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Tuesday 5th
posted by Morning Star in Features

Post-Brexit trade deals need proper democratic scrutiny before being passed, writes VINCE MILLS

THERE is an important motion currently before the Scottish Parliament which enjoys the support of Green, SNP and Labour MSPs, including leading left MSPs like Labour leader Richard Leonard, Neil Findlay and Elaine Smith.

It also has the backing of Trade Justice Scotland — a coalition of 27 trade unions, organisations and local activist groups campaigning against unjust trade deals. 

The motion demands, among other (good) things that “trade deals should not allow courts outside of the domestic legal system to grant special legal rights to corporations … and that public services should always be excluded from trade deals.”

With specific reference to Scotland, it argues that “there must be a formal role for the Scottish Parliament in the process of scrutinising and passing post-Brexit trade deals.”

There is likely to be intense resistance to such a demand from the Tories given that the Comprehensive Economic and Trade Agreement (Ceta) between the EU and Canada was almost killed off because of opposition from the Wallonia regional parliament, one of three regional parliaments in Belgium’s federal system.

That of course assumes that the Scottish Parliament would oppose such deals in the first place. 

This cannot be taken for granted. While the Scottish Labour Party has taken a firm anti-TTIP stance, for example, its MEPs have not and the SNP has been ambivalent to both Ceta and TTIP, so perhaps it is worth highlighting at this point the pernicious nature of such deals.

Undoubtedly the main but not the only concern about international trade deals is the investor-state dispute settlement (ISDS) embedded in these agreements. 

These allow multinational companies to sue governments whose policies damage their interests. 

Indeed, such was the opposition to the ISDS proposed in the Transatlantic Trade and Investment Partnership (TTIP) between the European Union and the United States that despite the alleged multimillion benefits to both sides (these have been contested) it had to be temporarily parked even before Donald Trump’s initial opposition. 

The history of the ISDS is the history of neocolonialism. Large corporations wanted to defend their investments in newly independent countries where there was a possibility of nationalisation or state sequestration.

It was a group of German businessmen, led by Deutsche Bank chairman Hermann Abs, in the late 1950s who developed what they called an “international magna carta” for private investors to protect their overseas investments in developing countries newly independent from the European colonial powers. 

In the 1960s, the idea was taken up by the World Bank, which said that such a system could help the world’s poorer countries attract foreign capital. 

“I am convinced,” the World Bank president George Woods said at the time, “that those … who adopt as their national policy a welcome [environment] for international investment — and that means, to mince no words about it, giving foreign investors a fair opportunity to make attractive profits — will achieve their development objectives more rapidly than those who do not.”

At the World Bank’s 1964 annual meeting in Tokyo, it approved a resolution to set up a mechanism for handling investor-state cases. 

A group of 21 countries — almost every Latin American country, plus Iraq and the Philippines — voted against the proposal in Tokyo, but it was passed despite the opposition arguing it would undermine their sovereignty. 

Have they acted, as the left suggests, to advance corporate interests? 

There are an estimated 3,200 such treaties in place and an increase recently in the number of actions being launched by companies against the governments which host their investments. 

Here are a few examples, from the many that could have been produced, on how it has been used to stop progressive measures in pursuit of profit.

In 2008 US-based Centurion Health Corporation claimed that its plans to establish private, fee-for-service health clinics in Vancouver, British Columbia, and Calgary, Alberta, were frustrated by various local and federal regulatory measures, in particular the Canada Health Act which forbids extra billing for publicly insured medical services. 

It sought $4.7 million in compensation but failed because it did pay its share of initial arbitration costs.

In 2010, Bolivia nationalised the country’s largest energy provider, Empresa Electrica Guaracachi. 

The British power investor Rurelec, which indirectly held a 50.001 per cent stake in the company, took Bolivia to the permanent court of arbitration in The Hague demanding $100m in compensation.

Bolivia was ordered to pay Rurelec just over $31m in May 2014.

The Swedish energy company Vattenfall is suing Germany for its decision to phase out nuclear energy. It previously challenged a German standard on the increase in river water temperatures at its coal-fired power plant and got Germany to relax the standard. In this second suit the company is seeking €4.7bn from German taxpayers.

It is clear from these examples that the early strategy of corporate capital to use trade deals to subvert the democracy of developing countries has expanded to include any country that seeks to prevent corporate plunder of its public services and resources.

This is a vitally important point for the British and Scottish left to address considering Tory plans to strike a trade deal with the EU as part of Brexit. 


Michel Barnier, the EU’s chief negotiator, said recently in relation to any trade deal: “There will be no ambitious partnership without common ground in fair competition, state aid, tax dumping, food safety, our environmental and financial stability…”

For which, read a continuation of the EU’s neoliberal policies of stopping nationalisation and preventing support to indigenous industry.

The level of scrutiny of trade deals to date has been cursory. Extraordinarily no vote was held on Ceta. Labour is now arguing that there must be extensive parliamentary scrutiny, including a debate and vote in Parliament and ultimately a mechanism for withdrawal if necessary.

The government’s white paper on trade post-Brexit published in October speaks only of the need to “engage” with “stakeholders” and offers consultation only with the devolved administrations, and while it acknowledges the need to “continue to respect the role of Parliament,” it hints at giving executive powers to ministers to adopt and implement trade deals after Brexit.

The motion before the Scottish Parliament suggests that insofar as such a deal affects the devolved areas of the Scottish Parliament, there should be a parallel process of scrutiny and approval there. 

So how do we combat unjust trade deals? We need a combination of extra-parliamentary and parliamentary action. Extra-parliamentary struggle in the shape of trade union and community action is required to ensure that effective parliamentary action takes place – this includes campaigning to empower the Scottish Parliament to scrutinise and if necessary veto such deals. 

Parliamentary action, however, is not enough. Trade union, party and community action may be necessary to prevent implementation on the ground. 

We must also campaign for a Labour victory in the next general election because a radical Labour Party in power is the best defence against concluding unjust deals in the first place.