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GMB Birmingham & West Midlands Region

Preparing for our Future UK Trade Policy

Monday, November 13, 2017

1. Introduction

GMB is Britain’s third largest trade union, with 620,000 members across a range of services, public and commercial, and a wide range of manufacturing sectors.

GMB is committed to ensuring that our members are protected from any negative impact regarding the decision to take the UK out of the European Union. The future direction of UK trade policy is crucial in deciding the security and development of our members jobs, the companies they work in, and the overall strength of our economy and our members’ livelihoods in years to come.

GMB believes that it is vital for the Government to develop, in parallel and mutually reinforcing, a strong Industrial and Trade policy backed up with a joint strategy geared to supporting and promoting jobs and companies in the UK. The white paper does not capture this in any positive way, and the Government Industrial Strategy launched at the beginning of this year was completely detached from the realities we face in a post Brexit UK and failed to acknowledge the vital role of trade unions to a successful industrial strategy. The Government needs to be inclusive in the development of its trade and industrial policies and establish structures to ensure the practical input and involvement of trade unions and businesses across the UK.

Of further concern is the fact that the Government has 58 sector post Brexit impact reports in its possession, which it has not made public. GMB would have to question why these reports are not being shared with the public at a time when people across the UK are feeling uncertain, and our polling shows they desperately want to know more about what lies in store for them and their jobs. By sitting on these assessments, the Government is confirming fears that they do not make positive reading. Yet it does not make sense to be developing future trade policy without this information/impact assessment being part of the debate and future direction. GMB urges the Government to publish the impact assessments as a matter of urgency.

The consultation exercise should be an opportunity for the UK to take an ambitious approach towards developing a future trade policy, which addresses the unacceptable inequality that past EU and global trade policy has generated. It is a chance to produce a trade agenda that puts people before profit, and generates fair and sustainable economic development based on the benefit of the many rather than the few.

This is the vision for a future UK trade policy that our members wish to see. The tone and direction of the DIT White paper is, therefore, a massive disappointment on so many levels. GMB is concerned that the Government is intent on pursuing an aggressive free trade and pro-liberalisation approach to future trade, which will be detrimental to our members’ jobs and livelihoods, and will fail to support UK manufacturing and services. The paper ignores the danger of private investment courts to both democracy and economic security, which will leave our country, and its companies, open to the worst excesses of corporate manipulation and trade dumping.

GMB’s response outlines our key concerns about the tone and direction of the DIT white paper, and then expands upon the shape of future UK trade policy GMB members would wish to see.

2. General concerns about the content and direction of the DIT White Paper

The white paper on the UK’s “independent” trade policy essentially reiterates the worst aspects of an EU and global trade policy that GMB and other unions have long opposed. It is largely based on the  assumption that promoting unfettered free trade and giving increasing power to multinational corporations will be beneficial not only to the UK but also to the rest of the world, particularly in the global South.

In his foreword to the paper, the Secretary of State says that “in the last three decades, commercial liberalisation has lifted more people out of abject poverty than at any other time in human history”. This wholly inaccurate statement is reiterated in the body of the document with reference to a 2015 World Bank report that has been widely discredited.

In order to preserve the illusion that free market capitalism is reducing poverty, the baseline year for measuring progress was shifted back to 1990 in order to include China’s remarkable economic growth, which was entirely state led. In other countries, poverty reduction came about as a result of state welfare programmes such as that of Brazil’s Bolsa Familia. A further distortion in the statistics was due to the Bank twice changing the method of calculating the international poverty line (IPL) that miraculously lifted 521 million people out of poverty overnight. Moreover, UNCTAD has pointed out that the U$1.25 daily IPL is far too low, and that anyone living on less than U$5 per day is “unable to achieve a standard of living adequate for health and wellbeing”. If the IPL were set at the higher figure, 5.1 billion people or 80% of humanity would be below the line.

The overarching theme of the paper that more trade and higher rates of GDP growth are desirable goals in themselves cannot be left unchallenged. “Trade” in this instance includes services, which although included in national statistics, is not really trade at all but rather the restriction on sovereign states to decide which corporations can operate in their jurisdictions, euphemistically described as “liberalisation” , and how their public services are run.

