PEOPLE’S NEWS pm News Digest of the People’s Movement www.people.ie | [email protected] No. 126 31 May 2015

EU development ministers put profits projects. This shift towards private-sector and privatisation first finance risks putting public services out of reach for the poorest people, who are unable EU development ministers have adopted a joint to pay the user fees associated with it. The position on how to finance the planned private sector cannot, and should not, replace sustainable development goals before the governments’ duty of providing essential conference on Financing for Development in services, such as health services and education, July in Addis Ababa. The stated aim is not only especially when there are no safeguards to to end poverty in all forms everywhere by 2030 ensure that this is done responsibly. but also to introduce specific environmental and social goals, such as reducing economic Joe Costello (Labour Party), minister for inequality. state at the Department of Foreign Affairs and Trade with responsibility for trade and develop- The content of the sustainable develop- ment, was part of the decision-making process. ment goals will be decided at a UN summit meeting in New York in September, which is The EU is also trying to sell its ailing carbon- intended to set the international development trading system to developing countries as a way agenda for the next fifteen years. Decisions on to curb emissions. It would be more convincing how to finance the goals will be made at the if it spent the revenue wisely, spending some of summit meeting in Ethiopia. the money raised to help poor countries adapt to climate change. Instead the primary But the insistence of EU states on emerging emphasis is on privatisation and profits. countries providing their “fair share” while they continually fail to reach their own aid targets is Secrecy—the EU’s modus operandi a backward step. European countries know how important overseas aid is to fighting The EU’s ombudsman, Emily O’Reilly, has poverty and inequality, yet they continue to fail opened an investigation into the secret to carry out their promises. meetings between EU institutions to shape laws, known as “trilogues.” These are the main means used for formulating EU legislation, but they take place behind closed doors, with very little public information about the negotiation process. O’Reilly says that the level of transparency of trilogues “has been drawn to my attention by several MEPs [and] MPs from some member states as well as by business and civil society groups.” The investigation will try to map what The EU is intent on “blending” public and documents exist before putting to the test private development funding, ensuring that its which of those should be public. own companies profit from overseas aid Trade Unions, meeting in Sydney, Australia on the 19th May 2015 considered the implications for millions of workers and their families arising from impending “Free Trade Agreements’’ known as TPP, TTIP and CETA and decided to oppose the ratification and implementation of these deals at all forums in which they participate; to take further steps to familiarise their members with the contents of these deals Amazingly, O’Reilly couldn’t say what that will empower international corporations to should be released, because “I don’t know grow their profits while diminishing the pay what is released, what is withheld, or what is and conditions of workers, inform the relevant even recorded.” She sent letters to the government agencies of their opposition to institutions last week asking them to provide a them; to coordinate common actions in list of trilogues, which documents are created, opposition; to encourage other trade unions to and which are or can be published, and in join the campaign of opposition and calls for which language the trilogues take place. their cancellation. The ombudsman’s office will concentrate its investigation on two files closed in 2014: the Mortgage Credit Directive (on consumer protection for mortgages) and the Clinical Trials Regulation (rules on clinical trials for medicines). Once this is done the ombudsman will decide whether further steps are needed to improve transparency—which is quite a way Congress resolution from eliminating the secrecy. The Congress of Global Power Trade Unions, O’Reilly noted that a balance needs to be meeting in Sydney, having considered the struck between accountability and speed, as implications for constituent unions of the the trilogue process is popular with the EU elite proposed TPP, TTIP and CETA “Free Trade” deals for its ability to speed up the legislative notes the following and resolves as follows: process. In the past five years there have been The inclusion of an ISDS [investor-state 1,500 trilogue meetings. On the morning of dispute settlement] provision in any of these O’Reilly’s announcement a trilogue resulted in agreements merits their rejection; agreement on the EU’s new investment fund. That Regulatory Cooperation poses a International meeting of trade unions potentially serious risk to the health and rejects TTIP welfare of our members and its inclusion in any of the deals merits its rejection; On the proposal of an Irish trade union, the The loss of the Precautionary Principle Technical, Engineering and Electrical Union, the through TTIP would merit rejection of the deal; following resolution was adopted by the International Congress of Global Power Trade That the major focus of trade union Unions and the following public statement was opposition is the ISDS provisions, while the issued: Regulatory Cooperation provisions pose a serious longer-term threat; Public statement That CETA negotiations having been The International Congress of Global Power completed, this deal, incorporating ISDS, being,

