We’ve just sent in our submission to the European Commission’s public consultation on its trade policy. The consultation covers everything under the trade sun, and so does our long submission.

It’s not exactly weekend reading, so I’ll pick out one of the more juicy issues (and award a prize to anyone brave/sad enough to read the whole thing): the EU’s new investment powers under the Lisbon treaty.

EU member states currently have about 1200 bilateral investment treaties with other countries, but under Lisbon, Brussels get the power to make new Europe-wide treaties. These little known treaties typically protect foreign investors from expropriation or discriminatory treatment by host states, and have been notoriously one-sided in their favour. Now the EU has the chance to balance out these treaties, by inserting some obligations on investors, and in doing so, close the “governance gaps” that lead to so much business abuse of human rights, particularly in the developing world.

As the (endlessly quoted) UN Special Representative on Business and Human Rights, John Ruggie, puts it:

“The root cause of the business and human rights predicament today lies in the governance gaps created by globalization – between the scope and impact of economic forces and actors, and the capacity of societies to manage their adverse consequences. These governance gaps provide the permissive environment for wrongful acts by companies of all kinds without adequate sanctioning or reparation. How to narrow and ultimately bridge the gaps in relation to human rights is our fundamental challenge.”

Such “wrongful acts by companies of all kinds” keep clogging up my inbox.

Europe’s best chance to help meet the fundamental challenge that Ruggie spells out would be to require investors under these new investment treaties to respect fundamental international human rights and environmental norms, through having an enforcement mechanism with teeth. At the moment, we have a small land army of international voluntary guidelines, tools, initiatives, compacts and standards, but nothing with real bite.

But rather than taking this “best chance”, the Commission’s recent communication on the topic looks a lot like business as usual. The only reference to investor obligations is a non-binding one to the non-binding OECD Guidelines on Multinationals in the non-binding preamble – language that might make some of the drafters feel warm, but will have no tangible effect on anyone, anywhere.

Further, the EU will most likely seek to use “Investor-State” arbitration process to resolve disputes under these new treaties. This means that investors can by-pass the entire domestic legal system of host states, to seek to enforce their rights in an international arbitration panel, with notoriously opaque procedures, no right of appeal, decided upon by arbitrators drawn mostly from the ranks of overpaid international investment lawyers.

Positive discrimination by the South African government to combat the legacy of Apartheid? Bolivia’s reclamation of its water supply to ensure the poorest can get access? Both actual disputes would have been ruled illegal by arbitration panels if global public pressure hadn’t forced the investors to back down.

EU member states, MEPs, Commission officials still have a chance to amend this communication and there are many options in front of them. They could scrub out reference to the arbitration panels, and make investors use the courts of host states. If investors can prove that the legal system isn’t fair or doesn’t work – allow them to use the legal system of the home state, but also give those affected by human rights abuses by foreign investors the same rights. Give workers and affect communities workers the same rights to sue in host and home state courts.

If this balanced approach is too much for some in Brussels to stomach, then the new investment rules should at least demand that investors can only step foot inside arbitration hearings in Washington if they have adhered to the OECD Guidelines on Multinational Enterprises.

That’s a slightly better title than the one I used for a blog I’ve just uploaded to the Ethical Trading Initiative (ETI) site: “The OECD Guidelines for Multinational Enterprise: What do they mean for ethical trade efforts?“.

To summarise the post: this week the OECD is launching its much needed review of the OECD Guidelines for Multinational Enterprises – a treaty on international standards of behaviour expected of multinational enterprises operating in or from the 42 states that have signed up to them. A key change of the review could be ensuring that companies take responsibility for the impacts they have on the supply chains they source from.

