The real story behind the NHS changes: The US/EU Free Trade Agreement

The NHS changes have been both promoted and fought as a national issue. However, they are actually part of the preparation for a corporate-interest US/EU Free Trade Agreement. David Cameron has flagged[i] this trade deal, due to be formally launched in the spring, as his priority in his chairing of the G8 this year[ii].

Even though the NHS changes have at this point been fixed in the complex legislative framework of the Health and Social Care Bill, the relationship to this wider international investment context has still not emerged as public information. What opportunities does knowledge of this background provide?

I have been looking at international trade agreement issues for about 12 years[iii].  Outside of big business, the small amount of UK interest in international trade agreements has tended to focus on the effects on developing countries, whereas I have focussed more on the effects on people in the UK.

I attend EU Trade Commission civil society dialogue meetings in Brussels where some information is given out, with the opportunity to ask questions. The other ‘civil society’ attendees are overwhelmingly business group representatives.

In a 2010 civil society dialogue meeting Trade Commission personnel flagged the intention to push forward a US/EU Free Trade Agreement.

In fact transatlantic integration has been a priority since 2007[iv] when a Transatlantic Economic Council was set up for ongoing work and six monthly progress reporting. It was left off the public agenda for a period because of the banking crisis.  Financial service liberalisation, the primary cause of the banking crisis, is a major part of this trade agreement.

In the 2010 civil society dialogue meeting I’ve referred to, the Trade Commission admitted:

  •  That while it would normally not be possible to get this agreement through, the economic crisis would now actually be used to push through the agreement as quickly as possible[v].
  • That the important preparatory process would be regulatory ‘harmonisation’ before the launch of negotiations
  • That the first thing to be ‘harmonised’ would be health

Since then we have had the Health and Social Care Bill in the UK, preparing the sector for transnational health investors.

Liberalisation changes are often in a two-step mode. In the UK, the establishment of privatised GP consortia is being encouraged. In this segmented, privatised format, businesses can easily be sold to investors[vi]. In such two-step processes, the end game is obscured.

Although the focus of this paper is health, some background explanation of the international trade agenda is necessary.

Firstly ‘trade’, which goes on all the time anyway, is not the same as ‘trade agreements’, which are effectively irreversible commitments made at the level of international law, i.e. beyond changes at the level of the UK government or the EU.

Trade agreements are negotiated by governments but on behalf of corporations, and in the interests of transnational corporations.

Although the pretence is maintained that ‘trade’ is primarily about goods[vii], most EU and UK trade is in ‘services’, in which financial services and investment play a major part.

The trade agenda is about liberalising. While liberalising trade-in-goods is about countries reducing at-the-border taxes, when countries liberalise a service sector they open it to transnational investors. (The UK always does this anyway, unilaterally, outside of any agreements).

When countries commit services to international trade agreements, the liberalisation of those services is then locked in i.e. a commitment to keep the service open to transnational investors.

With aspects of public services privatised, either via privatised contracting or sell-offs, the privatisations underpinning the liberalisations also become irreversible.

The categories of ‘trade-in-services’ are all-encompassing, but the financial services industry is a major force for the liberalisation of services. The City of London[viii], made up of transnational financial service corporations, is the main driver of commercial policy within the EU and of EU external trade policy.

In the UK, City of London financial services dominate policy-making to ensure that national policy both fits with that wider liberalisation agenda and provides an international model for it.

For financial services, the transforming of the NHS is an exemplary model of how to turn a globally-respected universal health service into a cash cow for transnational investors.

Trade-in-services trade commitments involve states giving transnational corporations rights to come in and operate and to keep operating, without limits on their activities or on the number of transnational corporations that enter the sector[ix], with rights to the same or better treatment than that which national companies receive (including any subsidies)[x], and rights to sue the government in an international jurisdiction if there is any attempt, by any level of government, to limit  those rights or to introduce any regulation which might, even  incidentally, limit corporations’ expected future profits[xi].