The quest for infinite GDP growth is the single most important economic policy aim of a market economy. However, technological advances coupled with capital and labour surpluses, (not to mention the limitations to plundering the earth’s resources in an era of severe climate change), demand a fundamental rethink of our priorities towards sustainable trade and jobs for the future rather than more neoliberal dogma.

The DIT paper needs to make a clear distinction between protection and protectionism. British workers and the companies they work in will rightly expect the Government to establish and enforce effective trade defence measures and remedies to protect them from dumping and unfair market distortions from trade competitors. The white paper is worryingly weak in these areas.

GMB is concerned by the lack of ambition the Government has in meekly supporting the aims and activities of the World Trade Organisation (WTO), rather than seeking to tackle the weaknesses of this flawed system and improve its functioning. It gives the impression that the Government is out of its depth in carving a progressive trade policy, preferring to accept an EU or global status quo.

Its mission is to “liberalise” trade and enforce rules designed to benefit transnational corporations at the expense of national sovereignty, a curious anomaly given that the stated aim of Brexit was to reassert the authority of the British state.

If the UK was serious about pursuing an independent policy based on respect for the needs of its trading partners, it would be campaigning to reform or abolish the WTO  in its present form, and replace it with a more flexible multilateral institution that recognised the vastly differing requirements of countries in the global South and  stopped  the coercive “liberalisation” measures of the current entity. The UK Government should look to strengthen remedies and anti-dumping measures in support of our industries and jobs beyond WTO measures.

GMB does not agree with the exigencies of the Government Procurement Agreement (GPA), which, again, restricts states’ ability to choose what path they want to follow. We are particularly concerned about the forthcoming ministerial conference of the WTO in Buenos Aires, which includes the possibility of multinational technology companies having unprecedented powers to collect and use data without oversight from the host state.

Proposals for the UK to participate in plurilateral agreements are similarly unwelcome. In addition to our opposition to the GPA, we vigorously oppose Trade in Services Agreement (TISA) membership for the UK in the same manner as we oppose it for the EU. It is yet another egregious example of shaping the world economy for the benefit of global capital instead of the needs of the people, and leaves public services and jobs, employment rights and conditions exposed to dangerous liberalising forces.

Similarly, the pursuit of free trade deals is inimical to any notion of balanced agreements between nation states. The existing free trade agreements between the EU and various third parties are, at best, a means to a profitable end for multinational companies and, at worst, little more than commercial blackmail in the case of the Economic Partnership Agreements (EPAs) with African countries. The assertion that trade agreements “can promote and support labour protections, the environment, human rights, anti-corruption, animal welfare and other important factors” has no basis in fact.

Finally, we would reiterate our opposition to WTO dispute settlement mechanisms and to ISDS generally. For too long they have been the stick to beat states that rightly choose to put public interest policy before the power grab of corporations. This imbalance of power has turned public opinion against current EU and global trade policy and needs to be addressed rather than mimicked in any future UK trade policy.

3. Key GMB priorities for future UK trade policy.

GMB has long opposed EU and WTO trade agreements, which have favoured the interests of corporations over the rights and protections of people and public services across the world.

In the context of UK’s exit from the EU, and therefore end of its coverage under EU trade arrangements, GMB believes it is time for the UK to establish a trade policy which puts the interests of people before profit, and ends corporate power grab through trade deals.

There should be no automatic acceptance that WTO membership and rules are the best route to follow for a future UK trade agenda. The Government should instead challenge the existing models of trade at EU level and globally, and insist on change.

Full transparency and inclusiveness

All UK trade negotiations should be fully open and transparent, and include structures and processes for ongoing and systematic detailed consultation and involvement of Parliament and key groups including specific rights to consultation for trade unions as the only legitimate voice of workers. Parliament, rather than Government, must have the mandate and power to agree the launch of any trade negotiations, and the scope to assess the benefits/threats across a range of areas including jobs, labour standards, environmental standards and protections and the security of public and health services. Parliament and its committees must have the ability to influence the direction of negotiations, and to have the final say on whether the trade deal should be ratified. The devolved governments and assemblies must also have a central role in defining and influencing trade policy and agreements within this structure to help ensure we have a trade policy and future agreements that work for the whole of UK.