Also, the ETI blog page is brand new, and should develop into an interesting read. The organisation brings together companies, unions and NGOs – with their diverse perspectives and roles – to tackle the commonly agreed problem: the terrible working conditions facing many workers in global supply chains. So here’s to some fiery debate…

Our brand new Chancellor is revealing his master plan for financial regulation in Britain as part of his Mansion House speech tonight. It finally promises some gritty detail on how the coalition government’s proposed bank levy can get the big banks to pay for the economic mess they’ve left us all swimming in.

That a bank levy is even on the cards is a big victory for the tenacious Robin Hood Tax campaign, and a sign of the positive influence of the Liberal Democrats on the coalition. But the big question for these budget slashing times is - will it raise enough?

Online chatter is predicting it will be more than the £1bn that Osborne had proposed while in opposition. But if you put our budgetary black hole, next to the predicted £90bn in reported profits and bonuses for the UK finance sector next year – then George needs to get a bigger calculator, and needs to consider more options than just a levy.

He need look no further than the IPPR’s excellent report on finance sector taxes. It shows that by clamping down on tax avoidance, levying financial institutions, and taxing profits and bonuses or financial transactions, we could raise up to $20bn. That’s the difference between a lot of nurses and teachers being allowing to continue their vital work, or the public services train wreck that’s currently on the cards.

The report adds that – true to its name – a Robin Hood-style tax, unlike the VAT, falls more on the rich than the poor. And it would fall more on high-frequency traders and their destructive, speculative behaviour.

So George faces a big choice tonight:  go down in history as one of Robin’s merry men that saved jobs and the economy, or as the axeman that took us all down swinging.

If William Hague, a Palestinian worker, the ILO and an IMF official agree on something, there’s a fair chance it might be right. All conclude that the Israeli blockade of Gaza is strangling the economy and jobs and must be lifted immediately.

Under Israeli restrictions only 72 of 4,000 commodities are allowed in, and only then, at a dismal trickle. The export trade is non-existent and concrete and raw materials are banned. The result: construction used to employ a quarter of the Gazan workforce, now it’s less than one percent. Without the means to repair bombed schools, hospitals and houses, Gaza looks like a permanent war zone.

The blockade is also unpredictable and illogical. Coriander is banned but cinnamon is allowed. And big blocks of butter are prohibited because they’ll need cutting up and that requires an “industrial process”. If the evil doers acquire the skills to slice up a large block of Lurpak, innocent Israelis might be next, so the illogic goes.

The impact of all this is predictable. The number of businesses in Gaza fell from 3,900 in June 2005 to just 200 by December 2008. Unemployment has soared to 39%. Although this figure is likely to be an underestimate, it’s still among the highest in the world.

This is the cause of immense suffering. After nearly a year of the blockade, over 70% of Gazans were living below the US$1 per day poverty line, and following the Israeli offensive on Gaza in January 2009, 75% were “food insecure”. Eight in 10 Gazans are now dependent on aid,

The blockade is also driving the very criminality it is purporting to prevent. As our new Foreign Secretary said:

As the once productive private sector has been decimated and ordinary Gazans have lost their jobs and their incomes, it is tunnel entrepreneurs and their Hamas backers who benefit.

The tunnel economy – there are some 400 to 600 tunnels into Gaza – is an important source of revenue for Hamas and for many desperate Gazans it’s the only source of work and essential goods. It’s also a recipe for appalling working conditions, according to the just published annual ILO report on the situation of workers in the occupied Arab territories:

…it is believed that up to 20,000 people are employed in the tunnels and associated economy, many in dangerous conditions, without protection and poorly paid. Child labour in the tunnels is said to be rife.

The very first recommendation in the latest IMF staff report is for the lifting of the blockade of Gaza, which is, “…essential to stem the continuing decline in Gazans’ living standards”.  Under a “pessimistic” scenario, the IMF concludes that GDP will continue to decline in Gaza if there is no progress in the peace process and only a limited easing of restrictions.

Sadly, this IMF “pessimism” sounds like business as usual, unless real pressure is applied to end this medieval siege.

