At a previous party conference back in the autumn of 2013, Lib Dem party members voted overwhelmingly for a motion committing the party to wholeheartedly supporting the Transatlantic Trade and Investment Partnership.
As we all (particularly parliamentary candidates, thanks to 38 Degrees) know, a massive campaign has appeared since then opposing the agreement, ostensibly over concerns that the NHS will somehow be threatened. Protestors were out in force outside the conference centre here in Liverpool, and given the number of members I saw signing the petition they were handing around, I thought it might be useful to set out again why those protestors are so wrong, not just in their opinion but on the facts.
Given the concerns, I wrote at length here on LDV back in January specifically on the topic of the NHS in my post “TTIP and the NHS: Separating fact from fiction“. Since then, and following unprecedented numbers of public consultations, the European Commission has published a 140-page report (pdf) looking at concerns about the investment provisions of TTIP.
Here is a reminder from my earlier piece about why fears over the NHS have no foundation:
The European Union routinely excludes public services from many of the provisions of trade and investment agreements, primarily in three ways.
First, monopoly provision of public services is protected.
Secondly, members states are entitled to favour firms within the EU over those outside and to specifically prevent foreign firms from investing.
Lastly, countries can continue to regulate public services in any way they wish. More on these exclusions here.
It is important to stress again that even without such exclusions, a company could only bring a case against a country where there is a specific breach of the agreement and even then could only seek compensation, not a reversal or change in the law.
An example of the formulation of such exclusions within agreements can be seen in one of the annexes to the draft EU-Canada agreement (pdf), which specifically states that measures “that are designed and applied to protect legitimate public welfare objectives, such as health, safety and the environment, do not constitute indirect expropriations.”
Both European and American officials have repeatedly stated that it is not their intention for public services to fall within the scope of TTIP’s ISDS provisions.
Karel De Gucht, the European Commissioner for Trade until November, said in an interview last year: “Public services are always exempted – there is no problem about exemption. The argument is abused in your country [the UK] for political reasons but it has no grounds.”
That assurance has been given in both Houses of Parliament by government ministers, including by the Minister of State for Trade and Investment Lord Livingston and the Health Secretary Jeremy Hunt.
And it is also worth reminding ourselves what Vince Cable said:
ISDS is about protecting businesses and individuals who have made investments overseas from unfair or discriminatory treatment by the host government. It cannot force governments to open markets or privatise public services, nor will it give excessive rights to US investors.
Neither the investment protection provisions nor decisions arising from ISDS cases will affect the ability of the UK government to regulate fairly and in the public interest. Investment treaties protect foreign investors from discriminatory and unfair treatment by the host state. There are specific provisions in the Commission’s consultation which are designed to safeguard the right of governments to take measures necessary to protect the health and security of citizens, and to protect the environment.
Given our party’s long-standing history of support for both free trade and the European Union, we should be at the forefront of defending TTIP as a matter of principle and spelling out the benefits in practice while of course ensuring that it is the best, most transparent agreement that it can be.
UPDATE 4.48: I asked Clegg about TTIP in his Q&A this afternoon. Here is his answer stating categorically that there is no threat to the NHS:
* Nick Thornsby is a day editor at Lib Dem Voice.
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147 Comments
I lean against TTIP. If people want a product for the US market they should just make one for it. We have coped up until now.
There are other reasons, but in the spirit of staying on topic and not getting into a big philosophical debate: I don’t see the need for TTIP and I worry about its effects on democracy.
There’s a fundamental difference between the TTIP and the EU: the EU includes mechanisms for the unification of the job market and oversight of the systems of regulation, without these balancing factors the EU would be a very bad thing indeed. The TTIP, without these measures, just boosts the power of corporations and weakens the ability of national governments to bring them to heel.
Multi-national corporations are already overly powerful entities; the last thing we need is to boost their strength.
A casual glance at other treaties of this kind should convince anyone that (a) they don’t actually produce the promised economic benefits and (b) they are used by powerful corporations to bully governments into permitting bad practice on their part.
“I lean against TTIP. If people want a product for the US market they should just make one for it. We have coped up until now.”
Presumably you could make the same argument about the common market?
“There are other reasons, but in the spirit of staying on topic and not getting into a big philosophical debate: I don’t see the need for TTIP and I worry about its effects on democracy.”
Ditto.
“while of course ensuring that it is the best, most transparent agreement that it can be.”
Can you give me a list of the meetings that have been held between any combination of US and EU officials on the one hand, and corporate lobbyists on the other?
Can you show me where the minutes of those meetings are publicly accessible?
No, didn’t think so.
I’m sorry, Nick, but this really takes the biscuit in terms of wool being pulled over eyes. Any transparency in these negotiations has had to be wrung out of the negotiators drop by unwilling drop. I do not trust them and I will not trust them until they practise the transparency you preach.
I am all in favour of free trade. TTIP is about so much more than free trade.
And ISDS; “ISDS is about protecting businesses and individuals who have made investments overseas from unfair or discriminatory treatment by the host government.” Why do they need this specific, secretive and protective mechanism. Are you really trying to tell us that any country has been allowed into the EU without a court system that is capable of dealing with this sort of thing? No, the only purpose of ISDS is to keep corporate secrets out of the public eye. It is not acceptable in a democratic system.
Don’t you love the blindness of the TTIP supporters!
Under TTIP, the Home Office would of been unable to appeal (under UK law) against the “confidential arbitration process” decision to award the US Raytheon company £224m compensation for the early termination of the e-borders project… Need I say any more?
Good post. Protectionism rears its head regularly, like nationalism, and for many of the same reasons. It’s good that liberals and Lib Dems have always argued strongly against protectionism.
Much of the momentum in the anti-TTIP campaign is carried by anti-capitalist protesters, who have found a new outlet that the public are susceptible to, by merging it with fears over the NHS. Those (unfounded) fears have been stoked up by the Labour Party for political reasons, but now have a life of their own and will come back to bite the Labour Party if it makes it back into government.
The notion that the French, and Germans – who are both notoriously defensive and unwilling to bow to the USA (or indeed, anyone) – would willingly sign up to a treaty that would allow their own public services to be “force-privatised” by US corporations, is laughable. I can only presume that the people actually thinking this is happening have never met a French person and never seen a French politician on TV. Oh well. But back in the real world, the European Commission has been perfectly clear: public services are exempt. The leaked text from the BBC shows this.
But for many, the anti-politics mood has become imbued with anti-free-market mood, and TTIP has to be opposed at all costs cuz teh evilz neo-liberalism! Or something.
Eddie – not sure you understand what TTIP and free trade are about. Nothing to do with making products for the US market – a lot to do with reducing barriers to selling there (and US firms selling to the EU
Simon McGrath, I can cope with TTIP, even if I lean against it, but I don’t believe in supporting something just because someone has called it free trade. David Boyle has written what I think it is a very good article on how there is a good pro free trade argument against TTIP:
http://davidboyle.blogspot.co.uk/2014/11/why-free-traders-might-oppose-ttip.html
I see liberals staying quiet whilst we sign up to an investment bank by democracy subverting China. It is “free trade gone mad”.
“I don’t see the need for TTIP and I worry about its effects on democracy.”
Double ditto.
And it’s a considerable net vote loser.
Simon McGrath 14th Mar ’15 – 4:41pm “Eddie – not sure you understand what TTIP and free trade are about. Nothing to do with making products for the US market – a lot to do with reducing barriers to selling there (and US firms selling to the EU).
Eddie, when you, Jedi and myself all agree about the potential threat to democracy, contrary to Simon’s assertion, I think we understand more than enough!
We need to pause. Ensure large corporations pay their taxes and obey international and international laws, have full information about the implications of TTIP, openly debate its merits and then decide. Until then the precautionary principle must prevail.
The questions run much deeper than just the NHS. Liberal Democracy has the spreading of freedom, power and wealth at its heart. I can see little benefit to ordinary citizens and even to SME’s but a plenty for the multi-nationals.
These negotiations for the TTIP have been held in secret between high-level EU officials and corporate lawyers and lobbyists (the Moneymen). TTIP will, quite simply, give more power to unaccountable, undemocratic multinational corporations, many of whom are already more powerful and wealthy than many nation states. We “little people” don’t have the ability to negotiate with governments like this. We’re lucky if an MP even bothers to reply to a letter. Lib Dems are supposed to break up large concentrations of power and hand it to the people. This whole treaty, from the content to the way it has been negotiated so far, is in my opinion, in conflict with what you lot preach.
When one invests, there is always a risk. That is the nature of capitalism. Investors don’t need “protection”. If they’re going to play the game and risk their money for the chance of a big payoff, that’s fine with me. It’s their choice. But the game, as it is, is already stacked in their favour. This is just more of the “privatise profits, socialise losses” mantra big business has been playing at for some time. Enough. Companies or individuals who lose out due to decisions taken by democratically elected governments knew the risks when they invested in a particular area. They don’t need even more protection, especially against democracy.
Giving more power to unelected, unaccountable people is never a good thing. Giving that power to multinational corporations is just madness. The pre-Clegg LibDems would have been against this.
This just makes me so angry. This article is basically sticking up for the Moneymen (global corporations, corporate lawyers and lobbyists) and poo-pooing concerned citizens who simply don’t want TTIP.
Which is par for the course in this party these days. At least we know which side yours is buttered on.
The National Health Action Party opposes TTIP.
I trust doctors more than politicians.
@Stephen Hesketh – Um, Jedi isnt agreeing with you at all…he’s saying all the arguments you are using can be used against the EU, but you dont seem to be using them against the EU.
@Jayne – I trust doctors more than politicians to tackle my illnesses, but I certainly don’t trust them more than politicians to make the law. E.g:
Doctors opposed the creation of the NHS
Doctors have wanted to criminalise boxing forever
The War on Drugs was only possible because doctors supported it when it started
Given half a chance, pretty much anything bad for you would be illegal if doctors were allowed to write the law
Etc…
A report says TTIP will bring European disintegration, unemployment and instability.
TTIP: European disintegration, unemployment and instability. GDEA Working Paper 14-03 Jeronim Capaldo. October 2014.
Stephen Campbell I could not agree with you more! Thank you for bringing some sanity to this discussion. I would go a step further than angry, if I am honest. I cannot believe that supports of TTIP do not understand what it actually is, I can only conclude they simply don’t care. The nature of the right wing beast is well alive in the Liberal Democrats, it seems. And it breaks my heart.
@Samuel Griffiths: ” I can only conclude they simply don’t care.”
No, they do care. Just not about things traditional Preamble Lib Dems care about. Sadly, there is a large number of right-wing entryists in this party who think the UK is just crying out for yet another free market fundamentalist party (as if Labour, Tory and UKIP weren’t enough). Some people in this party are so ideologically wedded to the free market and blind to its many failures that they remind me of the old Trots who used to say “the USSR isn’t *really* communist” and “what is needed is more extreme communism”. The Lib Dems I used to vote for would support the free market in areas where it worked and state provision in ares where that worked. I’m not anti-capitalist, but I am a Social Democrat. A position which was once mainstream in this party, but now has been shoved aside by the free market fundamentalists. The old Lib Dems would’ve been against secretive treaties drawn up by corporate lobbyists and lawyers. The old Lib Dems used to argue for greater transparency in all walks of public life. The old Lib Dems would’ve found a middle ground. At the very least, they would’ve listened to the concerns of us who are against the TTIP, treated us as equals and adults rather than smearing us all as anti-capitalists or other nonsense I’ve seen on this site. These days, those who have power and influence in this party just brush off our concerns and call us names. The preamble and constitution mean nothing to them, not to mention the legitimate concerns of millions of people across the EU. They Moneymen have won and, as with Labour, turned a once-proud and principled party into another hollow corporate PR exercise.
” The nature of the right wing beast is well alive in the Liberal Democrats, it seems. And it breaks my heart.”
It breaks my heart as well. The party I supported and voted for over the course of about 20 years is no longer one I recognise. It is now a party which is willing to put the interests of the already powerful above the interests of those with no power. The way this party acts these days is very often in direct opposition to its stated aims in their constitution.
MBoy 14th Mar ’15 – 6:35pm
“@Stephen Hesketh – Um, Jedi isnt agreeing with you at all…he’s saying all the arguments you are using can be used against the EU, but you dont seem to be using them against the EU.”
MBoy – Oops – you do appear to be right – but only about Jedi’s view. I misread ‘ditto’ to signify his agreement with Eddie’s comment.
So, how about … Eddie, when you, Jack, Rob, Roland, Stephen C, Jayne, Samuel and myself all agree about the potential threat to democracy, contrary to Simon’s assertion, I think we understand more than enough!
I do hope that makes you happy 🙂
Stephen Campbell and Samuel Griffiths.
Many of us do care – very much. We must not go anywhere near another coalition with Clegg as leader. Ideally not at all in the next Parliament. We need to elect a new leader – which will itself go a long way in proving if we have indeed been taken over by the Clegg Centrists and TTIP-supporting economic liberals such as Nick Thornsby and Simon McGrath.
If that proves to be the case then 1) the Liberal Democrat party will not survive much past 2020 and 2) traditional Preamble-supporting Liberal Democrats will have to join or found another party. I for one will never give up my time to help any party dedicated to assisting the haves rather than the have nots whether we are talking about social, economic, political justice or power.
We need the support of fellow Radical Social Libertarians in the battle to save the Liberal Democrats as a party of the progressive centre-left. Just £5 will secure you this opportunity!
Both Conservatives and UKIP oppose Free Movement, which is an essential part of the free market. The Greens oppose Free trade- and Labour has protectionist tendencies occasionally.
So yes, we do need a free market party.
As far as I’m aware, a libertarian is a person who thinks we shouldn’t pay taxes. Is a “Radical Social Libertarian” something different?
IF TTIP is so great why are its provision still shrouded in secrecy?
Those who do evil love the darkness.
Nick Thornsby | Sat 14th March 2015 – 2:42 pm
Nick’s piece has all the hallmarks of someone, metaphorically speaking, who walks up to a front door, reads the brass plate saying ‘Free Trade’, nods in agreement and walks off without even trying the handle. It is a shame that sections of the Liberal Democrats, my party, seem to have done the same.
Before opposition to TTIP can be safely dismissed as ‘anti-capitalist’, remember TTIP is largely concerned with making things easier for a very specific group of enterprises, namely trans-global corporations. Any benefits accruing to small/medium enterprises while welcome, and intended, will be marginal as such companies cannot afford the eye-wateringly expensive corporate lawyers who operate the ISDS ‘Investor-State Dispute Settlement’ tribunal mechanism which is the Heart and Soul of TTIP.
There are several reasons to be wary of TTIP:
• DEMOCRACY: If agreed, TTIP would give corporations the power to sue governments over decisions that could harm their future profits, undermining democratic decision-making made in the public interest.
• PUBLIC SERVICES: TTIP will create new markets in public services such as health and education, leading to greater liberalisation and privatisation. It would also make it very difficult to bring these services — as well as our energy and water — back under public control or re-nationalise them.
• FOOD SAFETY: Through a harmonisation of food safety regulation, EU food safety standards would be lowered to US levels. This would remove EU restrictions on genetically modified organisms GMOs), pesticides, hormone-treated beef, chorine-washed chicken etc. etc.
• ENVIRONMENT: TTIP would see EU environmental regulations being harmonised and reduced to US levels, allowing a US-style fracking boom in the UK and elsewhere in Europe.
• CLIMATE: With strong investor rights, TTIP would allow corporations to sue governments for bringing in new policies to leave fossil fuels in the ground.
• WORKERS’ RIGHTS: Workers’ rights could be reduced to US standards and businesses could relocate to US states and EU countries with the lowest labour standards.
• PERSONAL PRIVACY: Leaked documents indicate that TTIP could be used to reintroduce central elements of the Anti-Counterfeiting Trade Agreement (ACTA), which was rejected by the European parliament after popular protest. This could force internet providers to spy on their customers.
• FINANCIAL CONTROL: TTIP is set to remove many of the new financial regulations (such as banking safeguards) have been introduced since 2008 to prevent a future financial crash.
• SECRECY: While corporate lobbyists are playing an integral role in negotiations, the public have been shut out. All negotiators must sign non-disclosure agreements. There is no access to the draft text of the agreement — even for MEPs and MPs — so most of what we know is from leaked documents.
• BLUEPRINT FOR THE REST OF THE WORLD: If TTIP is agreed, countries in the global south will come under huge pressure to apply TTIP standards to avoid losing trade. The business lobby are upfront about their aim of creating ‘global convergence toward EU-US standards’. This would see free trade policies forced on poorer countries, that they have had no part in negotiating.
