Written evidence from Linda Kaucher
INTRODUCTION
Part 1 of this submission
deals with trade issues, particularly "Mode 4". Mode
4 concessions allow transnational corporations to move temporary
migrant workers across borders, as "trade".
Not only is Mode 4 the aspect of the trade agenda
likely to have the greatest impact on people in the UK, but effects
of the EU's Mode 4 commitments will also be felt disproportionately
in the UK in comparison with other EU Member States.
Mode 4 concessions are included in all EU trade deals,
including Doha, but the EU/India Free Trade Agreement, currently
being negotiated, is a particular focus here. Evidence shows that,
in this Agreement, India will not sign up without Mode 4, that
Mode 4 labour access is the single demand from India, indicating
its commercial significance, and that the UK is the main and willing
target for Mode 4 access.
Cheaper labour brought from outside of the EU by
transnational corporations displaces workers here and undermines
economic recovery. Yet information on Mode 4 is kept from the
UK public.
Trade commitments are the means by which the UK is
tied into enforceable international trade law. The right of Member
State parliaments to veto trade agreements negotiated and signed
up in Brussels was lost when the Lisbon Treaty came into force,
so proposed commitments should be considered in a precautionary,
timely way and in a context of full information.
I have provided links to further information that
I have produced on Mode 4 including a presentation to the EU Trade
Commission's civil society dialogue session on Services.[1]
If Mode 4 has not, to date, been brought to the attention
of the Committee, it is a major omission for which some rescheduling
should perhaps be considered.
Part 2 of this submission
relates to the Select Committee's oversight of BIS administration
and policy. In relation to BIS administration, issues are raised
about the process followed for the Call for Evidence for the Trade
and Investment White Paper, which have prevented information reaching
the Committee. The BIS policy issues relate to policy on the conduct
of submissions, trade policy, and policy on dealing with alternative
views.
PART 1: TRADE
ISSUES, WITH
AN EMPHASIS
ON MODE
4
Sections
(a) Mode 4 (IV)
A very important aspect of the trade commitments
being made at the EU level on our behalf is Mode 4. (Mode IV).
It is called Mode 4 because four "modes"
of delivering services across borders have been defined by the
WTO[2]: Mode 1 by internet
or post, Mode 2 by the customer crossing the border as in tourism
or foreign student services, Mode 3 by cross border establishment,
and Mode 4 by moving workers across borders. So EU trade concessions
on Mode 4 allow transnational companies to bring in temporary
labour from outside the EU.
Information from the EU Trade Commission, documentary
evidence obtained via other Member States and the structural arrangements
now in place in the UK, combined, indicate that the UK is the
main and willing target for this, though the UK public are not
told.
But Mode 4 actually allows transnational corporations
to capitalise on the differential between wages in poorer countries
outside of the EU and those in EU Member States, particularly
the UK. Thus while Mode 4 allows transnational firms to increase
profits, the consequences are likely to be extremely negative
both for displaced UK resident workers and for the national economy.
Despite a lingering idea that "trade" is
mainly about goods, both agricultural and manufactured, "services"
is now a main part of the trade agenda. Unlike the border measures
that are the substance of trade-in-goods liberalisation, liberalising
services means increasing the rights of transnational corporations
while reducing the rights of national parliaments and of the European
Parliament to regulate them.
"Services" includes banking and financial
services, and underpins all other trade. It also includes moving
workers across borders.
The EU's Mode 4 commitments are not general across
the EU. They depend on Member States labour migration regulations.
The UK government has created structures within the Points Base
System to allow this labour movement now, without numerical limits,
in preparation for Mode 4 commitments.
With the stalling of the WTO Doha Development Round,
the EU has embarked on a program of bilateral and regional trade
agreements.[3] The EU's
WTO Doha offer,[4] and
its bilateral and regional trade agreements, including Economic
Partnership Agreements (EPAs) with poorer regions, all include
Mode 4 concessions.
Transnational corporations of both partner countries
in a trade deal can utilise Mode 4. In the Doha deal, the Most
Favoured Nation rule that means the transnational corporations
of all 152 WTO Member States.
India is the main country, globally, seeking Mode
4 access to the EU, and an EU/India Free Trade Agreement attention
is currently being negotiated. Attention is particularly drawn
to this Agreement, because of the central importance to India
of Mode 4 concessions and because of the central role of the UK
in these Mode 4 concessions. Information from the Commission is
that this is "85% a UK deal".[5]
Although the text and negotiations on bilateral trade
deals are secret until negotiations are effectively completed,[6]
the Commission's chief negotiator has stated definitively that
the Indian government will not sign up without Mode 4 concessions[7]
and a senior member of the Trade Commission
staff has confirmed[8] that
Mode 4 is the single request from the Indian government. The priority
given to this request indicates the expected commercial significance
of Mode 4 concessions to Indian transnational corporations.
