the EU, its environmental protections would simply be transferred into British law. Protection would even be improved in some areas with the creation of a new ‘green watchdog’. Then, in September, the hard-Brexit lobby group the Institute of Economic Affairs (IEA) published a warning that if the UK continued to strengthen its regulatory environment, it would lead to ‘wealth destruction’ and ‘push people into poverty’. And if the UK harmonized its regulatory environment with the EU’s after Brexit, the lobbyists insisted, it would make independent trade deals with countries such as the US, China and India impossible.
Government assurances to the contrary were soon shown to be wanting. In November, MPs on the UK parliament’s Environmental Audit Committee saw gaping holes in the government’s 25-year plan for a greener future. While two-thirds of EU legislation could be rolled over into UK law with just a few technical changes this March, around a third of all environmental rules governing air, water, chemicals and waste disposal cannot. The government has not committed to replacing this third, meaning polluters could go unpunished and wildlife will be denied vital protection post-Brexit.
Meanwhile, at a global level, there has long been a deliberate separation of trade and climate issues.
Climate accords (such as the 2016 Paris Agreement) have been silent on the issue of trade. And trade agreements make no mention of climate. The World Trade Organization (WTO) states on its website that it has no ‘specific agreement’ that deals with environmental issues. This is becoming increasingly untenable.
Trade impacts on climate in a range of complex ways, far beyond the growing carbon footprint of transporting goods or managing complex transnational manufacturing and supply chains.
Free-trade deals further entrench an export-oriented, industrial model of agriculture that is itself a significant contributor to climate change. A rise in corporate farms leads to increased pesticide use and more energy required to push agriculture into marginal lands.
Policies to support climate-resilient farming systems, such as allowing grain reserves to protect farmers from market volatility or incentives for long-term investments in adaptation strategies like agro-ecological practices, are often discouraged by the WTO and free-trade deals like the Trans-Pacific Partnership (TPP).
Sometimes there are minor environmental benefits: coffee or cocoa tree crops can, for example, reduce soil erosion. But often the economic gains come at a high environmental cost. Kenya’s booming cut-flower industry (supplying 40 per cent of the EU and 70 per cent of the UK market) is causing an alarming decline in the water level of Lake Naivasha and there are concerns about pesticide use.
And, of course, mining and fossil-fuel extraction – a large part of traded goods – cause serious environmental damage, especially in countries such as Peru or Nigeria where environmental controls are lax. As we have seen corporations and governments can use trade and investment rules to challenge decisions taken to protect the environment. For example, trade rules have been used to challenge India’s popular domestic solar programme.
Meanwhile, between 2010 and 2014, 99 per cent of UK overseas investment in the energy sector went not to renewables but to fossil fuels.
Some argue that international trade enables developing countries to shift to cleaner technologies. However, free trade has more commonly let richer countries export their pollution as production plants move to nations with cheaper labour and lower environmental standards. You need only look at what has happened to China’s air quality in the past 20 years. Around 22 per cent of global CO2 emissions stem from the production of goods that are, ultimately, consumed in a different country. While the US and many European countries have reduced their domestic emissions over recent decades, some of this reduction has been offset by increasing imports from countries such as China that have a more carbon-intensive energy mix.
Traditional inventories do not include emissions associated with imported goods; the emissions are put on, say, China’s tally rather than that of Britain or the US.
So, even though domestic emissions fell 27 per cent in Britain between 1990 and 2014, if CO2 imports from trade are considered, this drops to only an 11-per-cent reduction. Similarly, a 9-per-cent increase in domestic US emissions since 1990 turns out to be a 17-per-cent increase when trade is included.
Caroline Lucas reckons: ‘There needs to be conversation about where trade policy and the emissions from it fit into the whole climate debate. If we could move to a scenario where we were involving those emissions automatically as part of the climate reporting I think it would raise important questions and put real pressure on areas like trade policy, which at the moment can feel entirely divorced from the climate discussion.’
She adds: ‘What would international trade look like in a framework that was serious about the targets that the IPCC set out? I do think that localizing our economies, if we were to start that debate again, would be very timely.’
