A comprehensive economic and trade annexation

Are recently announced trade deals compatible with democracy? Despite their proponents’ reasoning, one of the agreements’ principal features means we have cause for concern.

Last October, following a long (albeit somewhat unbalanced) debate and numerous major demonstrations in several European cities, the European Union signed an agreement with Canada which its supporters hailed as “the European Union’s best deal ever”, and which was advertised as increasing economic growth, creating jobs and facilitating trade as a whole between Europe and Canada.

Its advocates (comprising some business leaders and politicians from across the centre-to-right spectrum) had little time for the arguments of those who oppose them, and chose a PR approach to deal with them. This was also reflected in the way the subject was covered by large parts of the press, which allowed only limited space to the controversies surrounding the deal.

“Limited” is not to say “non-existent”; arguably because some of the more disputed aspects of the agreement are very difficult to conceal, some news outlets opted for a policy of minimal impartiality: some of the criticisms were communicated, though in such a way as to make them appear minor and in any event outshone by the deal’s enormous benefits that Canadian and European populations will enjoy. In other words, whilst disapproval of the agreement did not go completely unreported, the framework within which it was aired was strictly bounded. Meanwhile, adjustments were made to the proposal addressing opponents’ concern; their effects, however, were to muffle scepticism, with the modifications being minor in nature.

It would have been surprising to see a different kind of debate; the reasons for this course of events can be deduced from the fact that this and other trade agreements were originally intended to be carried through in secret. It wasn’t until documents from the negotiation of the planned business deal with the US, TTIP, were leaked that awareness of both that deal and CETA spread across European and North American populations.

CETA stands for “Comprehensive Economic and Trade Agreement”; it is yet to be ratified by individual national parliaments, but its ostensible purpose is to bind the European and Canadian economies more closely together by removing 99% of customs duties in order to facilitate trade between the two blocs. Tellingly, the proponents’ description is given in vague, but carefully chosen language, that, if taken at face value, makes it hard for the reader to disagree with it: who would deny that making it easier to export goods is a good thing? The resulting narrative puts the proposed deals in contrast with trade protectionism without considering a centre ground; it’s either corporate rule or Le Pen.

However, as public awareness of these trade agreements increased, the European Commission – the protagonist on the European side of the negotiations – embarked upon a strategy to appease critics and push the deals through in spite of public concern (this approach has already been successful in persuading the European Parliament). This strategy has borrowed extensively from conventional marketing: justifications are phrased in terse, hazy language which allows considerable room for interpretation and which relies on efficacious key words; changes to particularly unpalatable aspects of the deal are described using words such as “transparent” and “democratic”, while little of substance has actually been reformed.

There is one example which illustrates this approach fitly, so let’s look at the way in which the EC has promoted one of the critics’ main cause of concern, and consider what the consequences of CETA’s eventual implementation would entail.

Central to this trade deal, as well as to the objections voiced by those who oppose it, is the transferral of authority from national parliaments to multinational corporations, encapsulated by an arrangement which sets up a parallel judiciary, known as the Investment Court System (ICS), formerly Investor-state dispute settlement (ISDS). This mechanism was actually controversial enough to make the Commission conform to public opinion – at least on the surface. The EC’s websites fervently defend this change, stating that this is a “new, transparent system” and stressing its democratic values and trustworthiness.

The ICS allows corporations to sue governments if they feel their profits are being obstructed, for instance when a government enacts a law to protect, say, public health. This has happened on many occasions already, one well-known recent example being the Swedish energy company Vattenfall’s decision to sue the German government over their move to phase out nuclear power following the disaster in Fukushima in 2011, and a lesser-known one being a popular uprising in Bolivia eleven years earlier, after the country’s privatisation of water supplies resulted in the collection of rain water being made illegal.

The grounds on which the contestants may choose to sue are entirely at their discretion; the phrasing of the relevant section of the agreement allows for pretty much any government policy to be challenged (this remains the case even after the addendum that excludes “frivolous” law suits, the interpretation of which is gauged by the ICS panel).

The European Commission announced with great pride the nomination of judges “with high qualifications” (whatever that means) and a new, more balanced method of appointing the dispute-settlement tribunal’s arbitrators. It also makes a number of other vague assurances (“multiple proceedings will be avoided”) and generally couches its proclamations in agreeable, enthusiastic language. However, what receives less passionate publicity is the fact that the corporation remains the only party able to sue, and of the three arbitrators only one of them is chosen by the government; the third, “neutral” member is chosen in a very obscure selection process, and, at any rate, none of the referees is financially disinterested. The result of procedures would therefore be somewhat predictable, and the Commission’s hastily applied idea of making ICS hearings public will do little to change the outcome (a point which is reinforced by a provision of the system enabling both parties to maintain secrecy if they deem it necessary – a decision which, once again, depends solely on those parties’ judgement).

The outcome of this plan would be an independent, isolated system which is not subject to national jurisdiction and which consists of privately appointed lawyers; despite some minor amendments the ICS remains an arrangement which is essentially unaccountable to the public, in effect granting foreign corporations some degree to which they can determine any member state’s domestic policies, including those regarding health and the environment. Once enacted, elected governments will have no choice but to comply – and the resulting diminution of government power to fulfil its electoral mandate will, in all likelihood, be permanent. We would have the judicial equivalent of a tobacco vendor forcing someone to chain-smoke at gunpoint.

These circumstances make it rather easy to see what’s wrong with CETA and comparable trade agreements: they signify a significant shift from sovereign national control towards corporate power¹; it is implausible to argue that EU standards of food, health, labour rights, public services, environmental protection, animal welfare (whose standards are already appallingly low in the EU) and other safeguards can be maintained whilst creating a single market with countries whose own norms are not only much lower, but whose governments are also unwilling or unable to raise them. Suspicions about the real purposes behind those deals are more than justified when considering the above-mentioned fact that they were never meant to be debated publicly, but to be implemented in secret – and the resulting question of why populations shouldn’t know about these things means that CETA’s advertisement as a benign and innocuous project should be registered with caution. Despite the Commission’s insistence that individual parliaments’ sovereignty and other much-valued aspects of governance in Europe and Canada are in no way interfered with, there are several points which cast serious doubt on these promises: given the structure of the ICS, what reason for their existence other than to decide in the contestant’s favour could there possibly be?

When European politicians address this issue, they put forward the argument that in a changing world, trade agreements such as CETA would allow EU countries to shape the future (“if we don’t do it, others will”). This reasoning sounds fair enough – but is, once again, flawed: if the objective is to buttress European values in the processes of globalisation, preserving one of Europe’s core principles – representative democracy through elected parliaments – should be a priority. Abandoning that principle, or other results of century-long democratic strive, cannot be part of such an agreement if it is to truly reflect such ideals. Trade deals have been made for a very long time, but they have tended to focus on trade; to state that now, in order for them to be successful they must curtail and encroach on democratic processes, seems like a rather spurious argument, as well as a very desperate attempt to impose a dubious business deal.

Whether one believes in the benefits of CETA or not (various studies have come up with different projections – some have found that hundreds of thousands of jobs will be created, others have concluded that similar numbers will be lost), the obvious fishiness of both the nature of these deals and their disjointed publicity means we should not allow their advocates’ utilisation of language, or their pointing to China’s increasingly dominant economic role, to distract us from understanding the perilous effects they will have on our quality of life.

1Mainly US corporate power, to be exact – a large number of businesses involved in the negotiations, and bound to benefit from CETA, are Canadian subsidiaries of US companies.