A proposed international agreement on trade in services would encourage further financial deregulation while undercutting labor and consumer protections.
Originally published by Equal Times.
The Trade in Services Agreement (TiSA) is a new global deal in the works that aims to remove barriers – or what is left of them – for corporate service providers to capture markets worldwide, promote an employment model based on exploitation, and boost the financialization of the economy.
The International Trade Union Confederation (ITUC) recently published a detailed analysis of leaked negotiating texts of TiSA – after 20 rounds of talks over the past three and a half years – which shows that if it is agreed, signed, and ratified, the deal would have grave consequences in the world of work.
Its scope appears to be vast, spanning transportation, energy, retail services, e-commerce, telecommunications, banking, construction, private health, education, and more in the European Union, the United States, and countries in Asia and the Americas. As services account for the biggest part of global GDP, TiSA would transform the world labor market.
For instance, TiSA would legally fortify and economically facilitate the operation of the “platform economy” – a term (also known as the “gig economy” or “sharing economy”), describing the online, on-demand business model of international companies like Uber.
Such companies thrive by injecting unfair competition among service providers, employing unprotected informal workers, and avoiding paying taxes.
Professional services, like auditing, architecture, accountancy, and engineering, offer vast unexploited space for the platform economy to develop. And TiSA will make sure that these companies do not face many hurdles like class action or the banning of services, like Uber in France.
TiSA has more unpleasant surprises for workers. Services are provided in four ways. First, with cross-border supply, like when a patient goes to a hospital in another country to be treated; second, with consumption abroad, like tourism; third, with commercial presence, like when a bank opens a branch abroad; and fourth, with the presence of natural persons.
This fourth way of delivering a service, also known as Mode 4, is actually a form of short-term migration, for instance when an IT application developer works for a high-tech company on a particular project that lasts for six months.
[pullquote]Big banks will get bigger by out-competing smaller domestic banks or through mergers and acquisitions.[/pullquote]
The employment terms – like wages, leave, and health insurance – for this worker are laid out in the same contract that specifies the project, the time of delivery and the quality safeguards. This works for high-skilled, mobile, and flexible professionals like IT application developers, but not for nurses, catering staff, or dental assistants.
Depending on how broad commitments different governments will undertake in TiSA, many categories of workers, including the low- or middle-skilled, risk finding themselves employed abroad with terms far inferior to those stipulated in the receiving country’s labor law – simply because the labor law will not apply if they are hired with a project contract.
How would governments ensure that professionals who benefit from Mode 4 have appropriate skills? TiSA includes procedures that would converge or mutually recognize licensing and qualification requirements, as well as technical standards such as those ensuring the quality of a service.
Another part of TiSA goes deeper into the sovereign competences of regulation. Governments will have to give early notice of planned regulation, giving service corporations, including foreign ones, an opportunity to comment on them.
This might sound harmless, but taking into account that such comments come before the regulation-making process starts, and coupled with the possibility to take a government to an investment tribunal – under the highly controversial investor-state dispute settlement mechanism (ISDS) – they can have a watering-down or even chilling effect on regulators.
Sectors at risk
The countries negotiating TiSA now are willing to fully open transportation services. This includes maritime, air, and land transportation, and the express delivery of packets. Transportation unions have made a strong argument that this would only lead to the further deterioration of wages and safety of transportation workers – a bit like what happened with truck drivers when the EU borders opened to eastern Europe competition.
TiSA also includes financial services. There is hardly any financial transaction that cannot by presented as a financial service. By pushing barriers down, TiSA will help further the consolidation of financial markets. This means that big international banks will get bigger either by out-competing smaller banks that currently only operate on a domestic level, or through mergers and acquisitions.
[pullquote]We face a downward spiral for workers, micro and small enterprises, and consumers if TiSA proceeds in its current form.[/pullquote]
Whatever the way, the result is the same: the banks that are too-big-to-fail will become even bigger under TiSA, posing an increased risk to the financial system.
The designers of the deal also intend to deregulate financial markets. For instance, if a toxic financial product is allowed in one TiSA country, then all other countries will have to allow it to circulate. Such products were at the heart of the 2008 financial meltdown.
Public services and public services procurement are also to be opened up. Although the EU and others have provided reassurances that this is not the case, provisions of the leaked texts show that reversing privatization will be impossible.
Adding an element of “competitive neutrality” between state-owned enterprises and the private sector, and allowing unfettered access of private providers into the market, we only need a third step to complete the puzzle.
That is, austerity measures which cut spending on public services, lower their quality and, on the basis of lower quality, raise popular support for privatization.
We clearly face a downward spiral, for workers, micro and small enterprises, and consumers alike, if TiSA proceeds in its current form. Governments should reconsider, for the sake of their citizens and the very stability of the global economy.
Yorgos Altintzís is an economic and social policy officer at the International Trade Union Confederation. He advocates workers’ interests in international trade and investment as well as global governance.