In addition, leaked documents from within the EU[9]
show that the UK is prepared to take 40% of
the EU's commitment on a main Mode 4 labour migration category.
But, further, while other Member States have consulted with their
labour organisations and are taking very much smaller shares of
the EU commitment as ceiling percentage/figures, the UK has failed
to consult with UK labour organisations, is taking the lion's
share of the EU labour migration commitment, and, importantly,
has removed any numerical limits from the relevant categories
of the Points Based System, indicating its intention for the Mode
4 commitment to be a "floor", rather than a ceiling.
Thus even the disproportionate allocation of commitment is not
a ceiling for numbers of Mode 4 workers that the UK will accept.
That is effectively limitless.
It is difficult to anticipate the effects of Mode
4 trade commitments in advance, but after trade deals are signed
up it is too late to affect changes. Under these circumstances,
current mechanisms are useful indicators, such as the effects
of free movement of labour and services within the EU, and current
UK Points Based System labour migration provision and how it is
being used.
With A8 enlargement, in contrast to most other EU
Member States, the UK opened straightaway to free movement of
workers, with a prediction that was completely inadequate, that
13,000 workers would come. The reality has been estimated to be
closer to 1 ½ million.
At one point the Trade Commission produced an estimate
for Mode 4 entry for the whole of the EU[10]
that was below the figure for workers currently
coming into the UK under similar national labour migration provision.
This equally unrealistic figure has not re-emerged.
There are four worker categories included in Mode
4.[11] Of significance
for high numbers are "intracorporate transferees" (ICTs),
that is workers brought from outside of the EU to work in the
same company established within the EU, and Contractual Service
Suppliers (CSS), workers brought in by a transnational corporation
utilising Mode 4, to be supplied into other companies, including
those who do not have access to using Mode 4.
The current situation for labour entry from outside
of the EU into the UK, as it relates to the Mode 4 categories
is discussed here.
Currently, national UK labour migration regulations
allow for companies to bring in Intracorporate Transferees (ICTs).
The ICT category, in Tier 2 of the UK Points Based System, has
been excluded from any numerical limits.
In addition, the huge potential of Contractual Service
Suppliers is accommodated in "international agreements"
under Tier 5 of the Points Based System, also without numerical
limits, in preparation for Mode 4 commitments. Although the term
CSS is not used in the Points Based System, the UKBA has confirmed
that this is the case.[12]
The Contractual Service Supplier category was the
subject of the leaked document showing the UK prepared to a hugely
disproportionate share of the EU commitment, discussed earlier.
Currently the UK government is allowing ICT workers
brought in for less than a year to be paid the Minimum Wage, in
fact even less until Parliamentary Questions were asked about
it,[13] with the wage
made up only to the low end of the scale of normal rates for the
work by means of "tax-free expenses". These workers
are also exempt from employee and employer National Insurance
contributions. Overall, they are therefore cheaper than UK resident
workers.
Most ICT workers are being brought in for less than
a year. And in fact, most workers brought in as ICTs, to work
in the same company in which they work overseas and on which their
employment visa relies, and with the financial advantage that
the government is granting, are, even now, actually being supplied
into other firms as Contractual Service Suppliers.[14]
Set irrevocably into trade agreements, Mode 4 entry,
with no numerical limits on the two categories of most importance,
is perfectly structured for Indian transnational corporations
to offer a supply of workers, and also onshore outsourcing, on
a broad scale, as UK managers seek to cut expenditure.
This combination of evidence shows that we are very
close to being committed to accepting numerically limitless numbers
of workers brought in from India by transnational corporations,
disproportionately to the rest of the EU, and effectively irreversibly.
But in this process, UK workers are displaced, with
implications for the national economy.
The EU stipulates that workers brought in under Mode
4 are "skilled" or "highly skilled" workers.
"Highly skilled" generally means graduate level. Low
skilled worker migration into the UK is already happening, without
numerical limits, with EU free movement of workers and of services.
NB the high rate of graduate unemployment in the UK.
The Trade Commission has referred to the Minimum
Wage as the "safeguard" for maintaining labour standards.
However, if it is skilled work that is in question, the safeguard
mechanism of the "Minimum Wage" of Member States, (if
this holds—it has been undermined by decisions of the European
Court of Justice), is either inappropriate, or is ominous.