2 most likely, the first to be ratified, poses the grounds of some cosmetic promises by the EU most immediate threat and demands our commissioner for trade, Cecilia Malmström. immediate attention. To reach the agreement the Socialist Group Motion gave up their original rejection of the ISDS The constituent unions of the Global Power mechanism. In return, the European People’s Trade Unions will oppose the ratification and Party accepted language submitted by the implementation of TPP, TTIP and CETA at all Socialist Group, stating that the parliament forums in which they participate; take further takes into account “the EU’s and the US’s steps to familiarise their members with the developed legal systems … to provide effective contents of the deals, inform the relevant legal protection based on the principle of government agencies of their opposition to democratic legitimacy [and] efficiently and in a TPP, TTIP and CETA—as appropriate; coordinate cost-effective manner.” common actions in opposition; encourage The compromise also includes a weakened other trade unions to join us in opposition and call for the creation of an international trade calls for their cancellation. court to hear investment dispute cases. The final text says that, “in the medium term, a Listening to the concerns of “EU public International Investment Court could be citizens”! the most appropriate means to address investment disputes.” The Socialist Group had Members of the EU Parliament gave their previously stated that such a court “is the most support to talks on the proposed Transatlantic appropriate means”; this is now reduced to Trade and Investment Partnership in a surprise “could be.” vote on Thursday and have backed away from a confrontation with the EU Commission over The resolution, backed by the EU Parlia- investor-protection rights. ment’s main groups, including the centre-right EPP and the Socialist Group, calls for a transparent legal mechanism for disputes, where cases would be heard by “publicly appointed, independent” judges, with the opportunity for decisions to be appealed. It also suggests that a public international investment court would be the “most appropriate” means of handling investment disputes in the medium term. However, ISDS would still be part of the deal—and that is the nub of the problem, which no amount of tinkering about will address. Earlier this month Malmström unveiled a plan to set up a global court that would decide on disputes between investors and govern- ments in an attempt to defuse the controversy, The Trade Committee voted by 28 to 13 to although US officials have stated that they do support a non-legislative report, which is not support the reopening of the ISDS regime. expected to have significant influence on the Backing the compromise following days of vote by the parliament on 10 June. The Socialist back-room wrangling with the EPP (of which Group turned tail on ISDS, apparently on the Fine Gael is a member) is a significant U-turn

3 by the Socialist Group. The draft report by Berd What is Malmström proposing on ISDS? Lange of the Socialist Group had originally called for ISDS to simply be excluded from the remit of negotiations. The vote was hailed as a “victory for free trade” by the EPP’s spokesperson on the committee. The business lobby group Business Europe (of which IBEC is a member) also welcomed the report. “Today’s vote shows we have come a long way and positive dynamics are back,” said its CEO, Markus Beyrer. In the formal proposal published by Cecilia Critics of ISDS warn that it allows firms to Malmström last week the Commission suggests take governments to court if they discriminate steps that can be taken to transform ISDS into a against them or introduce new laws that system that functions more like traditional threaten their investments, saying it could have courts. That involves the appointment of grave implications for consumer protection, permanent arbitrators, with similar qualifi- environmental and health legislation. “There cations to those of national judges, and the wasn’t enough courage to reject ISDS,” said introduction of a bilateral appeal system. Werner Schulz, a German member of the EU In parallel, the EU wants to work towards Parliament, who accused members of having the establishment of a permanent multilateral ignored concerns on a raft of issues. The Green investment court with tenured judges, who Party and the European United Left (GUE) both would replace the bilateral mechanism over voted against the resolution. time. “Deplorably, the took The article makes a number of other a very ambiguous stance on the infamous suggestions: Investor/State Dispute Settlement (ISDS) system,” said the secretary-general of the 1. Malmström does not want ISDS to allow for consumer association BEUC, Monique Goyens. “forum-shopping,” in which corporations “We have yet to see any facts justifying its would pick the most suitable agreement inclusion in an EU/US trade deal,” she said. with which to bring forward an ISDS claim. Trade officials have now completed nine 2. ISDS would be used only when a company rounds of negotiations since the summer of had been treated unfairly, such as through 2013 and are hoping to keep as close as the expropriation of property. possible to their self-imposed deadline of 3. “Mailbox” cases would be prohibited: only December 2015 for agreeing a draft text. The companies with real business operations timing is important in an attempt to avoid TTIP could bring forward an ISDS challenge. getting caught up in the race to replace Barack Obama as president of the United States, which It has also been reported that: will begin in earnest in the autumn. The next 4. arbitrators would be selected from a vetted round of talks will take place in July. list agreed upon by both sides, and Although the EU Parliament, which will 5. Malmström would implement “a adopt its final position in Strasbourg on 10 multilateral appeal mechanism as part of a June, cannot change the Commission’s nego- permanent court.” tiating mandate, it has the power to veto— But while Malmström herself would appear though not to amend—a draft agreement. to have misgivings regarding ISDS, none of

