Speaking at Unite the Union on 6 September 2017, Barry set out Labour's vision for a progressive trade policy to uphold labour rights and environmental standards.
Ladies and gentlemen,
I am delighted to be able to speak to you this evening on some of the social and environmental aspects of Labour’s international trade policy. The Conservative government has announced that it will be publishing its Trade and Customs Bills this autumn, so this is quickly becoming a real debate as to our country’s future as a trading nation. I’m very grateful for the invitation and to Unite for hosting us here tonight, and I am particularly honoured to have the opportunity of hearing first-hand from Señor López Obrador as to the situation facing the people of Mexico.
I am particularly interested in hearing about the current plans to renegotiate the North American Free Trade Agreement between Mexico, Canada and the USA. NAFTA was the first treaty to introduce many of the elements that have become familiar to us in the ‘new generation’ trade agreements of today, and its renegotiation offers an interesting opportunity to assess what the agreement has brought in real terms to each of the three countries involved.
Labour believes in the power of international trade to bring economic benefits to businesses and working people alike. When properly designed, trade agreements can create a win-win outcome for all sides, enhancing prosperity and building new bonds of shared commercial interest between countries.
I launched the Just Trading initiative at last year’s Labour Party conference for precisely this reason: to work together with global trading partners to develop the best possible trade and investment agreements that would remove trade barriers while promoting skilled jobs and high standards. It’s why Labour’s manifesto for this year’s general election reaffirmed our commitment to minimising the tariff and non-tariff barriers that prevent us from enjoying the full benefits that trade and foreign investment can offer.
Yet at the same time, we are equally aware of what happens when free trade agreements are not designed properly. We examined closely the proposed texts of the Transatlantic Trade and Investment Partnership between the EU and the USA (or TTIP) and also the Comprehensive Economic and Trade Agreement (CETA) negotiated between the EU and Canada. In both cases, we came to the conclusion that we could not support those trade agreements in the form they had been put before us.
One of the reasons that led us to that conclusion is that both treaties sought to include the principle of investor-state dispute settlement that first came to public consciousness through NAFTA Chapter XI and in the many suits brought against Mexico and Canada under that chapter over the past 20 years. Labour rejects the idea of granting multinational corporations their own judicial system through which to sue host governments for loss of profits, and it is interesting to see the Trump administration now proposing that NAFTA’s investor-state tribunal system could be replaced by an opt-in version, from which the USA would most probably opt out. I wonder what Mexico’s response to that option would be…
NAFTA is also important in that we now have two decades of data through which to study the effects of the agreement on jobs and other social outcomes. While there is disagreement over exactly how many hundreds of thousands of skilled jobs were lost in the USA as a result of the agreement, there is no such dispute over its impact on employment in Mexico.
We know that two million Mexican farmers lost their jobs and their livelihoods as a direct result of NAFTA, which forced open local markets while still allowing the USA to continue its use of massive agricultural subsidies to support its own exporters unfairly. The new jobs created in Mexico’s maquiladora factories were characterised by very low pay and harsh working conditions, backed up by the threat that those jobs could always be relocated to China once it joined the WTO (as many indeed were). It is astonishing to learn that by the year 2000, the real terms value of the minimum wage for Mexican workers had fallen to a fifth of what it was in 1976.
It is precisely this type of experience that we need to guard against in our trade and investment policy. A number of publications this year – including from international bodies such as the World Bank, IMF and WTO – have acknowledged that the backlash against globalisation seen in so many countries these past two years is a genuine response from ordinary working people to the negative impact of unregulated trade on their lives. If we allow this trend to continue, we risk creating a vacuum for racist and extreme right-wing groups to capitalise on people’s grievances and lead them off in directions that we in our movement abhor.
Labour takes human rights and labour standards seriously. When Jeremy Corbyn unveiled his ‘Ten Pledges to Transform Britain’ last year, they included the undertaking to build human rights and social justice into our trade policy. The Labour Party conference followed this up with a commitment to develop a trade and investment policy that would protect and promote skilled jobs, human rights and workers’ rights based on internationally recognised labour standards. Our manifesto for this year’s general election took this still further, with a commitment to ensure that future trade agreements cannot undermine human rights and labour standards, and that unfair trade practices in other countries are not able to jeopardise the high-quality, skilled jobs that we want to see in Britain and elsewhere.