Mode 4 has not come to public attention because of
secrecy and spin. If this very significant part of the trade agenda
is mentioned, the tendency if for it to be immediately labelled,
as "sensitive", a signal to avoid reference to it.
The spin term "brightest and best", used,
including in the White Paper,[15]
in attempts to maintain counterintuitive public approval for the
entry of cheap labour and the structures set up to facilitate
it, hides the reality. Interestingly, at the EU level the term
"best and brightest" is used for the same purpose.
It is in fact now admitted that the ICT labour migration
pathway is not being used for the "brightest and best"
and the managers for whom it was supposedly intended—evidenced
by the low wages and. the IT worker categories that predominate.
Mode 4 commitments effectively hand control of national
labour migration policy to transnational corporations. Any perceived
failure to keep to trade commitments, including on Mode 4, is
liable to state-to-state trade dispute challenge, enforceable
in international trade law. Because of this threat, trade commitments,
including on Mode 4, are effectively permanent, thus affecting
future generations.
Now the Trade Commission is seeking a mandate to
introduce investor protection[16] into
its trade agreements, which will allow investor-state trade dispute
challenges. This will allow transnational corporations to instigate
legal action, and seek financial compensation, not only in regard
to any perceived failure to keep to commitments, but also for
the effects on all future profits of any proposed national or
EU legislation that has the potential to affect those profits,
called "expropriation".
In this way, EU Mode 4 commitments effectively hand
control of UK labour migration to transnational corporations,
with the accompanying loss of national policy space to regulate,
and loss of democracy.
With EU Mode 4 commitments, the return of workers
at the end of the work period, visas etc, are all the responsibility
of the Member State. With the UK taking by far the majority of
Mode 4 work entry, this burden will be significant and the current
enforcement situation creates doubt about whether measures and
procedures will be adequate.
Because only transnational corporations can utilise
Mode 4[17] to bring in
cheaper temporary workers from outside of the EU, it discriminates
against SMEs and national firms, giving a further advantage to
transnational corporations, in addition to their ability to utilise
cheap labour overseas, wider access to credit etc.
Mode 4 commodifies labour, with a very narrow conception
of "efficiency" that is only for individual firms. While
it provides transnational corporations with the cheapest labour
and a lucrative business in labour supply and allows other firms
to offload all employer responsibility, this does not take account
of the effects on UK workers or on the UK national economy.
While cheap labour benefits the individual firm,
the negative effects for the overall UK economy include:
- The loss of the earn/spend cycle, so important
to economic recovery, as workers are displaced.
- The loss of NI and tax to the Treasury.
- Wages repatriated overseas.[18]
- Increased welfare bill as UK workers are displaced.
- Loss of skills.
- Loss of the means for skills transfer.
While the Indian government's emphasis on Mode 4
access shows the degree of commercial expectations from it, there
can be no pretence that, in the current economic conditions in
the UK that Mode 4 is about "extra" jobs. It means job
losses among UK resident workers, a situation likely to be exacerbated
with cost-cutting programs.
On skills, even the "Call for Evidence"
document makes reference to the loss of skills in the engineering
construction industry, mostly due to current EU "service
liberalisations". This has wider implications for the UK's
energy security.
In University computing degree courses, numbers have
slumped by almost half in a decade as IT workers have been brought
in from India.[19]
With cheap overseas skilled labour available, investment
in training by firms becomes unnecessary, and the individual's
investment in their own skills becomes pointless.
Yet few people in the UK would know that this is
what the UK is signing up to, and perhaps only a few people in
the UK Government know too.
In difficult economic times, with high unemployment,
all political parties claim policies that "create jobs".
But no Keynesian-style initiatives are possible under the current
labour migration structure. ONS data repeatedly indicates that
that almost all jobs created over the last few years have gone
to workers born overseas. Therefore government spending to create
jobs for UK workers goes, metaphorically, into a bucket with holes
in it. And there can be no realistic jobs policy while Mode 4
offers are being made in the trade agenda because the Mode 4 concessions
will intensify this, with no escape clause.
This key aspect of the trade agenda must be brought
into the open and discussed.
(b) "Investor Protection"[20]
and EU Trade Policy
The Commission is currently seeking a mandate to
introduce investor protection, with the intention of applying
it initially into several of its Free Trade Agreements including
the EU/India FTA.
Investor protection in the NAFTA has already caused
Canada to abandon proposed environmental legislation on petroleum
additives because of the threat of being sued by US corporations.