It sounds like high time we put people and planet at the heart of trade policy.
Winners and losers
Olivier Adopo is a rubber tapper in the Grand Lahou forest in the West African country of Côte D’Ivoire. His is a skill that has been passed on through generations – an ‘art’ he says – that provides him and his community with a living. He sells the latex he collects to a local factory. But these are worrying times. The price for latex has fallen by half. The cause? The trade war between China and the US. China is the largest manufacturer of goods containing rubber in the world, and a fifth of its exports go to the US. And this is dampening demand for latex.
The old African saying ‘When elephants fight it’s the grass that suffers’ has poignant currency in Côte D’Ivoire today.
Free-trade enthusiasts often say that, in order to develop and flourish, the countries of the South must be more integrated into the global trading system. But they are already highly integrated: Africa is far more dependent on overseas trade than Europe or North America – and not in a good way.
African countries are largely importers of finished goods and services but exporters of raw materials, often controlled by big foreign companies. Raw materials do not generate the profit margin that goes with ‘value adding’ by turning commodities into products – cotton into t-shirts for example. Global commodity prices are notoriously volatile. Trade between African countries remains weak and limited. Unfair trade relations that have disadvantaged African foreign trade since colonial times prevail.
Imperialism lives, maintains Ugandan-born trade expert Yash Tandon. He calls the EU’s Economic Partnership Agreements (EPAs) ‘Europe’s trade war on Africa’ and writes: ‘I have knowledge and personal experience (nearly 30 years) of the way the EU has been pushing EPAs on African, Caribbean and Pacific countries. African governments, weakened by their dependence on so-called “development aid”, are often “willing” to sign these asymmetrical and totally unfair agreements.’
In order to conclude its free-trade EPAs with Africa, the EU threatened sanctions on those countries that did not sign. At the time of writing, Kenya, Rwanda and Burundi have signed while Uganda is on the fence and Nigeria and Tanzania have refused.
Up to three-quarters of Africa’s population depends on agriculture for a living. A foolish or hasty step towards liberalization can risk the livelihood of these people, most of them poor. The EU and US have preached the gospel of free trade but not practised it themselves, paying their own farmers generous subsidies.
South African trade expert Mustaqeem De Gama observes: ‘As a result, African farmers are less able to compete. This destroys rural livelihoods. It causes mass patterns of migration and you know the consequences in terms of issues of migration, asylum seekers and so forth.’
But today China, not Europe, is the biggest player in Africa. Welcomed as a trading partner at first, the love affair has begun to turn sour. The Chinese tend to bring in their own workers rather than employing local Africans. Their big infrastructure projects provided work for Chinese companies but have plunged the host nations deep into debt. It has turned out that China is doing what big powers usually do – acting in its own self-interest.
Brazilian farmer Gustavo Lopes is happy. In 2017 he decided to rip up his sugar canes and plant soy instead on his 4,000-hectare farm. His bet paid off when, a couple of months ago, Chinese buyers loaded up on South American soy after Beijing imposed retaliatory tariffs on US beans. Lopes got a good price for his soy crop.
Brazil’s new government under far-right leader Jair Bolsonaro is likely to carry on the policies of Michel Temer’s previous ‘coup’ government that privileged ranchers and big farmers at the expense of indigenous people, peasants and landless people.
In Argentina too, soy farmers are looking to reap benefits from the US-China trade war. Researcher and activist Luciana Ghiotto says that in the past, US companies and investment were the most important in the region, but during the past eight years China has taken that place. In a January 2018 summit between Latin American presidents and China’s leadership, the latter offered millions in investment to include Latin America in the ‘New Silk Road’ aka ‘Belt and Road’.
China hoovers up Latin America’s raw materials – minerals, lithium, gold, magnesium, copper, oil, gas, soy and so on. The region’s neoliberal governments might prefer, ideologically, to do business with the US, but China is customer number one now.
