Berlin, October 2015: 150,000 people are taking to the streets to demonstrate against the TTIP – there is no more persuasive proof of the fact that the free trade agreement has filtered through to the public at large.

It is different with the TiSA, the Trade in Services Agreement – again all the alarm bells should be ringing because the consequences of this agreement are just as potentially explosive as those of the TTIP.

The 1980s and 1990s were dominated by a wave of privatisation of public-sector enterprises and publicly-owned companies. It was often a licence to print money for corporations, especially in the service industry, where the consumers are dependent on services like water and energy supplies. Companies can increase the prices, cut back on service and investment, and achieve good margins – for a time at least – and then the protests start. A trend in the opposite direction has been apparent in the last 10 years. Many privatisations have been reversed, especially at local authority level where many businesses have been returned to the public sector.

The corporations fear for their business model. Help is intended by way of the TiSA, an international agreement which will force and guarantee liberalisation and tie the hands of local authorities and future governments.

Free trade agreements are like vampires: they die in the glare of publicity.

Another observation in connection with the TTIP: it is dangerous, if not fatal, for free trade agreements to come under public pressure and to be subject to public scrutiny.

This public notice must first be generated for little brother TiSA who is not so little at all. The negotiations have been running for at least a few weeks in the European Parliament.

The agreement will lead to a radical restructuring of the worldwide trade in services. One of the implications of this is that the floodgates will be open to the liberalisation of many services, including public services – such as in the education, health, post and telecommunications sectors. There is also a threat that severe limitations will be imposed upon the freedom of action of towns and regions – to subsidise local enterprises, for example.

The negotiations on this controversial agreement are questionable from both a democratic and a political perspective:

Firstly, all the rounds of talks conducted to date have been held entirely in private. Secondly, precious few MPs actually have access to the negotiation documents. The talks are not being conducted by the European Parliament, which is the only legitimately democratic EU institution, but by the Commission.

And as if that were not enough, it transpires that even after the end of the negotiations the text of the agreement may not be published for five years. Therefore members of the public are also to be denied access to the politically charged documents for years after the negotiations.

Some sections of the negotiation texts only came to notice at all through leaked information published by WikiLeaks in July 2015. These leaks confirmed all the fears – the TiSA is an unscrupulous licence for liberalisation without any regard for losses.

Best friends forever

But to go back to the beginning: 22 countries[1] and the EU have been negotiating the terms of the TiSA since 2013, calling themselves the “Really Good Friends of Services”.

The negotiating countries are combining almost two thirds of the global service market. The service sector in the EU accounts for more than 70% of GDP and employs 68% of the working population, the majority being women.

The service sector is traditionally regulated by the state.

The TiSA is based on the GATS, the General Agreement on Trade in Services, issued by the WTO. Plans for the reform of the GATS have been thwarted until now by the opposition of the so-called developing countries as they feared they would be put at a huge disadvantage by the deregulation of the markets. This was the reason why the Doha conference in 2001 on the relaunch of the GATS ended in stalemate – much to the dismay of the USA and the EU. With the TiSA the “best friends” are now attempting to break the deadlock in the negotiations and are arguing for more liberalisation outside the WTO framework, without the economically weaker countries. The plan, however, is to frame the TiSA in the WTO structure further down the line and to create new standards for the worldwide trade in services. Therefore countries which, for good reason, are not even sitting at the negotiating table will later have the commitments and obligations set out in the TiSA all but imposed upon them.

List it or lose it – technical ploys to wrest the irreversibility of liberalisation and raise the drawbridge

The TiSA is being negotiated on the basis of what is referred to as a hybrid listing approach. The European Commission had mainly worked with positive lists in previous negotiations on free trade agreements. Positive listing means that all the areas which are to be liberalised must be listed in the agreement. Any areas not in the list are not included. A negative listing approach, by contrast, lists the exceptions to which an agreement does not apply. Everything else is then liberalised. Naturally this is a far more sweeping approach. The biggest difference arises in the case of future services which are not known at the present and therefore cannot be listed. With the negative listing approach they are automatically liberalised – a technical ploy which is perceived to be little but which makes a huge difference!