4 these suggestions are yet formalised, and the of TTIP and CETA, with his group voting in United States has no interest in reopening the favour of ISDS at the EU Trade Committee last issue. week. At this point the proposal can only be Ireland exports 90 per cent of the beef it viewed as a smokescreen to deflect and con- produces, which is equivalent to about half a fuse those opposed to ISDS. million tonnes, worth about €2 billion to the economy. It is the biggest component of the IFA pushes for regulatory convergence country’s €10 billion food and drink exports. A But what about food safety? recent report by the research group Copen- hagen Economics predicted that the Irish beef The opening up of the EU import market to industry stood to lose up to €50 million a year large volumes of American beef poses one of from increased competition if TTIP goes ahead. the greatest threats to Irish agriculture in decades, the Irish Farmers’ Association has Beef production costs in the United States warned. are significantly lower than in Ireland or the EU, for a number of reasons, including the The association says that the reduction in relatively larger scale of production and the use trade barriers envisaged by the proposed EU- of hormones and non-hormonal growth US trade deal “without regulatory enhancers, which are banned in the EU. These convergence” on both sides would put factors are estimated to reduce production producers in Ireland at a competitive dis- costs by up to €100 per head. advantage. This is because of the extra costs European farmers would incur in complying Ten years ago with EU regulations, which include tighter controls on the use of genetically modified French “no” vote rocks EU elite organisms, hormones, and non-hormonal growth promoters, he said, suggesting that the IFA would not oppose the lowering of food safety standards.

The people of France shocked the EU

establishment on 29 May 2005, rejecting the The association stated as a fundamental proposed EU constitution drafted by their principle that EU negotiators should insist on former president, Valéry Giscard d’Estaing, equivalence of standards, noting that “mutual after earlier indicating 70 per cent support for recognition of standards” was simply not it. enough. Described at the time as a “political The statement was made at a seminar on earthquake,” the result blew apart assumptions TTIP at the EU Parliament’s Dublin office, about “ever closer union.” Ten years later we organised by a Fine Gael member of the EU are still feeling the aftershocks, as the process Parliament, Seán Kelly, who serves on the EU’s for the latest critical EU referendum, to be held Trade Committee. Kelly is a staunch supporter

5 in Britain, gets under way. a given issue to offer the Commission technical The re-drafted EU constitution was called advice with no strings attached. the Treaty of Lisbon, and it was rejected by the Irish people when it was put to them. The financial crisis followed soon after, and the people were panicked into voting for the treaty on a rerun. We didn’t give them the desired answer first time out, and the democrats in the EU decided that we should try again. Let’s not forget that! The EU Commission’s expert groups Lobbyists eagerly take part in expert groups—especially at the initial stages of the EU democracy in action legislative life cycle, when ideas are at their What do they do? Well, it seems that no-one most malleable and the officials who are really knows, nor can anybody say how many shepherding them are at their most receptive. there are. They are the EU Commission’s “The earlier in the process you engage with “expert groups”—panels made up of industry policy-makers the more likely it is that you can associations, corporate representatives, and influence the outcome,” said Markus Becker, non-governmental organisations, hand-picked who works for General Electric and has taken to help shepherd legislation from conception to part in expert groups on energy issues. It is implementation. crucial “to engage with whoever is in the driving seat and explain your position on the The Commission has hundreds of these issue at stake.” groups working on issues as varied as nuclear safety and “horizontal questions concerning the But expert groups are too vulnerable to CAP” [common agricultural policy], as the influence from industry lobbyists who hope to Commission web site describes their mission. make their mark on EU legislation at a critical stage. And NGOs say they lack the resources of Critics say the groups have too much the private sector and struggle to keep up with influence, that they have become a free-for-all the demanding work schedule the groups for lobbyists and vested interests, and that the require. EU should not be delegating its policy-making responsibilities. In a recent review of expert groups the EU ombudsman, Emily O’Reilly, concluded that the Suggestions for reform include requiring requirement that expert groups be “as that calls for applications to take part in expert balanced as possible” between industry and groups be made public, strengthening other representatives was inadequate. “This measures to prevent conflict of interest for provision is unsuitable to guarantee that all panel members, and requiring that members of expert groups are balanced,” her letter to the expert groups be listed in the EU Transparency Commission said. “Nor does it demonstrate Register, a public list of interest groups that commitment on the part of the Commission to lobby the EU institutions. strive for a balanced composition.” Industry representatives say they see no Before the Commission’s planned reforms, reason for such changes, arguing that the here is what you need to know about how the system provides a way for often low-ranking expert groups work. company employees with a deep knowledge of