As corporate rights are thus increased via trade commitments, the rights of governments to control them are correspondingly diminished and democratic control over the activities of corporations is forfeited.

When applied to health, this means the whole emphasis of health care changes. The rights of transnational corporations become the priority and health becomes primarily a trade issue.

Trade agreements are usually conducted very secretly but David Cameron, led by the financial service industry, has emphasised the US/EU Free Trade Agreement – though he hasn’t spelt out what it involves. It is also being promoted by ‘business leaders’, such as CEOs of banks[xii].

Yet despite the front page report of the Prime Minister’s speech and his focus on this trade agreement, the media, including the publicly funded media, have failed to analyse or question the implications of it or indeed what it has meant so far for the NHS.

There are as yet no organised critical voices to take this up.

Health is just the starting point. Regulatory ‘harmonisation’ with the US will be much broader.

For instance, until now the EU has resisted the importation of genetically modified human foodstuff and seeds (GMOs) which are the norm in the US. A push for a change in EU regulation on GMOs, for ‘harmonisation’ with the US, is inevitable[xiii].

Another obvious target for ‘harmonisation’ is the European public broadcasting model. The US media model is overwhelmingly corporate with public broadcasting marginalised. Recent events undermining public trust in the BBC have increased its vulnerability to calls to narrow its activities in favour of private media.  At this point, the EU Commission is proposing a ‘harmonisation’ of media laws across the EU, monitored by the Commission[xiv], an ominous start.

A major aspect of the ongoing work of the weighty Transatlantic Economic Council, headed by the top-level US Trade Representative and the EU Trade Commissioner, is to work pre-emptively with regulators to ensure that any new regulation takes account of the intended trade deal, so it is ready ‘harmonised’.

With the UK taking the lead in this trade agreement, albeit behind the scenes, and with the information from the Trade Commission two years ago about harmonising health, we can assume that the Health and Social Care Bill was prepared in this way,  yet without public information to this effect. The debate on the passage of the Bill was not properly informed.

The Trade Commission is the most heavyweight part of the EU Commission and its work is driven to a great extent by financial services based in the City of London. Yet neither the existence of this part of the Commission, nor what its bureaucrats are signing us up to in free trade agreements[xv], are mentioned in current UK discussions on the EU and the terms of UK membership. Without public knowledge of this major function of the EU, any referendum would be misinformed.

The failure of the media to provide this information is partly due to the fact that there is so little knowledge of the trade agenda among reporters except those who are complicit, even among BBC senior economics reporters.

Summary and suggested action

–          It is in health that the effects of ‘harmonising’, towards this Free Trade Agreement, are already manifest. The fact that the NHS has been prepared for transnational investors as part of a planned US/EU free trade agreement should be made public.

–          The similar threat to other areas should also be public.

–          The activities of the EU Trade Commission on our behalf should be an important part of the debate about EU membership.

–          There is a job to be done on disseminating information and demanding reporting and analysis of the implications of the US/EU Free Trade Agreement, so that it is not just the perspective of transnational capital that is being presented. (The BBC has a Business Unit presenting this perspective but has no such unit for workers or public service users). The nationwide concern about the NHS and established networks of concern could be the means for a strong, clear and concerted public voice on this.

–          The juggernaut of the trade deal backed by business voice propaganda is unlikely to be questioned otherwise.

–          The lack of public information on this broader context of the NHS changes is grounds for the Health and Social Care Bill to be repealed. The Opposition Labour Party needs to call for this.

Raising the issue in relation to health would support information-seeking etc. for other areas

Linda Kaucher, Researcher on international trade

[i] The Guardian, front page 1.1.13

[ii] The UK has the presidency of the G8 this year. The annual meeting will be In Northern Ireland in June. The G8 members are Canada, France, Germany, Italy, Japan, the Russian Federation, the United Kingdom and the United States. The European Union is represented by the president of the European Commission and the leader of the country that has European Union presidency, which is Ireland for Jan –June 2013. This will be a united front in promoting the trade deal, though the FTA is not technically in the hands of the G8 institution.

