Putting an end to the EU’s neo-colonial policies in the field of trade and investment

14 April by ReCommons Europe


This document is the second of the five texts that form part of the publication entitled “The impact on the South of European financial policies and development cooperation strategies and possible alternatives”, elaborated in the framework of the ReCommonsEurope project. Since 2018, this project engages the CADTM, in collaboration with the association EReNSEP and the trade union ELA, in a work aiming to feed the debate on the measures that a peoples government in Europe should implement as a priority. This work of elaboration concerns all social movements, all people, all political movements that want a radical change in favour of the 99% .

Thus, a first phase of this project culminated in 2019 with the publication of a “Manifesto for a new internationalism of peoples in Europe”, which was signed by more than 160 activists, militant peoples and researchers from 21 European countries. This manifesto, published in 4 languages (French, Castilian, English and Serbo-Croatian), expose the most urgent measures on the following issues: currency, banking, debt, labor and social rights, energy transition in order to build an eco-socialism, women’s rights, health and education, as well as more broadly international policies and the need to promote constituent processes.

With this second phase, we seek to define a set of clear proposals that a peoples government should implement in order to bring about a real and profound change in the unjust relations between the European states and the peoples of the Global South. To this end, we are carrying out a process of drafting texts, based on joint work between activists, politicians and researchers from the countries of the South and the North. This work concerns the following areas: the indebtedness of the countries of the South vis-à-vis the countries of the North, free trade agreements, migration and border management policies, militarism, the arms trade and the wars, and reparation policies regarding the spoliation of cultural goods.

In addition to this second text, we invite you to read the other articles that are part of this project:

- Abolish illegitimate and odious claims by European countries from third parties and give absolute priority to human rights

- End the inhumane migratory policies of Fortress Europe

Day in and day out, the coronavirus pandemic is a catalyst for inequities across the world. These inequalities tend to increase both within countries and between countries and regions of the world. We recently showed that the policy of indebtedness of countries, far from serving to finance essential services, serves as a mechanism for the domination of the countries of the South by the capitals of the North. If we want to address inequalities, more than ever we must promote a policy of debt cancellation. The same applies to trade relations. These have only replaced the old colonial relations, largely favouring the capital of the countries of the North, reproducing the productive divisions at international level and making the populations of the countries of the South massively precarious.

In the context of the global crisis of capitalism and the stalemate facing multilateral negotiations within the WTO WTO
World Trade Organisation
The WTO, founded on 1st January 1995, replaced the General Agreement on Trade and Tariffs (GATT). The main innovation is that the WTO enjoys the status of an international organization. Its role is to ensure that no member States adopt any kind of protectionism whatsoever, in order to accelerate the liberalization global trading and to facilitate the strategies of the multinationals. It has an international court (the Dispute Settlement Body) which judges any alleged violations of its founding text drawn up in Marrakesh.

, European Union (EU) governments are increasingly strengthening the dynamics of regional trade agreements in their relations with almost all continents: Asia (Korea, India, ASEAN countries), North America (Canada), South America (Mercosur, Peru/Colombia/Ecuador), Central America, the Middle East (Gulf Cooperation Council). The European Union is currently negotiating Economic Partnership Agreements (EPAs) with various regions of Africa. With the countries of Europe’s southern periphery (on the shore of the Mediterranean) and eastern periphery (Ukraine, Moldova and the Caucasus States), the European Union has embarked on a process of negotiating so-called free trade agreements which have already been signed and for which negotiations for a second generation have begun. These are comprehensive and in-depth free trade agreements that include harmonization of laws and regulations (including European legal acquis) to the benefit of large companies and banks, especially those of the dominant countries within the EU, at the expense of peoples’ rights. The EU is thus out on a neo-colonial trade crusade to subordinate the peoples of the Periphery to the dominant factions of European Big business and to impose even more liberal conditions than those obtained within the WTO on the profits of its capitalist corporations.
The trio World Bank World Bank
WB
The World Bank was founded as part of the new international monetary system set up at Bretton Woods in 1944. Its capital is provided by member states’ contributions and loans on the international money markets. It financed public and private projects in Third World and East European countries.

It consists of several closely associated institutions, among which :

1. The International Bank for Reconstruction and Development (IBRD, 189 members in 2017), which provides loans in productive sectors such as farming or energy ;

2. The International Development Association (IDA, 159 members in 1997), which provides less advanced countries with long-term loans (35-40 years) at very low interest (1%) ;

3. The International Finance Corporation (IFC), which provides both loan and equity finance for business ventures in developing countries.