Philip – I use Libertarian in an entirely positive sense rather than its US usage. To which I would also add neo-liberal and liberalisation of markets … No, No, No …
In my defence of my usage I would cite: http://en.wikipedia.org/wiki/Libertarian_socialism
Libertarian socialism (sometimes called social anarchism,[1][2] left-libertarianism[3][4] and socialist libertarianism[5]) is a group of political philosophies within the socialist movement that reject the view of socialism as state ownership or command of the means of production[6] within a more general criticism of the state form itself[7][8] as well as of wage labour relationships within the workplace.[9] Instead it emphasizes workers’ self management of the workplace[10] and decentralised structures of political government[11] asserting that a society based on freedom and equality can be achieved through abolishing authoritarian institutions that control certain means of production and subordinate the majority to an owning class or political and economic elite.[12] Libertarian socialists generally place their hopes in decentralized means of direct democracy and federal or confederal associations[13] such as libertarian municipalism, citizens’ assemblies, trade unions, and workers’ councils.[14][15] All of this is generally done within a general call for libertarian[16] and voluntary human relationships[17] through the identification, criticism, and practical dismantling of illegitimate authority in all aspects of human life.[18][19][20][21][22][23][24]
Past and present political philosophies and movements commonly described as libertarian socialist include anarchism (especially anarchist communism, anarchist collectivism, anarcho-syndicalism,[25] and mutualism[26]) as well as autonomism, communalism, participism, revolutionary syndicalism, and libertarian Marxist philosophies such as council communism and Luxemburgism;[27] as well as some versions of “utopian socialism”[28] and individualist anarchism.[29][30][31][32]
I would say there is a big difference between the above and someone ‘who thinks we shouldn’t pay taxes’ but I hope it gives you an insight into my usage. In fact upon reading the Wiki definition I was struck by certain similarities between it and many mainstream Preamble Liberal Democrat aims. Certainly a far cry from statist socialism or corporate conservativism … or not paying taxes!
Nick Thornsby | Sat 14th March 2015 – 2:42 pm
Nick’s piece has all the hallmarks of someone, metaphorically speaking, who walks up to a front door, reads the brass plate saying ‘Free Trade’, nods in agreement and walks off without even trying the handle. It is a shame that sections of the Liberal Democrats, my party, seem to have done the same.
Before opposition to TTIP can be safely dismissed as ‘anti-capitalist’, remember TTIP is largely concerned with making things easier for a very specific group of enterprises, namely trans-global corporations. Any benefits accruing to small/medium enterprises while welcome, and intended, will be marginal as such companies cannot afford the eye-wateringly expensive corporate lawyers who operate the ISDS ‘Investor-State Dispute Settlement’ tribunal mechanism which is the Heart and Soul of TTIP.
There are several reasons to be wary of TTIP:
• DEMOCRACY: If agreed, TTIP would give corporations the power to sue governments over decisions that could harm their future profits, undermining democratic decision-making made in the public interest.
• PUBLIC SERVICES: TTIP will create new markets in public services such as health and education, leading to greater liberalisation and privatisation. It would also make it very difficult to bring these services — as well as our energy and water — back under public control or re-nationalise them.
• FOOD SAFETY: Through a harmonisation of food safety regulation, EU food safety standards would be lowered to US levels. This would remove EU restrictions on genetically modified organisms GMOs), pesticides, hormone-treated beef, chlorine-washed chicken etc. etc.
• ENVIRONMENT: TTIP would see EU environmental regulations being harmonised and reduced to US levels, allowing a US-style fracking boom in the UK and elsewhere in Europe.
• CLIMATE: With strong investor rights, TTIP would allow corporations to sue governments for bringing in new policies to leave fossil fuels in the ground.
• WORKERS’ RIGHTS: Workers’ rights could be reduced to US standards and businesses could relocate to US states and EU countries with the lowest labour standards.
• PERSONAL PRIVACY: Leaked documents indicate that TTIP could be used to reintroduce central elements of the Anti-Counterfeiting Trade Agreement (ACTA), which was rejected by the European parliament after popular protest. This could force internet providers to spy on their customers.
• FINANCIAL CONTROL: TTIP is set to remove many of the new financial regulations (such as banking safeguards) have been introduced since 2008 to prevent a future financial crash.
• SECRECY: While corporate lobbyists are playing an integral role in negotiations, the public have been shut out. All negotiators must sign non-disclosure agreements. There is no access to the draft text of the agreement — even for MEPs and MPs — so most of what we know is from leaked documents.
• BLUEPRINT FOR THE REST OF THE WORLD: If TTIP is agreed, countries in the global south will come under huge pressure to apply TTIP standards to avoid losing trade. The business lobby are upfront about their aim of creating ‘global convergence toward EU-US standards’. This would see free trade policies forced on poorer countries, that they have had no part in negotiating.
@Stephen Hesketh
Thanks. Language is a funny thing. I wouldn’t have thought anarchists supported taxes (as I understand they think all law should be abolished), but I guess they can if they want to.
Anyway, this corporations suing governments over decisions which affect profitability idea reminds me of a story I saw this week that Big Tobacco would sue the UK if it introduced plain cigarette packaging on the basis that the UK would have destroyed their intellectual property. I thought the story was ridiculous- surely there was no legal basis for that (this is reinforced by the information that Australia has not been sued despite implementing the same measure). But maybe they could under TTIP?
@Philip Thomas: “Both Conservatives and UKIP oppose Free Movement, which is an essential part of the free market. The Greens oppose Free trade- and Labour has protectionist tendencies occasionally.
So yes, we do need a free market party.”
Ok, fine. If you think the electorate are just gagging for another free-market fundamentalist party who is beholden to multinational corporations and global finance, be brave and start one of your own. That’s what most people would think you should do. What has happened instead is that right-wing entryists have infiltrated the Lib Dems and turned it into something it has never been. The Lib Dems of the past were always pretty pragmatic and not rigid dogmatic ideologues. They were about doing what worked best. Sometimes that would be the market, sometimes that would be the state. And the Lib Dems of the past would never have been in favour of secret trade negotiations which were drawn up by unelected corporate lawyers and lobbyists. The party I used to support, this party, was about giving more power to everyday people and standing up for the weak – not standing up for the already strong such as multinationals.
Instead, a small group has captured the leadership of this party and steered it further rightwards, much like Militant Labour tried to do with the Labour Party in the 1980s, albeit from the opposite end of the political spectrum. We all know how that ended.
And if you truly think the public at large want yet another right-wing party who dogmatically worships at the altar of the almighty market, surely the Lib Dems would be riding high in the polls right now. Right?
@Philip Thomas
Philip, I should have added that, prior to about 1981, I considered myself to be such a (always tactically Liberal voting!) Libertarian Socialist and found no problem at all in making the full time switch to Preamble Liberalism!
Perhaps one of our clever philosophers can explain where Libertarian Socialism and Social Justice Liberalism meet?
More interesting to me might be where socially liberal Conservativism and so-called free market and TTIP/global corporate-supporting liberalism divide? I have struggled to identify any difference between them!
Chris Burden 14th Mar ’15 – 9:42pm
Excellent post Chris.
The Liberals back through history have always been the party of free trade. It’s also a bizarre myth that only giant companies want to be able to buy and sell internationally. Large companies already have the scale and buying power to go across borders. It will indeed remove counter-productive govt regulations for them, but it also opens up the US market to our smaller and medium sized companies.
The principle is sound and is part of bringing about greater economic freedom. Most objections appear to be about a non-existent threat to the NHS and technical discussions about what are entirely standard enforcement norms. I can’t help thinking that the same argument would be had with the same people if we were only creating the European common market now. Luckily that battle is already won.
“And it is also worth reminding ourselves what Vince Cable said:”
Perhaps we need to remind ourselves of just what Vince Cables role in the EU’s TTIP negotiations are, namely he isn’t a member of the EU’s negotiating team. [source: http://trade.ec.europa.eu/doclib/docs/2013/july/tradoc_151668.pdf%5D, and neither is he a member of the EU Commission. Hence he has no direct involvement or knowledge of the confidential EU negotiations on TTIP.
@Stephen Hesketh “More interesting to me might be where socially liberal Conservativism and so-called free market and TTIP/global corporate-supporting liberalism divide? I have struggled to identify any difference between them!”
My personal breaking point with the Conservative Party was over Europe (over a decade ago)- and recently with the proposals to end Free Movement it has become even clearer that the modern Conservative party is not truly a free market party: nor does it support the fundamental freedoms enshrined in the Human Rights Act. The modern Conservative party also appears to have an ideological desire to shrink the state, which is not a necessary part of liberalism (liberals are wary of the state, but shrinking it is not a dogmatic issue for them). A lack of concern for the poor and marginalised in society may also be seen- look at Conservative proposals to end Housing Benefit for under 25 year olds- blocked by the Lib Dems.
The last is a trivial example- but there are real differences: You might think my position (and that of others on the so called “economic liberal wing of the party) is closer to the Tories than it is to yours, but I would rather have a social liberal as my ally than a Conservative- and if I have to choose between socialism and repealing the Human Rights Act, I will choose socialism.
@Stephen Campbell.
I don’t consider myself a free market fundamentalist, nor beholden to multinational coporations and global finance. I am however in favour of freedom: and that includes the freedom of individuals to obtain goods and services all over the word (Free Trade). I have not researched TTIP and from what I am reading to me I am not convinced by it (nor do I have complete confidence in our leadership, otherwise I might accept TTIP on trust). In any event, I am certainly not going to found a new party- ironically the suggestion was made in the opposite direction on LDV a few days ago (a social liberal suggesting a new socially liberal party should be founded)- and my reasoning against that idea applies equally well to founding a pure economic liberal party: there are too many parties in the UK political area as it is.
If you don’t believe in unfettered capitalism and want something other than the neo-liberal agenda then there really is no point in voting as all parties believe in it. All mainstream political parties are essentially fully signed up to the same agenda, the only thing they disagree about is how to implement it. That’s all an election is, picking which way to implement what is essentially the same thing.
This isn’t about free or fair trade, this is about strengthening corporate monopolies and ensuring that state policies reflect the interests of those at the very top – the same people who evade their taxes, seek ever-lower regulation and outsource labour to developing countries with poor pay regimes. We should be promoting free, fair trade and using the state or whatever means to break up these huge concentrations of power. Instead we’re being led into a ‘free trade’ agreement on the back of a mix of half-baked arguments.
– Now and again maybe we should stop to wonder if it’s in our interests being a member of an EU that speaks up for big corporations at the expense of the people, shoving austerity down the throats of countries like Greece in an example of large-scale usury.
@David – Sad but true.
I am not at The Conference but I have been to plenty in the past.
Sometimes you go into the conference hall and a vote is about to take place. You have not listened to the debate and so do not vote. But when the hands go up you can guess which way you probably would have voted when you see who is voting and how they are voting.
So it is with this thread.
I see on one side of the debate Nick Thornsby, Simon McGrath, amd other devotees of a strategy that has brought our party to its knees.
On the other side of the debate I see Stephen Hesketh, Jayne Mansfield, Stephen Campbell and others who say things which I find to be in touch with reality outside of the Bubble which has been subject to Corporate Capture.
Unlike a debate at Conference I can go back and read this thread as if I had been here from the beginning.
My conclusion is the same – but I am glad I read through because I read the comment from Chris Burden — whose list of ‘Reasons To Be Wary’ is excellent.
My own attitude to TTIP is informed in a similar way.
If Big Tobacco is lobbying hard for TTIP (and it is lobbying hard for TTIP) that sounds like a giant alarm bell ringing, a reason to be wary.
@David. I agree that all parties favour some form of market capitalism, but at this election there is a fundamental difference between the parties: a difference on which both wings of our party can unite- the Tories and UKIP want to abolish human rights and replace them with “British” rights. The commitment to human rights was a fixed aspect of the agenda which all parties respected. But the two right wing parties have now torn it up: who knows what parts of our common liberal democracy they will seek to destroy next.
John, if you want to judge TTIP not on its merits but by the company that its advocates keep, so to speak, I hope you won’t mind me pointing out that your opposition puts you at one with right-wing US republicans.
@Nick- of course. The right-wing of the Republican party are isolationist nutters so the naturally oppose international treaties. Their position is a given which doesn’t shed any light on the merits of the treaty.
I am more interested in Big Tobacco’s support for TTIP: what do they gain from it? Would TTIP prevent restrictions on sale of cigarettes? One can imagine a treaty doing that in the name of free trade…
JohnTilley 15th Mar ’15 – 7:11am
Good morning John. I agree, Chris Burden’s post is excellent and presently the stand-out contribution on this thread.
TTIP is far from being the next step towards free trade, in truth it is more likely to turn out to be the next big step empowering big business over national governments and individual citizens and towards a dark society in which the ‘haves’ are little more than consumers of goods and services, and the ‘have-nots’ are a cast aside population living on the fringes.
As Tsar Nicholas states, “If TTIP is so great why are its provision still shrouded in secrecy?”
Just as free trade was a 19th century party-splitter, one has to wonder if TTIP might end up a similarly powerful determining concept in the coming years. The vast majority of ideologies have their less benign extension. This is free trade’s.
Nick Thornsby 15th Mar ’15 – 8:22am
Nick, If right-wing Americans agree with the reasons to be wary of TTIP set out by Chris Burden, I welcome them with open arms.
Chris’s list —
There are several reasons to be wary of TTIP:
• DEMOCRACY: If agreed, TTIP would give corporations the power to sue governments over decisions that could harm their future profits, undermining democratic decision-making made in the public interest.
• PUBLIC SERVICES: TTIP will create new markets in public services such as health and education, leading to greater liberalisation and privatisation. It would also make it very difficult to bring these services — as well as our energy and water — back under public control or re-nationalise them.
• FOOD SAFETY: Through a harmonisation of food safety regulation, EU food safety standards would be lowered to US levels. This would remove EU restrictions on genetically modified organisms GMOs), pesticides, hormone-treated beef, chlorine-washed chicken etc. etc.
• ENVIRONMENT: TTIP would see EU environmental regulations being harmonised and reduced to US levels, allowing a US-style fracking boom in the UK and elsewhere in Europe.
• CLIMATE: With strong investor rights, TTIP would allow corporations to sue governments for bringing in new policies to leave fossil fuels in the ground.
• WORKERS’ RIGHTS: Workers’ rights could be reduced to US standards and businesses could relocate to US states and EU countries with the lowest labour standards.
• PERSONAL PRIVACY: Leaked documents indicate that TTIP could be used to reintroduce central elements of the Anti-Counterfeiting Trade Agreement (ACTA), which was rejected by the European parliament after popular protest. This could force internet providers to spy on their customers.
• FINANCIAL CONTROL: TTIP is set to remove many of the new financial regulations (such as banking safeguards) have been introduced since 2008 to prevent a future financial crash.
• SECRECY: While corporate lobbyists are playing an integral role in negotiations, the public have been shut out. All negotiators must sign non-disclosure agreements. There is no access to the draft text of the agreement — even for MEPs and MPs — so most of what we know is from leaked documents.
• BLUEPRINT FOR THE REST OF THE WORLD: If TTIP is agreed, countries in the global south will come under huge pressure to apply TTIP standards to avoid losing trade. The business lobby are upfront about their aim of creating ‘global convergence toward EU-US standards’. This would see free trade policies forced on poorer countries, that they have had no part in negotiating.
Philip Thomas 15th Mar ’15 – 8:28am
“….I am more interested in Big Tobacco’s support for TTIP: what do they gain from it? ”
I think you are on the right track on this one, Philip. Why would an International cartel which has been the subject of legal action under the US Trust-Busting Laws be in any way interested in “free trade” ?
Stephen Hesketh 15th Mar ’15
Yes indeed , I do not always agree with Tsar Nicholas but he is right on ths one.
I wish he would change his screen name or use his real name as it goes against all my instincts to agree wih a Tsar.
What I find saddening, truly saddening, is Nick Thornsby’s second paragraph.
The sizeable opposition to TTIP has not been stirred up by 38 degrees, it has simply provided a vehicle through which those of us who distrust the decision making of those in power can make our voices heard. I don’t even think that the economic case for TTIP has been made, or are we expected to ignore research from a respected American University.
I used to think that the Liberal Democrats supported the idea of ‘people power’. It seems not.
@Stephen Heskith: “TTIP is far from being the next step towards free trade, in truth it is more likely to turn out to be the next big step empowering big business over national governments and individual citizens and towards a dark society in which the ‘haves’ are little more than consumers of goods and services, and the ‘have-nots’ are a cast aside population living on the fringes.”
I fear we are already there. Just look at how austerity has been directed towards those least able to carry the burden: the unemployed, the sick/disabled who cannot work, students and our public services. The “have-nots” are already being made to pay for mistakes made by global finance and their chums in government. In fact, the super rich have become much more rich since the 2008 crash and continue to do so. Meanwhile, the rest of us get stagnating wages, Jobcentre sanctions, zero-hours contracts, public services falling apart at the seams, etc.
Those in favour of TTIP need to be honest with us: they know it will lower our food and environmental standards (because implementing lax American-style standards is always a god idea), they know it’ll remove financial regulations, further damage our workplace rights, etc. The thing is, TTIP is an extreme version of free-market dogma, and that is exactly what they want. The globalists want this simply because it’ll further build their power base against the state and the electorate. Democratically-elected governments have always been a thorn in the side of global corporations. The corporations simply want more power and will do all they can to increase it. Anyone who thinks they truly care about democracy is naive at best. And we all know the kind of corrupting influence accumulation of power has. Those in power will always do their utmost not only to keep it, but to increase it. And those with power very rarely use it for anything other than their own ends.