6 It is referred to as the “generation of accepted the Commission’s offer to join a knowledge” phase of the legislative process— recently established group looking into how the when the Commission sounds out those with EU and businesses can work together to significant interests on a particular issue. The prevent VAT fraud. “Just as we respond to EU idea is to get a sense of the technical require- consultations and write position papers, we will ments that future legislation might have while join expert groups to provide more detailed keeping an eye firmly on the political technology and business input,” a company environment. spokesperson said. “Getting the right experts Expert groups are established either by the around a table leads to better outcomes and Commission as a whole or by specific enables a good working relationship with the directorates-general or departments to advise Commission.” civil servants as they prepare legislative But many NGOs say they don’t have enough proposals and policy initiatives on writing the resources to allow full participation, and that major part of these proposals. Their mandate is the requirement that they be ready to address broad, but their advice is non-binding: in highly technical issues every time an expert principle a commissioner is free to ignore a group meets has them stretched to breaking- group’s recommendations. point. These ad-hoc panels are made up of at least Industry representatives say the advice they six members—but often many more than provide in many groups deals with technical that—who can set their own schedule, subject detail rather than broader policy issues, and to loose guidelines from the Commission on that NGOs’ expectations about being part of how they should go about their business. every group are unrealistic. Participants in expert groups are not paid for But NGOs dismiss that argument, saying their advice, but groups can receive subsidies that companies with a stake in an industry are for carrying out impact assessments or studies. exactly the ones that should be excluded from such a delicate legislative moment. “If we establish an expert group on terrorism, are we going to ask Bin Laden to take part?” asked one NGO campaigner. Depending on the advice sought, groups can be made up of company representatives, The relationship between NGOs based in research centres, national governments, NGOs, and the expert groups system has EU bodies, and international organisations. deteriorated in recent months. Even those who Most groups meet several times a year and manage to get a place at the table express their may or may not appear on the Commission’s displeasure with what they argue is dominance official list of expert groups. (There are now by industry of the system and a lack of 787 on the register, but as there are no transparency. transparency requirements the figure could be Some of these concerns appear to have had higher.) an effect, with the Commission now preparing Nevertheless, well-resourced industry to take steps towards a greater level of groups exploit the process. They can send transparency. experts to answer any technical question that “I find the whole system opaque, difficult to might come their way, and are required to do follow and impossible for us—with limited so in a way that takes their employers’ position resources—to take part in,” said the director of into account: they are not impartial observers. the EU unit of Greenpeace, Jorgo Riss. “NGOs The American technology company Intel have tried to highlight the role of expert

7 groups, both at the embryonic stages of NGO on board. But these groups are technical legislation and at the ‘comitology’ phase,” bodies—not political forums.” when the Commission fine-tunes legislation The EU Ombudsman’s decision in May 2014 that has already been approved. to begin an investigation into the Commission’s expert groups caught some observers by surprise. As the EU’s public watchdog, the ombudsman investigates cases of maladmin- istration, and some grumbled that this was a case of “mission creep.” Emily O’Reilly’s findings, published in January, were scathing. “It is currently not possible adequately and consistently to review the composition of specific expert groups,” she The most recent foray into the debate is a said, as a result of “deficiencies in the study published by Alter-EU, a coalition of framework governing such groups.” transparency NGOs, which portrays an expert group system dominated by corporate interests and lacking in basic accountability for how members are appointed and who they actually represent. The report finds that more than a quarter of the groups it examined are controlled outright by corporate interests, with more than half their members linked to business, while in 64 per cent of the groups, business interests appear to be over-represented (compared with NGOs, member-state officials, and independent experts). She also found that there was a problem of Commission officials concede that this representational balance on expert groups. She situation is not ideal but argue that they often demanded that the Commission “set out an struggle to find the right civil-society individual definition of ‘balance’ for each contribution. “NGOs have been doing the expert group,” and that it make public the number-crunching about the presence of criteria used in selecting the group. industry in expert groups—but that simplistic She also urged the Commission to make its calculation just makes me laugh,” said Christian calls for applicants public, effectually curtailing Feustel, a senior policy adviser with Business the Commission’s unfettered discretionary Europe. “Of course you are going to have more powers when appointing the groups’ members. industry people in these groups, in the same But we must not forget that the EU way that the groups dealing with social policy Parliament cannot initiate legislation, while 70 will be dominated by NGOs and civil society.” per cent of our lives is governed by EU He said the reason for industry’s high profile in legislation. This highly undemocratic and the groups is that the policy areas that would secretive method of drafting gives undue traditionally be dominated by civil society— influence to corporations and should be health, policing, education, pensions, welfare— abandoned rather than reformed. are not EU competences. “No-one in these groups would mind having a highly competent It is just another disturbing example of the

8 secretive nature of the EU and its In a joint signing ceremony the defence fundamentally undemocratic structures. ministers of the three countries pledged a two- year study to lay the basis for a European drone Italy, France and Germany sign up to EU to be operating by 2025. They also announced drone project that Spain and Poland had expressed an interest in joining the scheme.

