[CTC] Some Trade Deals on Hold after Trump¹s Election, but Danger Lurks in the Lesser-Known Trade in Services Agreement (TiSA)

Mon Nov 28 23:47:45 PST 2016

   Some Trade Deals on Hold after Trump¹s Election, but Danger Lurks in the
Lesser-Known 
Trade in Services Agreement (TiSA)

November 28, 2016 by Deborah James
http://www.huffingtonpost.com/deborah-james/some-trade-deals-on-hold_b_13282
998.html

Fair Traders who are celebrating the defeat of the Trans-Pacific Partnership
(TPP) may see their hard work undone if the talks towards the proposed Trade
in Services Agreement (TiSA) continue under a Trump administration.

Many Democrats who minimized the importance of the negative impacts of
corporate trade deals on working class Americans have now paid the price in
the recent elections. As my colleagues at the Center for Economic and Policy
Research <http://cepr.net/>  have pointed out, racists and xenophobes were
always going to vote for Trump but the key
<http://thehill.com/blogs/pundits-blog/economy-budget/305330-dems-need-alter
native-to-four-decades-of-neoliberal-failure> voters the Democrats were
counting on that they lost were largely
<http://thehill.com/blogs/pundits-blog/economy-budget/305330-dems-need-alter
native-to-four-decades-of-neoliberal-failure> working class voters
<http://thehill.com/blogs/pundits-blog/economy-budget/305330-dems-need-alter
native-to-four-decades-of-neoliberal-failure> , many of them union members,
in states hit hard by trade deals (supported by both parties) that put
working class people in competition with lower-income manufacturing workers
in other countries while
<http://cepr.net/blogs/beat-the-press/the-high-price-of-the-trans-pacific-pa
rtnership> preserving protections for intellectual property-holders and high
income professions 
<http://cepr.net/blogs/beat-the-press/the-high-price-of-the-trans-pacific-pa
rtnership> .

While these working class voters may have voted against their economic
interests in terms of workers¹ rights, social security, work/life balance,
and other pro-worker provisions in the Democratic platform, they were right
that both parties have become too aligned with corporate interests ‹ and
trade agreements is one of several instances where that is the case.

It is yet to be seen how or if President-elect Trump will make good on his
pledges on trade to these voters, but in the initial preview of his first
days in office, he has promised to withdraw from the TPP. Likewise the talks
with the EU on a Transatlantic Trade and Investment Partnership (TTIP) are
on hold. In the EU, the EU-Canada agreement, known as CETA, is in limbo
while the European Court of Justice decides whether the dispute settlement
mechanism in the agreement complies with EU law.

Fair trade advocates are rightly celebrating
<https://medium.com/@citizenstrade/no-trump-didnt-kill-the-tpp-progressives-
did-884b534542d#.3bf4r7bsa> important victories and noting that, thanks to
successful grassroots campaigning
<https://medium.com/@citizenstrade/no-trump-didnt-kill-the-tpp-progressives-
did-884b534542d#.9t1tyew2w> , President Obama did not ever have the votes to
send the TPP to Congress for approval, and won¹t be able to do so in the
lame duck session as he had originally intended.

Unfortunately there is still a corporate trade agreement under negotiation
that has so far received scant attention: the proposed Trade in Services
Agreement (TiSA). Trump has not commented about the TiSA, so we really don¹t
know his views. But there are three reasons why we¹re not ³out of the woods²
with the TiSA, and why the TiSA isn¹t in the same category as the TPP and
TTIP for now, despite media reports that the deal is on hold until US
negotiators get new instructions:

1. Trump is not against corporate-driven trade agreements; he has said that
he thinks US negotiators did a bad job negotiating and that they¹ve gotten
bad deals, and that he¹s going to renegotiate and get good deals. So he
could very well take up the TiSA as an agreement that¹s still under
negotiation, put his stamp on it, and then claim that ³this is what happens
when you negotiate a good agreement!² And you can bet that the corporations
are doing their best to talk with him now about doing this, because they are
not going to abandon the project when he has yet to state his position.