The pendulum has swung too far the other way since the 1970s. It is a good thing Soviet Communism was defeated. The Communist Party ruled the USSR not in the interests of their people, but in their own interests. Nowadays we have global finance and business accumulating more power than nation states and wielding that power not for the good of all, but for the good of their bottom line. Just look at the words the corporate media (especially the right-wing papers) use to describe the unemployed or those on benefits. It’s one step away from “useless eaters”. They only care about us in terms of spending money on their “stuff”. Of course, once we’ve bought their “stuff”, decent customer service and care is usually a thing of the past provided by cheap foreign labour in distant call centres. We’ve been reduced to nothing more than atomised “consumers”. We can’t step outside our homes without being constantly bombarded by advertising and marketing. We are being dehumanised by these corporations.
I don’t want to live in a world where big business and multinationals are more powerful than the nation state. I don’t want the Moneymen to have more power than they already do. I don’t want to smash capitalism, but I also don’t want rule by corporate oligopolies.
@Jayne Mansfield: “I used to think that the Liberal Democrats supported the idea of ‘people power’. It seems not.”
They used to, but now that they’re a “serious party of government”, they care more about appeasing their corporate lobbyists and their chums (who, no doubt will be providing nice “consultancies” for MPs who are not re-elected). Just look at the way this party has sneered at grassroots groups and campaigns such as 38 Degrees since 2010. People such as Nick Thornsby can just label us all as “anti-capitalists” and thus ignore our views, arguments and concerns.
It’s politics by name-calling, rather than politics by debate and consensus.
Every system, if left without proper checks and balances and taken to extremes, has the capacity to become totalitarian or tyrannical. TTIP will simply be another step on the road to corporate totalitarianism.
Nick, good piece.
I’m rather surprised about the vehemence here on TTIP being an anti-democratic vehicle of the global corporations etc etc.
Let’s take Chris’ list:
• DEMOCRACY: If agreed, TTIP would give corporations the power to sue governments over decisions that could harm their future profits, undermining democratic decision-making made in the public interest.
This isn’t about democracy at all, it is about governments being held accountable for policy changes / expropriation. I’d suggest that the 28 elected governments of the EU and the elected governments of NAFTA all actually exhibit democratic accountability.
• PUBLIC SERVICES: TTIP will create new markets in public services such as health and education, leading to greater liberalisation and privatisation. It would also make it very difficult to bring these services — as well as our energy and water — back under public control or re-nationalise them.
Except that this isn’t true. The EU have made very clear that national health provision in the EU will be outside the scope of TTIP – as Sweden, Denmark, France, Germany etc etc want.
• FOOD SAFETY: Through a harmonisation of food safety regulation, EU food safety standards would be lowered to US levels. This would remove EU restrictions on genetically modified organisms GMOs), pesticides, hormone-treated beef, chlorine-washed chicken etc. etc.
• ENVIRONMENT: TTIP would see EU environmental regulations being harmonised and reduced to US levels, allowing a US-style fracking boom in the UK and elsewhere in Europe.
Is there any evidence for this? I’ve seen nothing of the sort. Indeed, it is equally possible to argue that the harmonisation will be to the higher common standard as has happened in the past. Scaremongering isn’t policy analysis… The same critique applies to the Climate, Worker’s Rights, and Financial Control subheads. I’m not sighted on the personal privacy issues. Anti-counterfeiting – or the protection of intellectual property – is a key area for safeguarding high wage, high skill jobs in the UK and Europe, though.
• SECRECY: While corporate lobbyists are playing an integral role in negotiations, the public have been shut out. All negotiators must sign non-disclosure agreements. There is no access to the draft text of the agreement — even for MEPs and MPs — so most of what we know is from leaked documents.
What a lot of nonsense. The Commission have opened up their negotiating strategies and red lines for the first time. This is a lot of hysteria.
• BLUEPRINT FOR THE REST OF THE WORLD: If TTIP is agreed, countries in the global south will come under huge pressure to apply TTIP standards to avoid losing trade. The business lobby are upfront about their aim of creating ‘global convergence toward EU-US standards’. This would see free trade policies forced on poorer countries, that they have had no part in negotiating.
Do you oppose the WTO for the same reason? Are you recommending to developing countries’ governments that they *don’t* sign up to the WTO, ICSID or a TTIP modelled deal? If so, you’re actively damaging the chances of developing countries attracting investment that they need to develop – which helps nobody. ICSID is especially important in countries with an unfortunate history of political instability leading to expropriation – the lack of it increases the risk profile (and therefore the cost of capital) and makes it harder for mainstream firms to invest, leaving things to high rik investors, often attracting buccaneers. Is this what you want?
How can this be true if the TTIP is still under negotiation? Surely the backing was for the negotiation rather than any possible outcome?
Surely the issues have to be the democratic oversight, interpretation and adjudication. I would be happy to see that the EU parliament, commission and courts have power here, otherwise what legal status could the agreement have?
@ Toby Fenwick,
Am I opposed to the WTO? Well I am certainly not blind to its failures even after the 2001 Doha negotiations that were supposed to put developing nations at the centre of their agenda. Nor to the reality of who the trade agreements really favour and at whose expense.
Great para Stephen,
“We need to pause. ensure large corporations pay their taxes and obey international and international laws, have full information about the implications of TTIP, openly debate its merits and then decide. Until then the precautionary principle must prevail.”
Totally agree with you.
Hi Stephen, I agree there seems to be people against TTIP, or at least sceptical of it, from across the political spectrum, even if it is mainly seen as a left wing issue at the moment.
The only thing I want to add is that economic liberals are more “progressive” than me and most of the public on some issues, so people shouldn’t despair too much about it.
Regards
Tony Rowan-Wicks 15th Mar ’15 – 2:47pm
“Great para Stephen”
Thank you Tony … ‘national and international laws’ would have been better but it’s the sentiment that counts!
How any large or small l Liberal (or anyone else with half a brain cell) can support a secret, yet to be finalised, potentially game-changing treaty of any kind, let alone one further empowering global corporations over nation States, is clearly well beyond my simple Liberal and Democratic comprehension.
Long Live 38 Degrees!
@Jayne: And why do you think that did the Doha (DDA) round failed at Cancun? I’d be the first to scrap the CAP in toto and unilaterally, but the refusal of leading developing countries to consider market access for services as well as goods isn’t going to get a deal. Personally, I’d be very happy for a G20 free trade deal that anyone could opt into on equal terms, as it is one of the few ways that the US/EU/Japan could have mutual agricultural subsidy disarmament.
@Toby 2What a lot of nonsense. The Commission have opened up their negotiating strategies and red lines for the first time. This is a lot of hysteria.”
A staggeringly complacent attitude that totally rewrites the events that have forced the EU to take the baby steps it has in becoming a little more open.
@Toby Fenwick: “This isn’t about democracy at all, it is about governments being held accountable for policy changes / expropriation. ”
Governments should be held accountable to and by their electorate and nobody else. Especially not to multinational corporations. If a government takes action, supported by a majority of the electorate, which harms the profits (or future profits) of a company, well, tough. That’s democracy and it should be sacrosanct. Corporations are not people. Your argument treats them as such. You are essentially supporting the idea that global companies are above the Nation State and not subject to democracy. You may want this to be the case, but the majority of people on all sides of the political spectrum would not. Further, investment is always a risk and a gamble as I’ve reminded people in earlier posts. If people make good investments, great. If they make bad ones, well, that’s the nature of capitalism. They don’t need more protection, especially protection which comes from the pockets of taxpayers.
“Is there any evidence for this? I’ve seen nothing of the sort. Indeed, it is equally possible to argue that the harmonisation will be to the higher common standard as has happened in the past. ”
Are you truly so naive to believe that American corporations are fighting for the TTIP so standards will be higher? Pull the other one. Regulations governing food, the environment, workers’ rights, etc., are notoriously lower in the US than in the UK/EU. Such corporations never lobby governments for higher standards and greater regulation.
“What a lot of nonsense. The Commission have opened up their negotiating strategies and red lines for the first time. This is a lot of hysteria. ”
Why did it take so long for small parts of TTIP to be publicly released? Why just the “negotiating strategies and red lines” rather than the whole document? I thought Lib Dems believed in the greatest amount of transparency and giving power to people, rather than unelected, unaccountable entities like global corporations. Why the secrecy in the first place, where even those MEPs who have seen the draft agreement have had to sign waivers forbidding them to disclose its details? In fact, we, the public, still don’t know all the details of the treaty. Why? If TTIP is as great as the lobbyists and their corporate cheerleaders such as yourself think it is, why not just release all the detail to the public so we can make an informed decision? Or would that be too democratic for you?
The fact remains that nobody asked us if we wanted globalisation and all which that entails. Nobody asked us if we were ok with global finance and corporations becoming more powerful than democratic nation states. I’m thoroughly sick of this attitude that overlooks the negative effects of globalisation, particularly on those of us on lower incomes. Globalisation may have been great for big business, finance and highly connected, middle-class Westminster Bubble/think-tank wonks such as yourself, but for a large section of society, it has done nothing for us but drive down wages, harm our public services and erode our quality of life. But, hey, we get plastic crap from China for really cheap, so it can’t be all bad, eh?
“This isn’t about democracy at all, it is about governments being held accountable for policy changes / expropriation.”
It’s about democracy. Governments are accountable. This is about weighting accountability towards corporations, and thus away from people. Corporations do have representation in that their owners, their shareholders, their employees have votes. What advocates of TTIP are saying is that these votes aren’t enough – that corporations are effectively due an extra influence because – well, because they’re corporations, they’re special.
What a shame Lib Dem discourse is now so filled with the sound of brutal Toryism. At least one line in this article gives me hope for the party: “given the number of members I saw signing the petition they were handing around”. How many I wonder? And I hope to read some of their opinions here, in articles, rather than portrayed as dissenters in the Great Clegg Project.
Toby Fenwick,
I believe that the main point was the refusal of rich countries to cut the huge subsidies they give to their own farmers. Developing countries were also concerned about new EU rules on foreign investment which they feared would open their countries up to control by foreign multinationals. It must have come as a shock that developing countries actually worked as a bloc to counter the weight of the EU, US and Japan.
I have worked with the very poor in a developing country, and I choose to get my information from non-governmental agencies and anti- poverty groups, groups as diverse as, for example Action Aid, (Competition Policy and the WTO) and Medicine Sans Frontiere, (public health v intellectual property of rights of multinational pharmaceuticals etc), rather than those who have the power to draw up rules and agreements that favour the powerful.
Anyway back to TTIP. I am opposed to it.
In political life I continually find, it’s a terrible nuisance to make up one’s mind….
(Which was written of Arthur Balfour in another argument about Free Trade).
I don’t know. Can we wait and see what actually emerges from the negotiations before deciding, or will it be too late?
Philip Thomas 15th Mar ’15 – 5:18pm
Hi Philip, being as there is no truly informed debate due to the secrecy surrounding the negotiations we appear to have just three options: 1) believe the clearly uninformed nonsense put out by TTIP supporters, 2) keep an open mind pending the outcome of the discussions and then debate it or 3) react instinctively.
At the present time I can’t see that anything other than options 2 and 3 is remotely sensible.
Ok, I guess I’ll sit on the fence for a while longer. I hope this fence is painted yellow…
Nick Thornsby’s title: “…A reminder of why (my opponents) are wrong”
The tone of this title says it all, doesn’t it?
It is hard not to worry that TTIPs is our era’s version of a 15th-century papal bull.
Cobden saw “in the Free-trade principle that which shall act on the moral world as the principle of gravitation in the universe,—drawing men together, thrusting aside the antagonism of race, and creed, and language, and uniting us in the bonds of eternal peace.”
Cobden would surely have refused to trade with businesses that subject their workers to deplorable conditions and wages.
UPDATE 4.48: I asked Clegg about TTIP in his Q&A this afternoon. Here is his answer stating categorically that there is no threat to the NHS:….
Wasn’t there another ‘pledge’ before the last GE? And, if memory serves, Mr. Cameron ‘pledged’ , “No top-Down reorganisation of the NHS…
How did they pan out?
“I asked Clegg about TTIP in his Q&A this afternoon. Here is his answer stating categorically that there is no threat to the NHS”
As I’ve said before wrt to Vince Cable, Nick Clegg is not part of the EU negotiating team, neither is he a member of the commission, hence he , like Vince Cable just doesn’t know … It is the equivalent of asking your local council leader about what the PM and his Cabinet are discussing…
” Can we wait and see what actually emerges from the negotiations before deciding, or will it be too late?”
No it will then probably be too late, depending upon the convention in place for making EU treaties binding on member states. One of the big problems with TTIP is that there is very little about positions and reasons why negotiation is required and the real intent of those negotiations. So for example in the case of IT, there are some motherhood and apple pie words about standards, but no substance saying what is causing problems. This lack of clarity about where we are now, which can in no way be regarded as confidential information can only serve to raise questions about just what is being negotiated.
Additionally, one of the things TTIP supporters put out is that TTIP is supposed to be a fast track agreement between the EU and the USA, but looking at the full extent of the trade areas TTIP covers, it is obvious it cannot be a fast track agreement without cutting corners. Which brings into question the whole rationale for the negotiation of TTIP outside of existing trade forums…
Roland 15th Mar ’15 – 9:30pm
“I asked Clegg about TTIP in his Q&A this afternoon. Here is his answer stating categorically that there is no threat to the NHS”
Well done that man!
The NHS is safe – so it is just the rest of the economy and democratic control at risk then. Thanks Nick (Clegg). I am greatly reassured by your pledge.
An excellent article. There’s so much blinkered anti-capitalist paranoia about opposition to TTIP and sadly facts are being completely ignored. Thanks for the breath of sanity.
“Anti-TTIP protestors reach #ldconf. A reminder of why they are wrong”
Nick, have you actually read the EU report looking at concerns about the investment provisions of TTIP, that you reference?
In the executive summary it explicitly states:
” there are in particular four areas where further improvements should be explored:
– the protection of the right to regulate;
– the establishment and functioning of arbitral tribunals;
– the relationship between domestic judicial systems and ISDS;
– the review of ISDS decisions through an appellate mechanism. ”
This, I suggest, is politely saying the provisions in the current text are wholly inadequate, significant parts of the remaineder of the document add specific details of why they current draft inadequately protects European interests (and I would assume that UK interests are broadly in align with those of our European neighbours…
As a firm supporter of free trade and open markets I am dismayed by the weight of opposition to Nick’s piece in the comments here. I should make it clear straight off that I have reservations about investor-state protection provisions and that I acknowledge there are legitimate philosophical objections to them.
In an ideal world I would prefer a policy of unilateral free trade to the mercantilist approach of nations and regional blocs like the EU which always demands a quid pro quo for removing trade barriers, as if freer trade were a burden that should give rise to compensation rather than a mutually beneficial arrangement to expand the sphere of voluntary exchange.
The basic fallacy implicit in this approach is a failure to recognise that exports are a cost not a benefit; that the purpose of exports is to pay for imports; and that it is the role of imports in expanding our consumption possibilities that makes us wealthier. The role of exports is to simply to finance this improvement in our consumption possibilities; there is no inherent virtue in exports any more than there is in producing things for the sake of it: rather, the ultimate purpose of production is consumption. Once we grasp these elementary tenets of welfare economics, we should be able to appreciate that lowering trade barriers makes sense irrespective of whether our trading partners reciprocate.
The economic logic of opening up an economy unilaterally – that is, no matter what policy any other national government adopts – was vividly expressed by the Cambridge economist Joan Robinson (nobody’s idea of a free-market ideologue), who observed: “Even if your trading partner dumps rocks into his harbour to obstruct arriving cargo ships, you do not make yourself better off by dumping rocks into your own harbour.”
In this spirit I totally agree with Toby when he says “I’d be the first to scrap CAP in toto and unilaterally”, yet I fear he is also right that what he calls “mutual agricultural policy disarmament” is the best we can realistically hope for. Unfortunately we have not yet reached such a state of enlightenment that even the few uncontroversial insights of economics have been heeded by politicians and the population at large. Realpolitik appears to demand that the goal of liberalising trade is pursued in baby steps by means of bilateral or multilateral deals, with all the horse-trading which that implies.
It is in this context of a highly imperfect world that I defend TTIP, and similar treaties such as the Trans-Pacific Partnership (TPP) and the EU-Canada trade deal (CETA), as deals that must be salvaged if the objective of freer trade worldwide, and the more prosperous and peaceful world which that promises, is to be salvaged.
It is when we look at the real-world context of bilateral and multilateral trade and investment treaties that the hyperbolic nature of the jeremiads about TTIP is laid bare. The first thing to note is that, whatever the flaws of the investor-state protection provisions that might be contained in the final version of any agreement – and they are currently subject to ongoing consultation – they should not be conflated with the wider case for an EU-US free-trade deal. TTIP and ISDS are not synonymous. The basic idea of TTIP is that, with no tariffs and harmonised regulation, businesses could compete and products could move freely from California to Croatia, to the benefit of consumers throughout a huge transatlantic region. Those who rail against the ISDS provisions might want to consider whether the baby should really be thrown out with the bathwater.