The third man Jean Monnet, Robert Schuman and Paul-Henri Spaak are the trinity of names most often associated with the political origins of the EU. Monnet, the technocratic behind-the-scenes manipulator, had been unsuccessfully pushing The EU’s objective of developing a drone schemes of federal-style supra- programme took an important step forward on nationalism for Europe since the 18 May when Italy, France and Germany agreed end of the First World War. His opportunity to develop a medium-altitude long-endurance came after 1945 when American “Cold War” (MALE) drone, a type of drone that can fly at an warriors began to see federalism in western altitude of up to 9,000 metres for twenty-four Europe as a bulwark against communism. hours. Schuman was the A plan to develop a European drone for “ventriloquist’s dummy” whose reconnaissance and surveillance was first name was attached to a considered in 2013. declaration drafted by Monnet proposing that the coal and The scheme for a pilotless aircraft built by steel industries of France, the three EU countries could be worth up to a Germany and the Benelux €1 billion if it goes ahead, officials said after the countries be placed under a supranational High deal was signed in Brussels. Needless to say, Authority as “the first step in the federation of the aircraft manufacturing giants Airbus, Europe”—a state or quasi-superstate by Dassault Aviation (France) and Alenia another name. Aermacchi (Italy) are all backing the project. And Spaak was the Belgian The EU’s aim is to develop a flexible social-democrat politician who surveillance drone that could be used for more than anyone else was civilian purposes, such as border control, responsible for guiding the firefighting, and disaster monitoring. One EU project towards its greatest diplomat said they could also have a military breakthrough of all, the Treaty role, carrying weapons. of Rome (1957). It was Spaak Large drones operated by European armed who persuaded the Euro-federalists to play forces are mostly based on American or Israeli down the ultimate goal of political integration designs, creating a dependence on foreign and instead stress economic integration. technology that some European companies and “Building Europe” was presented as a matter of officials see as bad for the capacity—and jobs and growth, to make supranationalism profits—of the European military-industrial more easily sellable to different national complex. publics.

9 In the preamble to the Treaty of Rome the until the point at which the “adoption of such six original signatories—France, Germany, Italy, proposals would become virtually inescapable.” , the Netherlands, and Luxembourg— Antoinette Spaak pronounced herself in stated their determination “to lay the found- favour of “a two-tier Europe.” “We cannot be ations of an ever closer union among the held to ransom by one country out of the 28 peoples of Europe.” The European Economic that rejects the solutions that are best for Community (EEC) that the treaty established Europe as a whole. The majority should be able was more popularly referred to as the to over-rule the minority in the interests of “Common Market.” A supranational European good governance. We will never solve Union based on the proposed EU constitution unemployment in Belgium if the problem of 2005 was established only by the Treaty of continues to exist in the rest of Europe. We Lisbon (2009). have to work together.” The web portal Euractiv recently featured In this she echoes EU leaders such as the an interview with Spaak’s daughter, Antoinette former French president Nicolas Sarkozy, who Spaak, in which she claimed that the “failure of said in 2011: “There are 27 of us. Clearly down the European Defence Community has been a the line, we will have to include the Balkans. catastrophe” and that “if that had succeeded, There will be 32, 33 or 34 of us. No-one thinks we would today have an independent Euro- that federalism, total integration will be pean army.” In this she reminds us that, far possible with 33, 34 or 35 states. Clearly there from being a “peace project,” the EU is an will be a two-speed Europe: one speed that archaic relic of the Cold War which was pushed moves towards a federation for the Eurozone by the United States in the 1950s and and one speed for a Confederation within the subsequently to provide a European economic European Union.” underpinning for NATO. Spaak himself served as the second secretary-general of NATO. The unrealistic assumption of both the former French president and Antoinette Spaak The European Defence Community was a is that EU countries with very different political core part of the supranational project. Monnet, cultures and economies should follow similar Spaak and the French government, egged on by policies as regards budgets, public spending, the United States, produced an ambitious plan credit control, bank rules and competitiveness to complement the Coal and Steel Community and can run separate national economies while whose institutions anticipated today’s Com- using an unsuitable foreign currency. mission. The proposal included plans for a European army, a European defence minister, a It is a recipe for economic and social Council of Ministers, a common budget and disaster, as we have recently discovered and for common arms procurement under the overall which we are still paying the price. aegis of a European Political Community. But the project came unstuck when the treaty What is behind an EU capital markets setting up this European Defence Community union? was rejected, amid scenes of great emotion, by The EU has just ended a public consultation on the French National Assembly in 1954. plans for a “capital markets union.” This is a The CIA bankrolled the European potentially important part of the negotiations Movement for decades. In 1965 a State between Britain and the EU. Britain is not part Department memo advised the then vice- of the EU banking union but would almost president of the Commission, Robert Marjolin, certainly have to be part of a capital markets to pursue a common European currency by union. stealth. It recommended suppressing debate