Australia has recently refused to include investor
protection in any of its trade deals, because of the effects on
Australia and on developing countries. In contrast with the emphasis
in the UK and EU on the need to be "competitive" with
all other countries, the Australian government has inherently
lined up the interests of people in Australia with those of people
in developing countries, and acted to protect them against assaults
by transnational capital on public monies.
If the introduction of Investor Protection at EU
level has not been considered in the Select Committee's deliberations,
this is a serious omission.
(c) Trade liberalisation and climate change
The international trade agenda is driven by transnational
corporations. Although states (or in our case the EU) negotiate
trade agreements, it is actually on behalf of corporations and
it is transnational corporate giants that have the most influence.
The domination of the trade agenda in Brussels is
documented[21] and the
influence of IFSL on UK input to EU trade policy, in its Liberalisation
of Trade in Services (LOTIS) committee meetings with UK Trade
and Industry personnel, has been witnessed.[22]
A commercial agenda dominated by transnational corporations,
acting in the interests of their shareholders and corporate profits,
is inimical to addressing climate change.
Within the current "trade" agenda, disastrous
climate change effects are corporate "trade opportunities".
Thus the trade agenda as it is developing will not lead to measures
that prioritise action on climate change.
Trade-in-Services commitments in trade agreements
limit control that developing and developed countries (and the
EU) have over the power of transnational companies operating within
their borders, with a loss of the policy space, especially where
investor protection is introduced.
It is nation state policy space to control corporations
which must be maintained to allow for climate change measures
to be taken.
The Call for Evidence for the Trade and Investment
White Paper allows only for a "larger role" for trade
in climate change action but not the diminution of that role.
Rather than the inclusion of climate change considerations
in the international trade agenda, a reduction in the prevalence
and power of the corporate trade regime is imperative for climate
change action.
If the limiting of national (and EU) policy space
in the process of trade-in-service liberalisations in relation
to climate change action have not been considered by the Select
Committee, it appears to be a serious omission.
(d) Trade agenda secrecy
It may seem strange that such a huge issue as Mode
4 could have remained so hidden, but the processes of the UK's
involvement in international trade negotiations and the EU trade
processes lack transparency throughout.
In the UK, International Financial Services London
has a secretive[23] Liberalisation
of Trade in Services committee (LOTIS), wherein the demands of
transnational Financial Services firms in relation to UK trade
policy are imposed on government officials.
In this Committee representatives of major transnational
financial services corporations based in London give instructions
to the Government bureaucrats who will attend Brussels trade meetings.
There are no minutes available despite the importance to the UK.
UK civil society has no such access to UK trade policy
making.
EU trade policy is then formulated in the fortnightly
meetings of the EU Trade Policy Committee (formerly the "133
Committee") that Member States' trade officials attend.
The UK officials who attend have no public profile,
and the nature of the input they take to Brussels and the nature
of the influence on that input are not public.
Minutes of the Trade Policy Committee are not public.
This means that, apart from information via other Member State
officials, it is not possible to identify the nature of UK national
input to the Committee.
The Trade Commission's competency to negotiate on
trade on behalf of the Member States increased when the Lisbon
Treaty came into force, and Member state governments lost their
right to veto trade agreements, though this was not made public
when the Treaty was being pushed through.
There is evidence that the Trade Commission is captive
to the interests of transnational corporations, which are global
rather than "EU".[24]
There is currently a legal challenge in regard to the degree of
privileged access granted to transnational firms in relation to
the EU/India FTA.[25]
The evidence includes letters written by Peter Mandelson in his
role as Trade Commissioner.
Because of the amount of business dealt with by the
European Parliament, the committee stage is very important in
the Parliament's "assent" to trade agreements, the role
it now has in the trade agenda.
The International Trade Committee (INTA) of the European
Parliament can be manipulated by information being hidden from
it, including by MEPs.[26]
The Trade Commission's position is given academic
backing by the Brussels think-tank "ECIPE".[27]
This is run by Dr Razeen Sally of the LSE, and Mr Stephen Woolcock,
also from LSE. Although Mr Woolcock lacks any other title, he
has been introduced to INTA MEPs as "professor". Alongside
the transnational service investors' actual lobbying mechanism,
the European Services Forum, ECIPE has a regular role in supporting
the passage of the heavily corporate-influenced agenda of the
Trade Commission.
The negotiations and texts of bilateral trade agreements
are not public, except in the barest form.[28]
The standard reasoning is that confidentiality is necessary for
the negotiating process. But clearly opposite numbers in negotiations
know what is on the table, and if business lobbyists have access
to information and indeed make it clear what they want, as appears
to be the case, then it is only the public, in whose interests
negotiations are nominally taking place, that is being denied
information.
