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BackPresenting a proposal on starting negotiations with the United States on a Free Trade Agreement, the Commission once again angered the civil society. The latter fears that this Agreement could lead to retrograde steps with regard to employment rights, consumer and environmental standards and in respect of the provision of public goods. However, the Commission claims the Agreement would increase growth by 0.5 percent and create jobs; this at least is the result of a study mandated by the Commission.
This week, Brussels was entirely focussing on the planned Free Trade Agreement of the EU with the United States: apart from a panel discussion, co-organised by AK and ÖGB, there was, among other, a half-day conference by the Greens in the European Parliament as well as an evening event of the Brussels office of North Rhine-Westphalia. MEPs, representatives of the EU Commission, Trade unionists as well as civil society representatives, who attended these events, presented their positions.
Investor-state dispute settlement mechanism: Mexico has to pay 70 million Dollar fine because it refused import of toxic waste from the US
One of the strongest points of criticism during the preparations for the negotiations on an EU-US Trade Agreement is the plan to introduce a so-called investor-state dispute settlement mechanism. Such a mechanism enables investors to claim compensation from the state if they feel they are disadvantaged in the state they are doing business. However, the decision how much compensation should be paid is not taken by a court, but by three arbitrators, appointed by the parties affected. A number of speakers, among other Thea Lee of the US trade union AFL-CIO, warned about this and used an example to illustrate the effects of such a mechanism: Mexico refused to deposit toxic waste from the US in her country. However, that was an infringement against the Trade Agreement with the United States and based on this mechanism the waste disposal company was ordered to get 70 million US Dollar in compensation. As Lori Wallach of the US-NGO Public Citizen’s Global Trade Watch reported, such regulations meant that 3 billion US Dollar were already being paid. Negotiations were currently taking place concerning a further amount of about 15 billion US Dollar.
Greens, Left and Social Democrats criticise the Free Trade Agreement
The German Green MEP Reinhard Bütikofer explained why the investor-state mechanism had been invented in the first place: Germany had created this system in the Fifties, to secure investments in countries that are not functioning states ruled by law. However, both the US and the EU are functioning legal states; hence, there was no reason for the Trade Agreement at all to provide for such mechanism, said Bütikofer. Both Thea Lee and Lori Wallach criticised the plan to provide for a dispute settlement mechanism between investor and state. Such a mechanism is not necessary in states with a functioning legal system, such as the US and the EU.
Bernd Lange of the Social Democrats also rejects this approach by the Commission. Instead of the investor-state there should be a state-state mechanism. His faction wanted transparency and a democratic system. He also emphasised that employment rights had to be protected. Unfortunately, there were even states in the US, where it was not permitted to establish work councils. However, he is a realist with regard to the Agreement and would advise to harvest the “low hanging fruits”, i.e. easily achievable results, such as abatements of customs duty in the automobile industry. EU representative Franziska Keller of the Greens also strongly criticised the lack of transparency in respect of the preparations for the negotiations on the EU-US Trade Agreement. The Agreement would lay down rules, which would be of global relevance; however, no one, apart from the EU and the US would have a say in the matter. Concerning the investor-state dispute settlement mechanism, she agrees with the other speakers. Such a regulation would be a danger to democracy.
Elmar Brok, a German MEP of the European People’s Party presents a completely different opinion. An agreement with the US was necessary, both for demographic and economic reasons. The EU had Free Trade Agreements with the entire world, with the exception of the US. It was still possible to set own standards, hence one should take advantage of this. Brok considers the discussion on standards over the top and says that nobody would get excited about the social standards in China. This, however, is not true as both employment representations and non-governmental organisations time and again have made reference to the poor working conditions in Asia.
Trade unions regard argumentation of the Commission as hypocritical
Florian Moritz, member of the DGB Federal Executive Board in Berlin considers it simply hypocritical to claim that the Agreement would be regarded as an opportunity to get out of the economic crisis. To negotiate a Free Trade Agreement would take years; one could only hope that the EU had left the crisis behind by then. It would be better to establish who would benefit from the Agreement and where the acquired surplus would be. With regard to employees it should be noted that the US so far had only ratified 2 of the 8 core labour standards of the International Labour Organisation. The situation was not easy for labour representatives in the US, as companies were able to prevent the setting up of work councils. Privatisation pressure via the Agreement had to prevented, as public services could be put into question.
US trade unionist Thea Lee also asked about the motivation behind the planned Free Trade Agreement. The industry was probably most concerned with so-called “trade irritants”. However, these refer to rules in respect of consumer and environmental standards and employment rights, which might come under consideration.
Commission believes that Agreement will provide growth and jobs
In contrast, Claes Bengtsson, member of the Cabinet of Trade Commissioner Karl de Gucht argued that the Commission did not want to wait any longer to see progress being made in respect of multilateral trade agreements. Hence, it was necessary to negotiate trade agreements with third countries on a bilateral level. The Agreement would increase economic growth by 0.5 percent and create jobs, hopes Bengtsson. Apart from that, Commission colleague Leopoldo Rubinacci defends the investor-state dispute settlement mechanism: should this rule not be introduced one had to go back to the state-state mechanism and that would be questionable. The legal systems in the two economic areas should be brought together and not destroyed, said Rubinacci.
