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TTIP Attacks on Wages, the Social and the Environment

by Verdi German union Tuesday, Mar. 25, 2014 at 7:57 AM

The belief that growth and prosperity for all people are promoted by free trade is as old as capitalism. This is often wonderfully represented in the model worlds of economists. But reality looks different. Specific particular interests are sold as the general interest.


By the German union Verdi

[This article by the German union Verdi published in February 2014 is translated from the German on the Internet,]

The planned Transatlantic Trade and Investment Partnership (TTIP) is outlined in the 15-page brochure after a criticism of the ideology of free trade. The negotiations are briefly described and the great promises (growth and jobs) unmasked. A chapter is devoted to the dangers and risks (investor protection damages democracy, transatlantic wage- and social dumping, restriction of environmental-, consumer- and climate protection, privatization of public necessities and attack on democracy). Then the demands and perspectives of Verdi are presented.


The belief that growth and prosperity for all people are promoted by free trade is as old as capitalism. This is often wonderfully represented in the model worlds of economists. But reality looks different. As a rule those more powerful economically gain a great advantage from largely unregulated trade. Therefore big businesses and their associations support the dismantling of so-called trade barriers. That these often serve the protection of employees, the social state and the environment is usually unmentioned. Specific particular interests are sold as the general interest.


Phases of free trade and more or less strong incursions of states for control of foreign trade (protectionism) alternate in history. After the 1929 worldwide economic crisis ended a liberal phase of world trade, most states reacted with a policy of national protectionism. A system of fixed exchange rates with the US dollar as anchor currency was first created after the Second World War in the framework of the Bretton Woods agreement. Europe’s restoration as an economic center and important trading partner of the US was central. A gradual liberalization of world trade and regional economic communities like the European Economic Community promoted growth in Europe and the US. In this process the former colonies or the economies of Asian, Latin American and African countries remained dependent for a long time on the western-dominated global economy. Trade relations were determined to their disadvantage by one-sided rules.

Free and unlimited trade with capital goods and services was carried out worldwide after the end of system confrontation and the opening of the countries of the “eastern bloc” and China for the capitalist market economy by the World Trade Organization (WTO). The countries participating in the negotiations blocked this for a long time and the WTO threatened to sink in meaninglessness.

At the end of 2013 an agreement was successfully negotiated in Bali in the scope of the Doha round since 2001 on liberalizing trade with goods and services that was accepted by nearly 160 states. The so-called Bali pact includes trade relief, reduced agricultural subsidies and help for developing countries. The International Chamber of Commerce (ICC) praised the agreement as “historic” while Attac Germany saw it as “a disaster for a just world trade order.” This judgment was connected with the fact that the WTO for a long while wanted to remove agricultural subsidies described as “trade-distorting.” Many developing countries subsidize staple foods to safeguard the nutrition of their population. A proposed abolition within four years met with the resistance of the G33- developing countries. A new breakdown threatened. Finally it was agreed the subsidies would be possible but only until a permanent adjustment of the agricultural agreement is resolved. Thus the theme remains on the WTO agenda.


The big industrial states have no problem using extensive subsidies to secure their own exports even though these are very problematic from a developmental- and trade-perspective. In Bali the EU and the US blocked the attempt to reduce the upper limits. Therefore the economically strong countries and economic zones (US, EU and Japan) profit from these agreements while the interests of up-and-coming Latin American, African and Asian countries hardly get a hearing and their policy is put in question again and again as “trade-distorting.”

Social rights as laid down in the norms of the International Labor Organization (ILO) are still not anchored in the WTO agreement today and like environmental standards are subordinated to trade interests. The prohibition of child labor, forced labor and the right to free union activity are such social rights. The long blockade of WTO negotiations in the past led to free trade agreements negotiated by the US and the EU with individual countries and economic regions – for example the North Atlantic Free Trade Agreement (NAFTA) of the US, Canada and Mexico. The economically advanced countries press for liberalization of trade with goods and services and for opening public provision systems to suppliers from other countries. Social and ecological standards are hardly agreed and when agreed are legally inadequate.

With the TTIP, the US and the EU are now attempting to enforce liberalization in world trade. Trade relief already negotiated in the WTO and in other bilateral agreements like NAFTA should be legally established and developed further.


Concerning the effects of the TTIP on wages and the social state, it is alarming that the US has only ratified two of eight core ILO norms. Therefore the freedom of association and the freedom of collective bargaining are considerably restricted in the US. The work of unions is made much more difficult. The T-Mobile USA Corporation that tried to prevent union representation of interests is an example. In the US there are pre-democratic conditions in enterprises and administrative centers. The mandate of the commission emphasizes national labor- and social standards. Nevertheless the danger persists that a downward spiral could occur in the standards in a transatlantic free trade zone. Corporations could exploit the different high standards so that only the lowest are applied. In this way national regulations could be evaded.