‘We cannot talk about a complementary relationship with China,’ says Ghiotto. ‘It’s a new imperialism. They work differently from the US: the US used the CIA to keep progressive governments away from power and was very interventionist. China does not care if the government is fascist or progressive; what it cares about is that it needs the oil, the soy and the minerals. So they create a strategic partnership which has had a huge role in setting new conditions for our governments.’
Sometimes this leads to weakening existing relations between Latin American countries. Individual countries are rushing to sign contracts with China that are not accessible to public scrutiny. ‘They are even worse in a way,’ comments Ghiotto. China exports capital: Ecuador, Venezuela and Argentina have made use of Chinese loans during commodity price collapses and the terms for these have been harsh, especially in the case of Venezuela. And China builds. For example, in Argentina China is rebuilding a 1,500 kilometre disused railway line, not for people but for soy.
One response to the current turbulence in global trade is to reboot efforts for intra-continental trade, including a possible convergence of two existing South American trade blocs: Mercosur and the Pacific Alliance. But Ghiotto reckons that neither of these two blocs has genuine concern for human and environmental rights.
In the next few months, various Latin American groups campaigning for trade justice are getting together to form a platform for action. ‘We have been in defensive mode lately. At least we now have good data, research and information on the consequences of the [free trade] model of the past 30 years,’ says Ghiotto. ‘People organizing, gathering info, lobbying and campaigning – that’s the only positive thing I can see right now.’
Kannaiyan Subramaniam is a small farmer from Tamil Nadu and a representative for the international peasant movement, La Via Campesina.
He says: ‘I come from India, where farmers are suffering due to crashing prices, import surges, land grabs, ever-increasing cost of production and import-driven crop pattern changes that put farmers into deeper and deeper crisis. As a result, more than 300,000 farmers have taken their own lives since India committed to WTO policies of free trade.’
Today Subramaniam and others are fighting against a free-trade agreement, currently being negotiated, that they say will destroy the country’s dairy sector, ruin millions of livelihoods, make medicines unaffordable and seriously damage Indian manufacturing.
The deal is the China-backed Regional Comprehensive Economic Partnership (RCEP), which currently involves the 10 Association of Southeast Asian Nations (ASEAN) countries – including Indonesia, the Philippines, Malaysia, Brunei, Vietnam and Cambodia – and six other ‘dialogue’ nations – Australia, New Zealand/ Aotearoa, Japan, South Korea, China and India. If it succeeds, RCEP will be the world’s largest trading bloc, comprising 3.4 billion people.
Talks are billed to conclude in 2019. At the time of writing China is still trying to get at least 86-per-cent tariff-free access to the Indian market, while India, traditionally protectionist, is holding out for less.
India has a huge population that depends on domestic agriculture. Subramaniam elaborates: ‘Among the several million small and backyard dairy farmers producing milk, 95 per cent are women. This is a mass production by the masses, not by a few big corporations. The income generated from dairy is predominantly spent by women for the welfare of the family.’ Subramaniam’s own education was thanks to his hardworking mother, who reared buffaloes and cows for a living.
India is self-sufficient in milk, with a vast network of farmers, co-operatives, local companies and individual milk sellers. ‘But RCEP will probably wipe out the small and backyard dairy farmers, and that will be nothing short of a suicidal step,’ Subramaniam stresses. ‘I’m not being an alarmist here, but I’m expressing our anguish based on our country’s experience in the case of edible oil and pulses.’ Two decades ago, India started importing edible oil. Some 70 per cent is now imported and local farmers are forced out of production.
The Indian backlash to RCEP is growing and is also coming from the business community and those fighting to defend affordable medicine, which is threatened by intellectual property clauses in RCEP.
In other Asian countries it may be harder still to stop governments entering harmful free-trade agreements. Indonesian economic justice activist Rachmi Hertanti says her government is rushing to sign many free-trade deals, including RCEP, without understanding what’s in them and without properly disclosing them to parliament, let alone the public. ‘They don’t look at the social impact, they don’t even have tools for doing so,’ she says. ‘Decisions are made only on an import-export cost benefit analysis.’
