UK leaving single market for TPP could hit workers' rights, union warns
Trade unions have issued a warning about the possible impact on workers’ rights if Britain leaves Europe’s single market and instead seeks to join a flagship Pacific trading group after Brexit.
After claims that officials had embarked on informal talks about future membership of the Trans-Pacific Partnership (TPP), the TUC general secretary, Frances O’Grady, said such a move would be “scraping the bottom of the Brexit barrel”.
“Trade unions around the world have opposed this deal because it allows labour abuses, it puts public services at risk and it gives too much control to corporations,” she said of a trading pact that has lost the support of the US but still includes 11 potential members including Australia, Japan and Mexico.
“Ministers should stay focused on keeping frictionless trade with our major trading partners in Europe and protecting our rights at work. The best way to achieve this is a Brexit deal that keeps us in the single market and customs union after we leave the EU.”
Abandoning TPP was one of Donald Trump’s first acts as US president, after he claimed during his election campaign that such deals were responsible for job losses and anger in America’s industrial heartland.
The Communication Workers of America union claimed the deal would be a “complete disaster” as it could incentivise corporations to move service sector jobs to lower-wage economies such as Vietnam.
There has also been resistance in Australia where trade unions claimed thousands of jobs could be destroyed by the arrangement.
The shadow trade secretary, Barry Gardiner, said TPP had been “mired in controversy, with negotiations clouded in secrecy and the USA pulling out over fear of job losses”. He called on the trade secretary, Liam Fox, to explain why it made sense to be discussing aligning regulations with countries on the other side of the world that accounted for 8% of British exports, given the potential losses from a nearer market that accounts for 44%.
Speaking in China, Fox said it was “a bit premature” to be trying to join the TPP grouping before a deal has been negotiated but did not deny that talks had taken place.
He insisted it would be foolish for the UK to rule out such an option in the future, while another minister argued that the UK’s geographic distance from the Pacific was not a barrier to such a move.
“We have said that we want to be an outward-looking country and therefore it would be foolish for us to rule out any particular outcomes for the future,” said Fox. “So we’ll keep an open mind and we’ll want to talk to our global trading partners.”
But Simon Fraser, a former British diplomat who has led both the Foreign Office and the Department for Business, Innovation and Skills, poured scorn on the idea of Britain joining a distant trading pact.
Simon Fraser (@SimonFraser00)
The former Tory Treasury minister Jim O’Neill, who was appointed by George Osborne, also criticised the government’s thinking over trade. He said leading Brexiters were mad to pour so much energy into markets such as New Zealand, a part of the TPP negotiations, instead of a trading giant such as China.
In comments published in the German newspaper Die Welt, the crossbench peer said: “Brexiteers in May’s cabinet like Boris Johnson or Michael Gove were very intellectual, smart people. But they have no clue about the world of economy. They are clueless, sadly. Clueless.”
Others pointed out that Japan, which is the largest economy within the TPP grouping, accounted for just 1.6% of UK’s goods exports in 2016, according to the MIT’s Observatory of Economic Complexity. Meanwhile, Germany alone accounts for 11%.
Meanwhile, officials from TPP countries told the Financial Times it was “way too soon” to talk about the possibility of a country such as the UK joining the group.
Senior UK cabinet figures have argued internally that forecasting around trade has been too reliant on the so-called gravity model. This claims that the size of an economy and how close it is are the two most important factors when it comes to predicting the scale of trade flows – and so suggests the UK would benefit more from a closer relationship to the EU (and countries such as the US and China) than to TPP nations.
David Davis and other senior figures within the government have argued that other factors such as cultural links and language are becoming increasingly important, particularly as transport of goods becomes easier and trade in services more crucial.
Samuel Lowe, a trade expert at the Centre for European Reform, said ministers were trying to downplay the gravity model because “it eventually says we shouldn’t leave the EU”.
Lowe admitted technological and other advances meant geography would become less important, but he said size followed by distance was still critical. Language and historical links were also important, but so too were timezones, he added, which benefited the closeness of the EU.
As for TPP, Lowe said there had also been talk of the UK joining the North American Free Trade Agreement (Nafta) but it was all “blue-sky thinking”.
“In terms of viability, TPP hasn’t been concluded and there is a long way to go. It is not ready for us to join and I’m not entirely sure if we’ve read it and would agree with it.
“We are never going to be able to join it until they know what our relationship with the EU is. The EU already has trading arrangements with some countries involved, so how does joining TPP fit in with that?”