Many criticised in particular the study commissioned by the European Commission, which forecasts growth and jobs. Thomas Klaus of the European Council on Foreign Relations commented that prognoses concerning other trade agreements had always looked better than they actually were. One should also ask the question whether the yields from the Agreement were fairly distributed. What impact would the Agreement have on individual Member States? Would Spain or Greece also benefit? The Commission failed to provide an answer. Previous discussions have raised more and more doubts who does actually benefit from the Free Trade Agreement between the EU and the United States – except perhaps a small number of large international concerns.
Investor-state dispute settlement mechanism: Mexico has to pay 70 million Dollar fine because it refused import of toxic waste from the US
One of the strongest points of criticism during the preparations for the negotiations on an EU-US Trade Agreement is the plan to introduce a so-called investor-state dispute settlement mechanism. Such a mechanism enables investors to claim compensation from the state if they feel they are disadvantaged in the state they are doing business. However, the decision how much compensation should be paid is not taken by a court, but by three arbitrators, appointed by the parties affected. A number of speakers, among other Thea Lee of the US trade union AFL-CIO, warned about this and used an example to illustrate the effects of such a mechanism: Mexico refused to deposit toxic waste from the US in her country. However, that was an infringement against the Trade Agreement with the United States and based on this mechanism the waste disposal company was ordered to get 70 million US Dollar in compensation. As Lori Wallach of the US-NGO Public Citizen’s Global Trade Watch reported, such regulations meant that 3 billion US Dollar were already being paid. Negotiations were currently taking place concerning a further amount of about 15 billion US Dollar.
Greens, Left and Social Democrats criticise the Free Trade Agreement
The German Green MEP Reinhard Bütikofer explained why the investor-state mechanism had been invented in the first place: Germany had created this system in the Fifties, to secure investments in countries that are not functioning states ruled by law. However, both the US and the EU are functioning legal states; hence, there was no reason for the Trade Agreement at all to provide for such mechanism, said Bütikofer. Both Thea Lee and Lori Wallach criticised the plan to provide for a dispute settlement mechanism between investor and state. Such a mechanism is not necessary in states with a functioning legal system, such as the US and the EU.
Bernd Lange of the Social Democrats also rejects this approach by the Commission. Instead of the investor-state there should be a state-state mechanism. His faction wanted transparency and a democratic system. He also emphasised that employment rights had to be protected. Unfortunately, there were even states in the US, where it was not permitted to establish work councils. However, he is a realist with regard to the Agreement and would advise to harvest the “low hanging fruits”, i.e. easily achievable results, such as abatements of customs duty in the automobile industry. EU representative Franziska Keller of the Greens also strongly criticised the lack of transparency in respect of the preparations for the negotiations on the EU-US Trade Agreement. The Agreement would lay down rules, which would be of global relevance; however, no one, apart from the EU and the US would have a say in the matter. Concerning the investor-state dispute settlement mechanism, she agrees with the other speakers. Such a regulation would be a danger to democracy.
Elmar Brok, a German MEP of the European People’s Party presents a completely different opinion. An agreement with the US was necessary, both for demographic and economic reasons. The EU had Free Trade Agreements with the entire world, with the exception of the US. It was still possible to set own standards, hence one should take advantage of this. Brok considers the discussion on standards over the top and says that nobody would get excited about the social standards in China. This, however, is not true as both employment representations and non-governmental organisations time and again have made reference to the poor working conditions in Asia.
Trade unions regard argumentation of the Commission as hypocritical
Florian Moritz, member of the DGB Federal Executive Board in Berlin considers it simply hypocritical to claim that the Agreement would be regarded as an opportunity to get out of the economic crisis. To negotiate a Free Trade Agreement would take years; one could only hope that the EU had left the crisis behind by then. It would be better to establish who would benefit from the Agreement and where the acquired surplus would be. With regard to employees it should be noted that the US so far had only ratified 2 of the 8 core labour standards of the International Labour Organisation. The situation was not easy for labour representatives in the US, as companies were able to prevent the setting up of work councils. Privatisation pressure via the Agreement had to prevented, as public services could be put into question.
US trade unionist Thea Lee also asked about the motivation behind the planned Free Trade Agreement. The industry was probably most concerned with so-called “trade irritants”. However, these refer to rules in respect of consumer and environmental standards and employment rights, which might come under consideration.
Commission believes that Agreement will provide growth and jobs
In contrast, Claes Bengtsson, member of the Cabinet of Trade Commissioner Karl de Gucht argued that the Commission did not want to wait any longer to see progress being made in respect of multilateral trade agreements. Hence, it was necessary to negotiate trade agreements with third countries on a bilateral level. The Agreement would increase economic growth by 0.5 percent and create jobs, hopes Bengtsson. Apart from that, Commission colleague Leopoldo Rubinacci defends the investor-state dispute settlement mechanism: should this rule not be introduced one had to go back to the state-state mechanism and that would be questionable. The legal systems in the two economic areas should be brought together and not destroyed, said Rubinacci.
Many criticised in particular the study commissioned by the European Commission, which forecasts growth and jobs. Thomas Klaus of the European Council on Foreign Relations commented that prognoses concerning other trade agreements had always looked better than they actually were. One should also ask the question whether the yields from the Agreement were fairly distributed. What impact would the Agreement have on individual Member States? Would Spain or Greece also benefit? The Commission failed to provide an answer. Previous discussions have raised more and more doubts who does actually benefit from the Free Trade Agreement between the EU and the United States – except perhaps a small number of large international concerns.