Indonesia is in a fix – it has two major exports that are both environmentally problematic, palm oil and coal. As the campaign against palm oil – an industry run by large corporations that violates human, environmental and wildlife rights – gains momentum in the West, the Indonesian government is aggressively seeking new markets.
A likely consequence of the current trade war between the US and China is that Indonesia will be flooded with Chinese goods which would have been bound for the US. Campaigners like Hertanti think that the government should be encouraging Indonesia’s small and struggling manufacturing sector and its agriculture. The country now imports much of its food from Australia, New Zealand/Aotearoa, Thailand, China and Vietnam.
‘For us agriculture is the priority. It is our life. Before you talk about trade you should first ensure food sovereignty and have local agriculture substituting imports. We are against free-trade agreements that do not recognize human rights, that stop governments from fulfilling their social obligations to their citizens.’
Like it or lump it
And that is the nub of the issue. In the words of De Gama:
‘We have been saying for a very long time that at the root of all of this is the unequal impact of this phenomenon we call globalization. Some countries win more than others, and the countries that are less successful suffer. They have to accept a predominant paradigm that is enforced through market forces, which eats away at the social security safety nets that national laws provide. It means that, in the end, you are not able to take steps to protect the vulnerable in society. It creates monopoly countries that really dominate whole areas; it creates rule-makers and the countries that are less successful just have to take the rules and absorb the consequences.’
At the end of last year we saw the rivalry between the trade giants – China and the US – spilling out into the meeting of the Asia-Pacific Economic Cooperation nations (APEC) in Papua New Guinea. As a result, for the first time since its founding in 1989, APEC was unable to agree a joint communiqué at the end of the summit.
What is that African saying about elephants, again?
Just, open and green
It is often said these days that the post-War, rules-based world order, founded on liberalism and international co-operation, is unravelling. Selfish nationalism, populism and protectionism are to blame.
But it can also be said that this process has been well under way for some time. The three disgraces of free-market fundamentalism, privatization and deregulation have been ripping apart the fabric of social liberalism for several decades. The tendencies incarnated by Trump and Brexit are consequences rather than revolutions – and certainly not solutions.
We can respond to the damage being done by leaping to the defence of the established order that prevailed before rightwing populism erupted so rudely onto the world stage.
Or we can seize the opportunity to create something better – the current threats and fractures providing an opening for change and creativity.
So what might a better global trade structure look like?
Here is a 14-point stab at the principles, at least, that could underpin just, open and green trade:1
1 Trade is for and about people. It should never be separated from its social context. Trade should improve people’s lives and the public good. International trade agreements should not trump human rights or the social contract a government has with its citizens. Governments need therefore to have policy space within trade deals to foster development, employment, food security, access to education and healthcare. Trade agreements should not block public ownership in key areas such as public health, education and transport.
2 Trade strategy must be subservient to environment and climate goals and accords to tackle global warming. That will include reducing trade and investment in fossil fuels and encouraging renewable, climate-saving technologies, agro-ecological and organic cultivation. It will involve localization and creation of domestic and regional markets. Any trade deal must require all imported food, goods and services to meet the same strong domestic safety and environmental rules, and comply with international biodiversity and endangered species codes.
3 Labour and wage standards that are strong and enforceable should be included in trade deals. According to the International Labour Organization (ILO), deals with strong labour rights increase the value of trade more than those that don’t.2 A progressive trade and investment agenda should protect skilled jobs as well as human, gender and workers’ rights based on internationally recognized labour standards. USMCA’s minimum wage clause is an example to build upon.
4 Trade rules that drive up the cost of life-saving medicines by giving pharmaceutical companies extended monopolies on drug patents should be scrapped. The WTO’s agreement on Trade-Related Aspects of Intellectual Property (TRIPS) gives manufacturers patent- and price-setting rights that make many medications inaccessible to the poor – particularly in developing countries.
5 There must be a transparent, democratic and accountable negotiating process without privileged backroom access for corporate lobbyists and industry associations. Currently, the contents of many trade deals and contracts are opaque and hidden from public scrutiny. All texts should be visible – unless there is a very good reason why not – and parliament should properly scrutinize and, if necessary, vote down trade deals. Business lobbying firms should not be able to pass themselves off as ‘thinktanks’ or charities.