There is then the important question of principle as to whether ISDS provisions have any place in international trade and investment deals. ISDS requires that when investors claim their property has been expropriated by signatory states, the dispute must be adjudicated in an international forum. The argument for such provisions is that they uphold the rule of law and the sanctity of contract. Foreign investors are particularly vulnerable to discriminatory or arbitrary treatment given that their owners and staff typically have no voting rights in the host country.
As a parliamentary briefing note on the subject points out, “prior to the emergence of the ISDS system, investor-state disputes that could not be resolved by direct investor-state dialogue or proceedings in domestic courts were either not settled, or were handled by diplomatic action and, in extremis, the threat or use of military force.”
http://www.parliament.uk/Templates/BriefingPapers/Pages/BPPdfDownload.aspx?bp-id=SN06777
The objection that ISDS is inimical to democracy, since an international arbiter can potentially force an elected government to pay compensation – though it cannot force the government to change its policy – elevates majoritarian populism over the rule of law, which is not an attitude that should appeal to liberals. The more persuasive objection is that it is hard to justify such protection when the signatories to a treaty have mature legal systems and a proven track record of judicial independence. While this applies to the USA and the majority of EU member states, there are notable exceptions (the Balkan states for example) and there may also be rare occasions when discriminatory action is taken by countries with otherwise sound legal systems.
Historically, in poor countries which often lacked independent judicial systems and which desperately sought investment from abroad, the submission to international arbitration was a way to protect local populations as well as foreign investors from short-sighted policies and corrupt leaders. But similar provisions soon found their way into agreements between developed nations. The Economist recently estimated that EU members have signed 1,400 trade and bilateral investment treaties involving ISDS, while America is party to 50 trade deals that include it. The UK has more than 90 bilateral investment treaties, all of which contain ISDS provisions. A recent OECD study found that 93% of bilateral investment treaties among its members contained ISDS provisions.
I am not clear whether those who are arguing against ISDS as a matter of principle realise how commonplace they are, and whether they propose unscrambling the vast majority of trade and investment treaties worldwide. If they deny this necessity, they need to show that TTIP has particularly opaque or egregious ISDS provisions that distinguish it from all those other treaties. Yet this doesn’t seem to be supported by the evidence. The parliamentary briefing paper cites analysis of the European Commission’s draft text for ISDS provisions which found that “the text contains considerably more detail on transparency, enforcement of awards, and the constitution of tribunals than is tupically found in other ISDS arrangements.”
Detailed analysis by the International Institute for Sustainable Development came to this conclusion: “The Commission’s draft on ISDS incorporates a number of elements to improve investor-state dispute settlement, long overdue. Notably, it enhances transparency in the process and improves the independence requirements for arbitrators. While the Commission could have been more bold and innovative in some areas, the draft does provide the institutional basis for additional improvements to be made in the near future. A key task now is to gain consensus among the member states and European Parliament on the need for change.”
I am not a lawyer or an expert on either TTIP or ISDS provisions. But as far as I can see the opposition is disproportionate and threatens to scupper yet another trade deal using a convenient pretext.
@Alex Sabine,
But is TTIP really about free trade strengthening economies or is it about the undermining protection for workers, consumers and the environment by granting major powers to corporations? Tariffs between the US and the EU are already low.
You mention ISDS. How is this mechanism democratic. There are already cases reported where we can see how this works in practice. The report include:-
Egypt is being sued by a company for raising minimum wages.
Slovakia was forced to pay a dutch insurance company when it tried to introduce public health insurance.
Argentina was successfully sued by water and electricity companies for freezing utility prices
An American drug company is being sued for refusing a patent thus depriving the company of expected profits.
I leave you to verify these cases , but why wouldn’t they cause concern about a future elected government’s ability to renationalise part of the NHS or tackle utility prices.
There is concern about job loses. What does a report that was commissioned by the EU state about jobs across the uS and EU? The is plenty of evidence from other free trade agreements around the world? What will harmonisation of regulations between the EU and the US mean?
As a housewife, I am no economist- although Mrs Thatcher, and and since he went into government, Nick Clegg, might beg to differ, but I resent the idea being put forward that as individuals, we are just puppets being played by anti capitalist agitators. Please consider that we might, just might, be worried about our democracy.
Anyway, back to considering the big issues such as , can Top Gear continue without Clarkson? and does Ed Miliband have two kitchens or one kitchen and a kitchenette?
@Alex Unfettered free trade would mean accepting any product onto the market, without any environmental or health-and-safety checks (or other checks such as “was this made by child labour?”). And, although I am in favour of free trade, I am not in favour of it at any price.
I have no idea whether TTIP’s price is right.
@Alex Sabine:
I’m afraid that ISDS is as inimical to the rule of law as it is to democracy. Allowing foreign corporations (and ONLY foreign corporations (or companies that pretend to be such by creating foreign subsidiaries)) to sue governments via secretive tribunals, not bound by any legal precedent (even other ISDS tribunal decisions), and without having to exhaust the normal legal process, over legally and democratically constituted decisions by national governments is totally contrary to the rule of law.
@Philip Thomas: “I don’t know. Can we wait and see what actually emerges from the negotiations before deciding, or will it be too late?”
It will be too late. The approach to dealing with these large, multi-national trade deals is that the negotiating teams negotiate and then the parliament is encouraged to quickly ratify through a fast track process rather than allowing the slow process of proper democratic oversight. When the handshakes are made in the negotiations it will be too late to end the process or do much more than twiddle around the edges. Expect three-line whips from the big parties and strong-arm tactics from the EU to force nation states to legislate according to their agreed programme.
@ Jayne
The same arguments have been made against all previous moves to liberalise trade – that doing so will “undermine protection for workers, consumers and the environment by granting major powers to corporations”. There is absolutely nothing new about TTIP in this respect. If they had they prevailed we would still have the autarkic, protectionist – and much poorer – world economy of the interwar period, which brought the preceding period of progress to a juddering, and ultimately murderous, halt. As it is, such arguments – when worn by negotiators as a rather ill-fitting cloak to disguise the defence of domestic vested interests and the influence of powerful sectoral lobbies – have helped to stall or scupper successive trade rounds, to the detriment of the very people they have claimed to champion.
The reason such arguments are specious is that they rest on a serious of false premises. Most fundamentally, they wrongly assume that we have “tried free trade” and the result is poverty and inequality. The first part of this assumption needs to be highly qualified – given the significant protectionist barriers to world trade that still exist – while the second is simply wrong as an empirical description of what has happened to world GDP, world GDP per capita and wider indicators of human welfare.
The proportion of people in extreme poverty in the world’s population has been falling, not rising, over a long period; indeed the absolute number of people in extreme poverty has been falling since 1980, for the first time in almost two centuries,because of the rapid growth of the Asian giants. Moreover, the gap in real income per head between rich and poor countries (and global inequality between individuals) has been narrowing since the 1970s as poorer countries at an earlier stage of industrial development have grown more quickly than their richer counterparts.
These are not just a set of dry statistical outcomes. The welfare of humanity, judged by life expectancies, infant mortality, literacy, hunger, fertility and the incidence of child labour has improved enormously. (It has improved least in sub-Saharan Africa, partly because of disease and partly because of the continent’s failure to grow. As Martin Wolf provocatively put it in his masterly book Why Globalisation Works: ‘The problem of the poorest is not that they are exploited, but that they are almost entirely unexploited: they live outside the world economy.’ The book as a whole is a must-read for those who are interested in the theory and facts of this vital subject.)
Anti-trade, anti-globalisation campaigners rightly highlight the economic, social and environmental problems that continue to blight various parts of the world. But in doing so they overlook the huge progress that has already been made. They either deny the progress – in which case they are simply denying all verifiable facts and data – or they take it for granted, without pausing to consider whether the move to freer trade and a more integrated world economy might have played a central part in this, and whether more of it rather than less might be part of the solution to the remaining problems. While they have no hesitation in attributing the remaining problems to globalisation, they do not see any need to attribute the bigger picture of overall global progress to it.
Unfortunately this leads them to focus on their opposition on the wrong things. For there is, in fact, much legitimate criticism that can be made of the way global trade liberalisation has been pursued and of hypocritical attitudes within the the developed world towards liberalisation. Alas, many of the protesters would make this hypocrisy worse.
As Wolf argues: “Most of these critics compare the imperfect world in which we live with a perfect one of their imagining… The critics represent the latest – and least intellectually persuasive – of a long series of assaults on the market economy. Yet however unimpressive their arguments, these critics are dangerous, because they can give protectionist interests legitimacy. The critique allows protectionists to claim that they benefit the poor of the world even as they deprive them of the opportunity to earn their living on world markets.”
In my last post I made an error.My fourth example should have read Canada is being sued by a big American drug company.
@ John Tilley
You note that Tobacco giants are lobbying for TTIP. Perhaps you will find this article which appeared in the Independent interesting;-
‘Big tobacco puts countries on trial as concern over TTIP deals mount’.
Jayne Mansfield 16th Mar ’15 – 2:04pm
Yes indeed, Jayne, the multi-billion dollar Tobacco Giant bullying a poor country with a population not much bigger Manchester because that country wants to increase the size of health warnings on packs!
The core of your article is —
“In the UK, critics have been particularly vocal about fears US healthcare companies now running parts of the NHS might use ISDS tribunals to sue future British governments wanting to reverse the accelerating privatisation of parts of the health service.
The British Government argues that such worries are “misguided” and says TTIP will create jobs and be good for the economy. ISDS agreements are necessary to give companies the confidence to invest, it says, particularly in more politically unstable countries.
The Marlboro maker is suing Uruguay – population 3.4 million – over its decision to increase the size of health warnings on cigarette packets from 50 per cent of the cover to 80 per cent.”
And Philip Morris (makers of Marlboro) is just one of the Tobacco Giants that already sues democratic governments, which are trying to protect the health of their people.
Info on this is available in ‘The Tobacco Atlas’ published by The American Cancer Society and The World Lung Foundation —
http://aje.oxfordjournals.org/content/early/2012/11/05/aje.kws389.full
http://www.cancercontrol.info/wp-content/uploads/2014/08/43-48-Eriksen_cc2014.pdf
I bring it down in my mind to this – yes to a carefully and fairly negotiated TTIP but only if ISDS is removed from its provisions. How can it be right for issues which could have enormous effect upon the economic and social well being of people across the American and European continents to be irrevocably decided (without any provision for judicial review) by panels of corporate lawyers? It is nowhere near enough to incorporate some sort of assurances about public services especially in an age when more and more of what would have been termed public services are being wholly or partly privatised. The examples given in this thread of cases already being taken elsewhere are real. In most cases the cause of action is simply the allegation that the measure complained about could potentially harm the profitability of the complainant.
@ Alex Sabine,
I certainly would not argue that we have tried free trade and the result is poverty and inequality. I would be more inclined to point out that our western economies were built up protecting certain industries and that we continue to subsidise domestic producers. The world is not a level playing field so by the same token, I would argue that some developing nations need protectionist policies so that they can build up their nascent industries.
You also seem to claim cause and effect between free trade, globalisation , neo liberal economics or whatever it is called and the reduction in global poverty and other indicators. You must know that this is a contentious claim. Since 1947, it is more often the case that developing countries that have put in place measures to protect nascent industries and allow their communities to diversify etc. that have seen expansion in their economies.
Places like Taiwan and South Korea built their strength from government subsidies, investment is infrastructure with protection from oversees competition, not as argued from the liberalisation of trade.
Those poor countries that have been able to reduce poverty are also countries where there has been a large amount of government intervention. China, India etc, whereas there are other countries that saw falling off in growth (
e.g Ghana), after opening up markets because they could not compete with foreign competition.
In a way, the arguments for an unfettered free market seem similar to those we hear from those who argue for marxism, that is, any problem is because we have not really had the real thing. To be honest, I wouldn’t want to take the risk of pursuing the real thing having actually seen what it does to some producer farmers etc.
If my eyesight allowed me to read more than small chunks of text,I think the book that would most interest me would be Stiglitz’ ‘Globalisation and its Discontents’.
My last comment was about the benefits of trade to the world in general and poor countries in particular. I realise that is not necessarily the focus of the debate about TTIP – which I addressed specifically earlier in this thread – but I do feel the wider case has to be established, since some of the arguments being used to oppose TTIP betray a more general ambivalence or anxiety about free trade.
I cited the facts about the growth of global and GDP per head and the decline in global inequality alongside the move to freer trade and a more integrated world economy. The specific charges that labour and environmental standards are undermined by trade deals are equally misguided.
Let’s take labour standards first.
1. It is understandable that those of us lucky to live in high-income countries are uncomfortable with the realisation that many of the things we buy are produced in developing countries by poor people, for what we perceive to be desperately low wages. Unfortunately, as Martin Wolf says, these feelings of shock and perhaps guilt have led many people “to draw a conclusion that is the complete opposite of the truth: namely, that people who work in what people in the west naturally consider to be poor conditions and for dreadful wages are in this miserable condition because of their ‘exploitative’ jobs, not in such jobs because of their miserable conditions…” They have got the causation the wrong way round.
2. Wolf continues: “China’s rapid growth over the past three decades has delivered more people from poverty, more rapidly, than ever before. That does not suggest exploitation. Moreover, the millions of young people, many of them women, who have fled to rural China to work in factories along the coast were not forced to do so by anything other than their poverty at home. Inadequate though they seem to a prosperous westerner, the incomes they earn make an enormous difference to their prospects. This is especially true for women, whose status can be transformed in patriarchal societies by opportunities to earn incomes for themselves.”
3. Those who accept these two points might nonetheless worry that a lack of enforceable labour standards in developing countries means that workers do not gain the fruits of their labours. Some of this concern is justified, although trade sanctions – which only affect the export sector and do nothing for the vast majority of workers in developing countries – are, at best, a very blunt instrument for tackling these problems.
4. There is a more fundamental point about the economics of wages and labour standards that needs to be grasped. The fact that workers in Chinese factories earn much lower wages than those received by their counterparts in similar western plants is neither surprising nor evidence of exploitation. It reflects the nature of China’s labour market as a whole, the fact that the proportion of the workforce that is employed in ‘modern’ activities is still small. The wage for unskilled labour is set by its value in the rural hinterland. Rather than paying western levels of wages, a profit-maximising Chinese factory owner will therefore employ more people instead, until the marginal product of labour equals its low cost. Any given plant would then employ substantially more people in China than it would in a high-income country. The average product of labour will be far higher than its marginal product, in such plants. Fortunately, this also makes China a profitable place in which to invest and so stimulates the country’s economic growth.
5. Suppose active trade unions were successful in raising wages and conditions for the lucky minority of workers employed in modern factories to levels cliser to those westerners consider reasonable. The result would be a much more polarised labour market, with low incomes for the great majority and relatively high incomes for the organised few. Both profitability in the modern sector and the labour-intensiveness of production would be lower. The modern sector would then grow more slowly. People would queue for these high-paying jobs, creating more open unemployment. Migration from the countryside would also slow, delaying, perhaps indefinitely, the time when labour shortages began to raise rural wages rapidly. As Wolf puts it: “All these unions would have achieved is to have created an island of privilege in an ocean of misery.”
6. This is not a mere theoretical possibility. It is exactly what happened in India, where a combination of strong trades unions, job protection, reservation of production to small-scale enterprises and prohibition of closure of bankrupt plants halted growth of employment in modern manufacturing. The exact opposite happened in South Korea and Taiwan. Today, the workforce of those countries enjoy wages and conditions Indians can only dream of. As Wolf argues: “The desirable development path goes via rapid growth of output and employment in a profitable modern sector to a tighter overall labour market. This is the path China is on. It is the only desirable path for the country as a whole.”
7. Even with the emotive subject of child labour, contemporary westerners need to be careful about judging developing countries by the standards they are lucky enough to enjoy. They compare what is happening in a still desperately poor developing country not with the alternatives enjoyed by its residents, but with their own. The reality is that the proportion of the world’s children who work in developing countries is lower than ever before. The vast majority of those that do work in agriculture and only a very small percentage work in export industries, predominantly in south Asia. Wolf again: “These children work because not their parents (if they have them) are more wicked than those anywhere else, but because of their poverty. Nothing is better established than the tendency of better-off parents in more prosperous societies to have fewer children and invest more in their children. The decline in birth rates in the developing world has already been dramatic.”
8. No less dramatic is the evidence of the impact of rising incomes on child labour. Wolf’s book cites the example of Vietnam, where between 1993 and 1998, the income of the poorest 10% rose by more than 50% in real terms. This led to a sharp reduction in child labour (mostly on the family farm) and greater investment in their education. “Suppose that western trade sanctions forced child workers out of export-oriented factories instead. If their parents cannot afford to keep them idle (or they have no families to look after them), they will do something else: prostitution, for example, or farm labour. They may work in factories for purely domestic production, most of which will be far worse run than those serving export markets. The conscience of western agitators will have been salved, at the expense of those they allegedly care about. Substantial evidence exists that exactly this happened in Bangladesh in the early 1990s, in response to a campaign against Wal-Mart’s purchases of clothing made, in part, by children. Thousands were sacked, many of whom moved on to more dangerous and less well-paid jobs.”
