On May 2nd, the Spanish international news agency EFE reported from Brussels that the European Commissioner for Trade, Karel de Gucht, had announced that “The European Union welcomes Uruguay’s interest in the TiSA negotiations and strongly supports its participation in the TiSA negotiations from now onwards”. He also affirmed that the Uruguayan Minister of Foreign Affairs, Almagro Lemes, has reassured that his country “shares the objectives of the TiSA negotiations and will respect the results of the negotiation achieved by other participants if it joins”. De Gucht went on to say, “The European Union and Uruguay look forward to working together towards an ambitious and open agreement”.
The same EFE report showed that Uruguay’s request for integration into the negotiations was made last September, something that the European Union hopes will be settled “swiftly”.
Several questions were immediately raised: What is the TiSA? Who are its members? What are its objectives? What instruments have been agreed so far? What benefits might this agreement have for the country? Which sector of the Broad Front (Frente Amplio in Uruguay) resolved to request integration into the TiSA negotiations? Why is this issue not public knowledge?
1. Knowing what the TiSA is (Trade in Services Agreement) is not easy, inasmuch as what is discussed amongst the member states is secret, although there are at least two important sources of information which are used in this article. The first is a special report by Public Services International (PSI), published on 28th April under the title “The Trade in Services Agreement and the corporate agenda” (1); the second is the annex project for the Financial Services Sector, which was divulged by WikiLeaks on 19th July (2).
Thanks to these documents, we know that the secret conversations constituting this agreement began in early 2012 and were made official in March 2013, but what is being negotiated remains confidential and they are currently in the seventh round of negotiations. Even if any member of the World Trade Organisation (WTO) is able to integrate the TiSA, this is negotiated outside the framework of the WTO, thus preventing any discussion of the traditional demands of the poorest countries, such as the cutting of agricultural subsidies which major countries use as a protective policy.
The states which are currently negotiating the agreement are: Australia, Canada, Hong Kong, Iceland, Israel, Japan, Liechtenstein, New Zealand, Norway, Pakistan, South Korea, Switzerland, Taiwan, Turkey, the United States, the 28 member states of the European Union and seven Latin American countries: Chile, Colombia, Costa Rica, Mexico, Panama, Paraguay and Peru. In 2013, China and Uruguay requested their participation in the negotiations.
It’s significant to note that four of the Latin American countries currently integrated into the TiSA are united by the Pacific Alliance (Spanish: Alianza del Pacífico). These are Chile, Colombia, Mexico and Peru, which like Costa Rica, have free trade agreements with the United States.
It’s clear, then, that within the framework of the global economic crisis, there continues to be a process of elimination of borders and regulations. Despite the fact that the Free Trade Agreement of the Americas (FTAA) was rejected in 2005, the US-propelled process is still advancing in several ways, be it through bilateral free trade agreements and investment protection treaties, or through new regional initiatives. It begs the question, then, why the Uruguayan government is going down the path taken by countries more committed to economic interests and not that of progressive governments that strive to develop alternative paths.
2. The objectives of this agreement are to liberalise trade and investment in services, and to impose regulatory norms in favour of economic gain in all sectors – including public services. With this new agreement, Multinational Enterprises are looking to break away from the limitations of the General Agreement on Trade in Services (GATS), ratified in 1995 as part of the World Trade Organisation (WTO).
The agreement incorporates all service sectors, information and communications technology (ICT), transport and logistics, construction, power supply, water distribution, accounting, marketing, advertising, banking and insurance sectors, education, health and many more.
The TiSA negotiations are part of a process of institutional changes driven by the major countries in order to reduce trade barriers to the bare minimum, those being the regulatory systems which protect national productivity and development, workers’ rights and the existence of public enterprises. All of this facilitates the penetration of the Multinational Enterprises, which are the main benefactors of free trade agreements and reciprocal protection of investments.
The TiSA is the result of systematic pressure placed on utility corporations by pressure groups such as, most notably, the Coalition of Services Industries in the United States and the European Services Forum.
By way of example, look at the stance taken by the Coalition of Services Industries, which maintains that “Some barriers to services trade include: limited movement of data across borders, unfair competition from state-owned enterprises, lack of transparency and need for due process of law, and forced local ownership and discrimination in obtaining business licenses and permits. An international services agreement has the potential to create trading conditions that enable services industries to achieve their full potential. The TiSA can be one of the most important economic contributions of this century – for the United States and the globe.” (3)
Explaining the interests of the European Services Forum, the European Union has urged the negotiations to go beyond a mere opening-up of its services markets and to also serve in the development of new trading standards in this area. It considers services trade to be of “strategic importance”, given that the sector accounts for some three quarters of the European Union’s GDP and employment.
The objective of these standards is to grant free access to foreign suppliers in conditions no less favorable than those enjoyed by national suppliers and to restrict governments’ capacity to maintain or adopt protective standards. This could drastically change the regulation of public services, which would replace the “state regulations” with “market laws”. The economic interests of foreign private corporations would be put before social interests.
