Labour is now opposing toxic trade deals, but what sort of trade do we want?
28 September 2016
Trade is always about power. That’s why, in post-Brexit Britain, our trading relationships will be the most important question we face. These relationships will in effect embed our new constitution, detailing how we approach issues like immigration, food policy, finance and public services.
The good news is that the Labour party has finally declared its opposition to the raft of toxic trade deals that have been on the table. But the real problem is that the left, more used to fighting against trade deals we don’t like, has little understanding of what ‘good trade’ means. If we are not to repeat the experience of the referendum – a battle between right and further right – we must urgently create a vision of trade which resonates with British people, providing a positive route out of the crisis that Brexit has created.
Trade and power
No one should understand the relationship between trade and power better than the British. We built our wealth trading slaves from Africa. We destroyed the economy of India, one of the most prosperous regions of the world, by undermining their textile trade. We forced mass opium addiction on China, decimated the population of Ireland, and oversaw the starvation of millions in India under the rubric of ‘free trade’ – a philosophy we made up to justify our actions.
Unfortunately, our use of trade as a form of power hasn’t changed much. Britain in the EU championed the view that ‘free trade’ would solve world poverty, most evident during Peter Mandelson’s time as Trade Commissioner. At the core of this is the old idea of ‘comparative advantage’: it’s best if we all concentrate on what we produce most efficiently and then trade it. In practice, this means ‘some people are better at being poor than us’. We have locked poorer nations into providing the low-value materials which richer countries use to build real wealth.
Most recently, Britain has fought for the most extreme version of a toxic trade deal called the Transatlantic Trade & Investment Partnership (known as TTIP), an attempt to create the world’s largest free trade zone between the US and the EU. TTIP is one of four massive trade deals being negotiated globally, which taken together represent the biggest corporate offensive against democracy in two decades.
These deals have almost nothing to do with tariffs, but rather aim to remove ‘regulatory barriers to trade’. It turns out, these regulatory barriers include laws against antibiotic usage in meat production, or minimum wage legislation, rules to undermine the creation of crisis-prone financial derivatives or local government’s ability to use their budgets to stimulate local business.
In a nutshell, these corporate trade deals turn every aspect of society into a gigantic marketplace. And they set up mechanisms to enforce that vision. Most of them include special legal panels only open to foreign capital – special ‘corporate courts’ which can be used to sue governments for taking action which damages corporate ‘investment’. Where they already exist these corporate courts have allowed big business to sue governments for putting cigarettes in plain packaging, for raising the minimum wage, for applying better health and safety standards to coal-fired power stations.
The EU referendum coincided with an enormous fightback against this free trade agenda in both Europe and the United States. Here in Europe, over 3 million citizens signed an anti-TTIP petition in just 12 months. Hundreds of local authorities passed ‘TTIP free zone’ resolutions. Celebrities, students, local businesses, even ‘foodies’, established networks to oppose the hated deal. EU Trade Commissioner Cecilia Malmstrom said TTIP had become ‘the most toxic acronym in Europe’.
Meanwhile in the US primaries, anti-free trade rhetoric, mostly focussed on TTIP’s sister agreement the Transpacific Partnership (TPP), was taken up by Bernie Sanders campaign on the left, and Donald Trump on the far right. The decimation and marginalisation of industrial heartlands has shown working class Americans all they needed to know about free trade deals that accord corporations the right to do whatever they like, while leaving ordinary people locked in their place.
Even arch-free trader Hillary Clinton was forced to stress time and again the ‘problems’ she had with the deal. However insincere her words, it is difficult to see how President Clinton would be able to adopt a staunchly free trade agenda in her first term.
At the time of going to press, TTIP looks like it has been killed off by this movement, one of the biggest pan-European campaigns in many years. In order to save another free trade deal called CETA (the Comprehensive Economic & Trade Agreement) between Canada and the EU, which is also under threat, French and German social democrats look ready to sacrifice TTIP. With elections approaching in both countries, it also seems that they’ve woken up to the fact that the conversion of social democracy to neoliberal agenda in the 1990s has robbed centre-left parties of their electoral base. Whether they can make a genuine break with the free trade agenda seems less likely.
Brexit and free trade
Although many of us who opposed TTIP argued passionately that remaining inside the EU was the best way to defeat the deal – and prevent free trade fundamentalists taking full control of Britain – there are undoubtedly similarities in the movement against TTIP and the vote for Brexit. Both are a reaction to the way that the free trade agenda, in its widest sense, has empowered corporations at the expense of people and democracy. Both herald the demise of neoliberalism.
The problem facing the left in Britain – as well as in the US and EU – is that this rupture will only open up progressive potential if the left can lay out a real vision and alternative which resonates with people and that definitively breaks with social democracy’s embrace of neoliberalism. If the left fails, then the far right in the US, in Europe and in Britain will fill the space with their own project for economic nationalism, based on hyper-protectionism and the sort of ‘beggar-my-neighbour’ trade policies which grew up in the 1930s. From Trump to Le Pen, to even the previously free trade UKIP, the right have used the anti-TTIP campaign to stoke nationalism.
The post-Brexit political vacuum in Britain has been filled, meanwhile, with a hybrid response which tries to hold together an adherence to extreme free trade and deregulation with a form of political nationalism and a clamp down on migration. The progressive elements of the EU project – freedom of movement, some social and environmental protection and cooperation – have been jettisoned, consistent with the long held view of one element of the British ruling class that Brussels, far from being too neoliberal, is too socialist.