9. Given these examples, it is easy to understand why governments of developing countries view with dismay the campaign for higher labour standards enforced through the WTO. However, this does not mean that nothing can be done of a positive nature to encourage higher labour standards. Wolf gives some examples: Encouraging export-led growth from the developing countries would help, since that raises incomes, tightens labour markets and so naturally tends to improve job standards. Aid could be increased to countries that do a reasonable job of policing working conditions, particularly health and safety – but this must apply to all employers, not just to exporters. If the people of high-income countries wish to accelerate the end of child labour, it would help if aid funded the education of poor children, while providing compensation to parents for the incomes they have lost. But imposing export sanctions on countries is a way of penalising them for their poverty while taking away the best ladder out if it. At best, it is foolish. At worst, it is gross hypocrisy. The test of whether all this talk means anything is whether high-income countries are prepared to put their money where their moralistic mouth is.”
The one thing that would not help reduce either poverty or child labour are moves to restrict trade or to impose trade sanctions on countries that do not match western ideas of what a ‘decent wage’ constitutes.
@ Jayne
I have not argued for laissez faire or denied the role of laws, customs, institutions and social welfare systems in most successful economies. The debate is about the central role of trade liberalisation in speeding up development and improving wages and social conditions. Doing this in no way prevents developing or developed countries from providing public services or redistributing wealth: it simply gives them a potent tool for improving living standards and thereby for financing those non-market services.
On your point about ‘infant industry protection’, this is a complex subject and it is not at all clear that such protection, rather than the other features of their economies, were the key drivers of progress in export-oriented economies like South Korea and Taiwan. I share Wolf’s judgement that: Protection is an indirect and ineffective policy for promoting infants. Apart from the costs it imposes on consumers, it has two other seriously negative side-effects: first, it limits the new industry to the domestic market, since protection, by definition, raises returns only on domestic sales; and, second, it provides protection from the world’s most potent competitors. The first limitation may mot matter much for countries with relatively big and rapidly growing domestic markets (such as the USA in the 19th century), but it is significant for most developing countries, which have tiny markets… The second limitation means that, protected from competition, the infants almost always fail to grow up.”
In any event, it is a bit rich to complain that global trade deals favour corporate lobbyists and simultaneously to support protection of particular industries. Producers of failed infants are, alas, an important obstacle to trade liberalisation.
Corporations are actually some of the most discriminated against entities in the world, with the pages of regulation, taxation and law upon them. ISDS is essential to allow corporations power to resolve disputes quickly and effectively without having to mess around with often biased national courts. Governments should consider the welfare of corporations when passing legislation, and ISDS gives them additional protections against excessive socialism or nationalism.
@Stimpson Corporations are inanimate abstractions that exist to do human bidding. They can no more be discriminated against than I can discriminate against my car. They do not have welfare, nor do they require protection.
Indeed, Philip. Nor can corporations pay taxes. As legal entities they can be responsible for remitting the money to the Treasury, but the taxes are paid by shareholders, consumers and (mainly) workers. All taxes are paid by people. This may be disguised by the existence of a separate corporation tax, but this is a matter of administrative convenience not economic substance. Much of the debate about corporations needing to pay more tax overlooks this rather elementary point.
@Alex If they can’t pay taxes then they shouldn’t be able to sue governments for taxing them, no?
What do you make of the afore-mentioned lawsuit against Uruguay for increasing the size of the health warning on cigarette packets?
Nick Thornsby – have you had access to read an official copy of the draft text plus the opportunity to take it away and study it with others? Do you know anyone that has? Does anyone know anybody that has?
If not, irrespective of the merits of otherwise of TTIP and similar “trade” agreements, then Lib Dem claims to support open government and transparency are another meaningless promise.
In fact, the sections dealing with trade are very much in the minority. Many, many more sections are to do with establishing property rights where there should be no property – for instance granting over-extended patents, patents of dubious merit or innovation and so on. That’s not about trade so much as rampant corporatism – elevating the “rights” of large companies above any other rights. For a flavour of just how abusive this quickly becomes see this summary list.
https://www.popularresistance.org/top-10-most-pernicious-investor-state-dispute-settlement-lawsuits/
So, Vince Cable’s reported comment (reported in the post) that, “ISDS is about protecting businesses and individuals who have made investments overseas from unfair or discriminatory treatment by the host government.” is contradicted by the evidence. Moreover one has to ask who is to judge what is “fair” in this context. The answer if TTIP is passed, is of course, the corporations themselves, not the democratic will of the people.
Most Lib Dems seem to regard support for ‘Free trade’ as part of their DNA but that is a dangerous position to take for it dulls the critical senses making it possible for some rather toxic proposals to get nodded through as long as they can somehow be branded as “free trade”. Lib Dems need to wise up about his.
Liberal support for free trade was born in the nineteenth century but only after Britain has become the world’s top industrial power. Their predecessors (then Whigs) like Walpole certainly didn’t support free trade and Britain had astonishingly high tariffs on imported goods. In the nineteenth century much trade was in basic commodities rather than manufactured goods – hence the Corn Laws.
In the modern era commodities trade remains important (arguably even more important because of oil) but most trade is between subsidiaries of multinational companies so it’s hardly ‘free’. ‘Managed’ would be a better description.
Meanwhile countries like Korea and China that have increased their wealth have all done so on the back of highly managed trade, with strict government controls, tariffs, local content requirements etc. In fact, apart from countries that live off commodity exports, I don’t think there is a single example of a substantial country that has got wealthy via free trade in the sense in which it is usually meant.
@ Philip
The point is that there is a distinction between legal form and economic incidence. Taxes paid by companies are borne exclusively by a combination of shareholders, consumers and workers via (respectively) lower dividends, higher prices and lower wages. It is difficult to break this down precisely, but most attempts to do so show that workers bear the brunt of the tax burden that nominally falls on corporations. Governments levy corporation tax as a surrogate for increasing other taxes. If you like, it is a rather untransparent additional income tax or payroll tax. So I’m just pointing out that people who call for corporations to pay more taxes are in reality proposing that workers should pay more.
Regarding your point on ISDS, the protection is for investors rather than companies as such. It applies irrespective of the legal form of the undertaking. As Vince Cable has pointed out, cases are regularly brought by individuals and small companies, not just multinationals.
Personally I have mixed feelings about the principle of investor protection. There are legal arguments and economic arguments. In terms of the legal arguments, on the one hand it is a mechanism to uphold contracts and the rule of law, which I think are rather important. It holds governments to a standard of keeping to their word, and demands that they pay compensation when they renege on previous undertakings. Uncompensated expropriation is itself offensive to the rule of law.
I have already addressed the criticism that such protection is not available to domestic investors: the point is that foreign investors are much more vulnerable to expropriation and arbitrary or discriminatory action given that they typically have no voting rights in the host country. On the other hand there are potentially perverse consequences if the definition of expropriation is too widely drawn, and the conduct of ISDS tribunals can be unacceptably opaque, and that this too risks undermining the rule of law.
In terms of the economic arguments, there is no escaping the reality that investor protection underpins much foreign direct investment worldwide. In the absence of ISDS the higher risk capital would in many cases be prohibitive, which is why countries themselves – not just investors – have typically sought the inclusion of ISDS provisions in trade and investment treaties. They have recognised it as a prerequisite for the FDI that they have sought to attract, and which in many cases has been essential to their development. Higher required rates of return would result in less FDI and ultimately in lower infrastructure investment and higher prices paid by their populations.
Aside from the philosophical arguments (legal and economic), there is the real-world fact that I drew attention to in an earlier comment, which is the ubiquity of ISDS provisions in trade and investment agreements entered into by the US, EU countries and the UK over the past 35 years or more. If there is something inherently wicked about them then, in all conscience, we would have to call on the UK government to try to negotiate its way out of the 90+ bilateral investment treaties that we have already signed, all of which contain ISDS clauses. Is that what the critics here would like to happen? If not, why not? Are the ISDS provisions that are envisaged for TTIP worse than those in all these other treaties? I cited evidence from both a parliamentary briefing note and an in-depth study by the Institute for Sustainable Development which rather suggests the opposite.
So I think we need to have a sense of proportion when discussing ISDS, recognise that it has been a standard part of trade and investment deals that in the round have been very beneficial even if the ISDS provisions themselves are far from ideal. Instinctively I remain wary of this practice, of the dangers of regulatory capture and the potential for litigation to have a chilling effect on policy. I would rather it wasn’t necessary to seal trade deals, just as I would rather we in the UK declared a policy of unilateral free trade rather than the current horse-trading whereby the EU (or the USA gor that matter) seeking ‘compensation’ for the supposed ‘costs’ of opening up our markets via protectionist measures in other sectors. (As I explained earlier, this attitude fundamentally misunderstands why openness to trade is desirable, but it seems to be inescapable in terms of realpolitik.)
I take seriously the concerns expressed about ISDS by the excellent John Kay, who recently wrote: “Serious bargaining incorporates an element of bluff, and too much transparency can prove an obstacle to necessary compromises. Some degree of privacy is indispensable. But Brussels and Washington, where most of the negotiations are being conducted, are the lobbying capitals of the world — places where large corporations spend lavishly in the finest restaurants. In the absence of a more open process it is very difficult to refute the general allegation that the TTIP agenda is driven by big business interests; or specific claims that Europe might — for example — find itself moving towards a US-style patent system, which is increasingly a licence to litigate rather than a spur to innovation.”
Vince Cable played down these fears in his detailed written response to the anti-TTIP campaigners: “There is no evidence to suggest ISDS tribunals favour big business. In fact, governments win more cases than investors. Cases are regularly brought by individuals and small companies, not just large multinationals.”
Be that as it may, I am conscious of the danger of companies exploiting ISDS clauses. I would like to see a number of safeguards including the maximum possible transparency, making arbitrations subject to a right of appeal, greater reliance on precedent and protections against frivolous lawsuits. The definition of expropriation, and the substantive clauses, need to be more precise and narrower in scope, as in fact has been the trend in recent trade treaties. ISDS proceedings and findings should be made public. Investors should not have recourse to arbitration until they have exhausted the domestic legal channels of the host country. On some of these fronts there is considerable scope for improving the ISDS provisions in TTIP.
That said, no matter how strong the safeguards and even if ISDS were to be dropped altogether, I do not expect the opponents of TTIP to lay down their placards. I strongly suspect that the Swedish economist Fredrik Erixon is right to predict: “If ISDS is discharged before the negotiations have finished, the criticism will move on to other parts of TTIP. The idea that NGOs then will become silent and accept TTIP is just naive. That is not the way they operate. I expect the US to lose faith in the EU’s capacity to stand up for an ambitious trade agreement…”
@ Jayne, GF:
You are right that not all successful developing countries have been beacons of free trade. Hong Kong and Singapore have been, while South Korea and Taiwan have pursued a more ‘managed trade’ approach as you say. But while there are differences between these two pairs of development success stories, there are even more similarities; and there are striking contrasts between all of them and the insular, protectionist approach of, say, India. In South Korea, for example, the ratio of merchandise exports to GDP in constant prices (a proxy for openness to trade) rose from 0.7% in 1950 to 36% by 2000. The data for Taiwan are similar. In the post-war period, all successful developing countries have had faster growth of trade than GDP.
There is a well-known and depressing tendency for high levels of infant industry protection to create perpetual children through the resultant strong home market bias in trade policy. As the World Bank has noted: “Typically the long-protected firms have not become efficient and do not in fact survive in a more competitive environment.” The Bank points to the example of the Indian machine-tool industry, long protected with 100% tariffs. When these tariffs were liberalised, Taiwanese producers took a third of the market. Since then, the Indians have fought back, but the successful competitors are new entrants, not the old flabby incumbents.
One of the difficulties in interpreting all economic data (especially historical and international comparisons) is the impossibility of identifying cause and effect with certainty. Unlike in science, it is not possible to conduct controlled experiments to verify or falsify propositions and counter-factuals are inevitably speculative. The fallacy of post hoc, propter hoc reasoning – because one event preceded another, it also caused it – is one obvious trap. In my view critics of liberal trade fall into this trap when they point to the supposed role of import substitution strategies in driving development. As I explained earlier, critics of globalisation similarly confuse cause and effect when they attribute the poverty suffered by people in developing countries to low-wage, ‘exploitative’ factory jobs geared to cheap exports – ignoring the fact that there is much greater poverty among the majority of the population who do not make T-shirts for sale to western consumers but work on farms or in factories geared to domestic production that pay worse.
To be fair, people of all political and economic persuasions are apt to confuse cause and effect. Nevertheless, for economic policies to rest on some empirical foundation, we have little choice but to make a stab at interpretation and analysis. We can observe strong correlations. I pointed out earlier the strong correlation between periods of increasing world trade and periods of strong growth in global prosperity (real GDP per head) and other measures of welfare (life expectancy, infant mortality, literacy etc). The correlation is even stronger when you look at specific phases in more detail.
Of course, in countries like India and China much of the impetus for rapid growth in recent decades has come from domestic reforms. Market forces have been allowed to operate in ways that would have been not just unthinkable but criminal 30 years ago. In China under Mao, economic freedom had virtually been eliminated. Under the Indian control system, no significant company was allowed to produce, invest or import without government permission. As Martin Wolf notes: “From this starting-point, much of the most important liberalisation was, necessarily and rightly, internal. Given where it was in the 1970s, liberalising agriculture alone started China on the path towards rapid development. Similarly, eliminating the more absurd controls on industry permitted an acceleration in Indian growth.”
In both cases, greater integration into the global economy played a significant role, however – spectacularly so in the case of China, with its extraordinary increase in merchandise exports, in the ratio of this to the output of goods in the economy, and in inflows of private capital and FDI.
Finally, Jayne mentions that tariffs between the EU and US are already low. It’s true that the average tariff on traded goods is modest, at 3% of their aggregate value. But zero would be better, and, given the size of these two great continental economies, it would actually make a worthwhile difference. Also, there are substantially higher tariffs in certain industries. Textiles, for instance, face a tariff rate as high as 40%. The EU imposes a 10% duty on imported American cars.
Moreover, it is through the reduction of non-tariff barriers – and the harmonisation of transatlantic regulations on things like food labelling, drugs-testing, the manufacture of cars and electrical components – that the biggest productivity gains could be realised. At present, for example, cars approved as safe in the EU have to go through another approval procedure in the US even though the safety standards are similar. Harmonising the approval procedure should make it cheaper to build cars without harming car safety at all. Restricted markets would be opened up: currently British lamb and venison cannot be exported to the US. And there are more dimensions to trade than goods: TTIP also offers the opportunity to open markets to services, investment and limited areas of public procurement (not publicly funded health care – Nick has already debunked that myth – education, social services or water services). Overall, it could boost UK GDP by an estimated £4 billion to £10 billion annually, depending on how ambitious the final version of the agreement turns out to be with regard to non-tariff barriers in particular.
But regardless of whether the gains would be modest or large, I don’t follow the logic that because there is plenty of trade between Europe and North America already, more of it would be a bad thing – unless you regard the existing trade as a problem. One organisation that clearly does is the Green Party, whose short-term policy proposals include the imposition of tariffs and import controls, and whose long-term goal is “to redesign trade policy so that it is based on less, not more, international trade” (Green Party economic policy statement, clause EC941). Indeed, we are told that this is a matter of principle: “Green policies are based on the principle that we need to reduce to a minimum the overall volume of international trade.” (EC904)
I’d say that is a strong contender for the most alarming statement of any of the 5 ‘main’ parties in the economic arena – and to think that someone as economically literate as Lord Oakeshott thinks this sort of agenda is worthy of his support and deserves its place in a Miliband-led government…
@ Alex sabine,
Many thanks for continuing the discussion. I need to absorb what you are saying before I respond. Also I am out this morning with a particular dangerous cell of pensioners, ‘Grannies against Greed’.
I’m only down the Martin Wolf’s assertion that those of us who are appalled by people working in exploitative jobs in poor countries have got the causation the wrong way round, they are in exploitative jobs because they live in miserable conditions. ( Did I read that correctly?).
Sorry but corporations are the bedrock of our economy. Corporations can be discriminated against just as other abstract entities can be. The left will certainly argue that trade unions are discriminated against for starters. You could argue that religion is an abstract entity but I don’t think many people would deny there is Islamophobia in this country.
The press is full of anti corporate hysteria (of which TTIP is a part). JP Morgan and Goldman Sachs are the targets of conspiracy theorists. Uber has been repeatedly slated by jealous taxi drivers who realise their monopoly is coming to a bitter end. A4e was routinely slated in the press, and was the butt of jokes and dare I say ‘hate’. The owner of A4e Emma Harrison was bullied mercilessly, and her children were also harassed. G4S is described in language that if it if wasn’t a corporation, would be tantamount to hate crime.