The G20 labour ministers, meeting in Washington earlier this week, have come up with a decent list of recommendations to get the world back to work, and strengthen our fragile economic recovery. Yet with treasuries and the IMF sharpening their budget cutting knives, will these recommendations just hang in the air like so much volcanic ash?

Many of the recommendations – pared down here for the busy blog reader – seem like no brainers for many of us:

• Growth in employment and incomes is critical in driving strong, sustainable and balanced growth.
• G20 countries have pursued a wide range of measures to create and preserve jobs. By ILO maths, this has saved 21 million jobs, but given that we’ve lost 34 million, such measures need to continue and expand.
• Better targeted efforts to generate employment for poor households and vulnerable groups are urgently needed for developing countries.
• Given the rise in vulnerable employment (“…half of the world’s three billion workers are employed in vulnerable forms of employment” according to the recommendations) better social protection systems are critical.
• Improve the quality of jobs through strengthening fundamental rights at work, to reverse the trend “in a number of countries” towards deteriorating or stagnant wages and working conditions and widening income disparities.
• Education, lifelong learning, job training and skills development strategies should be prioritised and linked to growth strategies.

This is all good stuff – but now what? Unlike other G20 commitments and processes, there is little clarity on the who, what and how. Leaders could pick up on them during the next G20 leaders meeting in Toronto at the end of June. But well before then, these recommendations really need to be the heart, lungs and soul of the G20’s “Framework for Strong, Sustainable, and Balanced Growth”, – a peer review process of national measures taken to drive growth and rebalance the global economy, overseen by the IMF.

Yes, the IMF. Worryingly, it’s now arguing for “significant fiscal consolidation” in 2011 – deficit cutting in ordinary speak. With recovery fragile, – and largely jobless – , and labour markets still propped up by government support, following this business-as-usual advice could result in millions more out of work, and in all likelihood tip the world into a second, deeper, recession. That’s why the global union evaluation of the G20 labour ministers’ meeting stresses the need for the International Labour Organisation – the global brains behind these G20 labour ministers’ recommendations - to be in charge of the employment and social protection parts of the G20 Framework.

Given the upcoming general election, our government reps in Washington couldn’t support something like this beyond a couple of weeks. Which political parties want to instead?

As if our financial Sheriffs of Nottingham didn’t have enough bad press, a new report shows that Africa may have lost $1 trillion US dollars in illicit flows to western financial institutions over the past four decades. The report – Illicit Financial Flows from Africa: Hidden Resource for Development – goes even further, stating that given the hazy nature of the data available, the true scale of this capital stampede might be as much as $1.8 trillion US dollars.

Is this just corrupt leaders buying Premier League football clubs and leaving their people destitute? According to the report by the think tank, Global Financial Integrity, only three percent of this total is due to the corruption of government officials, with a further 30-35% coming from crime. That leaves a staggering 60-65% due to, “the proceeds of commercial tax evasion, mainly through trade mispricing”.

As the report outlines:

This massive flow of illicit money out of Africa is facilitated by a global shadow financial system comprising tax havens, secrecy jurisdictions, disguised corporations, anonymous trust accounts, fake foundations, trade mispricing, and money laundering techniques.

The impact on Africa is immense, draining currency reserves, eroding tax collection to fund vital public services and thwarting poverty alleviation efforts.  “Developing countries,” according to research quoted in the report, can “lose at least $10 through illegal flight capital for every $1 they receive in external assistance”.

Siphoning profits off to some Carribbean hideaway must also seriously undermine attempts by local workers to secure decent wages and working conditions from local subsidiaries of multinationals. And if the international system is failing to reign in such financial trickery, what hope does a local union negotiator in Botswana or Bristol have in understanding the financial health of the multinational she’s bargaining with?

