Financiers seek to have fondest dreams come true through own secret trade deal

The financial industry has grown ever more powerful in recent decades, so perhaps the world’s governments believe it is only fitting that it has its own secret treaty. Similar to “free trade” agreements that curtail regulation of manufacturers, the Trade In Services Agreement’s Financial Services Annex, if passed, would eliminate the ability of governments to regulate the financial industry.

Incredible as it sounds, the annex, being negotiated in secret among 50 countries with continuing advice from lobbyists, would require signatory governments to allow any corporation that offers a “financial service” — that includes insurance as well as all forms of trading and speculation — to expand operations at will and would prohibit new financial regulations.

The driver of this offensive is the “investor-state dispute mechanism.” Deceptively bland-sounding, the “mechanism” is secret tribunals controlled by corporate lawyers that are commonly used under “free trade” agreements. Corporate executives angered because an environmental or safety rule keeps it from earning the highest possible profit can ask for a hearing at a designated tribunal to adjudicate its “dispute” with a government. Many of the judges who sit on these tribunals are corporate lawyers who otherwise represent corporations, and there is no appeal to their one-sided decisions.

City of London expanding (Photo by Will Fox)

City of London expanding (Photo by Will Fox)

The Financial Services Annex contains language identical to standard language used in “free trade” agreements that obligate “equal treatment” of all corporations. The practical effect of that language would result in the profits of speculators being elevated above all other human considerations, similar to proposed agreements such as the Trans-Pacific Partnership and Transatlantic Trade and Investment Partnership that would elevate corporate profits above all other considerations, should they come into force.

The countries negotiating the Trade In Services Agreement (TISA) Financial Services Annex, which include the United States, Canada, Australia, Japan and the 28 countries of the European Union, refer to themselves as the “Really Good Friends of Services.” If the “services” in question are services to the financial industry, then these governments are indeed really good friends.

If it is done in secret, it is for a reason

That we know anything at all about the Financial Services Annex is because the text has been published by WikiLeaks. Just as agreements like the Trans-Pacific Partnership and Transatlantic Trade and Investment Partnership are being conducted in secret because, as former U.S. Trade Representative Ron Kirk admitted, if people knew what was in the TPP, it would never pass, the annex is kept hidden from view, except for industry lobbyists.

The leaked text of the Financial Services Annex states it should be declassified “five years from entry into force of the TISA agreement or, if no agreement enters into force, five years from the close of the negotiations.” A deal designed to give financiers even more power over the economy is a state secret!

As with the ongoing “free trade” agreement negotiations, one should not hold one’s breath waiting for substantive information on TISA or the annex. The latest round of negotiations were held June 23 to 27 in Geneva, and here is what the U.S. Office of the Trade Representative reported, in full:

“The fourth round of TISA talks was positive and productive, with participants expecting to table offers by the end of this month. Additionally, the draft text of the agreement was further stabilized with the removal of all brackets concerning the ‘negative list’ approach. U.S. negotiators look forward to further work on this important agreement.”

Yep, that’s it. Despite that meaningless ode to bureaucratic blandness, the United States and the European Union are vying to introduce the most draconian language. WikiLeaks, in a press release accompanying its publication of the secret text, said:

“The US and the EU are the main proponents of the agreement, and the authors of most joint changes, which also covers cross-border data flow. … The draft Financial Services Annex sets rules which would assist the expansion of financial multi-nationals — mainly headquartered in New York, London, Paris and Frankfurt — into other nations by preventing regulatory barriers. The leaked draft also shows that the US is particularly keen on boosting cross-border data flow, which would allow uninhibited exchange of personal and financial data. … [T]he Agreement is being crafted to be compatible with [the General Agreement on Trade in Services] so that a critical mass of participants will be able to pressure remaining [World Trade Organization] members to sign on in the future.”

The intention is to make the agreement universal, solidifying the financial industry’s grip on the global economy.

A backdoor for Wall Street to eliminate Social Security?

Articles 1 and 2 of the Financial Services Annex place no limits on what constitutes covered “financial services”:

“This section/Annex applies to measures affecting the supply of financial services. … A financial service is any service of a financial nature offered by a financial service supplier of a Party. Financial services include all insurance and insurance-related services and all banking and other financial services.”

