The mother of all ironies.
By Don Quijones, Spain & Mexico, editor at WOLF STREET.
Today’s generation of trade agreements seek to transfer key decision making powers and sovereignty from the traditional repositories of democracy, national parliaments, to the C-suites of the world’s biggest corporations.
In the mother of all ironies, to do that, they need national governments to sign along the dotted line, effectively voting themselves out of any meaningful existence. Although granting corporations full sovereignty rights – including the right to sue any government that threatens their ability to earn profits at literally any social, human or environmental cost – is explicitly endorsed by many national governments (including the U.S., the UK, Canada and Spain, to mention a few), not everyone is on board.
And as Britain’s vote to exit the EU just showed, democracy is a process that can be carefully managed; it can even be stage-managed, but it cannot be completely controlled.
That’s why the European Commission decided last week to renege on a promise it had repeatedly made to Europe’s citizens that it would consult the national parliaments of all Member States before ratifying game-changing trade agreements like the EU-US trade pact, the Transatlantic Trade and Investment Partnership (TTIP), and the EU-Canada trade pact, CETA. When it realized that it would be impossible to guarantee the desired outcome — i.e., a unanimously supported agreement — with such an approach, the Commission changed tack, designating CETA as a unilateral EU agreement, not as a “mixed agreement.”
The decision sparked an immediate outcry from a number of EU countries, including France, Germany, Austria and the Netherlands, all of whom demand a say for their respective parliaments on CETA’s ratification. This prompted the Juncker-led Commission to execute a wholly unexpected U-turn this Tuesday, announcing that national parliaments would, after all, have to ratify the pact.
On the surface the Commission’s latest volte-face is a mystifying move. Handing over the decision on whether to ratify the agreement to national parliaments makes it far more likely that CETA, an agreement that has been under negotiation for seven long years, is rejected. It could also derail the much more important, much more controversial TTIP.
“Public pressure has forced the European Commission into a humiliating climbdown as they have been prevented from denying a democratic vote on whether to accept the toxic EU-Canada trade deal, CETA,” gloated John Hilary, executive director at the anti-poverty organization War on Want.
The agreements’ supporters are as livid as its opponents are delighted. Hosuk Lee-Makiyama, director of the European Centre for International Political Economy, told Politico that he was “shocked” how easily Brussels had surrendered its exclusive competence on trade. In a tweet, he described the Commission as “traitors, not guardians, of the treaty.”
As Chrystia Freeland, Canada’s trade minister, put it last month: “If the EU cannot do a deal with Canada, I think it is legitimate to say: Who the heck can it do a deal with?”
But what if it’s all a bluff? Or even worse, a carefully laid trap?
A cursory glance at the small print is all that’s needed to glimpse the Commission’s real agenda: to quietly, covertly pass the lion’s share of the agreement into law while everybody else celebrates its newfound respect for democracy.
Here’s more from Politico:
Despite losing the political battle to keep the approval procedure in Brussels, the commission insisted that the new ratification process would make little practical difference to the Canadian deal. One EU official noted that the accord would be implemented “provisionally” as soon as it received the green light from the European Parliament and governments represented at the Council…
“If a national parliament rejects the agreement — or in the Belgian case, even one of the regional chambers — that country can’t ratify the deal,” said Jan Wouters, professor of international law at the University of Leuven. “In consequence, there’s no official ratification. But that doesn’t legally oblige the Commission to stop the provisional application of the treaty.”
Applying the treaty “provisionally” would allow the EU to approve — and begin implementing — over 90% of the agreement’s provisions, even before the first national parliament casts its vote on the treaty. Those provisions include the creation of an international Investment Court System (ICS), a proposal that has already been unceremoniously trashed by the German Association of Judges, for having: a) no basis in law; b) no jurisdiction over European countries; and c) judges that are not remotely independent.
The only meaningful difference between ICS and the Investor-State Dispute Settlement System it’s supposed to replace is that instead of the prospect of having three private arbitrators (i.e. corporate attorneys) decide how many billions in taxpayer funds elected governments should pay out in compensation for daring to put the rights and interests of national citizens before the rights and interest of overseas corporations and investors, we can have a whole new, expensive international court system, paid for by global taxpayers, dedicated to doing exactly the same thing. Such a process would make a mockery of democratic rights on both sides of the Atlantic. By Don Quijones, Raging Bull-Shit.
The European Commission has learned absolutely ZERO from Brexit. Read… Desperately Trying to Salvage Canada-EU Trade Pact after Brexit, EU Escalates Assault on Democracy
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I addressed this two days ago, and it’s not what it seems:
https://www.theautomaticearth.com/2016/07/incredibly-stupid-juncker-opens-pandoras-box/
Since I’ve already expressed myself on the anti- trade agreement sentiment, I’m not going to clog up the comment section with a repetition.
However…it is intriguing to examine the investment opportunities that arise from the US standard bearer of anti- trade, Donald Trump.