2. The TiSA is about locking in further deregulation and privatization, and
Trump loves deregulation and privatization.

3. The TiSA is focused on services, so it may not speak to the working class
in his base in the same way that agreements that result in the transfer of
manufacturing jobs to low-wage, worker-unfriendly countries like Vietnam do.

Thus, there is an urgent need in the United States to not only ensure that
Trump does not take up a re-packaged TPP or TTIP (and possibly negotiate an
even worse deal for ordinary citizens), but also to use the short window of
time before he announces his opinion on the deal to ensure that the TiSA is
permanently sidelined as well.

However, it¹s important not to think of TiSA as ³only about services.² Now
that nearly every chapter of the agreement has been
<https://www.wikileaks.org/tisa> leaked <https://www.wikileaks.org/tisa> , a
more complete picture has emerged: that the TiSA is fundamentally an
offshoring and outsourcing charter.* The TiSA is intended to lock in a
system of rules to allow multinational companies to operate in a borderless
digitized environment with minimal regulation and maximum rights regarding
the treatment of labor, capital, inputs, and the new key element of data. As
promoted by the multinational financial, logistics, and big data
corporations through Team TiSA <https://www.teamtisa.org> , the agreement
would set severe limits on the ways that governments can regulate domestic
economies, removing key tools of economic management and the ability to
shape the service economy while providing an extensive corporate bill of
rights for multinational companies¹ operations across the globe. Given the
shift in employment patterns from high-paying manufacturing jobs to low-wage
services jobs, and given the potential offshorability of millions more
services jobs, the danger posed by TiSA is daunting.

Here are ten ways that the TiSA could fundamentally affect jobs and the
labor market, based on provisions in the leaked texts, some of which have
been accepted by all parties and some of which are under negotiation.

1. Companies are expanding the category of ³services² in order to make it
all-encompassing. Corporations no longer consider setting up a plant and
producing goods to be simply ³manufacturing goods.² This activity is now is
broken down into research and development services, design services, legal
services, real estate services, architecture services, engineering services,
construction services, energy services, employment contracting services,
consulting services, manufacturing services, adult education services,
payroll services, maintenance services, refuse disposal services,
warehousing services, data management services, telecommunications services,
audiovisual services, banking services, accounting services, insurance
services, transportation services, distribution services, marketing
services, retail services, postal and expedited delivery services, and
after-sales servicing, to name a few. Going further, a shoe or watch that
measures steps or sleep could be a fitness monitoring service, not a good. A
driverless car could be a transport service, not an automobile. Google and
Facebook could be information services and communication services,
respectively.

2. Offshoring and outsourcing of jobs and downward pressure on wages could
greatly accelerate as TiSA would lock in labor, tax, and regulatory
arbitrage through rules that would allow corporations to transfer capital,
inputs, workers, and data across borders without consumer, privacy, or labor
protections so that they can enjoy the seamless global operations of all of
the above services in whichever country provided the cheapest labor, least
regulation, and lowest taxes. Note that the services classification list
<https://www.wto.org/english/tratop_e/serv_e/mtn_gns_w_120_e.doc>  [DOC]
being used in the TiSA includes 120 subsectors, many of which are
professional categories like those listed above, that have heretofore been
protected from past trade deals.

3. Not only would TiSA promote offshoring of jobs, but it would also greatly
expand domestic ³inshoring². Foreign contractors (say from Japan) would be
able to bring in workers (say from the Philippines) to conduct work inside a
consumer country (say the United States) on terms and conditions well below
minimum local pay and local standards. The workers would not even have to be
from a TiSA country. The Mode 4 Annex
<https://wikileaks.org/tisa/analysis/Analysis-of-20150408_Annex-on-Movement-
of-Natural-Persons/> in TISA would make many employees or workers mere
³independent service contractors.² As they wouldn¹t be considered formal
employees, the migrant workers would not benefit from the protection of
labor laws in the host country, their employment contracts being governed
instead by default contract laws. The question then remains, which labor
laws will apply? Labor lawyer Tony Salvador has noted: ³If it is alleged
that the labor laws of the [workers¹] home country applies, it would be
practically impossible to assert their rights since they are working and are
based in the foreign country.²