“Party” in the text refers to a signatory government. Among other provisions, the annex would require:

  • Countries to change their laws to conform to the annex’s text (Article 3).
  • Countries to “eliminate … or reduce [the] scope” of state enterprises (Article 5).
  • Prohibit any “buy local” rules for government agencies (Article 6).
  • Prohibit any limitations on foreign financial firms’ activity (articles 7 and 10).
  • Prohibit restrictions on the transfer of any data collected, including across borders (articles 8 and 11).
  • Prohibit any restrictions on the size or expansion of financial companies and a ban on new regulations (Article 15).
  • Require any government that offers financial products through its postal service to lessen the quality of its products so that those are no better than what private corporations offer (Article 22).

Beyond the dry, bureaucratic language in which the annex is written is the crucial matter of how the text will be interpreted. Already, under the North American Free Trade Agreement, a corporate parcel-delivery service sued Canada in an attempt to have the Canadian postal system dismantled. That attempt failed, but as the secret tribunals issue more and more rulings granting more and more “investors’ rights” that become precedents for the next dispute, it is no stretch to believe that a tribunal of three “really good friends” of the financial industry could issue a ruling that a government retirement system such as Social Security is an illegal restraint on private profit.

Wall Street has long desired a privatization of Social Security, and the Financial Services Annex might prove to be the ticket for it to achieve its most sought-after goal and thereby put other countries’ public retirement systems at risk. Articles 5 and 22 hold the potential for a tribunal to rule that a government financial service such as a national retirement system is an unfair state subsidy. Consider Goldman Sachs, where customers are referred to as “muppets” with the intention of “ripping eyeballs out.” The infamous “vampire squid” stands out among its financial-industry peers for its ability to, in the words of Matt Taibbi:

“hoover up vast sums from the middle and lower floors of society with the aid of a crippled and corrupt state that allows it to rewrite the rules in exchange for the relative pennies the bank throws at political patronage.”

The foregoing, of course, is the standard operating principal of the entire financial industry. Is this who you want to control the possibility of your retiring some day?

European privacy laws would also be in the crosshairs. The U.S. has proposed language allowing cross-border movements of personal data without restriction, while the E.U. (which is negotiating on behalf of its 28 member countries) has proposed language allowing data transfers ameliorated only by boilerplate language that exempts personal privacy unless it “circumvents” the annex — a loophole wide enough to drive a truck through.

Existing “free trade” agreements have similar boilerplate language supposedly granting exceptions for human health and safety, but other clauses requiring adherence to “international norms” supersede such exceptions, rendering them meaningless.

Speculators would have unconditional rights to profit

Article 20 contains language sponsored by the U.S. and the E.U. that would require investor disputes to be heard by a panel having “the necessary expertise relevant to the specific financial service” — an invitation for bankers to sit in judgment of such disputes — and Article 13 contains language pushed by the U.S. that is essentially identical to text typically found in “free trade” agreements requiring “equal treatment” of domestic and foreign corporations.

It is that “equal treatment” language that is the battering ram used by corporations to knock down national regulations on health, safety and the environment.

For example, Chapter 11 of the North American Free Trade Agreement codifies the “equal treatment” of business interests in accordance with international law and enables corporations to sue over any regulation or other government act that violates “investor rights,” which means any regulation or act that might prevent the corporation from earning the maximum possible profit. Canada, in two separate cases, had to reverse bans on chemicals known to be dangerous to human health and pay millions of dollars to the chemical manufacturers.

In one of those chemical cases, the tribunal ruled that, when formulating an environmental rule, a government “is obliged to adopt the alternative that is most consistent with open trade.”

These are the types of precedents that will be used to further engorge financial speculators should TISA and its Financial Services Annex become law.

Those living in countries not yet part of these negotiations also have much to fear. Developing countries are mostly shut out of the TISA negotiations. The coalition group Our World Is Not For Sale, which includes more than 200 member organizations, writes:

“The proposed TISA is thus a cynical attempt of the major proponents of so-called ‘free trade’ and aggressive market opening to ensure that corporate wish lists can be fulfilled, without having to make any changes to existing WTO [rules] demanded by poor countries.”

A separate group of 341 civil-society organizations, in an open letter demanding ministers cease TISA negotiations, note that:

“The TISA negotiations largely follow the corporate agenda of using ‘trade’ agreements to bind countries to an agenda of extreme liberalization and deregulation in order to ensure greater corporate profits at the expense of workers, farmers, consumers and the environment. The proposed agreement is the direct result of systematic advocacy by transnational corporations in banking, energy, insurance, telecommunications, transportation, water and other services sectors, working through lobby groups.”