There should be no mystery as to why we consider human rights and labour standards to be such an important element of trade policy. Labour believes in an open, rules-based international trading system precisely because of the economic benefits and life chances that trade can bring working people. It would be entirely self-defeating if we were to allow that potential for good to be undermined by a race to the bottom, pitting workers against each other in a beggar-thy-neighbour contest that produces no winners, only victims.
This is why we have said there needs to be a full and independent sustainability impact assessment conducted in advance of any new trade negotiations so that we can establish the potential social, economic and environmental consequences for all sectors and regions involved. These cannot just be ‘tick-box’ exercises either, but we need to be ready to act on the basis of such assessments, adjusting our negotiating mandates for future trade agreements in order to avoid the job losses and other social dislocations that were predicted for agreements such as TTIP and CETA.
A Labour government will also seek ways to ensure that human rights and labour standards are fully respected in the trade agreements themselves. The traditional model of relegating human rights and labour standards to non-binding social clauses in EU free trade agreements has not been effective. Yet the ILO has found that including labour provisions in trade agreements serves to increase the value of new trade generated.
Even binding clauses in future trade agreements may not be the most effective vehicle for upholding (let alone enhancing) labour standards and human rights. Unequal power relations within global value chains mean that UK-based companies exercise huge control over the practices of their suppliers, so that even progressive employers can find themselves unable to improve conditions for their workforce if UK buyers do not guarantee their ongoing support. That is why Labour’s 2017 manifesto included a commitment to work with business to tighten the rules on corporate accountability in global supply chains, with a view to raising the bar across all sectors and in all countries where UK firms source their goods.
I’ve focused on the need to build human rights and social justice into trade policy as this represents one of the commitments that clearly distinguishes Labour’s economic policy from those of the other major political parties in this country. I’d like to finish, if I may, by turning my attention to the parallel environmental challenges, particularly in respect of climate change.
Many of the threats already described in relation to human rights and labour standards also apply if environmental considerations are relegated to a secondary afterthought in trade policy rather than taken seriously from the outset. EU free trade agreements have typically failed to make any concession to environmental integrity, even when official impact assessments have warned of the dangers. The European Commission publicly acknowledged that TTIP would be dangerous for natural resources and for biodiversity preservation, and that it would add millions of extra tons of greenhouse gases to the atmosphere, but at no point did it stop to consider whether this should call the agreement into question.
There is an even greater danger when expanded trade in fossil fuels is included as a goal within international agreements. The NAFTA requirement on Canada to continue exporting oil to the USA has been held partly responsible for the expanded exploitation of the Alberta tar sands instead of investment in alternative energy sources. Later, when President Obama rejected the 875-mile long Keystone XL pipeline that was to carry the tar sands oil from Canada across the USA, the US government was sued under NAFTA’s investor-state rules for a massive $15 billion. Donald Trump has reversed Obama’s decision, and construction of the pipeline is now back in full swing.
Similarly, one of the primary environmental dangers of TTIP was the proposed initiation of oil and gas exports from the USA to Europe, which would have led to decades of dependence on the dirtiest fossil fuels – in this case, not just tar sands oil from Canada refined in the USA but also shale gas from the US fracking boom. While the TTIP negotiations may be on ice, the inclusion of fossil fuels in the negotiations has already taken its toll on EU environmental rules: in order to win over the USA to its proposed energy chapter in TTIP, the European Commission downgraded the EU Fuel Quality Directive so that tar sands oil can now be treated the same as less polluting fuels.
Labour will seek to build a positive trade policy that promotes sound environmental principles while at the same time supporting British jobs. We will actively encourage UK businesses to increase their exports of environmental goods, increasing the availability of green technologies such as solar panels, wind turbines, recycling machinery and other waste management tools. The environmental goods and services sector contributed £29 billion in value added to the UK economy during 2014, and supported over 370,000 jobs. Labour’s 2017 manifesto included the commitment to back negotiations towards an Environmental Goods Agreement at the WTO, creating the potential for further expansion of UK exports at the same time as encouraging the global transition towards a low-carbon future.
Let me conclude with this simple reflection. Trade and investment are not ends in themselves but means towards our higher economic, social and environmental goals. As such, we have a duty to current and future generations to match our trade deals to those higher goals. Just as the renegotiation of NAFTA offers Mexico, Canada and the USA an opportunity to reassess their commercial relationship, so too does our withdrawal from the European Union offer Britain the chance to develop a progressive trade and investment policy that puts working people and the planet at its heart. I am happy to assure you that Labour looks forward to that task.