[iii] When the World Trade Organisation Doha Development Agenda Round, launched in 2001, stalled in subsequent years, the EU switched in 2005 from the multilateral possibilities of the WTO to a program of bilateral and regional trade agreements. An essential difference between the WTO round, which often saw globalised protests, and bilaterals, is that the latter are inherently more secretive. In fact texts and negotiations are secret – at least to the public on whose behalf they are being negotiated – until the deals are completed. NGO Corporate Europe Observatory is currently taking legal action against the Commission for withholding information on the EU/India Free trade Agreement that was made available to business.

[iv] See the Framework for Advancing Transatlantic Economic Integration between the European Union and the United States of America. The 2008 report has some mention of the work of the Transatlantic Economic Council. The 2009 report doesn’t. The 2010 report reasserts the role of the TEC, with a focus on ‘jobs’.

[v] Trade spin unfailingly presents further liberalisation as the answer to whatever is perceived as the current problem. The Doha deal was put forward consecutively as the answer to global terrorism (after 9/11), to climate change, and to the international financial crisis. ‘Jobs’ is the favoured current spin.

[vii] Coalition Secretary of State for business, Vince Cable particularly maintains the impression that ‘trade’ is about the UK selling widgets overseas, whereas Peter Mandelson in that position used a different strategy to deter attention from trade-in-services and effects in the UK, refocusing trade discussions onto developing countries.

[viii] The City of London Corporation joined with International Financial Services London, the previous financial services lobbying institution, to form TheCityUK in June 2010. At that time, the third partner was UK Trade and Industry, a UK government unit, attached to the Department of Business, Innovation and Skills (BIS) and to the Department for International Development (DfID). Thus business and a UK government unit were organisationally joined.  This was quickly dropped and now senior representatives of government departments attend TheCityUK board meetings, including on international trade, as ‘observers’. For useful reading on the City of London see the ‘Griffin’ chapter in ‘Treasure Islands’ by Nick Shaxson, and TheCityUK website

[ix] This is the Market Access rule in trade-in-services agreements

[x] This is the National Treatment rule of trade-in-services agreements

[xi] This limiting of corporate profits, including expected future profits, is called ‘expropriation’. The provision for corporations to sue governments in trade disputes is called ‘investor protection’. The EU has recently introduced ‘investor protection’ into the bilateral trade deals it is currently negotiating with Canada, India, and Singapore. The experience where it has been included in other trade deals such as in the North American Free Trade Agreement (NAFTA), between the US, Canada, and Mexico is that it is likely to result in either very big payouts by governments to corporations or to have a chilling effect on proposed legislation e.g. social or environmental legislation. See Corporate Europe Observatory’s downloadable document on the investor protection ‘industry’ called ‘Profiting from Injustice’.

[xii] Letter to the Financial Times 18th January signed by CEOs of 12 transnational corporations.

[xiii] Article in direct relation to the FTA

State of play in EU: 26 genetically engineered crops are currently being considered for approval in the European Union.19 out of these 26 are genetically engineered to be tolerant to herbicides.


[xv] The EU has now either completed, is negotiating or is ‘scoping’ bilateral or regional trade deals with much of the world. Of particular importance is the planned EU/India FTA. The Trade Commission admits this is essentially a UK deal and that the single demand India is making is for Indian firms to be able to supply cheap labour into the EU (mainly UK). This is called Mode 4 in trade terms. In 2011 the Trade Union Congress voted unanimously for the TUC bureaucracy to publicise and oppose this FTA. However the TUC bureaucracy has failed to implement this directive of the Congress. On 21st Jan 2013 in Brussels the Trade Commission refused to discuss if there are any numerical limits because it has agreed with Member States (though actually the UK government) not to. Yet it is workers in the UK who will be primarily affected.