On  the 6th of October, the self-organized European Citizens' Initiative against TTIP (Transatlantic trade and investement partnership) and CETA managed to pass the goal of getting more than 3 million people to sign the citizen petition against the secretly negotiated and highly controversial trade deals between Europe, the US and Canada.

With reference to major risks of the ISDS clause (corporations suing states), lowering environmental standards and worker rights, deregulation of public institutions and infringement on internet freedom, the initiative wants the negotiations to be stopped.

Yesterday, citizens all over Europe went out to demonstrate the undemocratic so called trade deals, attracting hundreds of thousands of people in Berlin. The biggest protest in Germany for many years. Demonstrations also took place in eight Swedish cities.

One of the most common arguments for TTIP is that "there will be more growth and jobs" through, for example, removing safety procedures (crash testing) in the automobile industry which according to a recent study could lead to a drastic increase in traffic-related deaths in Europe (since a European car is 33% more safe than the American counterpart). In other words,  it would generate more financial capital for the big multinationals at the expense of ordinary Europeans' health and safety.

According to a leaked document, published on Corporate Europe Observatory (20th of April, 2015), murky negotiations of "regulatory exchange" that would force laws drafted in any of the 78 states to go through a screening processes by a technocratic elite has taken place without public knowledge. This screening process would be done by a bunch of lawyers and lobbyists, in form of a permanent, undemocratic, and unaccountable group of technocrats. Most people think this type of group only will serve to uphold the interests of multinational corporations. 

According to attorney David Azoulay, at the Centre for International Environmental Laz, "Not only will it extend an outrageously burdensome process on future legislation, but any current legislation in the public interest that doesn't sit well with trade interests on either side of the Atlantic could be subjected to the same process to make it conform to corporate interests"

In summary, this is the response of a predatory Empire, and it's elite, to a world without growth. It starts cannabilizing on the very foundation that underpins it, ordinary people and nature. Now is the time to change the entire system, or crumble under it.

Tax “competition” or more precisely tax wars is the process by which countries or even cities use tax breaks and subsidies to attract investment or hot money (TaxJusticeNetwork). States often cut taxes on wealthy individuals and/or corporations and then try to make up the difference by hiking taxes on poorer sections of society or by cutting public spending. At the global level, this process is a race to the bottom. Leading to a rise in inequality and erosion of democracy. At the national level all evidence shows that it is a mistake to try and create a “competitive” tax system for two major reasons. First, tax competition bears no economic relation to competition between firms in a market. Using the term competition obfuscates the reality of governments waging tax wars, to the detriment of labor. Second, tax is not a cost to an economy but a transfer within it. Tax cuts for corporations provides subsidies to them at the expense of public spending on roads, courts, education or health care etc. Even if cutting taxes does attract investment, the evidence being weak, it attract exactly the wrong kind of investment i.e. the flighty kind with few productive linkages to the rest of the economy. 

The financial system, and many large corporations working within it, has since at least the 1980s total global reach. The international tax architecture has not adapted to this reality. Offshore financial centres and tax havens are fully integrated into the global financial system and large shares of trade and capital movements are channelled through them. Using tax havens is now “normal” business practice in most large firms and banks. According to the Financial Secrecy Index (FSI) an estimated $21 to $32 trillion of private financial wealth is located, untaxed, in tax havens around the world. The FSI reveals that the world’s most important providers of financial secrecy (= tax havens) are not small islands as many suppose, but some of the world’s biggest and wealthiest countries (see chart). In a press release about the latest United Nations Trade and Development report 2014 UN officials stated that: “A large proportion of illicit financial flows – which make use of all kinds of mechanisms for circumventing judicial and regulatory oversight – goes through offshore financial centres, based in “secrecy jurisdictions”. Approximately 8–15 per cent of the net financial wealth of households is held in tax havens, mostly unrecorded. The resulting loss of public revenue amounts to $190−$290 billion per year, of which $66−$84 billion is lost from developing countries, equivalent to two thirds of annual official development assistance". This statement have major implications for both tax and aid policy. 

The world's four largest audit firms - PwC, KPMG, Ernst & Young and Deloitte - are central architects of corporate tax evasion and offshore financial secrecy according to a review of court cases, government records and secret offshore files uncovered by the International Consortium of Investigative Journalist (ICIJ). These four companies have worldwide operations and they employ more than 700,000 people and cash in revenues of more than $100 billion a year. Much of their top leadership is based in the United States and Britain. All of these companies have been involved in fraud but always gotten away with only paying penalties, i.e. no criminal charges, because of the new "too big to fail" philosophy among corporations and governments (ICIJ, November 5, 2014). There is no evidence of this being the case. In Luxembourg, internal company documents reviewed by ICIJ show that PwC has helped Pepsi, AIG, Apple, Amazon, HSBC, J.P Morgan, Lehman Brother, SEB, Cargill, Citygroup, Tele2 group, IKEA and other corporate giants from around the world to slash their tax bills by billions of dollars through secret deals (ICIJ database). These deals may be legal or not (TaxJusticeNetwork) but we won't know until they have been tried in court. Now commentators are speculating that Jean-Claude Juncker may lose his post as EU Commission President since he was prime minister in Luxembourg during the time the deals were struck. The EU commission has tried to downplay this new leak, but Danish MEPs are calling for an independent investigation (Euractiv)

Tax Justice Debate

In my last post I had a critical look at the trans-pacific partnership (TTP). And so to be fair and also bring this issue closer to home I will in this post have a look at the Transatlantic Trade and Investment Partnership (TTIP). TTIP is very similar to TTP, a proposed regional free-trade agreement, but between the European Union and the United States. Proponents of TTIP argue that it would result in multilateral economic growth, while critics argue that it would increase corporate power and make markets more difficult to regulate for public benefit. Like TPP this trade agreement has been delayed by leaked draft documents, due to it's secretive nature, but could be finalized by the end of 2014.

Corporate Control

Responses by civil society

Impact on environment, health and food standards

Trade unions, consumer groups, environmentalists and digital rights activists are opposed to increasing corporate rights over sovereign nations. Almost all (centre-)left groups in the European Parliament have voted against ISDS. So have the French Assemble and the Dutch Parliament. In Sweden, however, both the moderates (M) and social democrats (S) are positive to the TTIP (ETC, 2013). The current prime minister, Stefan Löfven, has stated that he welcomes the TTIP but that "social justice issues should be included" (ibid). This is a paradox since the (S) representative Mikael Damberg in a leaked document to Cecilia Malmström, the EU commissioner for trade, has signed a letter pushing for ISDS inclusion in TTIP (TTippen.se). The most troubling issue is perhaps how much of the negotiations have been kept secret from public and governmental scrutiny, similar to the TPP. Moreover it seems that countries have become so desperate for economic growth that they are willing to throw everything they worked for, in terms of environmental and health regulation, out the window. I am also surprised that conservatives don't seem to react to this issue as much as the left, one might think that they should be even more concerned with national sovereignty.