Can an ‘open relationship’ work after divorce?
By Laura Bannister, Senior Adviser on EU-UK Trade at the Trade Justice Movement (TJM).
Beyond Deal or No Deal lurks the ‘future relationship’, which is likely to contain a trade agreement. We should look now at what that means for our NHS, environment and rights.
The risk of No Deal is rightly dominating the headlines, but what if Boris Johnson does get us through the divorce on speaking terms? Despite efforts to look distinctive, the plan is in fact the same as ever: to establish a new relationship between the UK and EU using a free trade agreement (FTA).
While surely better than No Deal, this free trade agreement could reach into areas of our lives we think of as distant from ‘trade’, like the way that NHS services are provided and the protection of our rights and environment. If we do manage to limp through as far as Transition, we will have just two years to get this deal signed. We therefore need to look now at what this deal could contain, and what we want to demand from it.
The EU-UK free trade deal appears to hold promise as the best of both worlds, like some kind of ‘open relationship’ that holds onto our closeness with the EU while allowing us to flirt with exciting new trade partners.
Open relationships involve reframing the nature of the partnership. In the case of the UK and EU, reframing the partnership through a free trade deal is likely to strip out the deeper social goals inherent in EU membership and funnel our cooperation through a ‘free trade’ filter. This raises three key problems.
This first problem is that there are specific features that crop up in some free trade agreements that are not part of the rules that bind together EU members. These features pose major new risks, including the locking in of privatisation, the weakening of regulation, and the potential for corporate lawsuits against the public purse.
For example, ‘ratchet’ clauses in the Services chapter of FTAs mean that there is no going back once you privatise your public services. In the Digital Trade section, a ban on ‘source code disclosure requirements’ could stop regulators from checking that software used for visa or benefit decisions is free from race and gender discrimination. Free trade agreements can also establish a special court system called ISDS that can be used only by foreign investors and gives them a fast-track to sue governments over rule changes they dislike. This has been used to challenge important and popular policy changes like a fracking moratorium in Quebec, a tax on sugary drinks in Mexico and an increase to the minimum wage in Egypt.
None of these features exist in internal EU law, but they are all found in EU trade deals with other countries. It is very likely they will be included in an EU-UK trade deal, unless we can mobilise strongly to demand a different kind of relationship.
The second problem is that trade deals create binding international law that prioritises trade over all other objectives such as climate justice and public health. Rules requiring companies to use local suppliers or to maintain high animal welfare standards can be considered ‘barriers to trade’ as they can make it more complex for overseas companies to do business. Trade deals contain ‘necessity tests’ that say these rules should be ‘no more onerous than necessary’. These necessity tests, as well as outright bans on local content rules and the risk of ISDS court cases and trade sanctions, put pressure on governments to only make laws that multinational companies will accept, even if there is strong democratic demand for improvements.
These pressures already exist to some degree within the EU’s single market, but they are balanced out by strong EU laws on labour, environment and product standards, as well as overarching social goals and principles embedded in the EU’s founding treaties. A free trade deal lacks these counterbalancing forces, so the pressure on regulation may be more directly downwards. The EU is keen to maintain a ‘level playing field’ with the UK, so measures might be put in place to prevent this deregulatory shift. However, we still need need to keep a close eye on the proposed content of the EU-UK deal to ensure that harmful ‘free trade’-style measures are excluded.
The third problem with framing the UK’s relationship with the EU as a free trade deal is that the UK’s process for making trade deals is deeply undemocratic, so we could get little to no say over what is included and whether the deal is signed at all. Earlier this year the Trade Justice Movement and a wide range of partner organisations won major amendments to the Trade Bill that would have changed this, but the government has mothballed the draft legislation. This is both ironic and shameful given that a major reason for leaving the EU was a wish for more democratic control. MPs have managed to secure some control for themselves over the Brexit process which could involve the content of an EU-UK free trade deal, but this is far from certain given attempts by the new government to exclude parliament from decision-making.
These three problems - a lack of trade democracy, excessive free trade focus, and the specific risky features of FTAs - would be a poor basis for our new open relationship with the EU. If remaining in the EU becomes truly out of the question, we need to be ready to push the government towards a better kind of partnership that is structured around something deeper and more meaningful than just free trade.
The time is now to reinvent international cooperation on trade, regulation and the many other areas covered by trade deals. Members and partners of the Trade Justice Movement and progressive politicians are working to push out the high-risk elements from our future trade deal, and create this new positive vision. Broad public support and significant political will be needed to make this redefined EU-UK open relationship flourish.
Laura Bannister is Senior Adviser on EU-UK Trade at the Trade Justice Movement (TJM). The Trade Justice Movement is a coalition of sixty civil society organisations calling for trade rules that work for people and planet.
This blog does not necessarily reflect the views of the Alliance or individual members.