Sleeping Monster: The Trade in Services Agreement (TiSA), Scheduling, and “Standstill” and “Ratchet” Clauses

July 23, 2017
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Sleeping Monster: The Trade in Services Agreement (TiSA), Scheduling, and “Standstill” and “Ratchet” Clauses

By Lambert Strether of Corrente.

In our previous two posts in this series (on TiSA and the supply chain and its expansive definition of services), we looked at TiSA as a sort of dream of in the hive mind of our globalist elites; and I mean “dream” rather in the way psychologists mean it, as a product of the unconscious — in this case a collective one — and a structure that provides insight every waking moment and action of the dreamer, and not in the weaker sense of “The American Dream,” whatever that is, or “I wouldn’t dream of it.” Like a dream, too, TiSA seems totalizing and reasonable, to the dreamer, dreaming, but is also phantasmagoric, full of shifting scenes, displaced objects, and hidden meanings when analyzed, rather like Kafka’s The Castle (and now, see the Appendix).

Schedules and Standstill plus Rachet Clauses

I like the word “schedule.” It conveys a fine air of inevitablity — There Is No Alternative — as of trains running on time in dreamlike, frictionless progression. Unlike “Service,” “Schedule” is definable and well-defined in TiSA. Using, again, Professor Jane Kelsey‘s TiSA: Foul Play (PDF) as our guide, we find the following definitions (again, this is Kelsey’s summary, not TiSA verbiage):

Schedule

A Party’s list of binding commitments, primarily on market access to services markets and national treatment, but with scope to make commitments on additional matters, such as adopting an annex

And if we step through the chain of definitions, we’ll get not only a high-level view of how TiSA is being negotiated, we’ll see what TiSA implies for national policy. “Parties” — that is, each of 23 World Trade Organization (WTO) members, including the EU[1] — have schedules:

Party’s schedule

A schedule that sets out the commitments that have been adopted by a party through negotiation.

Schedules can exclude government measures or services; the negotation between parties is structured by service “sectors” (for sectors, see the Appendix on WTO/120).

Limitations

The explicit exclusion of a government measure or an aspect of a service from a sectoral commitment in a country’s schedule.

Note that limitations are negotiated; in other words, TiSA is structured as “opt out” (by sector) not “opt in.” Limitations apply at the nation-state level:

Policy space limitation

This limitation in a party’s schedule protects its right to maintain and introduce new measures that are inconsistent with its obligations to specified rules. In TiSA that applies to national treatment. These limitations are usually specified by name or by the service sub-sector or activity.

So, for example, the United States could negotiate to prevent the privatization of the United States Postal Service (USPS); unlikely, since the globalist elite would prefer that the USPS should be destroyed[2], but a successful negotation in this policy space would conclude with a limitation in our schedule.

Sector

The description of the general service category that is subject to commitments or rules.

If the negotiation to save the USPS were to be conducted, it would be in the “Postal services” sector (CPC code 7511), but see the Appendix for the squishiness of “sector.”

Subsector

A more specific service category within a general category of a service.

For example, per W/120, “Software implementation services” (CPC 862) is a subsector of “Computer and Related Services” is a subsector of “BUSINESS SERVICES.” (Only lowest branches of W/120 are numbered, unlike other classification systems like NAICS; I’m not sure why this is.)

Standstill

The rule applying in a particular subsector at the time the agreement comes into force (unless another time is stated) cannot be made any more restrictive. This applies in TiSA to national treatment, where domestic services and suppliers receive better treatment than their counterparts from other TiSA parties.

For example, if there is a rule protecting domestic suppliers — and the whole point of TiSA is to make such rules go away — of nursing services, through a union, say, those protections cannot be made stronger.

Ratchet

Any new liberalisation by a party is automatically locked in to that party’s schedule. In TiSA that applies to national treatment (removing discriminatory restrictions on foreign suppliers or preference to national suppliers).

TiSA policy commitments, once made, cannot be weakened. Foul Play explains the difference between a ratchet and a standstill:

A standstill… preserves the status quo in a service, but prevents any new or stronger protections for locals, such as reserved occupations… [A] ratchet locks in all new liberalisation.

Welcome to the Hotel California[3]:

Last thing I remember, I was
Running for the door
I had to find the passage back to the place I was before
‘Relax’ said the night man,
‘We are programmed to receive.
You can check out any time you like,
But you can never leave!’

(Hotel California, too, is a phantasmagoric dream: “My head grew heavy and my sight grew dim / I had to stop for the night.”)

Policy Implications of TiSA

Let’s say that you, as one flavor of leftist, have developed and sequenced a list of universal concrete material benefits, and your agenda puts the low-hanging fruit first. A non-exhaustive list might look like this:

1) Sector: “HEALTH RELATED AND SOCIAL SERVICES”: #MedicareForAll
2) Subsector: “Postal services”: A Post Office Bank
3) Subsector: “Computer and Related Services”: Hand-marked paper ballots, hand-counted in public
4) Sector: FINANCIAL SERVICES: Debt Jubilee.

Now suppose that the United States signed TiSA tomorrow; clearly, under standstill, unless “policy space limitations” had been carved out for each of the four sectors, those concrete material benefits could not be pursued, and under ratchet, they would “never, ever” come to pass.