In the TiSA the liberalisation of market access is being negotiated on the basis of the positive listing principle and yet the negative listing principle applies to the equal treatment of all companies from the signatory countries.

Public services in jeopardy

The European Commission and many other politicians argue that public services are not placed in jeopardy by the TiSA. “Public supply services” are defined so vaguely in the wording of the contract, however, that there is no consensus on the meaning of the term. As such, universal access to affordable public services cannot be guaranteed. In view of the key role of public services for the common good, this is fatal.

Every citizen must have access to essential public services, both in rural and urban areas, irrespective of his or her income.

The last few decades show that the interests of private enterprises cannot easily be reconciled with human rights.

Water – suddenly no longer a human right?

One prime example of the fatal consequences of privatisation was the move of Margaret Thatcher in the 1980s in Great Britain to privatise water supply and sanitation services. The public water companies were sold to the private sector on the pretext that the modernisation of the water network would place too great a burden on the public purse. Enterprises were now expected to carry out this task in return for generous packages with favourable starting conditions and exemption from corporate income tax. To this day, however, there has been no investment in the modernisation of the water network. In London alone 3.3 billion litres of water are lost every day because of leaking pipelines – this amount of water would be enough to supply the whole of Greater London for a whole day. At the same time the people had to put up with rising prices, rust-coloured water, impurities in the water supply, and leaking pipes. People who were unable to pay their water bill simply had their water supply cut off. Great Britain’s doctors raised the alarm and warned of disease outbreaks. The people of London rioted on the streets against this inhumane practice. It took protests on a massive scale before the practice of denying people the right to water was outlawed – instead the companies introduced a water meter with a slot for coins which would release the water supply for a certain time until the money ran out.

TiSA will step up this mounting pressure for liberalisation by several more notches. The privatisation of public services brings a deterioration in quality and a rise in prices. In 1999 Berlin city council sold half of its shares in water companies to two private enterprises. The water prices went through the roof and they made cutbacks in staffing. It took over 10 years, a popular petition and huge amounts of public pressure before the partial privatisation contracts were disclosed. The disclosure of the contracts showed that the enterprises had been given a profit guarantee – Berlin had assured them of a profit at any cost even if it meant dipping into the city council budget funds. The city council backed down and the Berlin water supply services were returned to the public sector completely in 2013. The buy-back cost billions and the loans had to be paid off for decades.

However, a de-privatisation of this kind would not be so easily possible under the TiSA for various reasons, such as the standstill and ratchet clauses, as they are called. These clauses can act as a pincer movement and put the screws on countries. The standstill clauses dictate that countries can no longer limit the degree of liberalisation from the point of signing the agreement while the ratchet clauses decree that even future liberalisation arrangements can no longer be reversed.

The TiSA is therefore in flagrant conflict with the successful European “right2water” initiative which has collected 1.8 million signatures from people all over Europe and sends out the clear message that water is a human right and not a commodity. Privatising the water supply means diminishing basic public services for all and violating basic rights.
Workers’ rights in jeopardy

The fact that free trade agreements can spell danger for employment rights and standards is demonstrated by the North American Free Trade Agreement (NAFTA). There were accessory agreements on working conditions and rights but these were too ineffectual to make a noticeable improvement to the conditions for workers in Mexico.

20 years post-NAFTA, trade unions in the USA, Canada and Mexico are finding a general loss of strength in the position of workers in the face of corporations and a rise in social inequality in various guises, such as in decreasing wages.

Studies conducted by the official representation of employees, the Arbeiterkammer, show that the TiSA also harbours the risk that labour legislation could be bypassed by the acceptance of bogus self-employment. What is more, the provisions designed to safeguard against wage dumping and social dumping could also be undermined.

