Plurilateral trade policy

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The main industrialised countries have been disappointed by the lack of progress in the Doha negotiations of the WTO and thus sought new possibilities to move forward with their liberalisation agenda. They found them in the form of plurilateral trade agreements – so-called ‘mega deals’.

In WTO negotiations, developing and emerging countries are increasingly resisting unilateral efforts towards liberalisation that benefits the rich North. As a result, efforts have been made to conclude regional and sectoral trade agreements in which a group of ‘willing’ countries agree on trade rules amongst themselves. In contrast to the multilateral approach, in which all WTO countries are included and the principle on consensus applies, in these processes they have no obligation to pay heed to poorer countries and their resistance.

The most important of these ‘plurilateral trade agreements’ are the Transpacific Partnership (CPTPP), the Trans-Atlantic Free Trade Agreement (TTIP), the Comprehensive Economic and Trade Agreement (CETA) and the Trade In Services Agreement (TISA).

These treaties, which have come to be known as mega deals, focus on harmonising standards and protecting investment alongside reducing tariffs. This aims to stimulate new investment and facilitate market access for foreign firms.

A victory for companies, but not for democracy and public welfare

The mega deals have much in common: whereas the general public and civil society had always been excluded from discussion and deprived of information, the multinational lobbyists had huge influence and plenty of time to get their ideas across. The agreements were thus imbalanced and clearly based on the interests of the multinationals.

© Martin Bichsel

First and foremost, the mega treaties enabled the multinationals to carry out their activities abroad with even greater freedom and on an equal footing with local companies. They then aim to dismantle national regulations and implement broad privatisation of public services – in an irreversible manner. The “ratchet” clause is precisely what impedes any reversal of the privatisations and deregulation.

The private sector therefore gains greater room for manoeuvre, to the detriment of democracy and the public welfare. States thus become deprived of the possibility to use regulations and public-service suppliers in order to guarantee the necessary basic services to people . This is a particular disadvantage to the poorest members of society.

Another sensitive aspect of the agreements: the strengthening of the protection of intellectual property rights. This aims to grant even wider patents and extended periods of validity – for example on medicines. As a result, drug prices would remain high and  stop much of the population in developing or emerging countries from gaining access to treatment, which is something that additionally complicates the fight against epidemics. Furthermore, the possibilities for patenting plants and animals would be strengthened, which would contribute to even greater vulnerability of farmers who are confronted by the agribusiness multinationals.

© Public Eye

Should there be a disagreement in interpreting the agreement, the decisions would then be taken by private arbitration courts that could impose sanctions on States. The risk of this is that their sovereignty could then be sacrificed to private economic interests.

Although the plurilateral trade agreements are only binding for the signatory States, they also impact third party States, as they will govern most international trade rules in the future.

Developing countries that are aiming to export a lot and are not included on these agreements lose their competitive edge due to the higher tariffs that they are obliged to pay. This leads to a distortion in favour of those States that have signed the agreements.

Broad resistance from civil society

In many countries political resistance quickly developed to these vast trade agreements. Civil society organisations have been warning against the limitations that mega deals place on the regulatory powers of States, as well as the way in which they limit democracy. Big coalitions of NGOs have developed to resist these agreements, including Public Eye, who observers the evolutions with a critical eye.

Public Eye is convinced that the plurilateral approach cannot lead to a more just form of international trade, and also presents risks (in german), particularly for the poorest sections of society.

Due to the lack of clarity regarding the direction that trade policy will take under the current US government and domestic political resistance, recently, the plurilateral approach has lost momentum. For instance, TTIP and TISA negotiations are currently on hold. The US has also withdrawn from the recently negotiated TPP. And it was only possible to provisionally bring the Canadian – European CETA into force because some provisions require ratifications from national parliaments.