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EU TRADE POLICIES AND THE DEMOCRATIC GAP after the other abandoned the sinking negotiations, pushing for its The accelerated process of European unification has resulted in completion before public opposition spiralled out of control.* a fundamental democratic gap, which provides an ideal environ- During the MAI negotiating session in February 1998, the EC ment for corporate lobbying. The powers of the European issued a strong warning against passing the April 1998 deadline Parliament remain far too limited to compensate for the loss of for the negotiations: "Buying more time will make things more democratic control created as more and more decision-making difficult, not easier, as special interest groups everywhere discov- power shifts from national capitals to the two highly untranspar- er the questionable value found in denouncing the MAI for their ent EU institutions, the EC and the Council of Ministers. own purposes which have nothing to do with investment."* Decision-making on international trade and investment policies The EC stressed that a failure of the MAI negotiations would is arguably one of the areas where the EU's democratic gap is also jeopardise the ultimate goal of an investment agreement in most pronounced. Member states have delegated most of their the WTO: "It would be bad for the globalised economy in gener- powers upwards, giving the European Commission an agenda-set- al. The world would be further away from global investment ting role. The Commission negotiates rules than ever, and this for a long on behalf of the EU member states in time, if we in the OECD cannot agree bodies like the WTO, and has the on the first cornerstone."* The US, on exclusive right to undertake new trade oe thanks to the public uproar the other hand, indicated to the other initiatives. The bulk of the EU's deci- about the Multilateral Ag reement negotiators that it was "not ready to sions on trade and investment are make a deal"; instead, it favoured "a made in the powerful "133 on Investment (MAI) and the reflection period and intensified bilat- Committee" (previously called "113 devastating financial crisis the eral contacts as the best way to make 5 st 3 Committee"), which consists of trade progress". officials from member states and EU's policies are increasingly The battle was led by powerful EU coming under scrutiny. Trade Commissioner Sir Leon Brittan, who, with his hardline neoliberal political stance, is a real barrier to Commission representatives. Only major or controversial issues are brought before the EU foreign trade ministers.” political change. According to World "The Commission is like a dog on a Trade Organization boss Renato very long leash," observes Michael Hindley, UK Labour Member __ Ruggiero, Brittan is "one of the most important free-trade advo- of the European Parliament (MEP), and this description is particu- cates of this decade".** Not even when financial meltdown hit larly applicable to ultra-free-Trade Commissioner Sir Leon large parts of the global economy did Sir Leon Brittan reconsider Brittan.” the dogmatic recipe of high-speed liberalisation he prescribes for The European Parliament is informed, but lacks decision-mak- every situation. ing power on external trade policies. National parliaments fail to exert effective control over their EU trade ministers due to a com- About the Authors: bination of lack of information and limited awareness about the Corporate Europe Observatory is a research and campaign group tar- importance of international trade and investment issues. These geting the threats to democracy, equity, social justice and the environ- critical issues have been treated as mere technical matters for far ment posed by the economic and political power of corporations and anni ante - ats their lobby groups. This edition of Corporate Europe Observer (no. 4) too long. Happily, thanks to the public uproar about the is from Belén Balanya, Ann Doherty, Olivier Hoedeman, Adam Multilateral Agreement on Investment (MAI) and the devastating Ma’anit and Erik Wesselius. An earlier CEO briefing paper, financial crisis, the EU's policies are increasingly coming under "MAlgalomania!", about the Multilateral Agreement on Investment scrutiny. Real change, however, will be hard to achieve. It is (MAI), was published in NEXUS 5/03 and 5/04. symptomatic and disturbing that the European Commission Fs remained firmly behind the MAI, even while one government Continued in the next issue of NEXUS... Endnotes (cont.) 27. Sir Leon Brittan, in a speech entitled 35. "Acting in Harmony on World Trade", resources, taking into account the rights of local "Europe's Prescriptions for the Global Trade European Voice, 16-22 January 1997. communities, while TRIPs only gives weight to Agenda”, Washington, DC, 24 September 1998, the rights of corporations. http://europa.eu.int/comm/dg01/0924slbsp.htm. Web Resources 22. Freudmann, Aviva and John Maggs, 28. ibid. Some campaign groups: 29. For an introduction to the EU's decision- making on international trade, see "Gender Mapping the European Union Trade Policy", "Bankers, insurers celebrate WTO pact: deal puts financial-services markets under global tules for the 1st time", Journal of Commerce, 16 ~ ATTAC: www.attac.org = Corporate Europe Observatory: www.xs4all.nl/~ceo : WIDE, 1997. . | ra , December 1997, www.islandnet.com/~ncfs/ 30. Interview with MEP Michael Hindley, 17 Council of Canadian: www.canadians.org maisite/fsia3.htm. February 1999. + Friends of the Earth: www.foe.org 23. Sir Leon Brittan in the Financial Times, 18 + Focus on the Global South: 31. After the high-level negotiation session in May 1998. . www.focusweb.org 24. "WTO Financial Services Agreement to eae Leia aunt oT + Green Group in the European Parliament: Come Into Force on 1 March", Agence Europe, meet the April 1998 deadline. www.millennium-round.org 16 February 1999. 32. Briefing note, European Commission repre- ~ People's Global Action: www.agp.org 25. ibid. sentative at high-hevel meeting on the MAI, 16- > Public Citizen: www.tradewatch.org 26. Dutch Ministry of Economic Affairs, 17 February 1998, Paris. = Third World Network: "Financiele diensten: een hernieuwde poging", 33. ibid. www.twnside.org.sg WTO-Nieuwsbrief, no. 5, November 1997, 34. Plijter, R., "Mission Report", European Transnational Institute: www.minez.nl/magazine/wto/w05.htm. Commission DG1, Brussels, 19 February 1998. www.worldcom.nl/tni/wto/ About the Authors: Corporate Europe Observatory is a research and campaign group tar- geting the threats to democracy, equity, social justice and the environ- ment posed by the economic and political power of corporations and their lobby groups. This edition of Corporate Europe Observer (no. 4) is from Belén Balanya, Ann Doherty, Olivier Hoedeman, Adam Ma'anit and Erik Wesselius. An earlier CEO briefing paper, "MAlgalomania!", about the Multilateral Agreement on Investment (MAI), was published in NEXUS 5/03 and 5/04. 16 = NEXUS EU TRADE POLICIES AND THE DEMOCRATIC GAP coming under scrutiny. Continued in the next issue of NEXUS... DECEMBER 1999 — JANUARY 2000