Legally binding and enforceable labour standards, employment and human rights

UK trade agreements must ensure that protection of labour standards, employment rights and conditions and fundamental human rights (including freedom of association and right to collective bargaining) are enshrined in legally binding provisions which offer effective enforcement mechanisms and dissuasive sanctions. Standards and conditions should level up to the highest provisions in any trade agreement, and there must be no regression of standards for any of the parties involved. Guarantees for living wages and adherence and respect for collective agreements at all levels must be ensured.

Protection of all public and health services

Future UK trade policy must protect UK public and health services from privatisation and marketization. Even where already partly privatised. The UK should re-ratify and implement ILO C94 labour clauses in public contracts, and enforce this and collective agreements in place in future trade deals. The government should also strengthen protections and guarantees under future UK provisions of Transfer of Undertakings Protection of Employment (TUPE).

Trade in Services

GMB has major concerns about the Government’s plans to push for greater liberalisation of global services. Given the fact that migration was a major issue during the referendum campaign, it is interesting to note that the Government makes no reference to its plans regarding Mode IV temporary movement of workers under any extension of trade in services. GMB recalls that in past EU negotiating rounds with other countries such as India, the UK government was prepared to make generous offers for movement of workers and we believe that its intensions in future trade policy in this area should be made crystal clear.

The Government should not become a member of TiSA (Trade in services agreement) which is a dangerous deal, and puts public and health services at risk given there is no protection for them. It is a highly deregulatory trade proposal, which also threatens the quality, job protection and conditions of wider services and presents major risks in terms of data protection.

Tariff free access not deregulation

GMB believes it is time for trade policy to return to its core focus of reducing or eliminating tariffs and providing duty free quota free access to mutual benefit of trading partners. Global trade policy has, wrongly, developed into an over-powerful vehicle for deregulation of standards and protections, and the dominance of investor power and rights over public interest and protection. Recent EU trade deals have been less about tariff reduction, (often already low or no tariff) and more about deregulation and liberalisation. This must be reversed.

Product, Environmental and quality standards and regulations

Future UK trade policy must protect and promote high and effective product, environmental and quality standards, which are at least in line with existing and developing EU norms. Banned substances lists should build on EU levels and develop more positive protections. The precautionary principle should apply to product and service standards as well as health & safety, employment and environmental protections. Trade policy must not be used as a means of deregulating standards and creating a race to the bottom, and must begin to address the growing environmental challenges faced by climate change.

Investor Courts/Dispute settlement

The UK must reverse the growth of power of global corporations to pursue investor rights over public interest policy developed by democratically elected authorities, and end the dominance of secret investor courts to enforce their will.

The UK should drop ISDS or any equivalent form of unaccountable investor court (including the recent EU proposals for an Investment Court System) from any future trade policy, and return dispute settlement to transparent and democratically controlled national court procedures. GMB wants to see guarantees for the scope and freedom for governments and authorities to apply public interest policy without risk of challenge. There should be no ratchet or standstill clauses restricting governments or authorities in their ability to bring services back into public ownership or control.

Trade defence measures/remedies and anti-dumping

GMB has major concerns that the white paper does not go nearly far enough in proposing robust trade defence measures to give UK companies and their workers the support and protection they will need in a post Brexit trade policy.

As a starting point, we believe it is important for the Government to distinguish between Protection and Protectionism. Global trade is becoming an increasingly harsh and competitive arena, and it is important that the UK Government has a trade policy which provides robust protection to guarantee a level playing field and fairness for UK businesses and for workers whose jobs rely on the success of those companies. The white paper shows considerable reticence from Government to put such measures in place, which British workers and companies will not find reassuring.

GMB already has clear evidence of the reluctance of Government to stand up for UK jobs and manufacturing in trade disputes with the ongoing scandalous behaviour of the US Government in its punitive tariff increases on Bombardier aircraft being produced by our members in Northern Ireland.  GMB has been dismayed by the lack of action by the UK Government to protect vital manufacturing jobs, and to show the US that it cannot act in this shameful way. The Government’s inaction does not bode well for future trade negotiations with the US or other countries, and is a sign of worrying weakness, which will be exploited by trade counterparts.

