Labour’s vision for post-Brexit trade deals is the right response to Trump

Trade policy is at a crossroads. For three decades, we’ve been told that free trade is the answer to any problem: open your markets, and jobs and growth will follow. We have a Trade Secretary, Liam Fox, fully subscribed to that doctrine. If only our businesses would learn from the buccaneering spirit of our Victorian forbears and dispense with the bloated support of Europe.

The problem for Fox is that vast swathes of working people no longer buy into this notion. Their experience of trade is of jobs being shipped abroad, communities being forgotten, high streets being taken over and then shut down. The votes for Brexit and for Donald Trump may have been led by the far-right, but without a disaffection with globalisation, they would never have won.

Today, trade policy has become nearly synonymous with globalisation. Modern trade deals are no longer simply about tariffs (taxes on imports and exports), but set the rules by which modern capitalism works. They’re about food quality, chemical regulations and environmental protection. They tell governments how they can spend local tax money when procuring public goods. They grant monopolies to big pharmaceutical corporations, allowing them to charge excessive prices for medicines decades after they were produced.

Many even include special ‘courts’ (known as Investor State Dispute Settlement or ISDS), which allow overseas investors to sue governments for treating them ‘unfairly’. In practice, this could (and does) mean putting cigarettes in plain packaging, raising the minimum wage or taking toxic chemicals out of petrol. No wonder giant trade deals like the infamous and now defeated TTIP (Trade & Investment Partnership between the EU and US) garner increasing opposition.

So how have right-wing populists from Trump to Farage, themselves from big finance and big corporate backgrounds, managed to take advantage of the backlash against trade and globalisation? In part it’s because free trade orthodoxy was so enthusiastically embraced by social democrat leaders across Europe, none more so than Tony Blair. That’s why it’s now time for the left to urgently rethink its approach to trade. And in a policy document published last month, that’s what Shadow Trade Secretary Barry Gardiner has started to do.

In Just Trading: What would a just trading system look like, Gardiner calls for neither free trade nor Trump’s aggressive tariff wars, but for ‘open and fair’ trade that rebalances the relationship between capital and labour. In office, Gardiner says, Labour will have no truck with sprawling trade deals like TTIP, or its Canadian and Trans-Pacific cousins, known as CETA and the TPP. Labour will also oppose the deeply controversial corporate court system, not signing any deals that include ISDS, and reviewing, with a view to removing, all ISDS clauses in current deals we have.

Gardiner promises that new agreements “cannot undermine social and environmental standards” and will work “to tighten the rules governing corporate accountability for abuses in global supply chains”. Given the concerns about pro-privatisation clauses in trade deals, Gardiner promises “watertight safeguards” to protect public services like the NHS. There is also an acceptance that trade rules need to make exemptions for procurement so that local and central government can use tax money to support local businesses and keep value within communities, a vital component of the now popular ‘Preston Model’. At heart, Labour will protect the right to regulate because “regulation is the precondition that stops free trade becoming anarchic, exploitative and ultimately self-defeating”.

What’s more, these deals can’t just be about helping ‘us’ – Britain and the wider Western world. While many here have fallen out of love with free trade in recent times, in Africa, Asia and Latin America, the history of Britain’s free trade is infamous. Gardiner says this must change and that Labour will “not support those bilateral trade agreements which have locked trade partners into exploitative relationships”. This is a big move away from the New Labour idea that free trade was the answer to global poverty. Obviously it also means an immediate review of the arms trade including suspending “arms sales to Saudi Arabia”.

There is also a pledge to make trade policy more accountable and transparent. As it stands, Liam Fox will be able fly around the world to negotiate trade deals after Brexit, without a mandate from MPs and without any scrutiny over his actions. When he brings any trade deal back to parliament, MPs will have no automatic right to have a debate, no ability to amend or stop it.

Gardiner rightly thinks this is a disgrace and commits to the “the maximum possible transparency, including both parliamentary scrutiny and external consultation”, democratic mandates for trade negotiations, “full scrutiny powers throughout the process of negotiations” and a final vote. Given that international treaties are more important than national regulation – it is often impossible for a future government to get out of these obligations in any reasonable time frame – this is fitting.

This document is a great start, and a better take on trade than most other European social democrat parties. It also needs to go further in some aspects – for example, we need a major shake-up of WTO rules, of intellectual property and services liberalisation.

Communicated well, it can also be vital in winning a bigger argument. For Brexiteers like Liam Fox, Brexit is not about migration nor even sovereignty per se, but our ability to sign sweeping trade deals. Because it is through these deals that deregulation and liberalisation can be introduced to Britain, as we break away from Europe and create ‘Singapore on Thames’.

Just Trading is the first stage in reconnecting with the real victims of free trade, and telling a different story about the power of the market and big business. It’s also important work for creating a framework which Labour could build on in office to begin transforming the global economy. After all, trade today is about pretty much everything you care about.    

Nick Dearden is director of Global Justice Now, which has produced a model resolution for CLPs on principles for just trade.

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