Women disproportionately affected

There is a risk with the TiSA that inequality still existing between men and women will get even worse, because women are disproportionately dependent on public services, both as consumers and as employees in the public sector. Cuts in public services and provision usually lead to a situation where employment, costs and risks are shifted to unpaid care and household work – and these are the very areas where the bulk of the work tends to fall on the shoulders of women.

Restrictions imposed on freedom of action of regional and local authorities

Town councils and regional authorities would suffer huge restrictions imposed on their freedom of action by the TiSA – through cutbacks in public services and through a section on “domestic regulation”.

This states that national regulations would have to be subjected to a necessity test in connection, for example, with the authorisation of service providers. This means that every regulation must be “objective”, impartial with respect to all applicants, “reasonable” and “no more burdensome than necessary”. Otherwise it is not irreconcilable with the agreement. It is not clear what exactly this is supposed to mean because, yet again, the definition of terms is extremely vague. Depending on which body makes the relevant decisions, therefore, there is a risk that trade policy issues will be favoured over aspects focused on the common good. It could then be seen as discriminatory, for example, if local companies or companies with a focus on public welfare are favoured.

So local and regional authorities might find that their hands are tied not only by standstill and ratchet clauses but it might also no longer be possible to put measures in place in pursuit of political targets, such as ecological or social targets. This would be fatal, especially in respect of the European structural policy and the Europe 2020 targets, such as action on climate, green jobs, poverty reduction, investment in education and training, and gender equality on the labour market.

Too big to fail – no lessons learned from the financial crisis

But the financial services sector is also getting a whiff of fresh air under the TiSA. Having just recovered from the 2008 economic crisis, the financial service providers are getting wind of new opportunities for deregulation again and are calling for new prospects for speculation without state control. The European banks are particularly interested in a potential liberalisation because they want to sell their financial products to the USA again without restrictions. What is more, disclosure requirements in business transactions in tax havens and capital controls on speculative ventures could be dropped under the TiSA. The countries would be prevented by the ratchet clause from putting short-term measures in place in the financial sector – as they are currently allowed to and which went some way to mitigating the 2008 financial crisis.

No safe harbour for our data

The TiSA would also entail a liberalisation of digital services. One central demand of the USA in this regard is the free flow of data. In plain language, the idea is that no country ought to prevent a company from another signatory country from transferring, accessing, processing or saving information. How that is supposed to fit with the European data protection ordinance and the Charter of Fundamental Rights of the European Union is anybody’s guess. The ECJ ruling of October 2015 also found that the USA is not a safe harbour for the data of European citizens (link: safe harbour agreement between EU and USA on the transfer of data of European users) and that transfer may need to be discontinued. This is still going to lead to some disagreements in the negotiations on the TiSA between the EU and the USA.

Fair trade – how does that work?

It is simply not possible to reach a fair trade agreement in the face of all these requirements. The TiSA must be stopped and, basically, new conditions must be established. In order for this to happen, there is a need from the outset for transparency as to what is actually being negotiated. There is a need for clear definitions and definitive policies, and no room whatsoever for loopholes which large corporations can exploit to get around the rules. The protection of the workers and human rights must come before the interests of private companies. All of us – as the people of all the negotiating countries – have a right to know what is being negotiated behind our backs. Democratically elected MPs must have access to the negotiations and full access to all the documents and tell the public.

The die is not yet cast in the TiSA negotiations: Uruguay’s government departments determined that the disadvantages of the agreement would clearly outweigh the positives – the country called a halt back at the beginning of September and pulled out of the negotiations again. So there is no time to lose.

[1]Australia, Chile, Taiwan, Costa Rica, Hong Kong, Iceland, Israel, Japan, Canada, Colombia, Korea, Liechtenstein, Mauritius, Mexico, New Zealand, Norway, Pakistan, Panama, Peru, Switzerland, Turkey and the United States of America

Posted by Michel Reimon