I guess this all goes back to how we see the party though. We should be the party of de-regulation, both of banks and of drugs, and stand up against all forms of hatred, even if it involves unpopular targets like corporations.
Finally the butt of many of much anti-corporate legislation and derision are often the workers at these organisations.
@Stimpson: ” JP Morgan and Goldman Sachs are the targets of conspiracy theorists. ”
JP Morgan and Goldman Sachs helped crash our entire economy.
“Uber has been repeatedly slated by jealous taxi drivers who realise their monopoly is coming to a bitter end”
Uber has been engaging in anti-competitive practices and it’s owners have been found to be engaging in smear tactics against people who raise legitimate questions about their business. They have also been facing serious questions about the quality of their drivers: there have been cases where women have been raped by Uber drivers.
“A4e was routinely slated in the press, and was the butt of jokes and dare I say ‘hate’. ”
A4E has been investigated for fraud. Several of their employees have actually been charged with fraud. Emma Harrison has been routinely paying herself millions of pounds in bonuses, paid for by the taxpayer, even though her company was not delivering the results expected of them. Their work has often been described as “worse than doing nothing” when it comes to getting people into work. They have an appalling record when it comes to how they’ve treated sick and disabled people who have been forced onto their programme. Yes, they have indeed harassed people who have been forced into their “services”.
“G4S is described in language that if it if wasn’t a corporation, would be tantamount to hate crime.”
G4S have been responsible for death. They truly failed when it came to security at the Olympics. Some of their employees have been charged with manslaughter. G4S is being investigated in South Africa over claims they tortured prisoners. Men have been brought to the ICC at the Hague to face accusations of torture, so why should G4S be spared or treated nicely just because they’re a corporation with a record of human rights abuses?
I’m sorry, but corporations are not hard done by in the slightest. They are more powerful and wealthy than many nation states. They have access to our politicians and supposed elected representatives on a scale we, the electorate, could only dream of. Many of them pay hardly any tax, get to make secret deals with HMRC, regularly flout regulations, have a record of environmental destruction, etc. There are good and bad corporations, yes, but just because an entity is a corporation does not mean it should get a free pass. Corporations are not hard-done-by and discriminated against. They are some of the most powerful, unaccountable and anti-democratic forces on this planet. And the larger they are, the worse they treat their customers.
You’re either a brilliant satirist or a corporate propagandist. Some corporations these days act like totalitarian and despotic states. I find it sickening you could defend a company such as G4S who are being investigated for very serious breaches of human rights.
They need more regulation and humanity, not less.
“…Globally, tobacco use kills nearly 6 million people a year, including approximately 600,000 deaths resulting from secondhand smoke exposure.
If current trends continue, it is estimated that tobacco will cause approximately 8 million deaths per year by 2030 …”
“…..In 2010, the six leading tobacco companies in the world had combined revenues of more than US$ 346 billion and combined profits over US$ 35 billion. These companies profit greatly from the addiction of others and work diligently to keep customers as lifetime addicts. ”
These Tobacco Giants lobby 24 hours a day for TTIP.
As they say in the USA — Do the maths !
Source– http://www.cancercontrol.info/wp-content/uploads/2014/08/43-48-Eriksen_cc2014.pdf
@John Tilley : “These Tobacco Giants lobby 24 hours a day for TTIP.”
Can you give us your source for this please ?
And how many G4S staff or executives have been sent to prison? Outside of the far left, G4S are a respected organisation, whom the public trust. In fact all the parties use G4S to provide security at their conferences.
If the other organisations are so terrible as well, how come they have not been closed down?
@Stimpson: ” Outside of the far left, G4S are a respected organisation, whom the public trust. ”
Do the public truly trust G4S? Care to back that up with a link? You are, essentially, defending a company who has caused deaths and is being accused of torture and human rights abuses. Do you have any idea how inhumane and sickening that sounds to those of us who care more about human life than the reputation of the company who has ended said lives?
Further, I am sick and tired of anyone who is to the left of Thatcher being described as “far left”. I am not far-left. I am a social democrat, a position I remind you again that was once mainstream not only in this party but in British politics in general, before Thatcher, New Labour and their globalist pals shifted the political centre further than it has ever been. My views have not changed; big business, corporate lobbyists and globalisation have taken hold and shifted the debate further and further to the right.
“If the other organisations are so terrible as well, how come they have not been closed down?”
Mainly because, as I keep saying, many companies are not only more powerful than governments, but said governments are already in the pockes of these businesses, through corporate lobbyists and promises to MPs of cushy “consultancies” and “directorships”. Parliament and Big Business is nothing more than a revolving door these days.
Governments and corporations have become entwined; one and the same. There is a word for that, which I won’t use, as it would probably be blocked by this site’s censor.
Stephen Campbell you have done a marvelous job in this discussion and I agree wholeheartedly. It does concern me that voices like yours are no longer the majority within the party, though. It would seem that Thatcherism is alive and well, with an agenda of open markets and privatisation and who knows what else. Are you a member? and if so, can you tell me what the left of the party feels it’s future might be? I’ll admit, when I first voted for the LibDems they would not have been a party favorable to the above comments you are responding to, yet these days they seem to pop up all over the place.
@Stimpson: ” Outside of the far left, G4S are a respected organisation, whom the public trust. ”….
Absolutely! The ‘far left’ media, such as The Times, Telegraph and Daily Mail, had only praise for G4S’s handling of the Olympics…..rumours that soldiers were recalled from leave were just ‘leftie’ scare mongering and David Taylor-Smith, Ian Horseman Sewell and Nick Buckles only resigned to spend more time with their families….
@ Jayne
“Did I read that correctly?”
Yes you did, but I went on to explain in some detail why such an apparently provocative or counter-intuitive statement was supported by sound economic logic, the facts about the structure of the labour market, and historical experience.
I won’t reprise the full explanation here (see my points 1-9 further up the thread), but basically those who regard it as an outrage that western consumers can buy cheap clothing (for example) based on cheap labour in developing countries, and who think the answer to this is trade sanctions/restrictions or making trade conditional upon the adoption of developed-country labour standards, are well-intentioned but seriously misguided.
They compare the paltry wages earned by, say, Chinese factory workers with those earned by workers in highly developed economies, not with the alternatives faced by the Chinese people – most of whom are still employed in the rural hinterland or work in factories that serve the home market (and who are keen to escape this by working in the export-oriented modern manufacturing sector), or (in the case of women) who are denied the opportunity to earn their own incomes and entirely dependent on male breadwinners.
The remedies they seek through trade policy would, by definition, only affect the traded sector where economic progress is in fact most rapid, and which is delivering a huge increase in living standards – albeit from a low base owing to the dire legacy of communism.
Profitability in the modern manufacturing sector would be reduced, as would the labour intensiveness of production, so fewer people would be employed in it. The modern sector would grow more slowly. People would queue for these high-paying jobs, creating more open unemployment. Migration from the countryside would slow, delaying, perhaps indefinitely, the point at which labour shortages would push up rural wages rapidly. So far from improving the lot of the majority of poor Chinese people, the trade policy would have taken away the best available ladder out of that poverty. It would only have succeeded in creating a highly polarised, dualistic labour market of ‘haves’ and ‘have nots’ – as Wolf puts it, “an island of privilege in an ocean of misery”. The policy would not just have been ineffective, it would have been seriously counter-productive and perverse.
This chain of events is as predictable as it is depressing. The alternative policy that China has actually pursued in recent decades has delivered a spectacular improvement in wages and living standards. The fact that there are many remaining problems, and that Chinese people are still poor by western standards, is not a reason to reverse the trajectory that has got them this far, but to accelerate it.
I also cited the experience of India compared to the likes of Hong Kong, Singapore, South Korea and Taiwan, and how badly an insular, anti-competitive, bureaucratic and protectionist approach for most of the postwar period (especially under Nehru and Indira Gandhi) served the Indian people. All of these were poor countries in 1950; only India still was so in 1990. Today, income per head in India is atound 10% of that in Taiwan and South Korea (whose GDP per capita is only just below the UK’s) and about 6-8% of that in Hong Kong and Singapore (which are considerably richer than the UK and among the highest-income countries in the world despite enjoying few advantages in terms of natural resources). Following the economic liberalisation that began in the early 1990s, India is now growing rapidly and beginning to catch up – but it has a heck of a long way to go given the appalling starting-point. Those who refuse to heed these lessons, preferring to take refuge in moral grandstanding to assuage their guilt about buying cheap clothes, would set back this progress and condemn the Indian people to perpetual poverty.
As I said, the fact that trade is a big part of the answer, rather than the problem, and that people who fail to recognise this are misguided in my view, does not mean I think it is a panacea – not by a long shot. Even the most ardent free trader would not claim that. Nor does it mean there is nothing helpful that can be done – both by domestic governments and those of us in the west who want to do what we can to help speed up development (see my point 9 above for some examples of positive, rather than counter-productive, steps that could be taken). But the purpose of such policy interventions should be to accelerate the development path developing countries are already on, not to stall or reverse it. And inevitably they can only play a supporting role to the more dramatic transformation that domestic liberalisation, integration with the world economy and rapid per capita GDP growth bring about.
The police and forces have been implicated in deaths, shall we shut them down as well? (I’d actually prefer both the police and forces to be run by G4S, for the record). What about the NHS?
G4S employs more people than the whole of Manchester so it is likely to have the odd bad egg. Sack and prosecute them.
As for the far left – globalisation, outsourcing, privatisation and offshoring is the mainstream centre ground. Social Democracy is left wing idealism. Public services have functioned far better since privatisation.
@Samuel Griffiths: ” Are you a member? and if so, can you tell me what the left of the party feels it’s future might be? ”
I’m no longer a member, no. After supporting this party for 20 years (and even being an initial supporter of coalition), I became rapidly disenchanted with Clegg and his circle’s actions. The first straw was the way this government immediately started treating the most vulnerable such as the sick and disabled. The final straw for me was the NHS reforms, which are having horrible consequences.
Personally, I do not feel the left in this party has a future at all. People such as @Stimpson above, with their dogmatic, unquestioning devotion to markets and Thatcherism look to be the future. In fact, I’m starting to feel there’s no room for “the left” at all in mainstream British politics. The money men have essentially taken over our democracy; it’s tentacles reach everywhere.
If you care more about people than money, have a deep-rooted lust for social justice and equality, and want a simpler, more community-based life that doesn’t revolve solely around making money for other people, you’re essentially not wanted in this society. Human worth seems to now be based on how much profit you generate for other people. If you’re not a “hard-working person”, you’re nothing. “Do-gooder” is a term of abuse. What hope for the left when corporations (some of the most powerful entities on this planet) are seen as the victims and those of us who want to limit their power are seen as dangerous communists and “domestic extremists”?
The money men have won. I’m a dying breed and I truly am starting to feel there’s little place left in the world for compassion, knowledge for knowledge’s sake and pursuits which don’t involve worshiping at the altar of mammon.
@Stimpson: “I’d actually prefer both the police and forces to be run by G4S, for the record”
From the sounds of it, you’d prefer no government at all. Why not just be fully honest and say you wish there to be no public sector at all? Why not go further and only allow representatives of corporations to be elected to Parliament? We used to only allow landowners to vote, so why not remove full suffrage and allow only shareholders to vote? It is, after all, the logical conclusions to your position. Parliament hardly represents the interests of the people any longer, anyway; they are there to serve their corporate masters. That way, at least us “idealistic” people will know for certain the facade of democracy is just that. Communists used to talk about “dictatorships of the proletariat”. Be honest: you want a dictatorship of corporations.
We live in a corporatocracy. And if you oppose it, thugs in G4S uniforms will deal with you. And they’ll be making a profit at the same time. Then they can put you in private prisons (as happens in the US), generating even more profit for them. And since prisons will be a business, the more of us they imprison, the more money they’ll make. Doubles all round!
What a horrible, cold, emotionless, dystopian world we’ve built for ourselves. I guess I’ll have to console myself by buying more useless stuff. After all, the corporations promise us that is the true route to happiness!
Alex Sabine – I hardly think that Singapore and Hong Kong count as ‘substantial’ countries as specified in my earlier comment you were replying to. The distinction is, as I’m sure you appreciate, that very small countries have niche strategies available to them that simply don’t work on a larger scale. That’s particularly true when close to a giant as Hong Kong is to China. The Chanel Island are another example from nearer to home that depend for much of their economy for their links to Britain.
Despite this caveat Hong Kong is an interesting case. Its early development was intimately bound up with Britain’s gunboats-to-drive-our-trade policy aka the disgraceful episode of the Opium Wars, hardly a shining example of free trade at a time when contemporary liberals claimed to support it.
You rightly observe that South Korea was dirt poor in 1950 – in fact it was even poorer than North Korea at the time and it produced almost nothing of significance that anyone else in the world would want. So course, it’s trade increased faster then GDP as the economy developed – that was a key government target in its emphatically NOT free trade development strategy, imports through the same period were restricted by various devices.
India certainly stagnated badly for decades. But there are many reasons to fail besides trade. So India was known as the “Licence Raj” for the year of failure. To suggest that trade policy in any simplistic way is the source of its underperformance is entirely mistaken.
As I said earlier, I don’t know of any example of a substantial country (resource economies excluded) that has developed WITHOUT a very unfree trade policy. Examples include Britain, USA, Japan, South Korea, China. What does seem to be the case is that, on becoming a dominant player, they change their stance and become free traders which is understandable given that, by definition, they are then looking to increase opportunities for their exporters, extend the scope of their patents etc.
@stimpson. I do not consider myself a member of the left. There can be no discrimination against trade unions: only against trade unionists. There can be no discrimination against Islam, only discrimination against Muslims. There can be no discrimination against the colour white, only discrimination against white people: see the pattern?
Only human beings can be discriminated against, because only human beings have the right to freedom from discrimination.
Quite so, GF.
@ Alex,
I don’t know why you are so wedded to what you read in a book published in 2004. A sMartin Wolfe himself said, Why Globalisation works was intended as persuasive book not an academic study.
He is a highly respected economic journalist , he seems to have shifted his views on some things somewhat over the years.
I think that if you google , ‘ The Global Crisis: Will Hutton, Martin Wolf in conversation with Professor David Held’, at the LSE in 2008, the subject being the global financial crisis, it, Professor Held in his introduction, mentioned that Martin Wold had written a book entitled, ‘Why globalisation works’ and asked Martin Wolf, ( no doubt tongue in cheek), ‘ You don’t want to change the title now’?
Economics is a social science and even the most respected economists are not infallible demi -gods Have you read any books by Ja Joon-Chang? You seem dismissive of NGO’s whereas I agree with the notion that ordinary citizens may be more clear- eyed than narrowly focussed professionals economists.
Jayne Mansfield 17th Mar ’15 – 8:49pm
Good question, Jayne. Ha-Joon Chang has been a breath of fresh air in recent years.
I was particularly impressed recently to read something from him on the dangers of letting The City of London have too dominant position in the UK economy. Some people have got stuck in the rut of Thatcherism and the worship of greed.
Ha-Joon Chang and a growing number of other academics and commentators are beginning to offer a much needed break from the orthodoxy of the last forty years.
@ Stephen Campbell.
Please, don’t allow yourself to go under. There are many, many people who think like you and hate the mean and nasty society we have become and are increasingly becoming.
Don’t buy more stuff. If family arrangements allow, get yourself off to work in another poorer part of the world, one where co-operation and social obligation still hold fast. Do you know anyone working for an NGO that you could visit for a short time? If it is at all possible, try it and come back refreshed.
This isn’t the party for me either, but I actually believe that we are pre-programmed to be co-operative, social beings, something which has been reinforced when I have worked with some of the poorest , most disadvantaged people in the world.
Nil corborudum illigitimi. People like you are needed more than ever. I just want to give you a hug.
Jayne: Thanks for the reply. I notice you don’t address any of my specific arguments about why trade sanctions and making trade conditional on western approval of developing country labour standards are so counter-productive, which was the particular point you had earlier asked me to clarify, and which challenges one of the central premises on which anti-globalisation arguments rest.
I am not “wedded” to the views of any single economist but I do think Martin Wolf is a cut above the run-of-the-mill economic commentators who opine regularly in our national newspapers, on TV etc. As far as I know he has not resiled from his support for free trade in any significant respect.
Of course, economics is a complex and multi-faceted subject and it is possible to agree with an economist on some issues and disagree with them on others. I might agree with Martin Wolf on free trade and open markets but disagree with him on aspects of demand management and fiscal policy, for example – or on immigration, the benefits of which he is more sceptical than I am. But if so I will certainly give his arguments serious consideration because I know him to be well-informed, scholarly and someone who thinks long and hard about political economy and public policy.