At the end of negotiations and before the formal
EP "assent" process, the text of trade agreements are
public, yet the Trade Commission deliberately does not inform
the public of the content or the implications[29]
until EP "assent" has been achieved.
This appears to undermine the democratic function of the Parliament.
Now, agreements are being "provisionally implemented"
after EP assent, before they have gone to Member State parliaments,
taking full advantage of the fact that agreements can no longer
be vetoed by MS parliaments.
The current crop of free trade agreements was given
the official go-ahead in a Council of Ministers meeting, attended
by Margaret Beckett, in her capacity at that time as Minister
for Foreign Affairs. Peter Mandelson in his role as Trade Commissioner
launched the negotiations on these agreements, but in the high
profile UK government position he subsequently held, he, like
Margaret Becket, failed to provide any information to the UK public
on what they were being signed up to e.g. Mode 4.
It appears that Mode 4 and the rest of the trade
agenda is deliberately kept from the UK public. When Prime Minister
Cameron and Secretary of State for BIS, Vince Cable, led a trade
visit to India in July 2010, the EU/India FTA and Mode 4 did not
appear in the extensive reporting by the UK press that followed
the delegation, indicating that it was not mentioned.
Similarly, the connection between the formal exemption
of Intra-Corporate Transferees (ICTs), in UK national labour migration
regulation in the supposed "immigration cap", and Mode
4 trade commitments, is not made public.
In relation to the BIS Call for Evidence processes
for the Trade and Investment White Paper, alternative views to
its full support for the "free trade agenda" were not
invited, while the document failed to give information either
on current trade negotiations or on Mode 4.
The White Paper similarly precludes alternative views
while still failing to give key information.
PART 2: BIS ADMINISTRATION
AND POLICY
ISSUES
Sections
(a) Administration: BIS process in relation to
the Call for Evidence process
Against a backdrop of lack of public information
on the trade agenda in the UK including how commitments made in
Brussels affect the UK and of transparency on trade policy making,
the BIS Department put out a Call for Evidence towards a Trade
and Investment White Paper in November 2010. An earlier closure
date was later extended, beyond the Christmas closedown period,
to 14 January 2011.
If the aims of public consultation processes are
defined, it is reasonable to assume that they would include obtaining
a diversity of informed views, and also to assume that there would
be an accountability process for whether a consultation had been
conducted in such a way as to maximise the opportunity for those
aims to be met.
However, the framing of questions in the Call for
Evidence document left no room for any views other than support
for an unquestioned free trade agenda, while failing to explain
that agenda.
My experience in making a submission to the BIS Call
for Evidence suggests that there are no such aims defined for
BIS consultations or Calls for Evidence, or, if there are, that
there is no accountability process, of if there is, it needs to
be activated.
I made a submission, evidenced and referenced, expressing
alternative views to the polemic Call for Evidence (CforE) document
issued by BIS.
My submission was acknowledged by email as I had
requested.
But my name was not listed in the BIS Response to
Submissions document and nothing from my substantial, informed
submission was included in the document. Needless to say, nothing
of my alternative viewpoint, providing information and questioning
the assertions in the CforE, was included in the White Paper.
BIS has informed me that all this was "wholly
consistent with BIS regulatory requirements".[30]
However, I assume that this process of serial omission resulted
in the Select Committee neither having any access to the alternative
information that I had submitted nor being informed that alternative
evidence and views exist.
I only found out very recently and by chance that
the Committee conducts its own public consultation, when the (belated)
response to my complaint to BIS led me to phone your Committee
Clerk. BIS, having failed to acknowledge my input, did not inform
me of the Committee's consultation.
Without the chance phone call, you would not have
had information on the issues to which I have drawn your attention
in Part 1, notably the issue of Mode 4, which is very significant
trade information in the UK context.
In Brussels I have had the opportunity to see some
of the underhand practices employed to keep key information from
MEPs, and the influence of transnational corporations on policy-making.
It seems possible that similar practices may be employed here,
even if "wholly consistent with BIS regulatory requirements".
The Trade and Investment White Paper was publicised
on the same day as Project Merlin, with reference to the hot topic
of bankers' bonuses. It would not have been difficult to predict
which the media would focus on. The minimal media attention to
the White Paper was to the reference in the White Paper to support
for SMEs. In fact not only is the reference to support for SMEs
in the document both minimal and tentative, but any such support
is in fact cancelled out by the overall thrust of the White Paper,
which advantages transnational corporations.