6 The privileging of big corporations in trade and tax arrangements must end. The system is skewed massively in their favour. They hold colossal global market share – one per cent of exporting firms accounted for 57 per cent of country exports on average in 2014.3 But they can also make fortunes by locating a company’s tax base in low-tax jurisdictions. The fact that US companies generate more investment income from tiny Luxembourg and Bermuda than from large markets like China and Germany shows how distorted the system is.
7 Trade alone cannot rid a country or the world of poverty. It can help lift people out of poverty; it can also deepen and create poverty. But the WTO’s abandoned Doha Round did try to put development at the heart of international trade strategy and it’s still possible – under the WTO’s Enabling Clause – for industrialized nations to operate non-reciprocal preference schemes for vulnerable countries.2 These include duty-free and quota-free access for exports from the world’s least-developed countries – which should be encouraged and expanded.
8 Investor rights exercised through the Investor-State Dispute Settlement (ISDS) system or International Court System (ICS) must be eliminated. They currently give corporations unlimited power to sue governments regulating for the public good.
9 Financial deregulation and the speed and ease with which capital can cross borders has been toxically destabilizing – as the 2008 financial crisis conclusively demonstrated. More than half a century ago, economist John Maynard Keynes had cautioned: ‘Let finance be primarily national.’ Capital controls – anathema to free market fundamentalists – are sometimes a necessary tool in a government’s box, used by Iceland during the 2008 financial crisis. Even the IMF has changed its tune on this matter. Financial services should be a well-regulated sector.
10 Stop and reject bullying tactics. Powerful parties in trade negotiations – such as the US, the EU and China – often use coercive tactics to prise open the markets of weaker partners. In the case of trade deals with African countries, these tactics have included threats to withhold development aid or investment. But a weakened, isolated, post-Brexit Britain could also be forced to open its National Health Service to, say, US commercial interests. Often the use of trade sanctions – such as US-instigated sanctions against Iran, Venezuela or Cuba – are politically motivated to destroy the economy of an ideological enemy.
11 Cut out the dirty tricks and add rules against trade cheating. Common tactics include a complex trick of ‘shifting boxes’, used predominantly by rich-world countries, which involves craftily reclassifying products – to your advantage – to get away with unfair subsidies. Deliberate and systematic accumulation of trade surpluses can be an unfair practice – one of which Germany is actually more culpable than China.
12 Trade should encourage innovation rather than oligopoly. The world needs to curb the monopolizing power of the internet titans such as Google, Apple, Facebook and Amazon (aka GAFA). Superstar firms crush competition and deepen global inequality. Regulating digital super-platforms is essential for developing countries to gain from e-commerce. Without this, poorer countries linking into existing super-platforms will only provide the companies that run them with more data – strengthening them further and facilitating their market access and domination.
13 Not all trade is good and more trade is not necessarily better. Judgement and moderation should prevail. Some just should not happen at all, like trade in arms to countries that are serial human rights violators. Not all investment is good either. For example, Britain enjoyed record inward foreign investment in the past year, but much of it was in the form of mergers and acquisitions that caused thousands of job losses.
14 Fair Trade makes up a tiny fraction of global trade, but is an important model for trade that is direct, ethical, non-exploitative, paying producers a fair price and providing continuity of purchase. Fair-traded food products, cotton and handicrafts have scaled up successfully and may well continue to do so.
There’s something missing in the above list – the World Trade Organization.
Even before Donald Trump and his international trade representative Robert Lighthizer gave it a kicking at the last ministerial summit in Argentina in 2017, the power and effectiveness of the WTO as the custodian of the multilateral trading system has been waning.
The failure to conclude the Doha Development Round – meant to put the needs of developing countries at the heart of talks – has not helped. Increasingly, major trade negotiations take place at a regional or bilateral level, outside the WTO.
But a critical function of the WTO remains to settle disputes between member trades. By vetoing the approval of new judges to the Appellate Body of the dispute system, Trump and Lighthizer managed to strike a potentially lethal blow. Unless this issue is resolved, by the end of 2019 the court will grind to a halt with just one judge left – calling into question the ongoing viability of the WTO itself.
