Model US trade deal is ‘a recipe for bad food, NHS privatisation, and financial deregulation’

Model US trade deal is ‘a recipe for bad food, NHS privatisation, and financial deregulation’

Date: 18 September 2018
Campaigns: Trade

Global Justice Now has slammed the ‘model free trade deal’ proposed by a number of radical free market think-tanks today as “entirely divorced from economic reality” and warned that such a deal would “destroy huge swathes of our economy, including farming, and would lay waste to public services.” The model trade deal has been drawn up by the controversial Initiative for Free Trade (IFT) and the US-based Cato Institute, with input from the Institute for Economic Affairs (IEA) the Adam Smith Institute, the Heritage Foundation, and the American Enterprise Institute (AEI). Eurosceptic MEP Daniel Hannan has taken a leading role in promoting the document.

Nick Dearden director of Global Justice Now said:

“The measures supported in this paper represent a free trade utopia, entirely divorced from economic reality. The authors view good government as ‘getting out of the way’ of business, and letting profit drive every aspect of our society. The paper sets out a vision of ‘zero trade barriers’. The problem is that one person’s ‘trade barrier’ is another person’s food standard, or chemical regulation, or ability to enjoy good quality, free healthcare.

“The policies in this ‘deal’ are a recipe for bad food, NHS privatisation and financial deregulation. Whatever the claims made by the authors, be in no doubt that this would be a boon for big business, especially the big financial corporations that created the financial crash ten years ago, but it would be very bad news indeed for ordinary citizens.

“While it’s tempting to ignore this really extreme economic thinking, we’re worried because many of these think tanks are very close to UK government trade secretary Liam Fox. They are influential. As things stand, Fox has near regal powers over future trade deals. The only way to stop this sort of deal becoming a reality is to fight for a more democratic process for negotiating trade deals which doesn’t leave Liam Fox in charge of the (non-chlorine-washed) henhouse.”

Global Justice Now is particularly concerned about the following elements of the model deal:

Zero restrictions on cross-border data flow. This threatens to hand huge powers to the Big Silicon Valley corporations to use and abuse our personal data, and would make it much harder to regulate and tax the likes of Amazon, Google and Facebook. After recent scandals, why do we want to give these corporations more power?

Zero restrictions on foreign direct investment in the economy. Possibly the worst aspect of the ‘model deal’ is that it doesn’t only cover trade but also investment. One of the biggest problems of globalisation is that it has made it extremely difficult for governments to control capital coming in and out of their countries. This allows the super-rich and big corporations to go where they want, when they want, without proper regulation or taxation. The authors believe that overseas investors should not even need an actual presence in the country concerned in order to operate there – meaning that foreign big businesses can profit here without putting anything back into the domestic economy. It enshrines the worst aspect of globalisation in a trade deal. Governments must be able to control capital if they are to have any hope of serving the needs of the people who elect them.

Strict prohibitions against the use of nontariff barriers, such as performance requirements, restrictions based on scientifically unsubstantiated public health and safety concerns. These sweeping provisions would set off a ‘race to the bottom’ in standards and consumer protections. They clearly aim at preventing post-Brexit Britain from being able to stop the import of industrially farmed chlorine chicken, food full of pesticides, genetically modified products and everything else people hated about the proposed US-EU trade deal, TTIP. In turn, this would risk the livelihoods of anyone who didn’t want to farm or produce goods in this way, forcing down standards across the board. The government would have to prove that any regulation was ‘the minimum’ necessary to avoid being challenged. This flies in the face of public opinion.

Zero restrictions on competition for government procurement. This would remove a vital tool which governments can use to stimulate local economies, local farming and local business. Governments should be able to buy high quality goods from local suppliers, without that supplier having to compete with lower-standard, industrial scale goods made half way around the world.

Zero discriminatory nontariff barriers…. affecting the provision of services.  The authors want to lock-in liberalisation of all services through the use of a so-called negative list. Anything which a government doesn’t specifically ‘opt-out’ of a deal would be liberalised, including services which have not yet been invented (based on new technologies). What’s more, the authors don’t like ‘carve-outs’ for thing like the NHS. This would ensure the continued liberalisation of our NHS. Indeed, the authors are clear that “health services are an area where both sides would benefit from openness to foreign competition.”

Despite our many, deep concerns, we do welcome a few aspects of the deal:

Trade deals should not cover every aspect of society. There’s has been a trend in modern trade deals to become bigger and bigger, covering aspects of society which have nothing to do with trade. We agree trade deals should ‘shrink’ – though we don’t think this ‘deal’ achieves that ambition.

No ISDS (investor state dispute settlement). We completely reject the use of ISDS, which are anti-democratic ‘corporate courts’ that allow big business to secretly challenge governments for making regulations. We are pleased the authors reject ISDS – which increasingly looks like a dead duck in trade deals.

A limit on intellectual property. In recent years big business has used trade deals to get increasingly repressive monopoly powers so they can charge what they like for important products like medicines. We agree with the ‘model deal’ – this approach must be stopped.

The free movement of people. We support the free movement of people, though it’s rather odd to have a group of people who by and large support Brexit, and the ending of free movement of people in Europe, to support such provisions. We also think that trade deals are not the place to negotiate free movement provisions.

Photo by: Chatham House / Wikimedia commons