Last updated: October 2015
Public Services, privatisation and TTIP, the EU-US trade deal
Linda Kaucher, long-term researcher and campaigner on the EU's secretive international trade agreement programme, explains what TTIP means for our public services.
There is justified concern that privatising public services, which inherently shifts the priority to shareholder dividends, is not best value either for the public purse or for optimal quality of services. Now the proposed EU-US free trade agreement, the Transatlantic Trade and Investment Partnership (TTIP), brings another dimension to this concern. As part of the agreement, the privatisations of public services, in whatever form, could become effectively irreversible.
As with all EU bilateral trade deals, the intention is for TTIP negotiations and texts to remain secret until the deal is completed, despite the fact that the deal affects 850 million people. Information is coming for the most part from leaked documents.
image source: healtheconomists.blogspot.com
What are public services and are they protected in TTIP?
There is no clear definition of public services, although our concerns about what is happening to them are real. For the most part our public services are a triumph of the post-World War II generation and the NHS is the jewel. MPs and MEPs have been responding to public concerns about public services and TTIP by asserting that services are protected in the deal.
Here’s why they are not:
‘Public services’ is not a term used in the international trade arena. The World Trade Organization defines that only ‘services supplied in the exercise of government authority’ and only on a noncommercial basis and not in competition with other suppliers, are exempt from trade liberalisation. This narrow definition, with narrow protection, is used in trade deals such as TTIP. With so many elements of our public services now open to commercialisation, any attempt to use this exemption – even if the political will existed – would clearly be subject to challenge.
Within the EU, the Lisbon Treaty divides ‘services of general interest’, – its term for public services – between ‘services of general economic interest’ i.e. essentially commercial, and ‘noneconomic services of general interest’. The latter are protected but are very few, for example, judicial services. The former, clearly potentially commercial, is almost everything including health.
Public services in ‘trade’ agreements
Public services are part of wider ‘public procurement’ or ‘government procurement’, which is all government spending at all government levels. In trade negotiating, public services are not separated from services generally.
When access to bidding is opened transnationally, big corporations – with political influence, economies of scale, and access to credit and cheap labour – tend to win contracts and other investment opportunities. See how Veolia handles waste globally, G4S handles ‘security’ globally and a handful of water companies have most of the water supply market globally.
The drive to privatise public services, and for international trade agreements which include corporate access to public spending, comes largely from the transnational financial services industry, for which the City of London Corporation is the global powerhouse. TheCityUK, the Corporation’s lobbying mechanism, ensures that such policies are enacted domestically in the UK and at EU level through UK input into EU trade policy, in a process which bypasses Parliament and the public. 1
What’s the nature of TTIP's threat?
The international trade agenda is about ‘liberalisation’, that is removing ‘trade barriers’. With trade-in-goods, liberalisation means reducing import tariffs (taxes) when goods are moved across borders.
With trade-in-services, which is everything else including public services, ‘liberalisation’ means opening investment opportunities to transnational firms, keeping them open, and giving rights to transnational investors.
The UK liberalises everything unilaterally even without trade agreements; with them, the commitment to keep the services liberalised is locked in. And inherently, the privatisations underpinning the liberalisation commitments also become effectively permanent.
Three aspects of the TTIP make this agreement especially dangerous, in addition to its magnitude (covering the world’s two biggest economies) and its comprehensive nature (David Cameron has said that ‘everything is on the table’).
Firstly, the central part of this agreement is the intention to ‘harmonise’ the regulation of the US and of the EU to suit the transnational corporations that are driving the deal.
This will inevitably mean downward pressure on the EU’s higher health and safety standards, for example, on food and chemicals, as well as on US recently-developed financial services regulations. An ongoing Regulatory Co-operation Council, with big business involvement from the earliest stages of all new regulation, is the most secretive aspect.
Any harmonising of EU public service models with those of the US must mean increasingly privatised, commercialised and degraded services. With the passing of the Health and Social Care Act (2012), the NHS has already been harmonised with the US corporate-benefit public health care model.
Secondly, all aspects of TTIP will be backed up by ‘investor-state dispute settlement’ (ISDS). This will allow transnational corporations to sue governments for any action that could negatively affect their future profits – such as reversal of the H&SC Act. ISDS cases in other agreements around the world are resulting in big public-purse pay-outs to corporations, or are having a ‘chilling effect’, with regulators afraid to regulate for fear of being sued.
A third, particularly dangerous aspect of TTIP, is the way in which services will be committed to the agreement. With the World Trade Organisation and previous EU bilateral agreements, services to be included were named – ‘positive listing’. However, TTIP will have ‘negative listing’, meaning only exceptions will be listed with no further exceptions after the deal is signed. Negative listing is much more coercive and, alongside ISDS, will serve to prevent renationalising in the future.
What action is needed on TTIP?
With public services, we already have an uphill battle against our own politicians to keep public provision of public services. That is the most democratic and, notably in the NHS, the most efficient use of public money.
The EU single market mechanism forces open public procurement within the EU: a forerunner to TTIP and global opening. But a lot of action is happening, and trade agreements have been defeated.
Joined-up civil society campaigning across the EU and the US is challenging a number of aspects of TTIP:
- The ISDS bias in favour of US investors
- Showing how the claimed ‘huge gains’ of TTIP are actually minimal.
- Highlighting the disconnect between supposed harmonisation gains while the European Commission is reassuring citizens that there will be no loss of standards i.e. no harmonisation
- Revealing that the institution that produced the main ‘independent’ study is backed by central banks.
In the UK there is, in parallel, both a strong call for an exemption for the NHS, including from ISDS, and for TTIP negotiations to stop. These are not contradictory. While safeguards for the NHS are needed in case TTIP does go through, TTIP must also be opposed in case there is no exemption. Calling for an NHS exemption has raised a lot of awareness about TTIP which may not have happened otherwise, and it is worth pursuing. It is for us to insist that we want a broad exemption for the NHS: it is then the job of politicians and bureaucrats to work out how to achieve it.
The French government got an ‘exception’ from TTIP for its film industry but only by threatening to veto the entire deal. An NHS exemption would require public pressure on David Cameron to overcome the demands of his financial service masters and pursue an exemption at the EU level. It will certainly require a strong demand from the leadership of the Labour opposition. At present this is only in an obscure form from Shadow Health Secretary Andy Burnham.
So MPs, the leadership of Labour, Conservative and Lib Dem parties are the campaign targets, as well as the new cohort of MEPs.
The European Trade Union Committee on Education is calling for an exemption for education. For any organisations calling for exemptions or other changes to TTIP, the only logical stance is to set a deadline, with complete opposition to the TTIP if changes are not forthcoming.
Negative listing of services must be rejected so that we can see what is being offered up for sale. This requires the negotiating texts to be made public. The call for this from a wide range of civil society organisations is now very strong. TTIP is especially a responsibility for citizens in the UK, because the City of London’s role in pressuring for this agenda internationally.
Awareness about TTIP and the trade agenda is the key to countering the secrecy, the supposed technicality and the spin that allow this agenda to go forward. ‘Trade literacy’ is growing. Spreading awareness of how TTIP is intended to work, for instance with public meetings and informed speakers, is solid resistance to this corporate grab. Such action will create strong building blocks for an eventual change of direction and a reassertion of people power over the public services that people have created and own.
1 In TheCityUK’s Liberalisation of Trade in Services committee (LOTIS) top executives from global banks, insurance companies and the Big 4 audit companies instruct Business Department bureaucrats on what message to take to Trade Policy Committee meetings in Brussels.