4. The TiSA does not include a labor chapter, and in fact the draft texts
only mention labor rights once ‹ in one Annex supported only by one
developing country. Workers¹ rights provisions in past trade agreements have
been weak and unenforced, but the TiSA doesn¹t even meet this low bar, and
does not even reference the basic standards set forth by the International
Labor Organization (ILO). In addition, companies also would not be required
to have local directors or managers, or even a local presence, compounding
the inability to hold them accountable for misdeeds in labor (or other)
disputes under national laws. TiSA¹s standstill clause would constrain
governments from implementing new regulations, including labor laws, that
might negatively impact the conditions of competition of foreign firms
vis-a-vis domestic companies.

5. Preventing governments at the national, state, and even municipal levels
from supporting local businesses and local employment is a major focus of
the TiSA. Foreign services corporations would also not be required to hire
local staff, even though that is typically viewed as a major benefit of
allowing foreign services suppliers to operate in a country. Market access
rules proscribing economic needs tests, provisions requiring that foreign
companies operate under ³at least as favorable² conditions of competition as
domestic companies, and government procurement
<https://wikileaks.org/tisa/analysis/Analysis-of-201504_Annex-on-Government-
Procurement/>  rules opening up services contracts down to the penny to
foreign bidders would eviscerate any laws resembling ³buy local² or ³buy
American.² 

6. The principle of ³technological neutrality² which TiSA negotiators take
as a given would have immeasurable job impacts particularly with regard to
the ³gig² economy. This principle means that the rules being developed in
TiSA (which are not regulations, but constraints on regulating) would apply
to all new services regardless of the technological mechanism by which they
are being delivered. So if a country opened its market to passenger
transport services, it could not apply new and different rules to Uber than
to traditional taxicabs. Driverless cars, drone delivery, and other steps
towards automation would have to be regulated the same way as other
mechanisms of delivering a service. Given the speed of technological change,
locking out the possibility of developing different regulations for
different technologies is a serious usurpation of the role of the public
oversight over corporate practices and would massively impact millions of
jobs in these emerging sectors.

7. Job loss as a result of privatization would increase as publicly owned
utilities 
<https://wikileaks.org/tisa/analysis/Analysis-of-20151006_Annex-on-State-Own
ed-Enterprises/>  would have to compete under the same rules as private
companies, reducing the benefits of public ownership, resulting in the
elimination of jobs that inevitably follows privatization. The TiSA also
includes a ratchet clause, which would lock in existing and future
liberalization of services, making failed experiments in privatization of
education, health, water or electricity distribution, transportation, postal
delivery, garbage collection, or wastewater treatment irreversible.

8. The financial services text of the TiSA is the closest thing imaginable
to a guarantee of another job-killing financial crisis. If the draft texts
were accepted, the TiSA would constrain governments from implementing most
of the regulations that are recognized, both domestically and
internationally, as essential to prevent another global financial crisis
<https://wikileaks.org/tisa/analysis/Analysis-of-20150415_Annex-on-Financial
-Services/> . This includes, for example, rules against banning toxic
financial products and rules against establishing limits on the size of
banks; governments would forego any possibility of breaking up ³too big to
fail² systemically risky financial institutions.

9. Workers would have to shoulder even more of the tax burden as corporate
tax evasion would accelerate. Companies that supply a service would not be
required to have any physical local presence
<https://wikileaks.org/tisa/analysis/Analysis-of-20151001_New-provisions/> ,
making value addition even more difficult to pinpoint, facilitating tax
avoidance. The trend of companies moving headquarters to tax havens would
speed up, shifting the tax burden of maintaining schools, healthcare, and
infrastructure even more to workers.