Am I equating anti-trade agreement with anti-trade?
To a major extent, yes. Trade between sovereign states inevitably involves irritants, trade agreements try to reduce these.
As we can all see, many are opposed to trade agreements but can anyone argue that they reduce trade? It would be difficult as both are way up since WWII, so they are correlated.
Moving on to Trump, a very big contributor to former GOP campaigns, who is not donating, has described Trump’s trade policies as ‘preposterous and virtually guaranteeing a world depression.’
I don’t know about that but it is possible to identify large US based companies that seem likely to suffer from his ideas.
Trump has said he intends to take on China re: trade.
OK, let’s say he gets the nomination and his campaign is doing well.
One thing we know about China- they don’t back down from a fight, as MacArthur found out. Neither should the US of course, as it leads the face- off against China’s grandiose territory grab in the Pacific, infringing the rights of ten or so other countries.
But retaliation in trade matters is easily done. If it looks like Trump has a chance at winning, it looks like short positions or less risky ‘put’ options against US companies doing a lot of business in China could be profitable.
One that comes to mind is KFC, which has 5000 restaurants there.
You switched from Europe to China, which is different problem, but let’s analyse the following scenario: a Chinese company buys one piece of a product, then uses reduced development costs, and cheap labour to flood your market with copycats. Or just makes the stuff for the Chinese market paying no heed to royalties. How would you frame this problem in terms of trace agreements? High tariffs maybe, just what Trump proposes?
I agree some Chinese stuff should have tariffs. One of them is steel and the US is slapping it with duties up to 200%.
I also agree with pushing China hard to respect copyright and patents and intellectual property.
However- I think the bulk of China’s stuff is found in Walmart- cheap apparel, shoes, toys, small appliances, micro-waves, flat screen TVs etc.
And even cheaper stuff in dollar stores.
I don’t think the vast majority of this stuff will ever be made in the US again. In the case of TV’s, the US was out before China entered.
Sony has just exited the TV market- which like a lot of this electronic stuff has become a very low profit commodity.
That’s why all the noise about China being a currency manipulator is irrelevant to the US. If the yuan is devalued 6 % it doesn’t mean a bunch of T-shirt manufacturers move from the US to China, but they might move from Sri Lanka, or India to China.
With both the yen and euro heading lower ( if Abe gets his wish) I think the biggest threat is not in a war from 30 years ago it’s a current one, autos, from Japan and Germany. But China is not a US ally and makes an easier target.
BTW: my comment above was not a defense of China nor was it an argument against tariffs. I’m asking, if the US does impose tariffs, what are the likely targets of retaliation?
There is money to be made in chaos- if you KNEW that Brexit was going to happen you could have made a killing shorting the pound.
The phrase ‘can anyone argue that they reduce trade’ would be clearer as ‘can anyone argue that they don’t increase trade’
I would love to see the Remain supporters defend the EU further stripping the pretense of democracy from all member nations as an example of why it’s worth staying in that corrupt union of bankers.
All I can say about the trade deals is that I am still sorry I didn’t vote for Ross Perot. He was right about NAFTA and we are now living with the nightmare. Trump is right about the US getting out of these deals and I will not chicken out this time.
Unfortunately, Trump is 2-3 decades too late, but better late then never. He would be doing the job of Clinton. Ironically, if Clinton is elected she will not be undoing what Clinton was not doing.
The problem is, business and trade was never too close to heart of any president in recent memory; they were mostly lawyers imbued with that empire business.
That last sentence partly applies to Canada, as well.
Agreed-our government is run by lawyers for lawyers. More regulations means more court time and billable hours. Can you imagine the destruction of livelihood a flat tax would produce? No more tax services and tax accountants, no more tax lawyers, no more bloated tax courses taught in college. That’s why THAT will never happen.
Hell yeah, a modified flat tax is the way to go! The first $24,000 earned should be tax exempt – a living wage so to speak. After that, all income of wages, capital gains, dividends and carried interest should be taxed flatly – say 18%.
Note how Hillary has, “been talking about for years” how carried interest loop holes allowing for hedge fund managers to pay less than teacher and nurses. HRC sure is blowing BS out of her mouth on this subject, but many US voters will believe her lie I’m afraid, and think she is on the side of the working class not the Wall Street banks she’s made millions on speaking to.
First stir up a bees nest so you can spend taxpayer money lining your pockets by fighting irritated bees. Once the bees have begun to settle stir them up again and show them the way to camp so you can remain in control of spending more money fighting the irritated bees.
The more things change, the more they remain the same, eh? We know who won’t be shaking things up despite what they may say.
Vote out the incumbent lawyers.
I believe my Dad’s solution to trade agreements was to make a key component that ten percent of the exchange had to be made by small businesses…he said this would make them unenforceable. He also cornered all the beernuts in a bar one night and the bartender had to twist his arm as a friend to sell some back to make peace. I object to trade agreements that leave out the sovereign consumer.