The Consequences of the TTIP on Labour: a Disaster Waiting to Happen

The seventh round of TTIP (the Free-Trade Agreement between the United States and the European Union) negotiations took place two months ago and the information that we have about the future Treaty remains limited and deeply biased. Its undeniable impact on the rights of workers on both sides of the Atlantic is being kept secret and goes unsaid.

Last October, in the face of social pressure, the EU published the document through which, in June 2013, the Council gave a mandate to the Commission to “officially” start negotiations with the United States; negotiations which had already been taking place, in an opaque way, since 2005 at least. This document empowered the Commission to negotiate with the United States an agreement to increase trade and investment between the two parties. Its objectives were threefold: to eliminate trade barriers, tariff barriers and, especially, non-tariff barriers (regulations applicable to the production of goods and services); to seek convergence between both systems of production “regulation” (that is to say; an approximation of national legal regulations which cannot be removed); and to craft common regulations to be shared subsequently at international level.
In regards to the area of labour rights, the document refers solely to the obligation of the parties to include in the agreement mechanisms to support the promotion of decent work and the implementation of the fundamental standards of the International Labour Organisation, with no further specifics given. Beyond this document, it is not possible to find a concrete reference to labour rights in the information published by the EU.
The publication of this scant information has been followed by a wide-ranging campaign of promotion and justification of the Treaty by the European Institutions. A series of reports have highlighted the advantages and the economic growth which would result from signing the agreement with the United States; indicating that the complete opening-up of trade would generate billions in profit in both economies. Specifically, it is stated that some 80% of the profit generated by the agreement will result from reducing “costs” imposed by “bureaucracy and regulations”, as well as the liberalisation of trade in services and in public procurement. This shows that the main objective of the agreement is not to reduce tariffs but to reduce the regulations which govern rights, including labour rights.
This propaganda campaign is being questioned by voices from diverse fields. This raises questions for which the economists committed to the TTIP do not have answers: who is going to benefit from this wealth-generation? What degree of affectation in the well-being of the population will the public services measures have? Could the TTIP trigger a reduction in labour rights?
Focussing on this last question, we should bear in mind that the signing of a free-trade agreement multiplies cross-border supply of services and cross-border movement of companies. This results in different labour legal systems and different levels of protection of rights colliding on a regular basis. This situation would not pose problems if two circumstances were in place: on the one hand; if the treaty included common standards in relation to labour rights (minimum wage, maximum working hours, collective rights etc); and on the other hand; and even if that first circumstance is not met, if the treaty included an inviolability clause or a non-regression clause which would oblige States to keep labour levels unchanged. If neither of these two circumstances is in place, experience tells us that when different labour systems collide and decisions relating to the location of a company or where to offer services from are left up to the free choice of capital, two phenomena occur: social dumping and downward legislative competition. These are now commonly observed in the EU.
Social dumping is a business strategy used to lower social costs by moving production to a State with reduced labour rights (usually wage-related). Companies also send their workers abroad to work only in a State with higher labour standards. Their working conditions remain those of their country of origin and the companies thereby position themselves better than domestic companies in regards to social costs. Moreover, legislative competition is a phenomenon that occurs when, in a situation of legislative disparity as described above, governments want to attract foreign companies by reducing labour rights (lower wages or increased facilitation of dismissal).
All of these phenomena are part of the current reality of the EU. To have minimal control over social dumping and quieten the critics of the EU’s social deficit, various measures have been adopted. The results have been negligible. Nonetheless, the phenomenon of legislative competition has become the strategy of the international financial authorities, established now through the EU’s mechanisms of economic governance. The results have been obvious; one only has to observe the worsening of the labour and social disparities in the EU with Greece, Spain, Portugal and Ireland worst for unemployment, instability, poverty and exclusion.
Given all of the above, to assess the impact of the TTIP on labour rights we must take two premises into account. Firstly; that European economic integration has had negative consequences for the majority of workers, especially from the South, even though EU member states – at least up until the most recent waves of enlargement – share similar traditions of recognising social and labour rights. Secondly, that the TTIP will bring together two systems which are basically opposed when it comes to recognising and protecting labour rights; that of the United States and that of Europe (or at least that of a majority of EU member states). A glance at the number of ILO conventions which have been ratified illustrates this disparity for us: Spain has ratified 133; France, 125; Germany, 85; and the United States, 14, among which do not feature the conventions relating to freedom of association.
Faced with this situation, some advocate forcing the inclusion in the future Treaty of non-regression clauses, of recognition of labour standards, of keeping labour issues outside the sphere of action of special dispute resolution system, etc. However, none of these clauses – in the unlikely event of them being included – would prevent the future race to the bottom of labour rights. The experience of the EU has shown this. There is no room for piecemeal solutions in the TTIP, neither in the sphere of labour nor that of the environment or health. The only chance we have to retain our rights is through upfront and emphatic opposition by the peoples of Europe to show, as has already been done in the case of that false “European Constitution”, that there is a limit to every ruse. Campaigns against the Treaty, such as ATTAC’s, are now a priority to raise awareness among the majority and achieve sustained mobilisation to confront the anti-democratic and anti-social TTIP. Once again, the response must come from the streets and must become the key issue for the political and trade union forces which defend the rights of the people.

Translation: Veronika Peterseil