10. The TiSA could potentially be used as the basis of a foreign company¹s
claim against the United States. The TiSA does not include the infamous
Investor to State Dispute Settlement (ISDS) mechanism by which private
foreign corporations can sue sovereign governments in private courts
(because the aim is to bring it back into the WTO). However, under the TiSA
an ³investor could also refer to the breach of TiSA rules as part of its
case that its Œlegitimate expectations¹ of fair and equitable treatment had
been violated ‹ an extremely open ended and unpredictable concept that
investors rely on most often to challenge government regulations and
decisions, even when they are made in the public interest,² according to the
analysis of the EU¹s
<https://wikileaks.org/tisa/analysis/201609_TiSA_Analysis-on-Dispute-Settlem
ent/201609_TiSA_Analysis-on-Dispute-Settlement.pdf> dispute settlement
proposal 
<https://wikileaks.org/tisa/analysis/201609_TiSA_Analysis-on-Dispute-Settlem
ent/201609_TiSA_Analysis-on-Dispute-Settlement.pdf>  in July of this year.

There are many other negative consequences of the proposed TiSA  for our
<https://wikileaks.org/tisa/analysis/Analysis-of-20151010_Annex-on-Domestic-
Regulation/> democracy
<https://wikileaks.org/tisa/analysis/Analysis-of-20151010_Annex-on-Domestic-
Regulation/> , the 
<http://www.world-psi.org/en/tisa-undermines-cop21-action-says-analysis-leak
ed-annex-energy> climate
<http://www.world-psi.org/en/tisa-undermines-cop21-action-says-analysis-leak
ed-annex-energy> , our
<http://www.world-psi.org/en/psi-special-report-tisa-versus-public-services>
public services 
<http://www.world-psi.org/en/psi-special-report-tisa-versus-public-services>
, global financial stability
<https://wikileaks.org/tisa/analysis/20161007_TiSA_Analysis-on-Financial-Ser
vices-Annex/> , and our
<https://www.eff.org/deeplinks/2016/10/tisa-proposes-new-global-rules-data-f
lows-and-safe-harbors> privacy and internet governance
<https://www.eff.org/deeplinks/2016/10/tisa-proposes-new-global-rules-data-f
lows-and-safe-harbors> , just to name a few.

But the labor implications have heretofore not been highlighted. At this
point they seem to be an open door through which to reach the
president-elect and his constituents, and to ensure that the increasing
servicification of the economy does not result in a disastrous future for
jobs, wages, and inequality in the United States.

Background Information on the TiSA

The TISA is currently being negotiated among 50 countries (or 23 parties,
counting the 28-member European Union as one) with the aim of extending the
coverage of scope of the existing General Agreement on Trade in Services
(GATS) in the World Trade Organization (WTO).