Conclusion

It seems obvious to me that TiSA must be defeated, just as TPP was. However, I think it’s clear that it’s not enough to defeat an agreement; the globalist elites and the Trade Blob will simply break that agreement up for parts and start pushing a new one, so they need to be defeated, not merely their agreements. (Look how the administration has retreated on NAFTA, for example.) How that is to be done — how to shake the elites’ shoulder and wake them from their dream — is not clear to me, but to gain the concrete material benefits, that is what has to be done. I think one first step would be to create an agenda, lay the items of that agenda against TiSA schedule commitments, and say “They shall not pass!”

NOTES

[1] Global Affairs Canada: “The 23 Members of the WTO participating in the TISA negotiations (i.e. the Parties) are: Australia, Canada, Chile, Chinese Taipei, Colombia, Costa Rica, the European Union, Hong Kong (China), Iceland, Israel, Japan, Liechtenstein, Mauritius, Mexico, New Zealand, Norway, Pakistan, Panama, Peru, South Korea, Switzerland, Turkey, and the United States.”

[2] And its real estate sold off by and to cronies, as with the UK’s NHS.

[3] Perhaps more precisely: One might say that TiSA is a roach motel: The standstill is the box; and the ratchets are the sticky glue that keeps the roaches trapped inside the box.

APPENDIX: On the Definition of Services

After trying and failing to fight my way through the thicket of trade standards to a glossary definition of “service,” I found that the Swiss Secretariat for Economic Affairs had concluded, in its material on International Trade in Services, that:

It is thus difficult to encapsulate the notion of “service” in one definition.

And I concluded:

In other words, the definition of “services” is a mess (but then you knew that).

I never did find a definition of the term service, so the whole effort had rather turned into a snipe hunt, but just to make sure I hadn’t been lazy or gone crazy, I queried trade activist Professor Jane Kelsey by email. She answered (with light copy edits):

The agreements apply expansively to “measures affecting trade in services”

“Measures” is defined expansively

“Affecting” is expansive

“Trade” is defined expansively as the “supply” of a service, which is the entire supply chain

Trade is defined in terms of the four modes

And the commitment of services to the core rules is traditionally defined by reference to the WTO’s W/120 list that draws from the UN CPC list from 1991. However negative lists may not refer to the CPCs. That is as close as any definition of ‘services’ gets.

(I’ll get to negative lists and CPCs another time, along with the four modes.) So I went and found W/120, which is WTO publication “MTN.GNS/W/120”, dated “10 July 1991,” . W/120’s cover page has this note (I’ve helpfully underlined the qualifying language):

The secretariat indicated in its informal note containing the draft classification list (24 May 1991) that it would prepare a revised version based on comments from participants. The attached list incorporates, to the extent possible, such comments. It could, of course, be subject to further modification in the light of developments in the services negotiations and ongoing work elsewhere.

Alrighty, then. This is the paragraph on which the entire edifice of international agreements on trade in services is erected: So far as I can tell, it’s an informal draft (!!), subject, “of course,” to later revision (!!!). But wait! There’s more!

W/120 does not give a glossary definition of the term “service”; rather, it’s a primitive taxonomy of a large number of services, like “Professional Services,” “Printing, Publishing,” “General Construction Work for Buildings,” and, of course, the ubiquitous “Other.” It’s rather as if Newton, on discovering that prisms could split a beam of light into the visible spectrum, had gone on to define what a prism could do, and the nature of the spectrum, by listing the colors ROY G. BIV, instead developing his theory of light and color. As I wrote:

If the terms of an agreement are not clear, then the potential scope for the application of the agreement is infinite (as indeed the dealmakers whose dreams are driving TiSA would like it to be). TiSA’s utopia, then, is totalizing.

In other words, “services” means whatever the lawyers in The Trade Blob say it means. I hope readers — and the trade experts encountering this series, if any — will forgive me if I’m not sanguine at that prospect.

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About Lambert Strether

Readers, I have had a correspondent characterize my views as realistic cynical. Let me briefly explain them. I believe in universal programs that provide concrete material benefits, especially to the working class. Medicare for All is the prime example, but tuition-free college and a Post Office Bank also fall under this heading. So do a Jobs Guarantee and a Debt Jubilee. Clearly, neither liberal Democrats nor conservative Republicans can deliver on such programs, because the two are different flavors of neoliberalism (“Because markets”). I don’t much care about the “ism” that delivers the benefits, although whichever one does have to put common humanity first, as opposed to markets. Could be a second FDR saving capitalism, democratic socialism leashing and collaring it, or communism razing it. I don’t much care, as long as the benefits are delivered.

To me, the key issue — and this is why Medicare for All is always first with me — is the tens of thousands of excess “deaths from despair,” as described by the Case-Deaton study, and other recent studies. That enormous body count makes Medicare for All, at the very least, a moral and strategic imperative. And that level of suffering and organic damage makes the concerns of identity politics — even the worthy fight to help the refugees Bush, Obama, and Clinton’s wars created — bright shiny objects by comparison. Hence my frustration with the news flow — currently in my view the swirling intersection of two, separate Shock Doctrine campaigns, one by the Administration, and the other by out-of-power liberals and their allies in the State and in the press — a news flow that constantly forces me to focus on matters that I regard as of secondary importance to the excess deaths. What kind of political economy is it that halts or even reverses the increases in life expectancy that civilized societies have achieved? I am also very hopeful that the continuing destruction of both party establishments will open the space for voices supporting programs similar to those I have listed; let’s call such voices “the left.” Volatility creates opportunity, especially if the Democrat establishment, which puts markets first and opposes all such programs, isn’t allowed to get back into the saddle. Eyes on the prize! I love the tactical level, and secretly love even the horse race, since I’ve been blogging about it daily for fourteen years, but everything I write has this perspective at the back of it.

(Why?)

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