Our new international trade secretary, Liam Fox, is the most hardline pro-US free trader in the cabinet. He’s called for a return to the ‘Victorian buccaneering spirit’ of Britain, which should send a shudder down the spine of anyone who understands Britain’s imperial history. Foreign Secretary Boris Johnson says that the TTIP-style Canadian deal (CETA) should be a model for our future trading relations. David Davies, Brexit Minister, is also in favour of ‘hard Brexit’, with no ongoing institutional relationship with the EU.
Without question the government will want to sign the fourth TTIP-style trade deal on the table, TISA, the Trade in Services Agreement. This super-privatisation deal includes all services, from finance to telecommunications, transport to energy services, healthcare and education. From what we know about the negotiations, courtesy of Wikileaks, the deal will include a ‘ratchet’ clause, making renationalisation of services like railways virtually impossible. It also threatens to prevent tighter financial regulation, obstruct governments’ preferencing renewable energy, and remove the right of certain categories of migrants from receiving labour rights. Ministers must be salivating.
The momentum behind a hard Brexit is building. It is being portrayed as the real intention of those voting Leave. This is the surest route to the so-called ‘Singapore option’, turning the UK into an offshore haven for capital, a financial trading centre, which can only survive by out-competing everyone else through lower regulation and lower wages. Our international relations would be a series of ultra-free trade deals which would see the global South producing everything we consume, paid for by the speculation and rent which form the basis of our economy. We would have no use for farmers or most workers, except those that support the service economy or sell property.
What’s the alternative?
Our constitution, then, is in the process of being re-written by the most right-wing government in British history. The left aren’t even making a dent in the debate. A common knee jerk reaction of many is that, after a history of fighting free trade, we should institute a policy of protectionism.
So what should we argue for? Short term, the best way to protect decent standards of regulation is to remain close to the EU, probably in a Norwegian-style relationship that allows us to join the single market. Unfortunately we won’t have a voice in how those rules are made, but we could rejoin the EU easily at a later date if we wanted to. This option also allows us to sign our own trade deals.
Perhaps most importantly, but most difficult, it would based on continuation of freedom of movement to and from Europe for people. This will be hard given the nature of debate in the EU referendum, but that’s all the more reason that the left needs to consistently argue for freedom of movement. This is the best achievement of the EU, without which capital can truly keep us imprisoned while it travels the world picking and choosing between labour forces.
Granted, EU freedom of movement coexists with a brutal anti-immigrant policy at its borders. This must be fought too. But achieving wider freedom of movement will not be helped by the collapse of the EU. The dream of a wider freedom of movement – which should be a given for anyone who believes your place of birth should not determine what sort of life you are able to enjoy – will be dead for a generation.
This is all important in the short-term, but it’s damage limitation. If we want to thoroughly rethink the global economy in a way which replaces neoliberalism with a fundamentally different sort of economy, we need to go much deeper. The whole idea that trade is always and everywhere a good must be debunked.
As a first step, all trade deals should be subject to environmental and human rights commitments – and this must be enforceable. The whole goal of trade deals should be an equal, collective form of development with a fair distribution of wealth produced.
Special corporate courts obviously need to be scrapped, and replaced with mechanisms that allow individual citizens whose rights are impinged by foreign corporations to achieve restitution – at an international level where individual governments won’t cooperate. This proposal would be brought about if we managed to achieve an internationals treaty to control transnational corporations, something currently being pushed by Ecuador at the UN – and consistently opposed by the UK.
Even the best form of trade doesn’t make up for a good industrial strategy and genuine economic development. So forms of protection have a vital place in modern economics. The key is not to protect your own industry, agriculture or services in a way that sinks your neighbour’s economy. Trade must play as role too, especially where it encourages the transfer of skills and technologies rather than monopolising these things through intellectual property frameworks.
Then, we need to evaluate how well trade deals contribute to social goals – equality, improved living standards for the poorest, and so on. Trade must never compromise the food security of nations (by incentivising the growth of export crops over food necessary for local sustenance). Fairtrade has proved that products made in better conditions can find a good market via decent labelling. Transparency is a minimum then. But we could go further and make trade easier for those that produce in decent conditions, or even better produced by cooperatives and collectives.
Such trade systems do exist, though they are nowhere near sufficiently developed. The ‘pink tide’ governments in Latin America developed an alternative trade system known as ALBA, specifically based on principles of solidarity, redistribution of wealth, and cooperation. Venezuela’s oil-for-doctors programme is one small example, and even Livingstone’s London got in on the act with cheaper fuel to power public transport. The left needs to spend more time studying Latin America in the 2000s, and Spain’s left today, where such ideas were and are hotly debated.
Towards an internationalist left
There is significant work to do to develop these models, but just as much work in building alliances which can convey this to an increasingly insular public. It's been so long since a radical left wing government came to power in the west, that thinking out a positive, alternative trade policy has not been on the top of anyone's list. When people’s experience of globalisation is simply unemployment and marginalisation, it’s easy to jump on a nationalist agenda, especially when that agenda depicts itself as anti-establishment.
Despite one of the biggest victories on trade for many years, the left has, post brexit, lost most of its ground on the economic debate. Our task is to develop economic models which are open, international, collaborative and local and democratic. The left urgently needs to develop a clear and compelling vision for international economics that taps into the concerns of those who voted to brexit, while preserving the internationalist outlook of those on the left who wanted to remain. Such models are the only hope we have of preventing a further decline into economic and political nationalism, based on a fear of the foreigner.
What are your 'Red Lines' in the Brexit negotiations? Find out more and email your MP >> globaljustice.org.uk/Brexit-red-lines