As Third World Debt gets worse, the World Bank (along with the IMF) tends to adopt a macro-economic perspective. For instance, it enforces adjustment policies that are intended to balance heavily indebted countries’ payments. The World Bank advises those countries that have to undergo the IMF’s therapy on such matters as how to reduce budget deficits, round up savings, enduce foreign investors to settle within their borders, or free prices and exchange rates.

, IMF IMF
International Monetary Fund
Along with the World Bank, the IMF was founded on the day the Bretton Woods Agreements were signed. Its first mission was to support the new system of standard exchange rates.

When the Bretton Wood fixed rates system came to an end in 1971, the main function of the IMF became that of being both policeman and fireman for global capital: it acts as policeman when it enforces its Structural Adjustment Policies and as fireman when it steps in to help out governments in risk of defaulting on debt repayments.

As for the World Bank, a weighted voting system operates: depending on the amount paid as contribution by each member state. 85% of the votes is required to modify the IMF Charter (which means that the USA with 17,68% % of the votes has a de facto veto on any change).

The institution is dominated by five countries: the United States (16,74%), Japan (6,23%), Germany (5,81%), France (4,29%) and the UK (4,29%).
The other 183 member countries are divided into groups led by one country. The most important one (6,57% of the votes) is led by Belgium. The least important group of countries (1,55% of the votes) is led by Gabon and brings together African countries.

http://imf.org
and WTO are acting together to support this trade war for the benefit of multinationals through the neo-liberal policies assiduously pursued by the majority of EU governments and the ruling class in the South. These agreements interconnect with bilateral investment treaties/agreements and all include binding mechanisms such as state-to-state (WTO) or investor-state dispute settlement mechanisms (for instance the International Centre for Settlement of Investment Disputes, ICSID ICSID The International Centre for the Settlement of Investment Disputes (ICSID) is a World Bank arbitration mechanism for resolving disputes that may arise between States and foreign investors. It was established in 1965 when the Washington Convention of that year entered into force.

Contrary to some opinions defending the fact that ICSID mechanism has been widely accepted in the American hemisphere, many States in the region continue to keep their distance: Canada, Cuba, Mexico and Dominican Republic are not party to the Convention. In the case of Mexico, this attitude is rated by specialists as “wise and rebellious”. We must also recall that the following Caribbean States remain outside the ICSID jurisdiction: Antigua and Barbuda, Belize, Dominica (Commonwealth of) and Suriname. In South America, Brazil has not ratified (or even signed) the ICSID convention and the 6th most powerful world economy seems to show no special interest in doing so.

In the case of Costa Rica, access to ICSID system is extremely interesting: Costa Rica signed the ICSID Convention in September, 1981 but didn’t ratify it until 12 years later, in 1993. We read in a memorandum of GCAB (Global Committee of Argentina Bondholders) that Costa Rica`s decision resulted from direct United States pressure due to the Santa Elena expropriation case, which was decided in 2000 :
"In the 1990s, following the expropriation of property owned allegedly by an American investor, Costa Rica refused to submit the dispute to ICSID arbitration. The American investor invoked the Helms Amendment and delayed a $ 175 million loan from the Inter-American Development Bank to Costa Rica. Costa Rica consented to the ICSID proceedings, and the American investor ultimately recovered U.S. $ 16 million”.

https://icsid.worldbank.org/apps/ICSIDWEB/Pages/default.aspx
, which is part of the World Bank Group) to reinforce the subordination of states to multinationals in order to ensure corporate profitability and protect their investments to the detriment of peoples and the environment. Thus, these neo-colonial trade and investment agreements are very broad and cover virtually all economic, social, political, cultural and environmental fields.

These agreements have different objectives, which can be clustered into three categories.

