NAFTA on Steroids: Free trade fever crosses the Atlantic

cooperating-governements_usa_regulating_flagsThree top news items emerged from the G-8 summit in Northern Ireland last week …

  • No one is going to do anything serious about Syria anytime soon
  • Vladimir Putin does not play well with others
  • The US and EU will soon begin working on what could be the largest free trade pact in history.

It’s this last item that should most grab your attention.

I know; international trade talks are mind-numbingly dull – I defy you to read this text of the EU draft mandate approved for the upcoming negotiations without doing a Ferris Bueller (“Anyone? … Anyone? …”). But it’s a safe bet that if such a far-reaching deal is achieved between Europe and the US, we’ll be living with the impacts long after Putin and Barack Obama have each gotten over their agonizingly awkward G-8 press conference.

Let’s make a deal!

The aim, of course, is to smooth the way for the world’s two largest economies to do even more business together than they already do (a whopping $650 billion in goods alone just last year). The US and the EU are each other’s top trading partners, and between them they account for nearly half of total global economic output. And according to a study done for the European Commission, an ambitious trade pact would mean another $275 billion annually in economic benefits.

With the European economy in a prolonged slump, and the US still slowly digging itself out from the Crash of ’08, that sounds pretty sweet to businessfolk on both sides of the Atlantic. Promoters of what’s being called the Transatlantic Trade and Investment Partnership, or T-TIP, are promising jobs and renewed prosperity on both continents if only they can be freed, like Gulliver, from the fetters of the thousands of  bureaucratic regulations that needlessly hamper commerce.

It’s not about the tariffs anymore

Traditionally, trade deals have been largely about lowering tariffs – the taxes countries add to imported goods to protect domestic products. But tariffs between the US and EU are already low. The target this time? “Non-tariff trade barriers.”

But as Ben Beachy, with Global Trade Watch in Washington DC explained to me, “Another word for ‘non-tariff barriers’ is ‘laws’ … There’s a lot of public interest policies that have been construed in the past as non-tariff barriers, and that’s what worries us.”

What Beachy means is that any law, rule or regulation in the US or Europe which in any way contrains a company’s ability to make money can be seen as a non-tariff barrier to trade. And the free marketeers are eager to get rid of them.

A few examples of the EU laws which American industries want to see eliminated are measures which:

  • limit genetically modified crops from being grown
  • ban the import of beef raised with growth hormones and chicken treated with chlorine
  • Higher levels of protection required for customers’ personal data.

European business interests have their own wish list of American laws which they’d like to have tossed aside, among them:

  • Wall Street reforms such as the Dodd-Frank Act, intended to rein in the out-of-control banksters who nearly crashed the global economy in 2008. German banks, in particular, find the modest requirements of Dodd-Frank to be burdensome. They’re especially vexed by the Volcker Rule, which restricts the ability of banks to gamble with taxpayer-insured money (US banksters hate this, too).
  • “Buy American” rules on government contracts

GMOs? Nein Danke!

A lot of Europeans are up in arms at the prospect of being forced to accept genetically modified crops, hormone-treated meat and other currently-banned industrial-food items, all in the name of free trade. And Global Trade Watch’s Ben Beachy says they have good reason to be concerned.

Under existing American trade pacts, such as the North American Free Trade Agreement (NAFTA) passed during the Clinton Administration, Beachy says, “Foreign investors have used the broad rights which are granted to them, which are superior to those granted to domestic firms, to demand taxpayer compensation for an increasing array of environmental, energy, land use, toxics, water, mining, labor and other non-trade domestic policies that are in the public interest.”

One example: In 1997, Canada banned the use of the gasoline additive MMT, found to be a neurotoxin and a public health risk. The US-based Ethyl Corp, manufacturer of MMT, sued Canada under the rights granted it within NAFTA. In the end, the Canadian government agreed to drop the MMT ban and pay Ethyl Corp $13 million(USD) to compensate the company for lost profits.

Ben Beachy says taxpayers in various countries have paid a total of $3.5 billion in similar compensation, with another $15 billion in cases still pending. And a recent UN report shows these so-called “investor-state” claims have increased more than 10-fold since 2000, from 50 more than 500.

Consider, too, that these disputes are ruled on by appointed tribunals, bypassing national legal systems. So, you’ve got anonymous trade tribunals, holding secret hearings, ruling that laws and regulations passed by democratically-elected governments are illegal barriers to trade, and compelling taxpayers to compensate foreign corporations for profits “lost” due to those laws. Can you say, “crisis of democratic legitimacy”?

The thing is, this exact template – already in place in NAFTA and other bilateral trade pacts between the US and other countries – is being used for the upcoming EU-US talks, as well as the TransPacific Partnership, another sweeping free trade deal currently being negotiated. This “capital above all” approach is on its way to becoming the global legal standard for trade worldwide.

The Ghosts of Seattle

This all goes back to the World Trade Organization fight in Seattle in 1999 and the subsequent battles over free trade vs fair trade. In those clashes, it became clear to me that a world where market values are the literal bottom line is a world where human values are bulldozed to serve economics, where the cultural and the aesthetic, the spiritual and the emotional are given no standing.

The free-traders stoutly maintain that their agreements must remain unencumbered by any but economic considerations. To clutter them up with labor and environmental and human rights issues, they insist, would render them unworkable.

But to sever our economic activity from our values is an invitation to abuse. If only financial factors are weighed as we make the entire planet one big marketplace, there’s no counterweight to prevent the aggressive exploitation of the earth’s life-sustaining natural systems — or of each other. History has amply demonstrated that, in the absence of such counterweights, those in a position to benefit from exploitation rarely restrain themselves.

How will an open global marketplace affect everyday peoples’ jobs, change their communities, influence their governments, alter their societies, impact their dreams for the future? What will be its repercussions on what they wear, what they eat, where they live? Will it create a tomorrow all of us will want to live in? Free trade enthusiasts have tended to brush aside these sorts of questions, relying on a powerful faith in the intrinsic benevolence of the invisible hand of unleashed enterprise.

Now – no less than in 1999 – the free marketeers need to supply good answers to those questions before we go irrevocably down this road, to where commerce is king.



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