BIS policy appears to be at fault in following a
procedure that has resulted in a failure to provide information
that has been submitted to the Committee.
There may be a case to review the processes by which
the Committee can be excluded from receiving information by the
Department it is charged with overseeing.
(b) BIS trade policy
Three aspects of BIS trade policy are identified
as problematic:
- (i) The policy on conducting consultations
or "Calls to Evidence"
- The framing
of the CforE document left no room to question what has been accepted
"trade theory" or its claimed benefits, or for debate
on the benefits and costs of the trade agenda, when there is evidence
now to question many aspects of all of these. Thus the plurality
of views that the CforE should have elicited were excluded by
the nature of the document.
- In addition, while this consultation
document calls for "evidence" from those engaging with
it, there is a distinct lack of evidence for the claims made throughout
the document. Rather than a document to stimulate input and discussion,
it is, undeniably, a propagandist document.
- Policy in relation to the production
of such a document, on such a key topic, should be reviewed.
- (ii) The nature of BIS trade policy that
is evident in both the Call for Evidence document and the Trade
and Investment White Paper
- Many aspects
of the unmitigated "free trade" policy throughout both
these documents are now subject to question, including the Mode
4 aspects that are omitted from the document but are central to
BIS trade policy.
- It is my experience that vested interests,
particularly of transnational financial corporations, dominate
UK trade policy and UK input to EU policy. The nature of BIS trade
policy and of the process for producing the White Paper is in
accordance with this.
- Below (a-k) are some of the assumptions
that are taken as given in BIS trade policy but which should be
public debated, with public information, while such debate has
been excluded in the BIS CforE process.
- (a) Liberalisation (the basis of the trade
agenda, and which the UK follows unilaterally) is always a desirable
direction. The nature of trade-in-services liberalisation
is not well understood, that it means opening investment opportunities
to transnational investors, and then committing these openings
permanently to trade agreements. The effects eg the extent of
transnational takeovers of UK firms, on jobs (Mode 4) and on public
services (liberalised privatisations becoming irreversible) are
not generally known or debated.
- (b) "Trade liberalisation produces
development". In conventional trade theory there are
no claims for redistribution and it is admitted that in trade
liberalisation there are winners and losers. While "adjustment"
is the conventional trade solution for "losers", the
funding driver is undefined. While corporations benefit, whose
responsibility is it to fund "adjustment"?
- Trade liberalisation, favouring transnational
corporate investors, is producing inequality across developed
and developing countries and this is well evidenced.
- (c) "The theory of 'comparative advantage'
is robust". It actually entrenches advantages and inequalities,
and is undermined anyway when capital, and workforce, can be moved
across borders.
- (d) Inward investment is the main goal.
Inward investment into the UK is almost entirely "brownfield",
that is acquisitions of existing companies, or taking advantage
of public service privatisations.
- When foreign firms acquire UK businesses
in sectors similar to their home country operations, they gain
control over production that is in effect in competition with
their home country production. Home country production is likely
to be cheaper production. So while UK activity may continue so
long as UK government subsidies are available, the possibility
is there to diminish industry or economic activity here to boost
cheaper home country production, reducing supply and reducing
competition.
- Foreign ownership via FDI is unlikely
to have the commitment of national firms to the UK. Thus the question
is raised of where national UK national interest lies in relation
to liberalised FDI. Other countries make alternative choices.
- (e) "Movement of labour boosts the
UK economy". With Mode 4, there is the potential for
foreign firms to bring in their own labour, taking advantage of
the relatively stable UK environment, the UK social environment
with public services, and the profit potential, but to the detriment
of workers in the UK.
- There are also obvious negative effects
for the UK economy.
- If movement
of labour is good for people in the UK it raises the question
of why Mode 4 commitments are being kept secret and why such a
ridiculously low estimate was produced in regard to A8, to hide
the reality.
- (f) Reducing tariffs and non-tariff barriers
produces "savings". The "savings" referred
to in the BIS documentation in relation to tariff and non-tariff
barriers reductions are, in fact, direct losses to government
revenue, the means by which governments make social provision.
With trade liberalisation, this revenue is redirected to transnational
corporation shareholders.
- For some small developing countries
with a low tax base, tariffs are a major component of their means
to provide any public services.
- (g) "Protectionism" is always
bad, and "competition" is always good. Concepts
of "protectionism" and "competition" need
to be re-examined and discussed, with consideration of context
and broader values, and on a case by case basis. Whether there
should, for instance, be protection for jobs for UK resident workers,
or for the energy sector for energy security, or for the environment,
are valid considerations that are eliminated when trade deals
are signed up.