10 But significant activity has been driven by foreign companies taking advantage of record low borrowing costs in the euro zone. American companies, for example, have sold €41.4 billion worth of bonds denominated in euros so far Bank lending to companies has declined in this year, triple the €13.4 billion sold in the recent years. While there has been some pick- same period last year. In Britain meanwhile the up in activity in capital markets since the issuing of bonds is running at a record €19.2 financial crisis, companies on the periphery and billion, with companies from Australia, China in eastern Europe have been virtually starved of and Mexico all issuing debt in euros at a record credit. Most of the increase in the issuing of level. corporate bonds was in only a handful of Like the banking union, the aim of a capital countries. France and Britain alone account for markets union is to shift the possibility of two-thirds of the growth in corporate bond imposing controls on capital markets from the markets since 2008, while Spain and Ireland— national to the supranational level, where the which had some of the biggest decreases in ECB would exercise it. This would be a bank lending following the financial crisis— significant further reduction of classical state barely saw any growth in their corporate bond sovereignty. It would make it impossible for markets. euro-zone states to require their credit systems Unlike the United States, where companies to advance any notion of a common financial rely mainly on shares or bonds to raise money, good at the national level. in Europe small and medium-sized firms But a capital markets union does not primarily borrow from their own countries’ overcome a fundamental flaw in the euro zone, banks. namely that Germany and the other northern Capital market activity in Europe has long members refuse to expand their own been overshadowed by direct lending between economies so as to encourage imports from the banks and companies. In turn, the business of southern members and thus stimulate those issuing debt has been concentrated in the City economies. of London, while American capital markets It is impossible to see how a capital markets count as the most developed and largest union could overcome three further trends globally. associated with the dominance of finance Between the financial crisis in 2008 and the capital in our economies. end of 2014 the value of bank lending to non- Firstly, large corporations have been financial corporates in Europe fell by 11 per financing investment largely out of retained cent, according to a recent report. Superficially profits, while also being able to obtain external it appears as though the effect of this decline finance in open markets. They have become was ameliorated by an increase of €725 billion less dependent on banks; indeed they possess in the total value of outstanding corporate independent capacity to engage in financial bonds; bank lending decreased by €675 billion. operations for their own profit. So far this year the issue of euro-zone Secondly, banks have correspondingly corporate bonds is running at a record pace of transformed themselves. They have rebalanced €183.7 billion, according to Dealogic, as the EU their lending towards individuals rather than Central Bank’s quantitative easing policy has corporations; they have also turned to fees and driven interest rates sharply lower, pulling $2 commission from mediating in open financial trillion of government bond yields into negative markets, rather than earning interest from territory.

11 outright lending. Thus, banks have added The Franco-German document also investment banking to their usual commercial mentions the need to “look at the institutional banking activities. and political framework, the common tools and Thirdly, workers have been driven into the the legal bases that would be pertinent in the financial system. Real wages have been longer term”—meaning that changes to the stagnant or falling in mature capitalist countries treaties could be considered in future. France for decades. Public provision in pensions, and Germany say they will present an housing, education, health and so on has additional joint contribution on this issue “by retreated, forcing people to seek private the end of 2016.” provision, which is typically mediated by banks The joint paper could also have serious and other financial institutions. Attitudes to implications for the Irish economy, as it names debt and to private financial gain have also tax as one of the areas where there could be changed, encouraging workers to borrow as greater convergence in the years ahead. well as to get caught in housing bubbles. The initiative would close the door on the These developments, which have been renegotiation of treaties, reflecting resistance correctly characterised as “financialisation,” among EU officials and diplomats in Brussels to have been far from a spontaneous or natural unpicking the treaties, according to the reports. development of economy and society: they The British prime minister, David Cameron, have relied on state-sponsored financial says he does not want the euro zone to develop deregulation as well as on the retreat of public deeper ties, because he fears it would leave provision from welfare and popular Britain as a second-class member of the union. consumption. They would prefer the emphasis to be on a Measures to reverse financialisation are in common market rather than on political issues. the immediate interests of society as a whole. He will present his demands to the summit meeting on 25 June and ask for support to France and Germany call the shots achieve his aims; but the latest development between France and Germany—which are essentially the motor of the EU—is likely to dash his hopes. The EU Commission reportedly held an orientation debate on corporate taxation on 27 May as part of its tax policy agenda, with a view to submitting concrete proposals on corporate taxation before heads of state and government at the summit meeting on 25 and 26 June. Subjects for discussion include a plan to create The French daily Le Monde reported on 26 May a basic rate of corporation tax throughout the that France and Germany propose moving EU, the German business newspaper forward with euro-zone integration “in four Handelsblatt has reported. “Germany and areas of action that should be developed within France are demanding a minimum threshold the framework of the current [EU] treaties over value; we are reacting to that,” one the coming years.” The four areas are economic Commission source told the paper. policy; economic, tax and social convergence; financial stability and investment; and the So there seems to be a firm commitment by reinforcement of euro-zone governance and Merkel and Hollande to complete plans for a institutional framework. more integrated euro zone.