The TiSA’s main instruments look to promote private investment in all sectors, as well as to perpetuate and make irreversible the privatizations already in place. For these purposes, mergers and acquisitions of local enterprises are favoured, as well as the elimination of those regulations which limit transnational penetration, guaranteeing these enterprises more control and extraction of profits from national and world economies.
To summarize once more, the main objectives targeted by the major countries with this agreement are: a) Free access to the markets for its enterprises with no limitations whatsoever; b) National treatment: its enterprises would be treated the same as national enterprises with no form of discrimination; c) Most-favored-nation treatment: the maximum benefit that is conceded to one country must be extended to the members of this agreement.
In order to ensure that these objectives are fulfilled and don’t suffer any setbacks, they have three “ironclad” regulations:
– First, the “standstill obligation” which “would freeze existing levels of liberalization across the board” (4). This would prevent any present or future government from being able to undo what is already liberalised.
– Second, the “ratchet provisions”, which implies that “any changes or amendments to a domestic services-related measure that currently does not conform to the agreement’s obligations be made in the direction of greater conformity with the agreement, not less” (5). This means that changes can only be made in the direction of greater levels of liberalisation by chipping away at national sovereignty. If a capital-driven government takes measures that eliminate regulations and liberalise markets, a subsequent government that defends workers’ interests, economic development with strong participation from the State and the protection of national medium-sized or small enterprises, wouldn’t be able to modify them.
– Third, in Article X.20: Dispute Settlement, the European Union and the United States propose that “the Panel shall have the necessary expertise relevant to the specific financial service under dispute” (6). This implies that the conditions that are established will be regulated and mediated by their own panels, just like in all international agreements, thus excluding competition and legislation from every country and – in the interest of the dominant sectors – removing any controversy from the results. There have been several instances which have demonstrated that these panels, such as ICSID, favour the interests of Multinational Enterprises to the detriment of the States which receive the investments.
Furthermore, the TiSA establishes as such that all existing markets are part of the same body, unless they are explicitly excluded from the agreement by means of a “blacklist”, which implies that all new markets generated through technological advances or through other means remain under the TiSA regulations. This contrasts with the General Agreement on Trade in Services, passed in 1995, which allows countries to choose which services it wants to liberalise through what is known as a “positive list”.
4. This agreement, which frees up services trade, will dilute national sovereignty, because economic control will be lost. Democracy will also be affected, because the agreements acquire a supraconstitutional character. In this way, foreign investors will get protection with respect to restrictive “free” trade regulations, regardless of whether these are designed to protect the environment, health, public safety or financial stability, or to guarantee universal access to services. Doubt may also be cast over labour rights and workers’ incomes, both active and retired, as these may deteriorate significantly themselves.
Furthermore, the TiSA weakens the possibility of maintaining and improving a system of public enterprises, which is currently characterised by: preserving national sovereignty in important economic spheres; being democratic inasmuch as it is wholly dependent on national legislation; leaving services that deal with social needs in the hands of the State; providing high-quality universal services for the population.
Do bear in mind that even if “The basic TiSA text excludes services ‘provided in the exercise of governmental authority’ from the scope of the agreement. (…) services provided in the exercise of governmental authority are narrowly defined as ‘any service which is supplied neither on a commercial basis nor in competition with one or more service suppliers’” (7). This implies that the majority of the public services provided by the Uruguayan State would be integrated into the liberalization of the TiSA.
With the information available at the moment, it seems fitting to ask the Broad Front, the government and, in particular, Minister Luis Almagro: What makes Uruguay keen to join this dubious TiSA scheme and what would be the advantages for the country, its workers and its people in general if the government’s authority and the sovereignty of the whole nation were drastically limited?
Antonio Elías is a University professor, trade union advisor and member of the REDIU (Left-Wing Economist Network of Uruguay).
Thomas McGuinn is a student translator, studying as an Integrated Professional Master of Languages in Spanish and German at the University of Manchester, UK. He is happy to lend his services to anybody, so if you enjoyed this translation, he can be reached at the following e-mail address: email@example.com
(1) Written by Scott Sinclair, Canadian Centre for Policy Alternatives; and Hadrian Mertins-Kenwood, Institute of Political Economy, Carleton University. http://www.world-psi.org/es/informe-especial-de-la-isp-el-tisa-frente-los-servicios-publicos
(2) https://wikileaks.org/tisa-financial/. Publicado el 19 de junio de 2014.
(4) “El Acuerdo sobre el Comercio de Servicios y la agenda corporativa”, p.14.
(5) Idem, p. 14.
(6) Trade in Services Agreement (TISA),Financial Services Annex, WikiLeaks release: June 19, 2014, p. 16.
(7) “El Acuerdo sobre el Comercio de Servicios y la agenda corporativa”, p.6.
Published in the Journal “Voces”, Montevideo, 10 July 2014.