- The promotion of "competition",
including with developing countries, has led to an economically-based
overseas aid policy that prioritises transnational corporation's
investment opportunities in developing countries over real development.
- Prioritising a "competitive"
environment for firms also means deregulating working conditions
here and allowing the entry of cheap labour.
- "Competition" between UK
workers and workers elsewhere means a lowering of labour standards
and wages towards equalising with the majority of the world's
workers who are underpaid and lack labour organisation.
- While "competition" supposedly
benefits consumers, the "competitive" liberalised environment
is actually increasing the power and resources of transnational
corporations, and tending towards anti-competitive cartel and
monopoly situations.
- Thus the assumptions associated with
these terms must be interrogated.
- (h) "Trade liberalisation benefits
SMEs". Although this rhetoric is frequently used to sell
liberalisation policy, trade liberalisation actually increases
transnational corporations' advantages over SMEs.
- Only transnational corporations can
utilise the access to cheap labour inherent in Mode 4 concessions,
giving them an advantage over SMEs both in bidding and operating.
It thus discriminates against SMEs and national firms.
- Because SMEs are the biggest employment
area in the UK, this disadvantaging of SMEs also affects workers.
- (i) "Trade liberalisation benefits
consumers". While trade liberalisation might produce
some goods and services cheaper, it often also means that jobs
are lost. The emphasis on people only as consumers is false one;
they are also workers, needing to earn to consume, as well as
tax payers at least if they are working, and also public service
users.
- (j) "Trade liberalisation is worth
the sacrifice of eg job losses for overseas investment opportunities".
The overseas investment opportunities for which Mode 4 concessions
are being "traded", as in the EU/India FTA, will benefit
transnational investment corporations based in London. Although
eg pension funds may be invested in these corporations, these
investment opportunities will not provide any economic stimulus
or jobs in the UK and they will be paid for with Mode job displacements.
- This in turn will limit who can actually
be part of private pension funds, increasing inequality.
- In addition the liberalisations forced
on other countries are often detrimental to the people there
[31] .
- (k) UK trade policy is for the benefit
of the UK. UK trade policy is dominated by the transnational
financial services corporations based in London
[32] , and the main emphasis is on liberalisation
which produces outward investment opportunities for those corporations,
for which UK domestic policy is the willing model.
- The evidence for this is what I have
observed in the context of the LOTIS committee.
- The exclusion of other views by BIS
maintains this singular agenda.
- The benefit of the UK as a whole is
not the priority for UK trade policy.
- There is increasing concern about
corporate policy capture and influence, with some action to address
this, at the EU level, and in the US. The policy position of BIS
on trade suggests similar capture at the UK domestic level. However,
there is not yet adequate pressure exerted for correction mechanisms
to be introduced, in terms of regulations on disclosure, transparency
or other means.
- At the same time, the implications
of trade agreements are not currently being made public, or publicly
discussed at any stage of the process. The Lisbon Treaty exclusion
of Member States' parliamentary veto on trade agreements potentially
exacerbates this situation, because it reduces the possibility
that there will be parliamentary discussion.
- Instead, the documents produced by
BIS on trade that maintain "trade theory" assumptions
are polemic and propagandist and preclude any such debate.
- This raises the question of why a
supposed consultation is of such a propagandist nature.
- Clearly there are debates to be had
as to the economic effects of liberalisation and of trade liberalisation,
especially of services. Such public debate is needed, underpinned
a priori with public information on what the trade agenda now
includes and the implications for people in the UK.
- There is an urgent need for information,
discussion and transparency rather than an automatic acceptance
of narrow trade theory assumptions, and on UK and EU trade policy
that is non-transparently dominated by vested interests.
- The Select Committee is the vehicle
to instigate these urgent changes.
- (iii) BIS policy for dealing with alternative
views
- It is clear
that despite the BIS Call for Evidence process for the Trade and
Investment White Paper, alternative views were not actually being
sought and would not be acknowledged in the White Paper.
- This is a policy issue to address.
CONCLUSION
Issues have been raised here about the Mode 4 commitments
being made on our behalf, as well as issues of investor protection,
the trade agenda and climate change, and the overall secrecy around
the trade agenda. Issues have also been raised in relation to
how BIS conducted its Call for Evidence, with implications for
the Select Committee's access to information, and BIS policy on
how it conducts consultations, on trade, and on how it deals with
alternative views.