The White House claims that the WTO is unfair to the US in its trade disputes, mainly with China. But this is not so, as the dispute settlement record shows – the US is the biggest complainant and has won 90 per cent of its cases over the past 20 years.
Trump’s deep hostility to multilateralism itself was apparent when, at the end of the 2017 WTO summit, he vetoed a statement affirming the ‘centrality of the multilateral trading system’.
There is widespread acceptance within the WTO that the organization needs reforming and updating – not least so that it can keep pace with the digital revolution, and many new trade issues thrown up by the data economy, e-commerce and power of platforms.
But there is also a determination to save the multilateral system. ‘What’s the alternative?’ says South African trade expert Mustaqeem De Gama. ‘War?’
Canada’s trade minister Jim Carr recently called a 13-party summit to forge an alliance of nations that support a rules-based multilateral trading system and to discuss how such a system can be modernized and improved. The EU, Australia, Japan and South Korea were among those that attended. Separately, China and Russia have called for the WTO to be strengthened.
But is the WTO fit for purpose and should it be saved? In his book What’s Wrong with the WTO and How to Fix It, Rorden Wilkinson, professor of international political economy at Sussex University, argues that the WTO system should be dismantled and rebuilt to provide equity of opportunity for all. The unfairness in the system, between countries at different stages of development, has existed since its conception. It reflects the trade requirements of its principal architect, the US, and was crafted to fit around existing US commercial methods, legal frameworks, styles of negotiating and economic ideas. Throughout the WTO’s history, tactics have been used, directly or indirectly, to prevent developing countries from competing in the global marketplace or fully participating in the negotiating process. Unequal deals have come about because competitive negotiating among unequals is embedded in the machinery of trade governance.
For Wilkinson, key to reimagining the WTO is a new declaration of its aims and objectives that places trade-led development-for-all, in an environmentally sustainable fashion, at the forefront of the multilateral trading system – with particular emphasis on helping those in most need.
One of many negotiations now taking place outside the WTO is the Trade in Services Agreement (TiSA). In the thick of trade war, the focus has been predominantly on goods being traded. But the trade in services (banking and financial, utilities, communications, insurance, health and so on) is almost as important. In some cases – Britain, for example – services form the larger part of a country’s exports. The US, while bellowing about its trade deficit in goods, keeps quieter about its trade in services – which is actually in surplus.
Services are set to be the big growth area, with the TiSA negotiations involving around 50 countries, including Australia, Canada, New Zealand/Aotearoa, the US and the membership of the EU. The sectors under discussion include financial, telecommunications, movement of persons, shipping, air and postal services, professional, electronic commerce, public procurement, environment, energy and services related to health.
Critics see TiSA as a corporate take-over that will target public services and lead to job losses. This view was confirmed by WikiLeaks’ exposure of draft texts under negotiation, showing how TiSA would seek to eliminate regulation and national legislation, enabling privatization and serving big business.
The US has most to win from liberalizing financial services, information and communication technology and postal services. The EU too has its eye on financial services. Trade unions are leading resistance because so many people are employed in the service sector. Whether in the ports of Canada or the hospitals of Pakistan, TiSA threatens to take away thousands of jobs.
And the EU?
Also missing from the 14-point list is specific mention of EU reform. Like the WTO, many agree the EU needs to change, but in what way? President Emmanuel Macron of France wants greater integration, fiscal and even military; a stronger Europe that can stand up to China and the US on the world stage. Highly indebted Italy is pulling in quite the opposite direction, fighting for more autonomy and setting an anti-austerity budget that the EU says is irresponsible and will destabilize the Eurozone. Italy’s coalition Right-populist government argues that the country followed EU rules and yet still its debt mounted. It can point to Greece – a weak member of the Eurozone – which suffered huge job losses and saw 25 per cent of its economy vanish when forced to comply with EU-imposed austerity measures following the 2008 financial crash. The self-harming shambles of Brexit, however, do not provide an encouraging example for those who want to leave the Union. Many say it’s better to stay and reform from within. University of London economics professor Costas Lapavitsas disagrees, saying that meaningful reform is impossible – the EU’s institutions are fundamentally designed to uphold the interests of capital against labour.7
Fellow leftists Hilary Wainwright and Mary Kaldor, however, say that there have always been contesting visions within the EU and point to significant victories for transnational social benefits and against corporate power. These include labour rights and other aspects of the EU’s Social Chapter, which Margaret Thatcher dubbed ‘socialism by the back door’.
