How free is free trade? On CETA, TTIP, and other false promises

Regina Kreide is Professor of Political Theory and History of Ideas at the Institute of Political Science, Justus Liebig University, Giessen. This guest post is Part 3 of a special series on TTIP that we’re running this summer.

Lines of social conflict are no longer configured in terms of “more state” or “less state”. Opinions differ as to how open or closed our societies ought to be. The same holds not just for matters of immigration, but also for economic and financial-political developments. But does opening economic borders lead to greater “plenty” for all? What, for that matter, does “open” mean in this context? Counter to commonplace views of free-trade agreements, a closer look makes one thing clear, above all: economic “globalization” does not create prosperity for the many. More still, the term is in no way synonymous with an open society or open economic borders. The contrary is true. The example of water supply shows that free trade agreements such as the CETA and the TTIP lead to economic foreclosure and to the bypassing of existing international law. It is “open” – like a one-way street – only for massive incroachments on our societal order.

To get a better idea of what free-trade agreements really have provoked so far, let’s have a brief look at one already in existence. Research has (amply) confirmed that the NAFTA – concluded between the United States, Canada, and Mexico in 1994 – has not created the 5.9 million new jobs that President Bill Clinton promised. There is only disagreement about the number of jobs that have left the United States since then. According to former German supreme court judge Siegfried Bross, the reason is the massive exodus of businesses to Latin America and to the states formerly belonging to the Eastern bloc. The result was not an economic upswing, but rather wage dumping elsewhere – meanwhile, economic spheres in the free-trade zone are atrophying wholesale.

Still, one might think, economically weaker countries benefit from free trade. But this is not the case, either. Free trade means “free” trade within the appointed economic zone. Indeed, this is the whole point: products manufactured within this economic zone are not subject to tariffs, while import duties or tariffs are levied on products from the outside. In most instances, countries in the South are left out, cap in hand. Once again, the NAFTA provides a good example: raw cotton is admitted to NAFTA-countries without import tariffs only when it comes from the United States — but here, it is subsidized and thus its price is lower. The TTIP will close borders that the WTO and other multilateral agreements have tried to open.

Likewise, it is mistaken to believe that there are advantages “for the inside” (if nothing else). In contrast to multilateral agreements encompassing the whole world – such as the United Nations, or, one level below, the WTO, the IMF, and the World Bank – the TTIP and related endeavours create bilateral agreements. This means that new, juridically partial identities emerge, which make accords and co-ordinated efforts extremely difficult within standing regulatory frameworks (Bross 2015). One problem, then, is that the states in the European Union will not be equal partners with the same contractual conditions in relations between different countries.

The increased complexity of international law, though clearly desired, is one problem, yet it is not decisive. If the WTO already represents a trade agreement that makes market access significantly easier, what is the point of the TTIP and the CETA? The added value can only be a matter of augmented liberalization of trade. What does this look like? Until now, trade agreements have been created exclusively in order to prevent discrimination and guarantee market access, in as far as tariffs are concerned. Thus, tariffs no longer play a significant role for the countries of the North. Today, the obstacles to commerce are domestic regulations to be eliminated or adjusted. As such, the programme does not simply call for the removal of “external” trade barriers. Instead, it is a matter of far-reaching socio-poliltical interventions. Removing impediments is not stand the issue here – re-defining social relations is, however.

Christian Tietje, an expert on international trade law, has spoken of regulation that spills over, and, in so doing, hollows out the principle of democracy [1]. Economic interests exercise a marked influence on the legistlation of signatory states by way of lobby groups and experts. Water is a prime example. Although the European Commission has declared that water supply does not represent an object of the TTIP negotiations, provisions for water and sewage are not explicitly contained in documents – despite requests from the European Parliament. The CETA and the TTIP, then, exercise a superordinate legal power. All organizational structures in water management, in as much as they are publicly-owned, stand to be affected. To prevent this from occurring, water and sewage management would need to be exempted from the treaty. But this – according to the Allianz der öffentlichen Wasserwirtschaft, among others – is not the case. So-called negative lists, a new component of the CETA and the TTIP, indicate that services for which no market access is to be provided must be specified explicitly. Although this sounds good, it leaves a great deal of room for interpretation on the part of courts – which would allow the privatization of water “through the back door” later on, say, by forbidding the re-municipalization of water management or declaring it mandatory to allow bidding on certain services in this sphere. Were this to happen, democratic legislation to keep water as a public service would come to nothing; what was previously a communal good would be turned into a commodity.

As planned, free-trade agreements are “free” in one respect, above all: they permit basic social conditions to be drastically altered. Once treaties are in place, borders are open for commercial enterprises, which have the power to interpret what is a public asset and what counts as a commodity. If this is the case, however, the political freedom of citizens is nothing but the promise of a bygone age.

[1] Tietje, Christian, “Lassen wir so etwas ins europäische Haus?” Frankfurter Allgemeine Zeitung, Nr. 49, 27. February 2015, p. 12.