Why EU ‘trade’ means a war on workers

Linda Kaucher

Presentation for Institute for Employment Rights conference ‘Developments in European Employment Law’

Wed 4th July 2012 Liverpool

1

Context: 3 interlinked global pathways

• Corporate takeover- size of corps - international trade agreements

• Corporations getting rights to access govt spending (public procurement)

- via complicit governments & international trade

agreements

• Globalised commodification of labour (only ‘cheap’ counts)- corp profit from cross-border

wage differential (supply, use) via international trade agreements 2

Why trade (agreements) matter

• Trade agenda is a corporate agenda• Where neoliberalism set into hard

international trade law• Can’t reverse even if - disastrous

- govt changes• Dangerously unseen

3

Focus: How EU trade deals affect

UK

(UK concern has been/is on trade effects on dev’g countries. Unions - ‘trade’ in ‘devt depts’)

4

EU’s external trade function

• Trade Commission (D.G.Trade) - heavyweight part of Commission (international)

but ignored in EU debate

• Negotiates trade on behalf of MSs

• Fixes EU neoliberalism in trade agreements subject to international trade law

• Implications for workers – allows cheap labour from rest of world as ‘trade’

5

2 ways to capitalise on wage differential

1) Move work to cheaper labour areas

2) Move cheaper labour into higher paid areas

Focus here on 2

6

EU trade agreement landscape:

•WTO multilateral Doha Round stalled •EU pursuing bilateral and regional trade agreements since 2005 (much more secretive)

7

Tech talk 1: What is ‘trade’?Not just ‘trade-in-goods’(agricultural, manufactured)

- although this focus is maintained - Cable

Also trade-in-services - now most ‘trade’ - 13 all-encompassing service categories (including ‘Other’)

- ‘Business Services’ category includes banking, investment, financial services

- Trade-in-services includes moving workers across borders.

8

Tech talk 2: How trade-in-services includes moving workers across

borders:4 ‘modes’ of service delivery cross-cut 13 categories

- Mode 1 - e.g. by internet

- Mode 2 - consumer crosses border e.g. tourism, foreign students

- Mode 3 - company establishes across border

- Mode 4 - workers moved temporarily across borders

9

‘Liberalisation’ - key conceptLiberalising trade-in-goods

= reducing at-the-border tariffs (& subsidies)

Liberalising trade-in-services = open investment ops to transnational corps & granting them rights, including rights to bring in workers

Lib’n can be - unilateral - via intern’l trade commitments (permanent)

UK - unilaterally liberalised - provides a model + big mover in EU trade deals acting for the City of London Corp

10

EU/India Free Trade Agreement• Neg’d since 2007 - trying for completion this year

• Mode 4 - Indian govt’s single demand

• ‘85%’ a UK/India FTA

• UK to take biggest share of Mode 4 commitment – but commitment is not a ‘limit’ or ‘cap’

• Relevant UK PBS category- ‘international agreements’ Tier 5 - no numerical limits

• Very big issues for Indian people re liberalisation demands on India - protests

11

UK govt & current Mode 4 commitments (ICTs)• Commitment for ‘senior manager’ & ‘specialist’ ICTs – but govt allows abuse • ICTs now substantial part of UK labour migration (but not

‘migration’)

• In ratio to population 2 X US, Australia, Canada. 10 X Germany• • Tier 2 ‘ICTs’ PBS category- no numerical limits (i.e. no ‘cap’!)

• Most less than a year – much lower wage requirement

• Can be paid TMW – made up with tax free ‘allowances’. No NI.

• ICTs - but most being supplied into other firms12

Current Indian Mode 4 demands Not ICTs (existing commitment)

but

Contractual Service Suppliers (CSS)- workers sent/brought into any sector by

Indian companies NOT established here

Independent Professionals (IP)

n.b. wide spectrum of employment circumstance

13

TUC - inaction or betrayal?

• September 2011 Congress resolution to publicise and oppose the EU/India Free Trade Agreement. Why hasn’t the TUC acted?

• Worse - quiet meeting with the Trade Commission on unworkable ‘safeguard clause’: involvement of ETUC

Nb ETUC 80% funded by Commission

14

Other EU trade agreementsAll include Mode 4 offers

In process •Canada•Singapore •6 Eastern Europe states•Central America•Andean states•Malaysia Earlier stage•Southern Mediterranean (Morocco to Israel/Palestine)•China (investment agreement) •US•Thailand, Vietnam•West Africa (EPA)•Pacific (PNG, Fiji) (EPA)Completed•Cariforum (EPA) •S Korea

15

Policy continuum: Internal EU/ EU external trade

EU mov’t lab & services/Mode 4 in trade ag’ts

Same - allow undercutting of host country workers by workers brought/sent in

- have EU and UK govt support - subject to government propaganda

- subject to false projections before the tie-in - ‘can’t change’ once fixed

Different - Mode 4 workers potentially cheaper - Mode 4 more secretive

- Mode 4 harder to reverse(international) 16

EU ‘4 freedoms’ goods, services, finance, labour,

Particular concern for workers: - Free movement of labour - workers come

individually - facilitated by agencies, EU - Free movement of services – firms bring in

own workers for contracts

Not just EE accession countries Also - high unemployment states

Also - de-facto accession of 6 more low-income EE countries, disguised as ‘trade agreements’ 17

Across whole skills spectrum

• EU labour migration - usually taken as ‘unskilled’ (though free movement of services - bring in own skilled labour)

• EU Mode 4 stipulation: ‘skilled’ or ‘highly skilled’ (n.b. UK grad unemployment)

18

Global employment situation

• Unemployment - a global crisis

• Wide open for labour exploitation - legalised means being set up for itInternal EU rules + ECJ / international trade law

Yet debate usually limited to national horizon

19

Effects on national economy

• Decreased tax take, no NI

• Wages repatriated - out of economy

• No earn/spend cycle - for economic recovery

• Increased welfare bill – workers displaced

• Skills lost, irretrievably, for future economy20

Why UK unions’ call for ‘equal pay and conditions’ is inadequate

• NOT what this corporate agenda is about

• Temporary migrant workers don’t get organised

• Comparative advantage undermined by ‘equal pay’

• Focus on ‘exploitation of migrant workers’ misplaced - even low UK wages worth a lot overseas. UK resident workers are losing.

• TNCs expect high skills cheap - policy-makers ignore

• Fails to take account of continuum, bigger picture, trade agenda 21

Some conclusions • Direction for workers - downwards

• Mode 4 in all EU trade deals - ‘carrot’

• Financial services lobby is fundamental

• Mode 4 requires secrecy – so far effectively maintained

• Anti-worker agenda supported by spin

• Most unions failing to grasp situation

• Recognising, resisting the situation - not ‘racist’. Workers’ rights lost in the few places they exist -> model lost -> no progress for workers elsewhere

22

Action• Recognise: moving workers is major capitalist strategy.

• Disseminate information & analysis. Expose hidden trade agenda & relationship to domestic agenda, spin, role of financial services

• Counter reluctance to discuss cheap labour, facilitate necessary public debate -> assert other work values -> law

• Call for Resident Labour Market Test across all labour entry categories

• Question EU free movement: UK govt can resist EU rules

• Call TUC to account re the EU/India FTA and beyond

• Challenge politicians to take this up 23

Why act?3 interlinked global trajectories

• Global corporate takeover

• Corporations acquiring legalised rights to access government spending (public procurement)

• Globalised commodification of labour

24