In addition to the 
<https://wikileaks.org/tisa/analysis/201609_TiSA_Analysis-on-Core-Text/>
core text 
<https://wikileaks.org/tisa/analysis/201609_TiSA_Analysis-on-Core-Text/> ,
it includes annexes setting forth specific disciplines with regard to either
government functions (domestic regulation
<https://wikileaks.org/tisa/analysis/Analysis-of-20151010_Annex-on-Domestic-
Regulation/> , transparency
<https://wikileaks.org/tisa/analysis/Analysis-of-20150422_Annex-on-Transpare
ncy/> , government procurement
<https://wikileaks.org/tisa/analysis/Analysis-of-201504_Annex-on-Government-
Procurement/> , state owned enterprises
<https://wikileaks.org/tisa/analysis/Analysis-of-20151006_Annex-on-State-Own
ed-Enterprises/> , localization
<https://wikileaks.org/tisa/analysis/20161007_TiSA_Analysis-on-Localisation-
Provisions/> ) or strategic sectors. The strategic sectors can best be
understood as giving corporations the right to move labor (through the Mode
4 
<https://wikileaks.org/tisa/analysis/Analysis-of-20150408_Annex-on-Movement-
of-Natural-Persons/>  and Professional Services
<https://wikileaks.org/tisa/document/20150213_Annex-on-Professional-Services
/>  annexes), capital (through the financial services annex
<https://wikileaks.org/tisa/analysis/20161007_TiSA_Analysis-on-Financial-Ser
vices-Annex/> ), inputs (annexes covering air
<https://wikileaks.org/tisa/analysis/Analysis-of-20150209_Annex-on-Air-Trans
port-Services/> , maritime
<https://wikileaks.org/tisa/analysis/Analysis-of-20150416_Annex-on-Internati
onal-Maritime-Transport-Services/> , and road transportation
<https://wikileaks.org/tisa/analysis/Analysis-of-20150730_Annex-on-Road-Frei
ght-and-Logistics-Services/> , energy
<http://www.world-psi.org/en/tisa-undermines-cop21-action-says-analysis-leak
ed-annex-energy> , telecommunications
<https://wikileaks.org/tisa/analysis/Analysis-of-201504_Annex-on-Telecommuni
cations-Services/> , and other services that all services companies rely
on), and data (the e-commerce annex
<https://wikileaks.org/tisa/analysis/Analysis-of-201505_Annex-on-Electronic-
Commerce/> ).  <https://www.wikileaks.org/tisa> All of these annexes and the
core text have been leaked <https://www.wikileaks.org/tisa> , sometimes in
multiple iterations which show the evolution of various countries¹ positions
over time, along with analysis of the implications of each of the texts
conducted by members of the global Our World Is Not for Sale (OWINFS)
network.

In addition, the TiSA includes the Schedule of Commitments for each member
country, in which parties set forth which sectors they are willing to commit
to the six market access disciplines and which sectors they are excluding
from the National Treatment disciplines.

I have written summaries of the implications of the leaked documents, on
<http://www.huffingtonpost.com/deborah-james/setting-the-record-straig_21_b_
7555862.html> domestic regulation, financial services, air and maritime
transportation, electronic commerce, transparency, telecommunications,
professional services, and the natural movement of persons (called ³Mode 4²)
<http://www.huffingtonpost.com/deborah-james/setting-the-record-straig_21_b_
7555862.html>  in June 2016; on financial services, telecommunications
services, electronic commerce, and maritime transport, as well as domestic
regulation, Mode 4, transparency, government procurement, and
<http://www.huffingtonpost.com/deborah-james/just-before-round-of-nego_b_771
5478.html> the Core Text
<http://www.huffingtonpost.com/deborah-james/just-before-round-of-nego_b_771
5478.html>  in July 2015; on
<http://www.huffingtonpost.com/deborah-james/climate-deception-non-bin_b_872
4014.html> energy services and environmental
<http://www.huffingtonpost.com/deborah-james/climate-deception-non-bin_b_872
4014.html>  services, in December 2015; on
<http://www.huffingtonpost.com/deborah-james/the-leaks-go-on-before-an_b_101
47030.html> state owned enterprises (SOEs), professional services, and
anti-localization provisions
<http://www.huffingtonpost.com/deborah-james/the-leaks-go-on-before-an_b_101
47030.html> , in May 2016; and on the
<http://www.huffingtonpost.com/deborah-james/as-deadline-looms-wikilea_b_124
91038.html> market access demands of the EU on developing countries
<http://www.huffingtonpost.com/deborah-james/as-deadline-looms-wikilea_b_124
91038.html>  in October 2016.

* I would like to thank University of Auckland law professor Jane Kelsey for
several of these insights.
________________________________________

Deborah James is the Director of International Programs of the Center for
Economy and Policy Research <http://www.cepr.net>  in Washington, DC. She
coordinates OWINFS, a global network of civil society groups working for a
sustainable, socially just, and democratic multilateral trading system.
Please see www.tisauncovered.org <http://www.tisauncovered.org> .

-------------- next part --------------
An HTML attachment was scrubbed...
URL: <http://lists.citizenstrade.org/pipermail/ctcfield-citizenstrade.org/attachments/20161128/7863e5b2/attachment-0001.htm>