In Scotland, GMB workers in the whisky industry will expect firm support from the Government to protect and promote their vital economic sector and the jobs they support. Yet GMB concerns raised for the future of the industry after Brexit have met with silence from the Government. Process jobs related to the industry are already disappearing, and yet we see no strategy or support from Government to ensure the industry has a positive future. The industry has always enjoyed reasonable support and protection from the EU in fighting its corner in past EU trade negotiations and we would expect the same and more from our own Government. GMB expects particular support and vigilance in any trade discussions with India and other parts of Asia where competition is a threat.

GMB wishes to see firm positions from Government in relation to countries who claim to meet market economy status conditions but have high levels of state intervention, and to see monitoring, enforcement and remedies provisions in place to deal with unfair competition from these sources.

The government should at least meet the new EU methodology on anti-dumping rules and go beyond these to include wider scope to assess the jobs, social and environmental costs and impact in such actions. GMB has major concerns with the proposals for an economic interest test, which we fear will put undue focus on lower consumer prices to the detriment of impact on remedies. We want to see an approach that would help protect UK manufacturing and wider jobs, standards and environmental protection. We oppose this proposal.

The Government has a poor record at EU level in supporting dissuasive tariffs on countries found to be dumping products on UK and EU markets. In the recent steel crisis, the EU was prepared to set much higher tariff thresholds on China, and it was the UK Government that was instrumental in these penalty tariffs being lowered. GMB insists that the Government reviews its laissez-faire approach to trade, and ensures there are robust measures in place to counter unfair competition in future trade.

We do not believe that the Lesser Duty Rule is a sensible approach in UK trade policy and urge the Government not to adopt this measure. GMB has worked with the Manufacturing Trade Remedies Alliance on these issues and supports the case evidence supplied on behalf of the group to the consultation.

GMB urges the Government to reassess its position on trade defence measures/remedies and to listen to key groups such as the joint trade union/manufacturing federation group and heed its advice on these policy areas.

Public procurement

The Government should maximise the scope to use public procurement and contracting to the benefit of UK manufacturing and services and promoting UK jobs.

GMB has major concerns that the Government will not use this scope, as it has already indicated in its recent decision to open up the manufacture of 3 vital Royal Fleet Auxiliary vessels to international tender. GMB fears this will be a taste of things to come for future trade and procurement policy. The UK voting public did not hear Government Ministers saying in its referendum campaign “take back control, and give UK contracts to the lowest global bidder, and hang UK industry and its skilled workers”. If this is to be the direction of future policy then we believe the British public has the right to know.

Any procurement offers under trade deals must ensure the highest level of labour, employment, human rights and environmental protections, which must be legally binding and backed up with sanctions. The UK government must implement the social clause contained in Article 18.2 of the 2014 revision of the EU Public Procurement Directives, which it failed to do in its national implementation of these provisions:

Member States shall take appropriate measures to ensure that in the performance of public contracts economic operators comply with applicable obligations in the fields of environmental, social and labour law established by Union law, national law, collective agreements or by the international environmental, social and labour law provisions listed in Annex X

It must also reinforce the scope to use reserved contract provisions to support employment for people with disabilities and other disadvantaged groups. (Article 20 of EU Directives 2014):

1. Member States may reserve the right to participate in public procurement procedures to sheltered workshops and economic operators whose main aim is the social and professional integration of disabled or disadvantaged persons or may provide for such contracts to be performed in the context of sheltered employment programmes, provided that at least 30 % of the employees of those workshops, economic operators or programmes are disabled or disadvantaged workers.

2.   The call for competition shall make reference to this Article.

GMB calls on the government to go further and re-ratify ILO C94 Labour clauses in Public Contracts and make this a condition within trade agreements.

Geographical Indications

The Government has not made clear its position relating to protecting and promoting Geographical Indication status to protect and promote the integrity and heritage of products under this category. As well as maintaining the current coverage of GI as it applies to Agri/Food products across the EU, GMB calls on the Government to drop its resistance to the extension of the GI system to non-agri/food products to help protect and promote a wider range of products across the UK. Many of these products have high intellectual property value, are niche products and support quality skilled jobs, which we need to protect for the future. Examples include Savile Row Tailors, Harris Tweed, Stoke and other potteries and Whitby Jet. GMB wishes to see support for this initiative in future trade policy.

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