Red carpet for lobbyists, red-baiting for unions

The watchdog group Corporate Europe Observatory reports that the European Commission trade department, which is negotiating on behalf of the E.U.’s 28 countries, has met more than 20 times with the European corporate lobbying group leading the push for TISA, the European Services Forum (ESF), but has met only once with trade unions. In fact, the ESF was set up with the encouragement of the European Commission in the 1990s, leading to a situation “where the public authority lobbies business to lobby itself,” the Observatory said. On the other hand, the Commission has descended to red-baiting unions when they bring up their concerns:

“When the Commission meets concerns about its aggressive services liberalisation agenda, it reacts with ignorance and mockery. A staff member of the European Federation of Public Service Unions, told Corporate Europe Observatory about one of the Commission’s Civil Society Dialogue meetings: ‘When I voiced concerns over the way public services were being dealt with in the EU’s trade policy, one of the officials basically said ‘there is no going back to the Soviet Union.’ ”

Privatization über alles! The European Commission, the bureaucratic arm of the E.U., is free from democratic accountability and if even if it weren’t there would be little or no accountability considering that the four largest blocs within the European Parliament collectively holding 549 of the 751 seats are broadly in favor of “free trade” agreements; the main center-right and center-left blocs hold a majority of the seats between them.

Nor should help be expected from the other side of the Atlantic. Not only does the U.S. consistently push for the most draconian rules regardless of which party is in the White House but its trade representative, Michael Froman, is a former high-ranking executive at Citigroup Inc. who is a protégé of former Treasury Secretary Robert Rubin, an architect of the Clinton administration’s 1990s dismantling of financial regulations, which led to the next decade’s economic collapse.

Multi-national corporations are well organized across borders; financiers and industrialists understand their common interests. If there is any hope to put an end to “free trade” agreements — and then go on the offensive to reverse those already in place — we had better do the same.

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10 comments on “Financiers seek to have fondest dreams come true through own secret trade deal

  1. Alcuin says:

    I’m beginning to think that the only way to organize opposition to these assaults on individual dignity is to appeal to a higher power, if you will. I’m reading about a movement called “post-secularism” and I find it very interesting. Post-secularism explains a lot of what is going on in the Middle East, for example. Organized religion, despite its history of being an arm of the State, is probably the only way to effectively counter the continually growing insults from TPTB. Religion was the driving force behind the destruction of the World Trade Center, after all. Despite billions of words written to explain, in a rational manner, how we are continually getting screwed and how we need to organize to fight back, nothing changes. Humans are, for the most part, irrational and completely incapable of being proactive. Freud proved that. Hierarchy and exploitation have existed since before our ancestors came down out of the trees and neither are going to disappear, despite the messianic discourse of Marx, Engels and hundreds of other dreamers. The Modernist project has failed on multiple levels – economically, ecologically, environmentally and politically, among others. Nietzsche was right.

    “God is dead. God remains dead. And we have killed him. Yet his shadow still looms. How shall we comfort ourselves, the murderers of all murderers? What was holiest and mightiest of all that the world has yet owned has bled to death under our knives: who will wipe this blood off us? What water is there for us to clean ourselves? What festivals of atonement, what sacred games shall we have to invent? Is not the greatness of this deed too great for us? Must we ourselves not become gods simply to appear worthy of it?”

    —Nietzsche, The Gay Science, Section 125, tr. Walter Kaufmann

    Isn’t the entire goal of the rationalist, Modernist project to turn mankind into God?

    • I have to say here, Alucin, that I read of your new-found pessimism with sadness. “Humans are, for the most part, irrational and completely incapable of being proactive.” If that were so, then nothing could change and we would still have social and economic relations based on slavery and absolute monarchs. I would like to say as gently as I can manage that to believe nothing can change means giving up. I’ll take Marx, not Freud.

    • Alcuin says:

      With all due respect, SD, I believe that you have misread my comment. It addressed the thought that you expressed in the last paragraph of your post:

      “Multi-national corporations are well organized across borders; financiers and industrialists understand their common interests. If there is any hope to put an end to “free trade” agreements — and then go on the offensive to reverse those already in place — we had better do the same.”