It just happens to be the case that support for trade liberalisation (like opposition to rent control, for example, or support for the economic rationale of taxing land value and other economic rents) is one of those issues on which there is an unusual degree of agreement among economists from different schools and of differing political persuasions. The reason for this is that there is a particularly strong case for these things based on both economic logic and empirical evidence. In this thread I happen to have cited Martin Wolf quite a bit because I had his book Why Globalisation Works to hand and it is widely acknowledged to be one of the most authoritative modern works on the subject (the back cover features encomia from Mervyn King, Larry Summers and Robert Skidelsky among others, and the Economist calls it “the definitive treatment of the subject”). But I could equally have drawn on the work of, say, Paul Krugman (who, whatever one thinks of him as a polemical columnist, is a highly respected trade economist) or Tim Harford or Samuel Brittan or John Kay or others too numerous to mention, who make much the same arguments and come to similar conclusions.
As it happens I saw the LSE debate which you mention between Martin Wolf and Will Hutton shortly after the onset of the financial crisis in 2008 (it was aired on the Parliament Channel shortly afterwards). As I recall, Martin did not take up the invitation to renounce his earlier work on trade. He had lots of interesting things to say about the banking crisis and about the financial imbalances in the global economy (as between creditor and debtor nations, with many developing countries being huge exporters of capital having had their fingers burned in previous crises, and many western countries being borrowers) that he saw as the underlying cause of it. I agreed with probably 80% of what he had to say and the other 20% was food for thought. He has made salient points about the role of ultra-lax monetary policy in incubating the crisis, about regulatory arbitrage, about the inherent susceptibility of all financial systems to periodic systemic crises, and so on. He has rightly argued strongly for the need to contain moral hazard in the financial system and the imperative of bank recapitalisation, although this latter emphasis has been in tension with his advocacy of a strong counter-cyclical response to the fragile global economy.
A perceptive point he made in that LSE debate was that, whereas Marx’s bourgeoisie were the owners of financial capital, in this crisis those people (bank shareholders) got “pretty well creamed”, while those who had escaped largely unscathed were the ‘super elite employees’ at banks (what he described as a stupendously highly paid ‘new proletariat’). But, as he said, the point about losses being socialised in financial crises has been a feature of every financial crisis everywhere in the world, irrespective of the political colour or ideology of the government in office (except where governments themselves have been bankrupt), since it reflects the wider public interest in a functioning banking system. The inherent instability of financial systems is the flip side of their positive role in facilitating economic growth, arising from the fact that we have delegated to the banking system responsibility for money creation and treat deposits as equivalent to real money. Anyway, this is getting some way off-topic, so I will leave it there!
I favour multinationals running public services, as the private sector is more efficient, and will deal with the dead wood that festers in the public sector (transport excepted as the private sector appear to still be overruled by hard left unions, so government legislation may be needed, plus agency undercutting and more migrant labour to stop the Unite / TSSA / RMT / ASLEF stranglehold).
I do not want corporations setting the law, we must have a democracy, but like it or not, the centre ground is now that privatisation is a good thing, as evidenced by history. It was the centre ground and acceptable to bait bears after all in the past.
I am highly offended that you call G4S employees ‘thugs’. Proof of my original comment that G4S are bullied mercilessly by the left. As usual the so called left slag off the workers.
Like it or not people have to compete globally now. The far left and UKIP are the two sides of the same coin, they want protectionism. The British worker will have to eventually learn to live like hard working Eastern European immigrants eventually, house sharing and working long hours. If you want your social democracy, then the only way to do it now is to pull out of the EU, NATO, WTO and go back to autarky. We are too intertwined with the rest of the world now. Attempting to enforce high wages, union protection, and high taxes will just see investors and those with the money go elsewhere. Corporations have taken over from nation states, and we should embrace them and work with them, rather than restrict them. The only way that can be stopped is by some global agreement, which will never happen because there will always be nations which welcome foreign investors and pitch tax levels and regulation accordingly.
Stimpson 17th Mar ’15 – 11:46pm
“The British worker will have to eventually learn to live like hard working Eastern European immigrants eventually, house sharing and working long hours.” …”Corporations have taken over from nation states, and we should embrace them and work with them, rather than restrict them.”
I have read and reread all your posts – you are an absolute master of satirical humour. Brilliant! I look forward to your future posts.
@ Philip: Absolutely. But that is no more an argument against ISDS than it is against corporation tax. Just as corporation tax (like all taxes) is ultimately paid by people, so the interests that investor-state protection provisions are intended to protect are those of people (investors who, as Vince Cable pointed out, can be individuals or the owners or executives of companies large and small). When governments win arbitration cases, which they often do, it is the interests of people that are ultimately being upheld, not those of a corporate entity (the government).
The case for ISDS does not rest on the supposed welfare of an abstract entity called a corporation. It is that discriminatory action and uncompensated expropriation by agencies that have a monopoly of coercive power (ie governments) are, in and of themselves, contrary to the rule of law. ISDS does not prevent a democratically elected sovereign government from changing its mind or indeed from breaking a previous government’s contractual obligations; it simply requires that investors whose assets have been confiscated are fairly compensated.
Foreign investors are particularly vulnerable to such actions for reasons explained earlier. They do not have voting rights in the host country, nor do national courts always treat foreign investors in the same way as they treat their own nationals. There was a clear example of this in Argentina recently, when the Argentinian government nationalised the operations and facilities of the Spanish firm Repsol, which had a majority stake in energy firm YPF, without paying any compensation (part of a more general trend towards economic nationalism in Argentina). As in many arbitration cases a settlement was reached without a tribunal having to rule on the dispute. Under this agreement Repsol received compensation while both parties agreed to end the litigation around Repsol’s previous majority stake in YPF and Argentina’s confiscation of its assets.
In theory ISDS should be less necessary with a transatlantic trade agreement like TTIP, given that most EU countries and the USA have well-established legal systems with generally strong records of upholding contract law. However, TTIP would include countries like Hungary, Greece and Romania whose legal/judicial systems are less reliable.
Of course, the fact that a case can be brought does not mean the litigant will be successful: indeed, only two such cases have ever been brought against the UK and both were unsuccessful. This despite the fact that ISDS is a feature of a vast number of trade and investment treaties worldwide, including 94 that the UK is a signatory to. In the light of these facts it seems hard to justify the more alarmist claims.
Even so, it is important to be vigilant about the potential dangers. For that reason, if ISDS is to be part of TTIP, I would like to see major improvements to the arbitration procedures and the inclusion of a number of safeguards which I detailed in an earlier comment. These are important as a matter of principle, rather than because the ISDS arrangements envisaged for TTIP are especially defective or somehow more egregious than those in all the other BITs and trade deals around the world (I note that critics here have not said whether or not they think all these existing treaties should be allowed to stand, or whether we should seek to negotiate its way out of our ones).
My main priority is that ISDS, and the controversy over it, should not be allowed to sink a deal that would finally eliminate tariffs between two great continental economies and reduce the non-tariff barriers that impose higher costs on both to no productive purpose. It is the ambivalence and opposition to that basic goal, not the partially justified (if exaggerated) objections to ISDS that have been super-imposed, that I am dismayed by.
@Alex,
As I pointed out, I struggle with large blocks of text and have to break them down in manageable chunks.
I just thought it an opportune moment to draw attention to the fact that economics is a social science and neo-liberalism is a theory and like all social science theories there are underlying ethical and political assumptions. Sometimes ordinary NGO workers have an understanding more rooted in the reality of a situation than academic economists.
I will of course address your specific arguments, although I think that you could save time and cut out the ‘middleman, by reading counter arguments directly given by economists.
Jayne: I forgot to add that, while you are quite right that Martin Wolf described his book as “a work not of academic scholarship, but of persuasion”, it nevertheless contains more scholarship and research evidence than is typical in many books by academic economists, never mind the more polemical offerings by his fellow journalists. Moreover, his preface makes it abundantly clear that the perspective he is writing from is a humane and liberal one and the case he is trying to persuade readers of is the advantages of a free and open economy as one, rather successful, dimension of a free society.
GF: I cited those countries because unfortunately few of the ‘substantial’ countries in the developing world enjoyed anything like similar economic advances for most of the postwar period. They were either under the yoke of Communism or, in the case of India, the ‘Licence Raj’ which you refer to. It is not plausible to claim that the reason they did not emulate the smaller and more successful developing countries was because they could not do so or inherently had fewer opportunities to do so – as subsequent experience amply demonstrates.
In fact there is plenty of evidence that the success of the ‘Asian tigers’ relative to other developing countries whose performance was so contrastingly bad was due to their policy choices not either their size, location, the (non-)availability of mineral resources or cultural factors. You are of course right that geographical factors and the lack of mineral wealth made it a natural choice for them to seek prosperity through trade, but that does not mean the experience could mot be copied by larger countries that do have more resource wealth – as China has since shown rather clearly.
This debate was about exposure to trade and integration with the world economy. Of course there are “many reasons to fail besides trade” as you say. I myself said that trade was only part of the answer to economic development, and that, though highly desirable, it was not a panacea. I also specifically pointed out that in countries like China and India, “much of the impetus for rapid growth in recent decades has come from domestic reforms. Market forces have been allowed to operate in ways that would have been not just unthinkable but criminal 30 years ago. In China under Mao, economic freedom had virtually been eliminated. Under the Indian control system, no significant company was allowed to produce, invest or import without government permission.”
Given where China was in the 1970s, liberalising agriculture alone played a key part in driving China’s development, while in India the elimination of the more oppressive controls over industry made the key difference. But I also pointed out that greater integration into the global economy played a significant role, however – especially in the case of China, with an extraordinary increase in merchandise exports, in the ratio of this to the output of goods in the economy, and in inflows of private capital and FDI.
All in all I do not think it is fair to claim that I suggested that trade policy “in any simplistic way” was the source of India’s underperformance. It was part of a wider story of woeful economic mismanagement: trade protectionism had plenty of equally perverse domestic counterparts.
You say that countries start by being protectionist until “on becoming a dominant player, they change their stance and become free traders which is understandable given that, by definition, they are then looking to increase opportunities for their exporters, extend the scope of their patents etc.”
While there is some evidence for this pattern, generally the periods of rapid growth correlate with the periods of freer trade, not just when you look at one country relative to another but when you look at regions as a whole or indeed the world as a whole. The periods of rapid growth in real income per head – from 1870 up to the First World War, the postwar ‘golden age’ up to the 1973 oil crisis, and the period from the 1980s up to the 2000s – each featured rapid growth of world exports. This contrasts with the disastrous experience of the interwar years, in which trade protectionism and a reversal of globalisation were a key feature. World exports and global GDP per head stagnated in tandem, in what was the worst period for world trade and the worst period for growth in living standards of the past 140 years. In the years 1879-1913 the liberal market economy coincided with the fastest growth the world had ever known up to that point.
It is inescapable that periods of fast economic growth have also been periods of fast growth in world trade, and that periods of economic stagnation have coincided with more insular policies and lower trade volumes. Moreover, this correlation holds true when you look at the most dynamic parts of the world in each period: the former British colonies (USA, Canada, Australia and New Zealand) between 1870 and the First World War, western Europe in 1950-73 and non-Japan Asia most recently.
Geoffrey Owen’s book From Empire to Europe drew some interesting conclusions about Britain’s relative decline based on detailed studies of specific industries. Owen argues that Britain’s relative decline pre-WWII has been exaggerated and that often-cited cultural and institutional factors (complacent public school values, a luddite trade union movement, a City distant from industry) were less important than post-war policy mistakes. In particular, he cites the lack of internal market liberalisation of the sort carried out in Germany under Ludwig Erhard, and also Britain’s failure to grasp the trade liberalisation benefits that would have come from early Common Market membership.
Under the impact of Common Market trade liberalisation, France went from 42% reliance on former colonial markets in 1952 to 13% by 1968. Britain re-oriented more slowly and later. In industry after industry which Owen analyses, failure to face the stimulus of open competition from other advanced economies was a major cause of decline. As decline took hold and became the subject of increasing national anxiety it generated failed attempts at industrial interventionism which only made the problem worse. But the major initial cause of postwar relative decline was the failure to open up to competition in the 1950s and 1960s.
Adair Turner draws similar conclusions in his book Just Capital: “The general case for market liberalisation and privatisation is strong and in many ways always has been. Intense internal competition, policed by a strong cartel office, was a vital driver of Germany’s postwar recovery. Trade liberalisation resulting from the establishment of the European Economic Community was the key to rapid European economic growth in the 1950s and 1960s, and almost certainly more important to France’s ‘trente glorieuses’ than all the clever plans and interventions of the Commissariat du Plan. Conversely, Britain’s failure to enter the free-trade area of the Common Market in the 1950s, which would have exposed its industry to the beneficial effects of competition, was probably the biggest cause of Britain’s postwar relative decline.
“Much play is often made of Japan’s interventionist industrial policy (orchestrated by MITI) but in the sectors where Japan has been most successful – such as automobiles and consumer electronics – ferocious internal competition was always equally if not more important… One key explanation of the US’s absolute efficiency advantage is its large single market which makes possible economies of scale and which ensures strongly contested markets. The case for market liberalisation has therefore always been there, and opposition to liberalised product markets (whether via tariffs, subsidies, cartels or nationalisation) was always wrong and confused.”
Finally, I would just point out that, while you suggest it is already rich countries that become keen on free trade later in their development, in fact it is actually developing countries that stand to gain most from trade liberalisation. High-income countries are far less reliant on trade with emerging economies than trade among themselves, which is already largely free of tariffs. This is why TTIP – though highly desirable – would deliver modest rather than large gains in GDP for the EU and USA. What matters to the prosperity of the already rich countries is that they achieve rapid productivity growth in all sectors of their economies, the majority of which are non-traded service industries. But for countries at an earlier stage of industrial development, growing trade flows, both between themselves and with the developed world, are of crucial importance. That is why the residual rich-country protectionism – in agriculture especially, but also some heavy industries such as steel and shipbuilding – is indefensible in terms of global economic equity.
@Stimpson If privatisation of everything in sight is in your view the centre ground, just what is the right wing position.
Personally, I don’t want to have a multinational co-operation running the British armed forces. I think it might be a little dangerous to give an organisation which could easily be bought out by the Russians or the Chinese the nuclear launch codes!
(that was “multinational coporation”…)
Philip Thomas 18th Mar ’15 – 7:56am
“…Personally, I don’t want to have a multinational corperation running the British armed forces..”
You must have been very much against what was happening in Iraq where multinational corporations under Bush and Cheney seemed to be running the show.
You must also want to withdraw from NATO in view of the links between their decision-making and various well known arms manufacturers.
BTW — Did you see Channel 4’s programme Despatches on Monday night. ?
There was a lot in – it but you might find especially enlightening the expenditure on two aircraft carriers (budget now stretched to twice original estimates) which will depend on US planes that have a habit of dropping out of the sky and which as aircraft carriers cannot go to see in a real war situation because we do not have enough support vessels to protect them.
So not much military or defence value to the UK but of enormous value to the multi-national corporations who are bleeding the tax-payer dry and laughing all the way to the tax haven.
@Stimpson:
When you referred to G4S being loved by everyone except “Extreme Lefties” I did a ‘double take’
However after your, “I’d actually prefer both the police and forces to be run by G4S, for the record”…..I realised you were ‘joking’…Either that or so far over the western horizon as to regard Thatcher as a member of ‘Militant Tendency”….
Maybe. Really I was wondering if, when Stimpson says he supports multi-nationals running public services, he really means all public services (including defence and law and order) or if, just like the libertarians who think benefit recipients are thieves because they take taxpayers’ money but won’t apply the same logic to soldiers and sailors, he means “those public services that aren’t important to me, because I will never need welfare, have private health insurance and send my children to private schools” (Of course, I may be doing Stimpson an injustice here, for all I know he’s a single mother on benefits).
Alex Sabine
OK Alex. I give up. You have worn me out. I cannot read another another three lengthy volumes of your thoughts this morning. I will wait for Jayne Mansfield’s response. Jayne puts across her points in a concise and meaningful way – an example to us all.
My civil service training was that you must get a point across in less than half a side of A4: otherwise no minister was going to have the time or the inclination to read it. 🙂
Handing public services to private corporations is the ‘Liberal Reform’ / Orange Book orthodoxy.
G4S has already swallowed up £ Billions of tax-payers money in lucrative contracts for all sorts of what used to be called “pubic services”.
In June 2012, David Taylor Smith the head of G4S predicted that with The Coalition large swathes of policing in the UK would be under the control of G4S. Some police forces are already there.
Anyone remember voting for that?
According to the NAO ( national audit office ) in the UK more than half the £ 187 Billion spent on public sector goods and services is contracted out to privateers.
Did we vote for that?
Does Norman Lamb the minister with a ‘ring fenced’ health budget ever mention how much of his budget has been handed over to private corporate interests, ‘on his watch’ ? Or did he just fail to notice it happening?
I don’t see how wanting multinationals to run public service, is the same as calling those on benefits theives. We need a certain amount of welfare, as there are people who for whatever reason are unable to work.
In fact by handing more services over to multinationals, we can still afford benefits, since multinationals will always be more efficient than the state. We should bite the bullet and privatise the NHS and Network Rail, as well as the police, army and court system.