Equality and anti-discrimination agreements have pulled many member states, including the UK, into a far more progressive place. And the EU stands out as world leader in tackling data protection issues and taking on the oligopolistic excesses of the digital titans.
Michael Holmes, director of the European Institute at Liverpool Hope University, points out that the structures of the EU make it very difficult to engineer meaningful reforms, but he is not totally pessimistic. ‘What is needed at this stage is the development of a Europe-wide progressive alliance to create a consensus about how best to democratize the EU and shift its policy priorities away from the dominant conservative orthodoxy, and how to promote broad values of social solidarity among the peoples of Europe. It’s a difficult path to travel on,’ he says, ‘but a very necessary one.’
Meanwhile, Caroline Lucas, a fierce critic of the democratic deficit in the EU while she was a member of the European Parliament, says that as a result of campaigning pressure, transparency and accountability have improved and are now better than in the UK parliament, of which she is now a member.
The future is plural
Meanwhile, the world is changing. It has shifted from being a unipolar world, with the US in charge, to an increasingly multipolar one. Not only China and the EU, but emerging economies like India, Brazil and South Korea are taking their place – pushing European countries down the league table of top economies, and becoming more assertive in international bodies.
There are moves towards strengthening and creating new regional trade blocs in Africa, Latin America and Asia-Pacific. A new 55-nation African Continental Free Trade Area is the most ambitious of these plans.
Dani Rodrick envisages ‘a pluralist world economy where nation-states retain sufficient autonomy to fashion their own social contracts and develop economic strategies tailored to their needs’.
Joseph Stiglitz calls for ‘fair globalization’ with shared prospects. The rules of the game have to be rewritten for the 21st century, he says.
Maybe the era of hyper-globalization is coming to an end. The growth in global trade is slowing down, according to the WTO. We have seen regional resistance to big power bullying: African nations standing up to the EU’s EPAs and rejection of ISDS spreading across the Global South, from South Africa to Ecuador to Indonesia. In Latin America a progressive trade justice platform is forming and there have been significant victories – international action got rid of the EU-US TTIP. We are also seeing signs of growing resistance to China’s ambitions within RCEP, to TiSA and to a rebooted TransPacific Partnership (or TPP 11) labelled a ‘job killer’.
A multipolar world has to be better, but balance of power in itself is not enough. Core values and principles are vital – and, for that reason, so is the role of social movements, campaigning across borders for trade that is shaped, not by raw competiveness, but by ideas of justice and sustainability.
We need an international mobilization that is pro-trade, but not enslaved to the mendacious corporate-driven delusion of ‘free trade’.
And developing trade that is just, open, green – for people and planet – starts with a vision.
Read part one of Trade in turmoil here.
Action on trade
Online social movement resource:
AFTINET (Australian Fair Trade and Investment Network) aftinet.org.au
Trade Justice Network/Council of Canadians canadians.org
It’s Our Future itsourfuture.org.nz
Straight Talk on Trade by Dani Rodrik, Princeton, 2018
Power, Platforms and the Free Trade Delusion, UNCTAD Trade and Development Report 2018, UNCTAD
Globalization and its Discontents Revisited by Joseph Stiglitz, Penguin, 2017
Backlash: Saving Globalisation from Itself by Joe Zammit-Lucia and David Boyle, Radix, 2018
Trade is War by Yash Tandon, OR Books, revised 2018
Privatized Planet by TJ Coles, New Internationalist, 2019
Belt and Road: A Chinese World Order by Bruno Maçães, Hurst 2018