      If we agree that human society has always been hierarchical (and thus exploitative) and I think we do – there has never been an idyllic existence as most of the followers of Jared Diamond and similar authors believe – then it follows that those at the top of the hierarchy have a great deal of power to ensure that they retain their privileges. They don’t always succeed (if they did, then there would never be any changes) but they do the vast majority of the time their social position is challenged. The corollary, then, is that those on the bottom of the hierarchy have very little power to change things – they are most assuredly not in the driver’s seat.

      So, my question is this (and I’ve raised this point before): how do you propose to achieve a leveling of the social hierarchy in the face of fierce resistance from the dominant members of said hierarchy? It is not enough to repeatedly state the obvious: we need to organize. How do you propose to do this? I reject the Marxist emphasis on class struggle, both because “class” is a very slippery term and because the “classes” involved in the struggle, even when said struggle is rarely successful, soon find themselves back in the very same status that they started out from – an exploitative hierarchy.

      Would Martin Luther King, Jr. have succeeded if he had not been a Baptist preacher? For that matter, would Martin Luther have succeeded in toppling the Catholic Church without an appeal to Divinity?

      I said, in my comment, that I believe that religion (or some kind of shared value system that stems from a divine and thus fearful source) is the only feasible way to organize opposition to hierarchy. That said, religion has a very long history of being used by the dominant members of a hierarchy to reinforce their position in society. Religion, after all, is just another form of ideology and I make no claims as to its moral value – only to its efficacy. That is why religious wars are so vicious and brutal. I quoted Nietzsche because what he wrote is true: the Enlightenment killed God and replaced Him with Reason. Was that successful? Nietzsche says no when he states that “yet his shadow still looms.” Yes it does – in the form of fundamentalist Christianity, Creationism and the Young Earth movement. I write all of this as a panpsychic, by the way, not as a theist. Are we really better off with Modernity and all of its ills?

      I maintain that Marx’s thought is shot through with teleological and messianistic themes that stem from the fact that Marx’s father was a Jewish rabbi. He was a masterful analyst of the capitalist economic system and how it works but also an intellectual embedded in the society of which he was a part. He couldn’t be otherwise, just as we are also embedded in the society we live in. I have the greatest respect for Marx’s analysis, but it is time to recognize that he should not be worshiped as the sole source of wisdom in social analysis, as he so often is.

      I don’t think it is possible to ignore the contributions of Freud to the debate. It isn’t a matter of being able to pick between Marx and Freud – both have to be considered. That is to state the obvious, though, because thousands of books were written in the 20th century (and continue to be in the 21st) attempting to combine the two men’s ideas.

      Again: how do you propose to organize effective opposition to the never-ending schemes of the dominant members of the hierarchy seeking to maintain their social position?

      I will delete one word in the sentence of mine that you quoted: ‘completely’. Other than that, I stand by my statement.

      You believe that I am a pessimist; I believe that I am a cynical realist.

      • If I have been wrong in believing you had become a pessimist, then I am pleased to be proven wrong. Let me try to address your well-thought-out concepts.

        One, I say flatly that Marx is not teleological or messianic. Many of his followers surely are/were and do/did present him as such. But I don’t believe a careful reading of Marx, or of Engels, justifies that. Nor does Marxism place all weight on economics to the exclusion of all else. Engels wrote of his frustration that his and Marx’s followers over-emphasized the economic while acknowledging that he and Marx were partly responsible because they had put a heavy emphasis there in their polemics with classical economists, who denied that.

        To again quote myself summarizing Engels: “Philosophical, political and religious ideas (which are built on the materials of their predecessors); the prevailing culture (which include traditions shaped in the conditions of the past that have survived into the present); and local geographic factors influence not only each other and but also influence economic conditions. What was a cause can become an effect, and an effect can become a cause.”

        This follows from Marx’s concept of historical materialism (again quoting myself): “To give a simplification similar to the triad shorthand that frequently is used to describe Hegelian dialectics, Marxist materialism posits that anything of human creation contains its opposite, that a contradiction inevitably arises from the tensions between the opposites, and in the process of resolving the contradiction a new, higher form develops. But the new form, although it contains elements of its precursors, is not permanently stable, either, and contradictions will arise here, too, continuing the process.”