Suggestions for change in relation to the role of
the Select Committee have also been presented.
2 May 2011
REFERENCES
[1] Presentation to Trade Commission civil society
dialogue Jan 2010 http://trade.ec.europa.eu/doclib/docs/2010/february/tradoc_145756.pdf
[1] Guardian http://www.guardian.co.uk/commentisfree/2008/dec/13/dohatradetalks-wto
[1] Corporate Watch http://www.corporatewatch.org/?lid=3928
[2] http://www.wto.org/english/thewto_e/whatis_e/tif_e/agrm6_e.htm#oblig
[3] The Global Europe Strategy http://trade.ec.europa.eu/doclib/docs/2007/april/tradoc_134591.pdf
[4] The EU's Revised GATS offer, tabled at the
WTO 2.6.2005 available in the Parliamentary Library
[5] Interview with Commission Member of Staff.
Can be identified in confidence.
[6] See Part 1 Section (d) on Secrecy
[7] In a Trade Commission Civil Society Dialogue
session
[8] In an email to myself. Can be identified
in confidence
[9] The leaked documents can be shown in confidence
[10] Presented to me in a personal interview
by Trade Commission Mode 4 specialist, Balaks Gargya
[11] Business Visitors(BV), Independent Professionals(IP),
Intracorporate Transferees(ICT), Contractual Service Suppliers(CSS)
[12] Personal email communication from senior
member of staff UKBA
[13] PQ by Lord Laird http://www.theyworkforyou.com/wrans/?id=2011-03-14a.26.0&s=laird#g26.1
[14] http://www.whatdotheyknow.com/request/60461/response/153597attach/5/2011%2002%2009%20FOI%
2017156%201341%20Q2%20T2%20ICT%20CoS%20Used%20by%20Client%20Contract%20ICT%20Sub%
20Tiers%20and%20Top%2025%20Sponsors%20010110%20161210.xls
[15] http://www.bis.gov.uk/assets/biscore/international-trade-investment-and-development/docs/t/11-717-trade-investment-for-growth.pdf
[16] See Part 1, section (b)
[17] See point 8 in http://docsonline.wto.org/GEN_highLightParent.asp?qu=%28%40meta%5FSymbol+S%
FCC%FCW%FC%2A%29+and+%28%40meta%5FTitle+Presence+of+Natural+Persons+and+Background+
Note%29&doc=D%3A%2FDDFDOCUMENTS%2FT%2FS%2FC%2FW301%2EDOC%2EHTM&curdoc=3&popTitle=S%2FC%2FW%2F301
[18] http://www.migrationinformation.org/Profiles/display.cfm?ID=800
According to this Polish academic research, in 2008, one third
of all remittances into Poland from tiny Ireland
[19] http://e-skills.com/Documents/Research/Tech-Insights-2011/eskills_2011_TechInsights_UK.pdf
Computing course applicants declined 44% since 2001,
total applicants for HE courses increased 41%
[20] http://www.corporateeurope.org/global-europe/content/2011/03/investment-rights-stifle-democracy
[21] Bursting the Brussels Bubble Alter-EU 2010
[21] Europe Inc Corporate Europe Observatory
2000
[22] By the author
[23] The existence of IFSL's LOTIS committee
was secret until it was investigated and revealed by NGO World
Development Movement
[24] The membership of BusinessEurope, a major
employers lobbying mechanism in Brussels includes eg Exxon
[25] http://www.eureporter.co/downloadmagazinepdf/1406/
[26] In January 2010, Sajjad Karim MEP NW UK
Conservative, gave a presentation to the INTA on the EU/India
Free Trade Agreement, without mentioning Mode 4, despite its central
importance to the Agreement.
[27] The European Centre for International Political
Economy
[28] EU Trade Commission report to EU/India Summit,
Dec 2010
[29] At a Trade Commission civil society dialogue
26.10.2010 Mr Rupert Schegelmilch, Head of Unit, Trade Relations
with South Asia, Korea and ASEAN indicated the need to avoid making
public the fact of, and the implications of, the EU/South Korea
Free Trade Agreement, for which negotiations have been completed,
before the EP had given its "assent" to the agreement.
Parliamentary assent to this agreement has now been achieved (Feb
2011).
[30] BIS response to my letter of complaint.
[31] Indian resistance across many sectors of
Indian society is very active: among unions, unorganised workers,
dairy workers, retail workers, and concerning banking and financial
services liberalisation, and most strongly, the limiting of the
production of generic medicines.
[32] Organised as International Financial Services
London (IFSL), now part of TheCityUK
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