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EU India Free Trade Agreement

You could be forgiven for not knowing about the free trade deal currently being thrashed out by the EU and India. Hardly a word has been raised in opposition – mainly because the talks are going on behind closed doors. Yet if passed into law it will have devastating consequences for workers in Britain and India, especially young people.

The deal will represent a huge coup for Britain's coalition government on behalf of monopoly finance capital.

It is central to the government's project to remould the British economy as a cheap labour platform for outside investors, especially for financial services.

Tellingly, one of David Cameron's first acts as PM was to lead a high-profile business delegation to India, once the crown jewel of the British empire and today a rapidly developing mass market with an English-speaking middle class.

This EU-India deal is tailor-made to pursue the British government's agenda.

It aims to secure big business access to the Indian economy and the employment of India's highly skilled IT, technical and financial personnel in Britain at minimum rates of pay and without collective bargaining protection.

Key EU demands are the liberalisation of the Indian financial services sector and the enforcement of intellectual property rights – in particular in its pharmaceutical industry which produces the great bulk of generic medicines for the Third World.

The EU also wants to see procurement rules that channel Indian public spending into transnational corporations as well as what is called “investor protection,” which would allow transnationals to sue the Indian government if it makes a decision that is not in their interests.

The Indian government's single key demand is Mode 4 access to the EU.

Mode 4 is a World Trade Organisation provision which allows transnationals registered within one trading partner to transfer labour at existing rates of pay and terms of employment to work temporarily within the company in the other trading partner.

To put it crudely, if the deal is agreed the City of London will get its hands on India's vast, localised and protected banking sector.

Its thousands of relatively small state-based banks will be quickly swallowed by big British and London-based US banks.

British, German and French pharmaceutical monopolies will see their global position secured and the big EU-based utility companies will get access to all Indian public expenditure.

At the same time, Mode 4 will be used by the British companies moving into the Indian market to secure temporary transfers of highly skilled Indian workers to Britain. This means social dumping, job cuts and an ever diminishing skill set in Britain.

No wonder Indian trade unionists are demanding opposition on an international scale.

On May 1 CH Venkatachalam, the general secretary of India's largest bank workers' union AIBEA, stated that “allowing full voting rights for foreign direct investors in banks, increased FDI/Foreign Institutional Investors investment limit in banking sector, higher FDI limit in insurance sector are some of the major challenges which the bank employees cannot afford to ignore.”

He went on to appeal to trade unionists to unite to oppose any move towards privatisation by the government.

While one side of the deal is affecting workers in India, Mode 4 will be used by British companies moving into the Indian market to secure temporary transfers of highly skilled Indians to Britain as a low-cost alternative to local workers.

The impact of the EU-India Free Trade Agreement on Britain's youth will be especially pronounced, in particular with regard to graduate employment and apprenticeship schemes. Research by the Centre for Economics and Business Research found that about 40 per cent of last year's graduates were employed below their skill level six months after graduation – up from about 30 per cent four years earlier. It predicted that this figure would rise to 55 per cent by the time the current batch of final-year students graduate.

Future generations in Britain face growing barriers to becoming a graduate at all – fewer courses and a massive rise in tuition fees.

And all this comes following decades of planned destruction of British industry and the subsequent steady decline in the opportunities for young people to undertake an apprenticeship. The issue of immigration poses a major challenge for internationalists and the labour movement. Internationalism rests on the free co-operation of independent sovereign nation states.The response of the British progressive and labour movement must be based upon the same principle, which is directly undermined by this free trade deal.

Britain's working class cannot view this agreement solely in terms of the domestic labour market. This would be to ignore the role of British imperialism.

Nor can it be limited to consulting with other European trade unions. This would be to ignore EU imperialism.

Rather, our national institutions – the trade unions – must look to their counterparts in India and establish a common front against a deal which is detrimental to workers as a whole.

The coalition government is supposedly committed to reducing net migration on an annual basis, which is the overarching agenda of the UK Border Agency (UKBA).

But this pledge has clearly been silently scrapped in order to appease the British financial monopolies and provide cheap skilled labour to monopolies in other sectors.

UKBA targets are designed to stoke ethnic division, while Mode 4 is designed to import cheap labour.

It is not clear whether Parliament will even be asked to discuss the issue before it becomes binding.

This free trade deal presents a clear opportunity to the labour movement to expose the coalition, as well as highlighting and exploiting the tensions between the domestic ruling class and the EU commission.

And the stakes are high.

The deal as it stands contains no mechanism by which it could be revised. Even if one was included it would need the agreement of all parties to amend or dissolve it.

This means that the outcome of the current discussions will effectively become permanent. It won't just mean a temporary distortion of the British labour market.

After all, why train young workers in Britain when a reserve army of skilled graduates, bonded to their employer and without enforceable rights, is readily available?

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This document was last modified by Mick Carty on 2011-06-23 14:14:34.
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