Firstly, the objective is to guarantee international capital access to the new areas of profit Profit The positive gain yielded from a company’s activity. Net profit is profit after tax. Distributable profit is the part of the net profit which can be distributed to the shareholders. and exploitation by

-  Doing away with or substantially reduce customs duties and so-called non-tariff barriers in the industrial and agricultural sectors;

-  Privatizing public social sectors (health, education, urban transport...) and public enterprises in strategic sectors (telecommunications, banking, energy...), in accordance with the provisions of the WTO’s General Agreement on Trade in Services (GATS) concerning the liberalization of trade in goods and services;

-  Encouraging foreign direct investment.
Secondly, the objective is to protect the privileged position of capital from the EU’s dominant economies in particular and the EU in general, as well as the control over the division of labor and power relations, specific to the hierarchy of global production chains, by

-  Enforcing compliance with competition law and policy as well as public market regulations for the benefit of big business;

-  Complying with patent rules (the WTO Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS));

-  Shifting to light, non-binding environmental protection standards,

-  Strengthening sanitary and phytosanitary standards for exports from the South, etc.

The third objective is to make cheap labor available to capital through

-  Deregulating workers’ rights with the introduction of maximum flexibility, i.e. precariousness. This deregulation and precariousness affect workers in the South as well as in the North because they are in competition with each other.

On the one hand, through these expansionary trade and investment agreements, the EU is forcing countries in the South to open their borders, markets and public services to companies of the center of the EU to export subsidized products without encountering customs barriers in order to plunder their wealth, exploit underpaid labor and repatriate surplus-value. On the other hand, it reinforces the protection mechanisms of its big capitalists with very strict health and food standards and by demanding binding social, fiscal and environmental clauses for imports from the South. These binding provisions are, for example, introduced in the Common Agricultural Policy (CAP) to limit the volume of exports to the European market, especially of agricultural products that compete directly with those of European countries.

The destructive effects of so-called free trade agreements

The destructive effects of these free trade agreements signed with the EU are already clearly visible in the majority of countries of the South and more particularly in the Economic Partnership Agreements (EPAs) in sub-Saharan Africa. These have earned the name of “economic hanging agreements” or “economic impoverishment agreements” already put forward by several struggle organizations in Africa. The main impacts are as follows :

-  Deepening of trade deficit and structural dependency.

-  Loss of customs revenues and increase in the balance of payments Balance of payments A country’s balance of current payments is the result of its commercial transactions (i.e. imported and exported goods and services) and its financial exchanges with foreign countries. The balance of payments is a measure of the financial position of a country vis-à-vis the rest of the world. A country with a surplus in its current payments is a lending country for the rest of the world. On the other hand, if a country’s balance is in the red, that country will have to turn to the international lenders to meet its funding needs. deficit.

-  Massive indebtedness repaid mainly by the majority of the population through tax increases and cuts in state social spending.

-  Worsening of the deterioration of environmental conditions through extractivism and resource grabbing.

-  Destruction of local seeds and restriction of local production of (generic) medicines by intellectual property rights (commodification of knowledge).

-  Increasing impoverishment of small peasantry and food dependency.

-  Increasing mass unemployment by destroying small producers in structurally weak industry and in agriculture producing for the national or local market, and by generalizing flexibility and precariousness of jobs and subcontracting.

-  Deterioration of women’s conditions through privatization of public services (education and health), destruction of the peasantry, unemployment, etc.

-  Multiplication of barriers and mechanisms to limit the crossing of the borders of Fortress Europe by migrants and refugees from the South.

The main consequences of the EPAs: a weakening of economies at the macroeconomic level, making them more dependent on the global market, the transfer of the costs of external liberalization to the majority of the ^population, a deterioration of local production and environment, as well as a strengthening of gender inequalities. At the same time, by making border crossings more difficult or even impossible, EPAs protect European powers from the social costs that their neo-colonial policies generate.

It should also be stressed that these agreements have an authoritarian impact in the sense that they reinforce undemocratic decision-making structures and practices in Southern countries. The negotiations of free trade agreements are characterized by opacity, which does not allow for any real democratic debate. The dominant classes in the countries of the South accept the majority of the provisions of these agreements because they coincide with the interests of the major local capitalists who are forging fruitful partnerships with European capitalists in order to strengthen their position in local power relations and to accumulate advantages and benefits to the detriment of the peoples of Europe and the South. These agreements are endorsed by undemocratic parliaments which do not represent the aspirations of the people.

Tasks of the radical left

The radical left in Europe must work very closely with the radical social and political movements in the South to fight against this trade crusade of the imperialist countries and their international institutions (especially the trio WB, IMF and WTO) which increases the concentration of wealth in the hands of a capitalist minority on a global scale. They must also combine their efforts to fight the ruling classes of the South who act as a kind of bridgehead for this new colonization which exacerbates the underdevelopment and wretchedness of the inhabitants. Their common objective must be to actively contribute to the coming to power of revolutionary and popular governments based on real democratic institutions at the grassroots and on a permanent popular mobilization.

