“If these talks are in the public interest why are the public not being informed?” one advocate asks of expansive, but notoriously secretive, trade talks.
WASHINGTON — A leaked negotiating text is offering the public its first glimpse into global trade negotiations, led by the United States and European Union, for a new agreement on the international trade in services — data services, business services, financial services, insurance and the like.
Civil society groups have been expressing concerns since the talks, around what is known as the Trade in Services Agreement, or TISA, began a year ago. Yet because the negotiations have been held in secret, watchdog groups have never been able to base their analyses on anything concrete. Now that they can, many are warning that the results appear to be even more problematic than they expected.
“The leaked TISA text is worse than I could have imagined — it’s pretty shocking,” William Waring, a trade expert with Friends of the Earth U.S., a watchdog group, told MintPress News.
“It goes to show that Mike Froman, the current U.S. Trade Representative and a wealthy former Wall Street banker, is trying to undercut existing and especially proposed regulatory safeguards put in place in the United States and around the world in response to the 2007 financial panic and the great recession that followed.”
The text, made public last week by WikiLeaks, covers only a portion of the TISA talks, the under-negotiation chapter on financial services. Although its authenticity has not been verified, WikiLeaks says it is a consolidated text from April.
A key focus in the chapter appears to be breaking down national-level regulation that U.S. officials and others worry impedes market access and the free flow of trade.
“It looks like the big banks and financiers want to return to the casino gambling practices that led to these problems in the first place,” Waring said.
“The International Monetary Fund, which is generally a pretty conservative group, has already warned the U.S. and E.U. for really being in denial about how their proposed model for deregulated financial markets presents an ongoing risk. And here the TISA looks like it’s an even more extreme version of this liberalized vision.”
Trade in services is an esoteric concept for most, including many at the highest levels of government. To a great extent this is because the concept has changed so dramatically in recent years, with the Internet and the forces of globalization having massively altered opportunities for the cross-border movement of services. Yet services could make up more than 40 percent of global trade today, according to the World Trade Organization, and account for some 80 percent of U.S. jobs.
The world agreed on a bedrock set of policies around the trade in services during the mid-1990s, under the WTO, in a treaty called the General Agreement on Trade in Services, or GATS. Since then, the world’s leading economic and financial powerhouses — notably, the U.S. and EU — have been pushing to update this accord.
Yet now that talks are going forward, the TISA negotiations are not actually taking place under the WTO, where many countries have expressed skepticism about deregulation and the liberalization of markets. Instead, some 50 countries, ostensibly ideologically aligned in favor of free-market access, are meeting every two months in Geneva by themselves.
“The governments that were pushing these talks moved outside the formal WTO boundaries to pursue TISA … Their goal is to make TISA the new platform for financial services,” Jane Kelsey, a law professor at the University of Auckland, wrote in a WikiLeaks-distributed analysis of the leaked financial services chapter.
“The U.S. has said it wants to establish new negotiating rules in TISA, get enough countries to sign on that will enable it to be incorporated into the WTO, and then have the same rules adopted for negotiations at the WTO.”
In her analysis, Kelsey says it remains unclear how exactly any eventual TISA text would be brought under the WTO, but she notes that the pressure on WTO members would be “immense.”
“If the plan did succeed, many South governments that resisted the worst demands of the GATS … will find they end up with something more severe,” she wrote. “Yet the architects of TISA aim to force those countries to adopt the flawed rules they had no role in negotiating.”
Among the most problematic sections of the new leaked text is one that has to do with what’s being called a “standstill.” The negotiating text makes clear that this provision is being pushed particularly by the U.S. and EU, with participation also from Australia.
Although the exact wording remains under debate, the standstill requirement would mandate that “[a]ny conditions, limitations and qualifications to the commitments” made in the agreement would be “limited to measures that a Party maintains on the date this Agreement takes effect.”
Thus, such a stipulation would likely provide for a ceiling on any regulation or other safeguards aimed at roping in the financial sector, including those passed in the aftermath of the global financial crisis. Any such laws already on the books would be grandfathered in, but no new regulatory moves would be allowed.
“This is a text that big banks and financial speculators may love but that could do real damage to the rest of us,” Lori Wallach, director of Public Citizen’s Global Trade Watch, said in a statement.
She noted that the current text would “cement us into the extreme deregulatory model of the 1990s that led to the crisis in the first place and the billions in losses to consumers and governments.”
So far, almost nothing is publicly known about the details or even the mechanics of the TISA talks. The 50 governments that are taking part constitute some two-thirds of all trade in services and half of the world’s gross domestic product, according to U.S. trade officials.
Six rounds of negotiations have taken place over the past year, with the seventh happening last week in Geneva. Last week U.S. Trade Representative Froman offered a unique but guarded public update on the talks, stating that “the basic framework of the agreement is in place, initial market access offers have been exchanged, and sector-specific work in areas like telecommunications and financial services is in full swing,” according to prepared remarks.
Yet civil society has been almost completely shut out of the TISA negotiations. Indeed, critics have expressed frustration that the talks are being held under even greater secrecy than the ongoing deliberations around two other U.S.-spearheaded trade accords, one among a dozen Pacific countries and another with the EU — both of which have become notorious for their secrecy.
Even if TISA were to become a reality, the related negotiating texts would be sealed for an additional half-decade.
Froman’s remarks last week did, however, offer an indication of the U.S. priorities in this process, both in substance and context. Froman spoke before a grouping known as Team TISA, a powerful coalition chaired by six prominent corporations — Citigroup, IBM, Liberty Mutual, MetLife, UPS and Wal-Mart. The overseas operations of each of these could stand to gain significantly from the talks, especially from TISA provisions able to weaken local competition.
“We have taken very seriously the calls from business to address new issues in TISA,” Froman told the gathering. “For example, we have tabled an ambitious proposal to address restrictions on cross-border data flows and the troubling trend toward localization requirements.”
Froman noted the particular challenges for U.S. business interests posed by “protectionist policies,” “discriminatory laws and regulations” and state-owned companies.
Of course, such issues can also affect a massive swath of issues of daily interest to any country’s citizens. Yet public advocates have also been shut out of the talks so far.
“While the agenda of business is being incorporated into the negotiations, civil society is forced to rely on leaks,” Daniel Bertossa, a senior policy officer at Public Services International, a union representing some 20 million public sector workers in 160 countries, told MintPress in an email.
“The ambition of the leaked text, the extent to which it reflects the banking industry’s wishes and the secrecy of the negotiations are all worrying signs for the other areas that we know TISA will cover, such as vital public services, environmental regulation, health, water, energy, waste and education.”
In April, Public Services International released a study of the potential impact of the TISA talks. The report warns that TISA could make it impossible for national governments to reverse the process of services privatization, even when private delivery has been deemed a failure.
It also raises concerns about the limits being placed on governments’ ability to regulate financial services. Bertossa says those worries have now been borne out by the leaked text.
“The new leak is a response to the extreme secrecy of the talks and the hidden agenda. If these talks are in the public interest why are the public not being informed?” he wrote.
“But the leak has heightened public interest in the TISA talks and will put pressure on governments to be more open. Governments not responding to public demands for more openness can expect to face increasing pressure from unions and civil society.”
There is currently no public timeframe for how long the TISA negotiations could continue. Similarly expansive talks, however, have taken years to conclude.