        Human development is a continuing process. I see nothing “messianic” or “teleological” in that. Some excellent philosophical work here has been done by Joel Kovel, and I bring him up because he spent much of his career attempting to bring together Marx and Freud, and explored psychological factors in The Age of Desire: Reflections of a Radical Psychoanalyst. That’s one I can recommend because I’ve read it. Another of his books I’d recommend is his better-known The Enemy of Nature: The End of Capitalism Or the End of the World?

        Professor Kovel has long been a leader within the Green Party, which, for all its faults, contains many people attempting to synthesize the environmental destruction of capitalism, previously ignored by most Marxists. The Monthly Review is also doing excellent work as well. What is happening here is an updating of Marxism, an adaptation to present conditions, that is completely within its traditions. I say again: If Marxism does nothing more than provide the best critique there is of capitalism and its variants, then it need do nothing more to be of the highest value to humanity. Marx did not provide any blueprints, nor is such a thing possible. But without the critique of capitalism, we can not possibly find the path to transcending it.

        Back to Freud: His work was the basis for modern consumerism, most notably summarized in his nephew Edward Bernays’ book, Propaganda, and also used as a tool to justify hierarchy. Freud’s work provided a supposed “scientific” basis for the idea that mental function is bifurcated into emotional and intellectual, and that the ideas of a dominant class are rational and intellectual while ideas from elsewhere are irrational and emotional. These labels were just as easily applied to majority/minority racial or national groups and to men/women.

        An excellent discussion of this can be found in The Age of Oprah: Cultural Icon for the Neoliberal Era by Janice Peck. This is not to say that there isn’t good work out there bringing together psychology with the material world. Eric Fromm’s still relevant Escape From Freedom remains a standard work here. But even Fromm, who developed a rigorous and challenging body of work that stressed the psychological underpinnings driving authoritarian movements, had no hesitation in resting his theory on an economic foundation.

        Finally, you ask: “What do we do?” If I had the answer, I’d have already told everybody. Marxism is not a magic wand, nor is any other body of intellectual work. Part of an answer, I believe, is to acknowledge the enormous changes in the social zeitgeist over the centuries and the enormous distances we have to travel. Everything of human creation is temporary, and we can’t skip over the step of repeating that over and over again because if we don’t believe that, then indeed nothing changes and we can just sit down and count down the days to the end.

    • We’re very much behind in terms of fighting TISA — I confess I had not heard of it until WikiLeaks published the financial annex a few weeks ago — but with the movement against TPP growing rapidly, we have the capability to defeat it, too. We need to tie those two together for they are one and the same attack.

  2. steve says:

    Hi

    In Europe there are people who are fighting back. A link here for those who are in Europe and want to protest.

    http://action.sumofus.org/a/ttip-comments/3/2/?akid=5960.3757210.tdHEFm&rd=1&sub=fwd&t=2

    I happen to think our politicians are in a bind.

    Our money and economic system will tend to drive behaviour for ever greater and larger corporations. Monopolies and cartels are the natural outcome which regulation seeks to control but doesn’t do a very good job.

    The bind is plain to see. Corporations are the giver or taker away of jobs and no politician is able to stand up to that threat.

    The end result is we consume ever more and we must for the ride to continue.

    The growth at all costs is a natural outcome of a broken economic system and we have been paying that price for a long time.

    I came across some interesting work which looks at our values and one can see how these may change over time. Values are as individual as our DNA with some of us more focused on for example security with others more focused on making a buck and yet others who tend towards ecology.

    The above is somewhat simplistic especially since there are 1000 values mapped out in one study alone.

    Things can and do change but it takes quite a while and a much effort.

    I haven’t thrown in the towel yet.

    Thanks to Systemic Disorder for your post.

    Regards

    Steve

    • Our economic system indeed compels the behavior that is so destructive. A corporation owes its duty solely to its shareholders, and that duty is to deliver the highest profit, period. Neoliberal apologists who claim otherwise need only look to their hero, Milton Friedman, who said it would be “immoral” for a corporation to be run other than for the maximum benefit of stockholders. And, of course, “external costs” such a pollution are not borne by the corporations responsible.

      So although we face an enormous challenge, I, too, haven’t thrown in the towel yet.

  3. Alcuin says:

    An article on John. T. Jost’s System Justification Theory and how it applies to Obamacare and climate change.

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