12 Sources say that a meeting in Berlin, which Any measure to harmonise corporation will also include the president of the EU taxes would probably hit Ireland, the base of Commission, Jean-Claude Juncker, is “almost many transnational technology companies, certain” to cause tremors in a London which has a corporate tax rate of 12½ per cent. suspicious of a two-speed Europe dividing euro The European operations of Apple, Google and and non-euro states. Facebook are all based in Ireland. The paper agreed by the French president, France and Germany have called for the François Hollande, and German chancellor, harmonisation of corporation tax for several Angela Merkel, rules out any treaty changes at years. In 2011 Angela Merkel and Nicolas least until the end of 2016, virtually wiping out Sarkozy aimed to introduce a “competitiveness any hope Cameron may have of securing pact” among the seventeen countries of the significant EU reforms that would require such euro zone, including a more standardised changes. corporation tax rate, drawing opposition from Ireland. The Franco-German paper calls for four areas of action to be developed without the The beneficiaries would probably be France need for treaty changes, dealing with economic (which now has a basic rate of 33 per cent and and fiscal convergence, tax and social stability, a higher rate of 36.6 per cent), Germany investment, and the governance of the euro (between 30 and 33 per cent), and Spain (30 zone. per cent). While the aims are much less ambitious The plan is a direct challenge to David than in previous years at the height of the Cameron, who is calling for sovereignty to be crisis, they do not envisage the return of returned to EU members. Britain is prepared to powers to member-states, as demanded by veto any proposals that see it surrendering Cameron and without which he has threatened power over tax rates to Brussels. to campaign for a No vote in the planned referendum. Being in the right place at the right time The EU Central Bank is no longer giving advance EU again considers plan to harmonise copies of speeches to the media; but private corporate tax briefings for representatives of business will continue. The bank’s announcements move markets, in which traders can make a profit if they beat competitors by fractions of a second. The ECB used to send its speeches to select journalists from the nineteen euro-zone states an hour before publication, under embargo. The EU is considering pushing ahead with plans But since 20 May everyone will see them at the for a “common consolidated corporate tax same time on its web site, or hear them at the base”—a first step in the harmonisation of same time if they go to a public event. corporate tax. The plan seems to have support The decision comes after an embarrassing from the Commission as well as from the incident in London on 18 May. A member of the governments of France and Germany. The two Executive Board of the ECB, Benoît Cœuré, gave countries are pushing a proposal to introduce a a speech to an invitation-only meeting of minimum corporation tax rate throughout the bankers and hedge-fund managers, including EU.

13 Brevan Howard, Goldman Sachs, and Citi, at the how often animals are transported across Imperial College Business School, in which he national borders as they are mass-produced, said that the ECB will accelerate the buying of fattened and slaughtered they might choose government bonds. The euro dropped in value “born, raised and slaughtered in the USA.” at the same time as he spoke, showing that In 2008 alone the American meat industry people in the room had used the information. spent more than $6 million in political lobbying. Journalists were not invited but instead got It spent more than $5 million per year from the text thirteen hours later, Reuters reports, 2009 to 2012, the period in which the United under the old one-hour embargo. When the States was revising country-of-origin labelling news came out, the euro moved again. to make it compliant with the WTO since the A spokesperson for the ECB denied that United States had lost its first appeal there. there was any connection between the Cœuré In fact the American meat industry has incident and the new arrangements. been fighting hard against country-of-origin labelling for more than a decade, since it was EU figures show tenfold wealth gap first passed in the Farm Security and Rural People in inner London, the EU’s wealthiest Investment Act (2002). In spite of the huge region, are ten times richer in terms of GDP per amounts spent by Big Meat, Congress has not capita than people in Severozapaden in repealed this act, because of overwhelming Bulgaria, the bloc’s poorest region, new figures public support for country-of-origin labelling: from the EU Commission show. Brussels, home 90 per cent of American people support such a to some 100,000 internationals, including measure, according to Consumer Reports. members of the EU staff, is the third-richest, Needless to say, civil society, including and twice as rich as most of Belgium. farming, consumer, labour and other organisations, won’t sit quietly. But the fact is A warning from across the Atlantic that the United States has to change country- On 8 May, President Obama told a crowd in of-origin labelling or face trade sanctions Oregon: “No trade agreement is going to force (though how significant these would be is not us to change our laws.” clear). The Office of the US Trade Representative has already said it will Twelve days later the House of encourage Congress to revise country-of-origin Representatives Agriculture Committee voted labelling. by 38 to 6 to repeal in its entirety country-of- origin labelling for beef, pork and poultry. The vote came in response to a ruling on 18 May by the World Trade Organization that the United States had violated global trade rules by requiring supermarket labels on beef and pork to state where livestock was born, raised, and slaughtered. The American meat industry is elated. In 2008 Canada and Mexico challenged the United States on country-of-origin labelling at the WTO, asserting that it unfairly discriminated against Canadian and Mexican meat. In reality it was the global meat industry, threatened by the idea that if shoppers knew

