TiSA: a framework for reregulating the global trade in services?
We live in a service economy. People across Europe expect and deserve high quality services. European business, too, rely on innovative services solutions to thrive in global markets. Through the post-war shift from manufacturing to services driven by the development of welfare states, the outsourcing of business services from manufacturing firms, deregulation and liberalisation, and recently the growth of the internet, we have seen the importance of services in trade and employment grow globally. In no other EU country is this truer than the UK, where services account for nearly 80% of the UK economy (79% compared to 14% for manufacturing and 6% for construction). Britain has the highest ratio of services exports to GDP in the G7.
The quality of rules governing this trade are set will determine the quality of services for consumers and businesses and crucially the working conditions for millions of service sector employees. Currently those rules are under renegotiation within the EU and globally. Within the EU, the 2006 Services Directive provides an overall framework for companies providing services across borders. It was as a union representative leading the European campaign for quality services that I cut my political teeth – as we fought for decent consumer and worker protection from cowboy providers. Ten years on, the European Commission presented a new Single Market Strategy on 28 October 2015, with the aim of deepening the single market in relation to services inside the EU.
At the same time, the EU is negotiating on behalf of its 28 member states, and with 23 other countries including the USA, Japan, Canada, New Zealand and Australia alongside the WTO, for a ‘plurilateral’ Trade in Services Agreement (TISA). The TiSA negotiations started a month before TTIP negotiators launched their work, in May 2013. As with all trade talks, all EU’s national governments agreed on the mandate given to the Commission to negotiate. And as with all trade deals, it will be up to the European Parliament and national governments together to accept or reject the agreement when the negotiations are concluded.
TiSA's main purpose is to set out new rules to make the global trade in services fit for the internet era. The rules that currently apply were devised in 1995 in a global agreement called the GATS (the General Agreement on Trade in Services). At that time, the Internet was still in its infancy and the scale of the technological change as a result has been colossal with new services created but this has also opened loopholes allowing undercutting and mis-selling. TiSA can also help opening up new markets for exporting European businesses. The EU market is already very open to competition from abroad, but other countries' are not. There are not just legal reasons to prevent EU companies from exporting. Sometimes, while the formal authorisation to trade is granted, technical and/or regulatory divergences mean that free and fair trade is not possible in practice. TiSA negotiators are looking into some of these issues for many specific sectors such as telecommunications, transport and business services. There is a balance to be reached between the aim of regulating trade in e-services and opening markets.
As the spokesperson of the Socialists and Democrats group in the European Parliament, the 190 strong grouping of Labour and its sister parties' MEPs, for the TISA negotiations I am conscious that many of the concerns expressed around the Services Directive remain today.
The TiSA negotiations are now entering the final phase in which all the key parts are agreed and trade-offs are made. It's time for the European Parliament to update its position taken at the start of the negotiations and say what it wants to see and what it does not want to see in any final agreement. We therefore are drafting a resolution for this purpose. If the Commission wants to see the deal through, it will have to take it into account or risk a veto by MEPs.
So what are our top concerns? Our public services, our rights and the future of global rules!
Socialist MEPs have pushed a consistent position across all trade negotiations. For us, public services must be fully shielded from global competition. This means that we will judge any agreement against whether public services are excluded and the right of public authorities at all levels are guaranteed their right to regulate in the public interest.
TiSA must also ensure that trade in services rules have no loopholes that could be used for social dumping. Services are mostly provided by human beings at a distance or directly – the latter in WTO jargon is known as Mode 4. Allowing people with expert skills across borders to provide services is necessary to a limited extent but ensuring that working conditions are protected from undercutting is a crucial concern. Socialist MEPs have been clear that the current GATS framework is not strong enough and therefore action here to reregulate is crucial.
In all things digital, the EU guarantees the fundamental right to data privacy and protection is a central concern. The European Court of Justice recently confirmed that current international safeguards do not function effectively. This means that if it deals with e-commerce and other digital services, TiSA must include rock-solid provisions to protect our data.
Fundamentally, TiSA is currently being negotiated amongst a group of (mostly rich) countries, rather than amongst all countries. The World Trade Organisation (WTO) has been stalled since the mid-2000s, mostly because of the failure of developing and developed countries to overcome their divergences on issues like agriculture and sustainable development. In order to evade this impasse and deliver the update that the GATS needs, TiSA has been launched on a basis of a smaller group of countries which together represent 70% of all trade in services. The idea is that once these countries will have reached an agreement between them, it will be possible to "multilateralise" the agreement by attracting all other WTO members to join. But we need to ensure that this really happens because what we need is a global deal to update the GATS, not a parallel trade agreement amongst mostly rich countries which would in fact be detrimental to multilateralism. We've asked the Commission to present a detailed plan on how it intends to achieve a deal at global level, and this will be a key condition for us to support or reject the deal.
MEPs will be voting on these issues in the New Year. It will be a chance for the European Parliament to assert that EU trade negotiators must respect our public services, uphold working rights and consumer protection, and use our trade talks to support the re-regulation of globalisation, recognising the opportunities and closing loopholes. If they do not, they cannot rely on MEP support at the end of the negotiations: quite a gamble to take!