I don’t see the issue with G4S or whoever running the army or police. As pointed out above private military contractors are used in Iraq, and it is worth noting part of our nuclear defence is privatised to Serco. Trident is already privatised to ABL Alliance. Our nuclear power plan is provided by Chinese investors. To criticise foreign ownership is highly racist, as it implies that foreigners are despots.
Thatcher paved the way for privatisation, and we are continuing on the correct path. I am pleased the Liberal Democrats now favour free market economics, as it gives us who do not want backward socialism something we can vote for, rather than the horrible Tories.
As to the comment “we did not vote for this privatisation”, you voted for it unless you voted for the Socialist Party. It is like saying “we did not vote for continuing with prohibiting the death penalty”. Privatisation like abandoning capital punishment is the centre mainstream accepted orthodoxy.
@ Alex,
You are right we are not really addressing the subject TTIP and I do have an important question I want to put to Nick Thornsby about TTIP and the NHS.
You are also correct that at least for me there is a general unease about Free trade, with particular reference to developing countries. This is why I am interested in the work I have just come across during our discussion, by Ha -Joon Chang who specialises in Development economics and is reader i the subject at Cambridge University.
I am sure that you are correct that Martin Wolf is motivated by a passionate concern, but that does not mean that he can’t be wrong on some matters. Members of the general public don’t I feel, elevate economists to a status, that after their failure to predict the financial crisis of 2008, some don’t think they deserve. We might hold that they too can be guilty of a confirmation bias that leads to filtering and choice of information that confirms existing preconceptions. In the case of mainstream economists and current orthodoxy, a sort of groupthink if your like. I say this not as an economist but a member of a democracy that has been taught to question authority. That is all I claim to be.
The question for me is, does free trade act as an effective anti- poverty strategy and I would say that the case has not been proven.What you have in places like India, is a thin layer of well off people and a massive population of very poor people. I’ve seen the consumerism in parts of large cities in India and I have also seen the people who still forage for food on rubbish dumps. Yes it has been claimed that a billion people have been taken out of poverty in the past 20 years, but when the World Bank standard is 2 dollars a day, moving someone from 1.99 dollars to 2.01 dollars isn’t that great an achievement.
You mention China quite a lot, bt does free trade really help the vast majority of the most poor nations? Do we really want to treat out people like China treats hers?
Large corporations have done very little to undermine patriarchy in countries where they invest, yes some women will have an income of there own, but the wage differential between women and men has not been narrowed as far as I could see. Wouldn’t that be a marvellous opportunity to pay men and women the same rate for doing the same wagegiven the profits multinational companies are making in some of these countries?
Yes people are driven into exploitative unsafe conditions because they already are impoverished , that is the very point of what exploitation is about.
Some labour standards are indeed not enforceable, because in many cases trade union activity is restricted by the fact that the company can move its operations fro India to China if there is any threat to the financial power these countries hold over their workers.
All that unions have created would be an island of privilege in a sea of misery? Is this what happened when workers fought against exploitative employers in this country? I would argue that this is the permanent state in many poor countries without unionisation and the concern of NGO workers and people who get upset when they see poverty on their television.
Child Labour. There is a vast difference between children helping their families who are subsistence farmers and those who risk their lives in conditions that would shame a 19th century mill owner. Of course the parents love their children. I wish I had a pound for every person who has said to me life is cheap over there or that the death of a child is not felt as keenly, because they can just have more. Children are more precious to people in the conditions we are talking about because they are all the family have. In my experience, the birth rate has dropped because medical interventions have meant that families are more confident that their children will livei. The birth rate of people moving from poor countries falls to thel evels of the richer host countries where there is this assurance that their children will live into adulthood.
Education of children has, as far as I have seen actually made children of the poor more militant and more ready to fight for their rights, those that you say are damaging to the countries in which they live.
Before taking a pot shot at people who don’t want to buy cheap clothes from people who deprive the poor of their only means of livelihood, may I point out that the factory at Rana Plaza where more than 1,000 women died manufactured high end clothes that are sold for a massive profit. In my view, and those in organisation such as War on Want, The answer is not to boycott goods produced in exploitative conditions, which, yes, would deprive people of an income of sorts, but to help the poor fight for better terms and conditions.
So far, I do not think that free trade brings quite as many benefits to poor people in dirt poor countries that those who see free trade as an answer claim. Free trade is not synonymous with fair trade.
John Tilley – goodness me, we’re handing out billions of public sector money (raised, let us not forget, from corporate and individual taxes) to “privateers”???
Avast ye, me hearties!
Stimpson 18th Mar ’15 – 9:47am
If your reference is directed at me — go back and read what I actually said.
Having done that — then point me to the section of the 2010 manifesto of any party that enthused about the privatisation of the police.
John Tilley: “My civil service training was that you must get a point across in less than half a side of A4: otherwise no minister was going to have the time or the inclination to read it.”
Half a side of A4? Wasteful waffle. if you’d have worked in the private sector you’d have learned to hone your message to three or four bullets points.
@ Alex,
Sorry, in my 8th paragraph, I meant to say that multinationals hold over workers. I could also say the power multi national companies hold over governments too.
@ Nick Thornsby,
When the Liberal Democrats came out is favour of TTIP was there a clause explicitly excluding the NHS from the treaty?
The National heath and Social care Act (2012) and the regulations for implementing it , especially Section 75 have changd the fundamental nature of the NHS,fragmenting it and opening it up to competition law and turning it into a market in which private companies can compete to get NHS funding for providing patient services The Health and Social Care Act have in effect turned it from a social into a commercial actitivity.
My questionis, now that the NHS is part provided by commercial companies, will it only be partly protected from TTIP or has it been explicitly excluded as is possible
The leaking of information about the possible privatisation of cancer services in Stafford plus TTIP make me wary of assurances from the likes of politicians who promised no top down reorganisation of the NHS.
I am not impressed by the sort of lobbying that went on, given the number of meetings between business lobbyists and the Trade department compared to the very small number held between the Trade Department and public interest bodies.
@Stimpson: “The British worker will have to eventually learn to live like hard working Eastern European immigrants eventually, house sharing and working long hours.”
Right. You’re definitely either a satirist or you consider anyone to the left of Gengis Khan a Bolshevik. Can I assume you will be the first to sign up to a life of living 7 to a room and working 100 hours a week for minimum wage? Or is that just for us “little people”? You are essentially arguing for a return to feudalism, where all of us “little people” lead miserable lives for the sole purpose of enriching and further concentrating wealth in the hands of an increasingly small few. Hayek was right about us being on the road to serfdom, he was just wrong that it would be via communism, when in actuality it is the dictatorship of the markets and tyranny of the money men that is leading us there.
Thankfully, most people don’t think the way you do. Unfortunately, our society is mainly run by s0ciopaths in Westminster and in the corporate world. The challenge is removing these s0ciopaths from power and replacing them with people who don’t worship money or want us to enter an era of corporate slavery.
@Jayne: “Please, don’t allow yourself to go under. There are many, many people who think like you and hate the mean and nasty society we have become and are increasingly becoming.”
Thank you, Jayne. What you wrote is an incredibly kind thing to say. You’re right, people like us are needed more than ever if we’re going to build a kinder, more compassionate world and stop sliding into the brutal, totalitarian dystopia where people’s worth is measured in how much profit or shareholder value they generate that people such as @Stimpson long for.
John: Fair cop, I have written at excessive length in this thread. Unfortunately I’ve found it difficult adequately to address the huge range of arguments, examples and citations that people have made on this topic as concisely as I would have liked, given the scope of the discussion (TTIP, the principle of ISDS, specific examples of arbitration cases, arguments about the rule of law, democracy, free trade more generally, the effect of trade deals on developing countries, the merits of of various economists and social scientists etc etc). I have tried to set out my arguments as clearly as sequentially as possible, with supporting facts and statistics wherever possible, but it has been at the expense of brevity. I note that others, too, have responded in some depth. If nothing else the fact Nick’s piece has generated getting on for 200 comments shows he did a good job in stimulating discussion! And it’s impressive how engaged so many people are in what is an important if rather arcane subject.
OR getting on for 150 comments, anyway…
Alex Sabine – The basic point I have been trying to make is that free trade is not always and everywhere a uniformly good thing and it’s not guaranteed to create prosperity wherever it goes. There is ample evidence that it can slide into a form of neo-colonialism and/or a way for multinationals to increase their power relative to others by playing off workers and regulations in one country against another.
That said, I am in favour of free trade where it can be clearly shown to deliver benefits but suspicious of it when there are ulterior motives and/or when it has too high a price in some way. TTIP fails on all counts; it and its sister treaty the TTP are specifically designed to exclude China which speaks to ulterior motives, the gross lack of transparency can have no good purpose, the touted benefits to the average European are trivial and depend entirely on calculations made using deeply flawed methodology. Even worse it would establish a dual legal system, one for us ordinary folk and smaller companies, one for the exclusive protection and benefit of a small group of multinationals.
Nick Thornsby’s update indirectly answers my earlier question as to whether he had read an official copy of the draft text or even knew anyone that had. The answer is apparently that he knows Nick Clegg who knows an Swedish MEP who is involved in the negotiations and so has presumably (?) read it. (The question mark is because there is a long history of legislators not reading drafts with sufficient care and attention although I hope that’s not true in this case but we will never know.)
So, this is very much in the same category as the infamous promotion of the South Sea Bubble “A company for carrying out an undertaking of great advantage, but no one to know what it is”.
For what it’s worth Clegg’s promise in the clip doesn’t reassure me one little bit. What he actually says is, “The is absolutely nothing in that agreement [TTIP] that would ever force a British Government to outsource or privatise any of our NHS and more than that there is absolutely nothing in that agreement that would force this government or any future government to return any outsourced part of the NHS back into public ownership”.
I had to pinch myself and listen several times but I think I’ve got that transcript right. We have a Clegg promise that TTIP will not force any British government to take the NHS back into public ownership. In saying that he navigates carefully around my concern which is not that TTIP will force privatisation itself but that it will create a ratchet so that it can never be undone. FWIW this government seems hell-bent on privatising chunks of the NHS with astonishingly bad contracts that cannot be understood in the context of defending the public interest or commercial prudence.
https://www.opendemocracy.net/ournhs/kate-godfrey/faqs-staffordshire-cancer-privatisation
For the avoidance of doubt let me also say that it’s not just the NHS angle that concerns me – it overturns a long historical struggle to establish the sovereignty of the people expressed through their democratically chosen representatives – and all for very little gain.
I understand “free trade” to mean everyone trading with a country under the same rules. This means ISDS is the antithesis of free trade, as it gives special rights to foreign investors to challenge a country’s laws. Thus it is actually a PROTECTIONIST measure, as it protects the profits of foreign corporations, at the expense of domestic corporations.
This is also antithetical to the principle of equality before the law, another way in which it goes against the rule of law.
The argument that foreign investors have no say in the host country’s law also has no validity, The same can be said of foreign visitors, but we don’t give them access to special tribunals letting them challenge laws on the basis that these harm their interests.
Gf: Fair enough, very few things are “always and everywhere a uniformly good thing”. I happen to think a liberal should be well disposed towards free trade and free exchange, just as I think journalists should have (as Robin Day used to put it) a bias in favour of reason. I think there is a moral, as well as an economic, case against protectionism especially where the victims of protectionist policies (as with CAP) have been people much poorer than us as well as our own consumers and taxpayers. Agricultural protectionism has also been particularly damaging to the environment (since agriculture supported by high prices is guaranteed to be more intensive in the use of all inputs: Switzerland, for example, uses 10 times as much input of chemicals per unit of land as Australia or Argentina).
No doubt the mere fact of my expressing such an instinctive preference will lead to some people to rehearse the “free-market fundamentalist” jibe, conveniently skating over the fact that their own positions rest on a priori assumptions, ideological proclivities and subjective interpretation of data at least as much as anyone else’s. We have been round the houses on the empirical evidence so I guess we will have to agree to disagree on the conclusions to draw from it.
You say you are in favour of free trade “where it can clearly be shown to deliver benefits” yet your support is hedged about with so many qualifications that it does not sound like many trade deals would clear the hurdle you set for them. The point about the benefits of trade is not that trade in itself has magical properties; it is not, for example, more important than science or technology. The point is that by removing man-made barriers to international economic exchange we gain the maximum advantage of what science and technology can deliver if only human institutions will allow them to.
As it happens, I think the potential for trade deals to deliver really large benefits for rich developed economies is much smaller than it was in the ‘glory days’ of trade liberalisation – simply because markets (except labour markets) are much more open than they used to be and so trade liberalisation has run into diminishing returns. It is still worth doing, however. It is poorer countries that stand to gain most from trade liberalisation, as I explained above. That is why I have found the apparent visceral opposition to free trade more generally more worrying than the specific complaints about TTIP or ISDS.
I have stated my view that there are genuine and valid concerns about ISDS, though this is not something unique to TTIP but common to most trade and investment treaties, which raises issues of consistency. But what I find ironic is that Lib Dems who find this practice, and the lobbying or power-broking that they associate with it, unconscionable rarely express a murmur of criticism about the wider activities and policies of the EU itself, which (whatever its advantages) is nothing if not a magnet for influence-wielding by sectional interests and large businesses. Its modus operandi is to seek to mediate between different interests through technocratic processes that temper (or, as eurosceptics would have it, dilute) the messier but earthier impulses of national representative democracy. Believe it or not, from the perspective of the majority of the country who are not so enamoured of the EU*, europhile Lib Dems can be just as guilty of the ‘confirmation bias’ that Jayne detected above as any other mortals…
* I’m well aware that, in some recent polls, a (wafer-thin) majority of the British public would vote to stay in the EU. On balance I share that view. But it’s abundandtly clear that most voters view it much more sceptically than do most Lib Dems – that’s my point here.
@ Alex Macfie
The problem with this debate about the principles of ISDS is that we end up going round in circles. You allege that it is antithetical to the rule of law, yet expropriating someone’s assets without compensation is clearly itself incompatible with the rule of law and due process, since it implies contracts are worthless and can be torn up with impunity. The substantial and procedural rights contained in BITs and other agreements uphold generally accepted rule-of-law principles.
It must be acknowledged that ISDS does give foreign investors recourse to dispute settlement in an international forum, which is not available to domestic investors. On the face of it this offends the principle of equality before the law – yet so does discrimination against a foreign company, of the sort I cited in the Argentina v Repsol case for example. There is plenty of evidence that national courts do not always uphold the rule of law with regard to foreign investors as they might for domestic parties. The question is what is a proportionate response to the problem.
You draw an analogy with foreign visitors, but as Psi argued in the previous thread on this subject: That is not the appropriate comparison. If visit a foreign country I do so under the expectations that I will follow the law. If during the course of my trip the host country decides to change its law so I have to pay a bribe to leave or they will retain all my possessions as I leave that would not be fair… You are right there are not international tribunals that deal with the sort of tinpot dictators that engage in this sort of activity but we know what we think of this behaviour. These tribunals are intended to stop the very occasional behaviour in developed countries which is common in unsavoury regimes. The fact we don’t have an international regime for dealing with low-level mistreatment of tourists and expat workers does not mean that we shouldn’t have some system (not necessarily this one) for holding the developed countries to a standard of keeping their word.”
One curious feature of the criticism of ISDS is that it has tended to focus on the procedural defects of the system (which are considerable) and neglected the substantive aspects. Yet, as the House of Lords has pointed out, “ISDS mechanisms are in themselves only an enforcement mechanism: the substantive protections afforded to foreign investors in the investment chapter of a TTIP agreement would matter most”. One of the most important ways of improving ISDS arrangements compared to those in previous treaties would be to ensure the substantive clauses are more precisely defined and narrower in scope. This is necessary to ensure that awards by arbitral tribunals are limited to compensation for the infringement of basic rights like non-discrimination and compensation in the event of expropriation, and not to guarantee a firm’s right to profits or projected profits. I absolutely agree that the latter is unjustifiable; the only justifiable role of ISDS is to protect standards of fairness and due process, not profits. But it should not be beyond the wit of man to frame the substantive clauses in a way that does this, just as it is perfectly possible to protect governments’ rights to regulate in the public interest.
GF: Not reading dry technical literature emanating from the EU is hardly new. How many European citizens do you think read the Lisbon Treaty, yet it was pushed through regardless. Hopefully there will be more effective scrutiny in this case. The Commission has published its proposals for legal texts in a number of areas covered by TTIP (including competition, SMEs, technical barriers to trade, and food safety) and a three-page ‘reader’s guide’ to the textual proposals: http://trade.ec.europa.eu/doclib/press/index.cfm?id=1231. It is undertaking further consultation before it draws up specific proposals for the TTIP negotiations, so I would hope and expect that more detail will be forthcoming in due course. Until then I am reserving judgement on the ISDS aspect of TTIP.
“The Commission has published its proposals for legal texts in a number of areas covered by TTIP…”
This is the welcome bit, which people overlook; particularly those who blindly think TTIP is a good thing. It has taken much lobbying (and the leaking of drafts) to get the EU to begin to open up and to publish proposals and drafts and also to engage in meaningful consultation. Hopefully this ‘quiet’ reform of the way the EU operates will become business as usual…
Roland, I agree.