Smugglers of social dumping

The threat of social dumping, where workers from nations with low labour costs are sent to another country to undercut local working norms, is set to hugely increase under new plans for the future of EU trade.

Mode 4 is a provision within the General Agreement on Trade in Services (Gats) trading framework (see below) covering cross-border services trade in which workers are moved across borders.

Its inclusion in the international trade agenda allows transnational corporations to profit from cross-border wage differentials, national insurance exemptions, tax juggling and other benefits of "flexible labour."

Ultimately Mode 4 undermines workers' abilities to maintain wages and conditions, loading the balance of power between labour and capital in favour of transnationals.

It also reduces EU member states' democratic rights to control their own migration policies, in effect handing that power to transnationals.

The EU is offering Mode 4 access in all the trade agreements it is negotiating and has already implemented it internally via the Bolkestein Directive of 2006.

In Gats's "Doha Round" negotiations, begun in 2001, the EU's revised offer, tabled in June 2005, included Mode 4 offers across service sectors.

Mode 4 is a particularly secret part of the trade agenda, kept from those who will be negatively affected.

These EU offers are without quotas or economic means tests.

Defenders of Mode 4 argue that it is not immigration but temporary labour movement.

But this does not lessen the detrimental effects on EU workers of an influx of temporary workers who will be prohibited from becoming unionised.

As labour standards are lost in the few places they have been achieved, such as in some EU countries, it will become more difficult for workers elsewhere ever to achieve them.

Once signed up to, Mode 4 openings, like all trade commitments, become effectively permanent due to the prohibitive cost of withdrawal.

Current EU "investor protection" proposals increase this penalty, allowing not just other states but trans-

national corporations to challenge a country's failure to fulfil its trade commitments. Successful challenges will lead to prohibitive financial compensation claims for the loss of all potential profits, called "expropriation."

So when workers feel the effects of the Mode 4 commitments that have been made on their behalf, it will be too late to reverse them.

India, on behalf of its transnationals such as steel giant Tata, is demanding transnational Mode 4 access to the EU and an EU/India Free Trade agreement is currently being fast tracked.

A recent report on the ongoing EU-India Free Trade Agreement (FTA) negotiations said the "full ambition of the FTA can not be achieved without Mode 4 - which currently faces a range of barriers like wage-parity conditions."

From the other side, the EU is demanding very significant investment concessions, including banking liberalisation. The indications are that the movement of '"intracorporate transferees" will be used broadly, and with high expectations of megaprofits.

But bringing Indian workers into the EU displaces local workers and undermines established working conditions. A race to the bottom is inevitable across many sectors, as transnationals can bring in workers in whatever areas they are established, plus offer cheap, onshore outsourcing.

The Indian government is arguing that the minimum wage stipulations of EU member states undermine its cheap labour "comparative advantage."

Yet even if minimum wage levels are maintained, wage competition for just the minimum wage represents intense downward pressure on labour standards for skilled EU workers.

For a set of reasons - historic, linguistic and related to the liberalised British economy - workers here are likely to be the most affected by EU commitments.

Notably in terms of secrecy, a recent British delegation to India, led by Tory Prime Minister David Cameron, failed to even mention that an EU/India Free Trade Agreement is being rapidly negotiated, even though it was specifically focused on trade.

Mode 4 is considered "sensitive" and thus kept from attention because this dimension of trade - commodifying and moving labour to increase transnational profits at workers' expense - cuts much deeper than trade in goods, or even other aspects of services.

Mode 4 can be recognised as a continuum with the attacks on workers that stem from EU "freedom of movement of services," which allows EU companies to move "posted workers" across borders at cheaper rates. Similar language and concepts of "cross-border establishment" and "movement of service suppliers" are used in both sets of rules.

This is what led to the relevant EU court, the European Court of Justice (ECJ), to make anti-trade union rulings in cases such as Laval, Viking and Ruffert which, in different ways, undermined the rights of workers to protect their wages and conditions (see panel).

ECJ decisions supporting firms' rights within the EU suggest Mode 4 offers "built-in" trade agreement protection.

The otherwise pro-EU TUC acknowledged in a recent report that Mode 4 threatens to undermine collective bargaining, local laws and the rights of migrant workers.

The TUC also accepts the parallels with recent anti-trade union ECJ judgments but offers little in the way of action to oppose either the EU rulings or the threat posed by Mode 4.

At the same time neocolonial, unequal and neoliberal EU trade policies continue to devastate Third World economies, forcing greater proportions of the world's populations to be driven abroad in a desperate search for employment and resources.

Mode 4 does not create a single job but does hand further powers to unfettered global capital to decide who works, where and for how much.

Gats and the EU

An extension of the Gatt, which has been the main method of negotiating multilateral trade agreements since its establishment in 1947 and is commonly regarded as the main driver for globalising neoliberalism.

Where Gatt covers merchandise trade, Gats covers the service sector. Run by the World Trade Organisation, it has been controversial for effectively opening up almost every human action and collective resource to commercialisation and ownership, as well as for using the process of globalisation to undermine the rights of working people.

Gats is the root of social dumping legislation worldwide, leading in the EU to the Bolkestein Directive of 2006, which opens all member states to social dumping.

The directive was most famously applied in the legal judgements of Laval, Viking and Ruffert, which found that it was legal to replace local staff with cheaper labour from other countries, barred trade unions from taking industrial action to prevent such practices and stopped states from withdrawing contracts from firms practicing social dumping.