14 The ruling means a much more serious country-of-origin labelling regime as well. attack on the future of America’s food system. In the United States, food and farming In the last two years seventy bills have been groups are becoming vocal about trade policy introduced in thirty American states that would undermining food policy through the fight on require the mandatory labelling of genetically “fast track” to decide whether Congress gets to engineered food. American people also intervene in trade negotiations and influence overwhelmingly support GE labelling. them or simply to vote Yes or No after they Not surprisingly, agribusiness has also have been completed. ramped up spending on lobbying on this issue. Country-of-origin labelling is a clear And, as with country-of-origin labelling, when reminder that in fact trade treaties can and do companies know that national lobbying won’t force countries to change their laws. That is be enough they use binding international trade why stopping “fast track” in the coming months rules, such as those being negotiated in the is also a win for democratising food policy. Trans-Pacific Partnership and the Transatlantic Trade and Investment Partnership to shape ■ With thanks to Public Citizen, the on-line food safety and environmental regulations. The voice of Global Trade Watch. TPP and TTIP are a new breed of trade treaties A note on “fast track” that specifically seek to harmonise national laws and regulations to enable greater corp- Fast track is an extreme and rarely used orate profit. So the WTO ruling has implications procedure created by President Richard Nixon for TTIP as well. to get around public debate and congressional control. The European Union also has country-of- origin labelling. In fact since 2002 the EU’s The fast-track system allows five hundred labelling scheme for beef requires “precise official and corporate US trade advisers to have information about where the animal was born access to the text of secret trade agreements and reared as well as the place of fattening, and to set the US trade agenda. slaughtering and cutting.” Moreover, the EU Under the Constitution of the United States, has expanded country-of-origin labelling. Since Congress is supposed to write the laws and set April 2015 it requires origin labelling on fresh, trade policy. chilled and frozen pork, sheep, goat and For two hundred years these “checks and poultry meat. In addition the EU Parliament balances” helped ensure that no one branch of also mandated the Commission to examine the government had too much power. But, possibility of extending mandatory labelling for beginning with Nixon, presidents have tried to meat used as an ingredient in processed food. seize those congressional powers, using the So far the EU’s labelling regime has fast-track mechanism. remained unchallenged at the WTO. But now Fast track has been used sixteen times, that the United States has seen its country-of- often to enact the most controversial of “trade” origin labelling struck down, it’s hard to see agreements, such as the North American Free why it would accept such labelling in other Trade Agreement and the establishment of the WTO member-countries without a trade World Trade Organization. challenge. Moreover, given that agribusiness on both sides of the Atlantic is on the offensive to Fast track lets the executive branch control weaken food safety rules in TTIP, country-of- Congress’s voting schedule. origin labelling could also become a crucial Unlike other legislation, both the House of issue for “regulatory harmonisation” in that Representatives and the are required to trade deal, signifying a possible end to the EU’s vote on a fast-tracked trade agreement within

15 ninety days of the president submitting it. No existing environmental and economic impact amendments from the floor are allowed, and assessments now required for US regulation. debate is limited. New regulations would also have to go for As a candidate, Barack Obama said he further review at the US Office of Management would replace this anti-democratic process. and Budget, which would be a point agency for Now he has got Congress to grant him fast a new EU-US Regulatory Council. This would track’s extraordinary authority—in part to try create a new bureaucratic layer at a time when to overcome growing public and congressional many people feel there is too much opposition to his controversial TTIP deal. bureaucracy. It is also duplicative: existing economic impact statements should already Congress has now given away its right to include trade impact if relevant. amend international trade deals for the next five years, and limited the legislature’s Recent experience with the OMB in influence to a yes-no vote. developing regulations implementing the Food Safety Modernization Act—passed because of Health services in TTIP deaths from the eating of contaminated peanut butter and spinach—does not bode well for The EU’s negotiating team for pharmaceuticals, these proposals. After this act was passed, the medical devices and cosmetics in the Food and Drugs Administration developed Transatlantic Trade and Investment Partnership implementing regulations in about a year. met representatives of civil-society organis- However, the OMB then held them up for an ations in Brussels on 27 May to defend the additional two years while it reconsidered their inclusion of health services in the ninth round economic impact. of negotiations, which took place in Washington in April. Now TTIP would create yet another body, an EU-US Regulatory Council, to review what The inclusion of a chapter on health the FDA is doing after the OMB is finished. This services in TTIP has triggered heated reactions is a blueprint for paralysis. from health NGOs and trade unions, which are wary of American-style “liberalisation.” It also seems that the EU has proposed that Consumer organisations are greatly concerned in future the EU and the United States should about proposals on regulatory co-operation, agree always to adopt the food safety which seem in many ways to be designed to standards of the Codex Alimentarius paralyse the work of existing consumer and Commission, a UN body that sets international environmental agencies. standards for pesticide residues, contaminants such as arsenic and aflatoxin, additives, food labelling, dietary supplements, and standards of identity for products like fish sticks. Codex standards are ultimately established by its Commission, where its 185 member-countries vote, on the basis of one country one vote. A frequently heard mantra of these trade negotiations is that both the EU and the United States have high standards of consumer and environmental protection—so, the implication is, it doesn’t matter whose standards are Proposals have been floated to require applied, it’s all good. But this generalisation trade impact assessments, in addition to the cannot bear close scrutiny. Everything isn’t just fine all the time. In the United States thousands

16 of General Motors cars have been recalled this cultures and conditions are not identical. year for safety defects, some of which killed We cannot pursue mutual recognition or drivers. There are some 48 million cases of equivalence willy-nilly, and we shouldn’t illness and three thousand deaths every year develop an agreement that in any way might from food-borne contaminants. require European countries to take faulty The American and European regulatory General Motors cars, or to stop labelling systems are impressive, but they are not genetically engineered crops, or that might perfect, nor are they interchangeable, and our result in unlabelled horse meat.

People’s Movement · 25 Shanowen Crescent · Dublin 9 · www.people.ie 087 2308330 · [email protected]

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