The danger of such a downward spiral has already been confirmed with other free trade agreements. With view to the EU weak or deficient social standards in the liberalized domestic market obviously lead to an increase of precarious working conditions, growing income disparities and intensified pressure on wages and working conditions. The legal rules of the country of origin (so-called country of origin principle) are in effect according to the European service guideline for service providers. Since then large numbers of workers from Eastern Europe work in Germany at cheap wages and under miserable social conditions in German slaughterhouses. Either they are hired by foreign subcontracted labor firms or the German slaughterhouses have signed work contracts with foreign subcontractors. There are hardly any permanent employees in many factories of the German slaughterhouse industry.

Non-existing binding regulations in the TTIP could lead to a downward spiral in wages and social standards.

If no binding agreements on labor standards are arranged in the TTIP negotiations, the danger exists that businesses will exploit the lower standards of some countries. Wage dumping, tax evasion and the undermining of union possibilities of influence would be the consequences.


The unions clearly positioned themselves from the beginning of the negotiations. [1] The demand for full transparency and extensive participation of the parliaments, civil society and the unions in the negotiations was at the top of the agenda. The governments of the EU member states must make all relevant documents available to their parliaments and organizations of civil society and inform them comprehensively about the negotiations. This is also true for the EU commission.


Social and ecological goals must be pursued on the same level as the economic goals. This means: adjustment of environmental regulations and standards on the highest level, complete ratification of all ILO-social standards in the EU and the US, safeguarding employee rights and right of joint determination in transatlantic businesses on the highest level. When employees are sent to work in the US or Europe, the destination country principle must be in force: equal wages for equal work at the same place.

The rights of consumers must also be protected on the highest level. The protection of personal data and the protection of copyrights must be guaranteed.

Public services are left out of the agreement. Past EU agreements on protection of public services may not be threatened through the backdoor by the TTIP. The subsidiarity principle valid in the EU according to which local communities, countries and member states largely organize their vital services themselves must be strictly observed. For the public jobs sector, no regulations should lead to further liberalization or privatization of public services.

Investor-state settlement mechanisms secure one-sidedly privileges for investors. They protect their profits and preserve them from the costs of necessary social and ecological changes in the contracting states. Therefore we reject investor-state arbitration processes in the TTIP. The legal orders of both economic zones offer enough protection for investors.

The decision of the EU not to negotiate about audio-visual services as bearers of cultural diversity must be lasting like the UNESCO convention on protection of the diversity of cultures.

If these minimum demands to the transatlantic free trade agreement are not fulfilled, the agreement must be rejected. In the next months, Verdi together with its alliance partners will make the TTIP into the theme of social discussions.

The planned economic zone of the TTIP agreement endangers essential labor standards. As to employee rights, the US is a bad and dangerous negotiating partner. The International Labor Organization resolved eight core norms on the basis of human rights.

The US has not ratified the following norms:

The freedom of association, the right of employees to freely organize in unions,

Right to collectively negotiated wage contracts,

Abolition of forced- and compulsory labor generally, above all in the use of prisoners for private businesses,

Equal wages for equal work of men and women,

Minimum age for entering an employer-employee relationship,

Prohibition of discrimination in the world of work on account of race, skin color, gender, religion, political opinion and national and social origin.


In the US, 24 of the 50 states have implemented so-called “right to work” laws that drastically limit union rights. Since the 1990s, German and European businesses outsourced production sites to these right-to-work states to profit from wage freedom and freedom from joint determination.

The states of the EU have ratified most norms of the ILO but decreasingly hold to these norms. In the “bailout measures” of the EU for Greece, Spain, Italy and Portugal, the EU together with the International Monetary Fund (IMF) suspends human rights norms when wage contracts are dissolved, wage cuts decreed and strikes made difficult.


Elementary labor rights and secure working conditions have been under pressure in Europe and the US for years. This trend will intensify through the Transatlantic Free Trade and Investment agreement.

Therefore we demand stopping the negotiations for the transatlantic free trade zone!




"Profiting from Injustice," 76pp, November 2012. How law firms, arbitrators and financiers are fuelling an investment arbitration boom. Corporate Observatory



Public Citizen, Trade Agreements Cannot be Allowed to Undermine Financial Reregulation

Trade: Time for a New Vision. The Alternative Trade Mandate, 20pp, January 2014

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