Tasks of a People’s Government

A radical grass-roots force coming into government in a European country must begin a process of breaking with the logic of the unequal, unjust and undemocratic exchange of world trade, which implies the non-equivalence of the values produced and exchanged and the accentuation of the underdevelopment of the productive forces in the South maintained by capitalism in its current neo-liberal phase. The corollary of this exchange is the system of international division of labor which condemns the economies of the South to specialize in the export of raw materials, agricultural and fishery products and to remain dependent on most levels, be it industrial, technological, financial, food or other. Here we find a very old logic that confined the peoples of the South to the status of neo-colonies and suppliers to the world powers. The imperialist countries on the other side are strengthening their protectionism to control import volumes in order to guarantee and maximize the profits of their capitalist enterprises and secure the dominant position of “their” capital in the global production chains. They impose the opening of the markets of the South to allow European exports, which are often subsidized.

A radical left-wing force that intends to reach the government must commit itself to placing trade at the service of popular aspirations and to prioritizing solidarity over competitiveness. It must commit itself to take measures to eradicate poverty and malnutrition and to promote employment stability instead of free mobility of capital. The aim is to unite the peoples and not to tie them to the interests of each ruling class by developing an alliance of workers, small producers, peasants and the unemployed in the South with the oppressed of Europe.

The People’s Government will establish assistance programs for the industrialization of the economies of the South and for the construction of independent, autonomous, solidarity-based local economies, promoting endogenous human and democratic development based in particular on food sovereignty.

A People’s Government will have to give preferential access to its markets for products that respect notions of equity Equity The capital put into an enterprise by the shareholders. Not to be confused with ’hard capital’ or ’unsecured debt’. and that come from small producers, and tax more agribusiness products and those that violate social and environmental standards. It will reactivate short marketing networks and back actions to small local producers in both the North and South and establish direct and trusting links between producers and consumers. It will recognize and support the right of populations to live with dignity in their territories without any foreign commercial aggression and without being forced to be displaced in any way.

The People’s Government will work to develop alternative trade cooperation projects that meet the aspirations of the people, drawing on the arguments and experiences of the struggle against the so-called free trade agreements developed by radical social and political movements in the countries of the South. The example can be given of the ALBA (Bolivarian Alliance for the Peoples of our America - People’s Trade Treaty) built on the principles of solidarity, complementarity, justice and cooperation, and placing human beings at the center of its tenets and practices.

It will take radical measures to break this international trade mechanism of subjugation and dispossession of peoples as part of a global process of breaking with the capitalist mode of production for an ecological, feminist, socialist and internationalist alternative.

The first steps of a people’s government

  • Subject all bilateral and multilateral investment and trade treaties to a citizen participation audit and suspend their application for the duration of the audit. Repeal all treaties that will be deemed illegitimate and/or abusive.
  • Disobey WTO provisions and terminate all free trade, partnership and investment agreements with the countries of the South.
  • Encourage the exercise of popular sovereignty in the countries of the South to develop fair trade that respects social and environmental justice and to set up real cooperation mechanisms that put an end to looting and promote the emergence of their economies.
  • Support measures for food sovereignty and for an ecological and socially fair production in the countries of the South.
  • Exit the WTO and call for an international campaign against this institution and its two counterparts, the WB and IMF, and for their replacement by democratic institutions of solidarity.
  • Institutionalize an accepted and legitimate arbitration procedure that consists of prosecuting transnational corporations within its national jurisdiction and increasing their financial penalties according to the gravity of their violation of the sovereignty of peoples, and / or of social and environmental standards.
  • Heavily sanction companies that do not respect human rights and environmental standards.
  • Support the initiative for a legally binding treaty compelling transnational corporations to respect human rights in all their aspects: civil, political, economic, social and cultural.
  • Unveil secrecy surrounding trade and investment agreements that allow companies to increasingly take the place of peoples and States in order to protect their freedom of action and investment.
  • Denounce and cut ties with despotic regimes and governments in the South that sign these agreements because they take advantage of them at all levels to enrich themselves and divert fortunes abroad.

Translated from the french version by Pierre-François Grenson and Christine Pagnoulle.




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COMMITTEE FOR THE ABOLITION OF ILLEGITIMATE DEBT

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