G20 finance ministers meet at the end of this month to review progress in reigning in the worst effects of financial deregulation, including measures to clamp down on global tax evasion. The OECD has also just set up a Task Force on Tax and Development to tackle the issue. Both bodies have a daunting to do list in front of them. One important and early victory would be to require companies to fully and accurately report on all of their financial affairs on a country-by-country basis, greatly cutting out transfer mispricing practices – the key culprit driving capital flight. Such a requirement should be included as part of the upcoming review of the OECD Guidelines on Multinational Enterprises.

Deemed irrelevant prior to the financial crisis, the IMF was given enormous powers by the G20 to resolve it. But in light of statements it made earlier this week, trade unions are wondering whether world leaders have put a fox in charge of the hen house.

At the end of April, the IMF will give an interim report to G20 Finance Ministers on their efforts to build “strong, sustainable and balanced growth” and outline options on how the Banks should help pay for the mess they got us in. In a worrying omen of what their conclusions might be John Lipsky, the second in charge at the IMF, said earlier this week, that to drive growth, “…liberalization of goods and labor markets and the removal of tax distortions… should be pursued vigorously”. As the global trade union movement’s statement of priorities for the meeting makes clear, the world is crying out for millions of green and decent jobs, not the cutting of taxes and slashing of workers’ rights.

Active interventions in labour markets are working. According to the ILO, some 12 to 14 million jobs have been saved through initiatives such as shorter working time, youth job guarantee schemes and decent income protection. As its recent World of Work report shows, countries that have done so, such as Brazil, Australia, Germany and Jordan have weathered the storm, while those with deregulated labour markets and limited social protection schemes haven’t.

The conclusion is that keeping people in work is keeping the economy afloat, but only just. That’s why the UK’s government’s commitment to extend the jobs guarantee scheme for young people – the hardest hit by the crisis – is so important.  

And so is collective bargaining. It enables workers to collectively come up with sensible compromises with management in tough times to keep people in work. For a statistical feast on how good industrial relations drives productivity, morale, and economic recovery check out the TUC’s recently published pamphlet, The Road to Recovery. 

Globally, the decline in the proportion of workers covered by collective bargaining arrangements over the past three decades is a key reason why economic growth has left the majority of people behind. As ordinary workers have lacked bargaining clout, their wages have stagnated and income inequality and the social hardship that comes with it have been rising. In many countries this has driven the dangerous reliance on debt to finance household spending that was responsible for the financial crisis.

The IMF would do well to understand the human cost of deregulated labour markets. In the UK’s white meat sector, weakened employment rights has only led to miserable working conditions for the mainly migrant workers employed there. As the recent EHRC’s inquiry into the sector shows the precarious status of these agency workers has made them vulnerable to bullying and harassment, forced overtime and poverty wages. And how many of the 260 workers interviewed preferred this deregulated and flexible arrangement? You only need one hand to count this one – four of them.

Instead of slashing workers rights and removing “tax distortions”, we need serious public investment to create jobs. The ILO estimates that, despite positive government action, some 34 million jobs have been lost globally since the financial crisis began. An estimated 215 million workers and their families have been pushed into extreme poverty by the financial, food and fuel crises – getting by on less than $1.25 per day. Joblessness is likely to continue well into the future, despite initial signs of recovery. In some countries, as the ILO and the OECD’s forecasts show, unemployment will not reach its peak until well into 2011 at the earliest. Globally, over 300 million new jobs will need to be created over the next five years to return to pre-crisis levels of unemployment.

Who should foot this bill? At Pittsburgh in September last year, the G20 gave the IMF the job of coming up with options on how the finance sector should “make a fair and substantial” contribution to pay for the crisis. It will report back to Finance Ministers at the end of April. Given the scale of the task ahead of us the IMF needs to seriously consider a Robin Hood Tax, or we need to seriously consider getting this fox out of the hen house.

The UN Secretary General’s office has just released a draft report on progress towards achieving the Millennium Development Goals. It makes for sober reading.  Given the scale of the global financial crisis, “over 300 million new jobs will need to be created over the next five years” and that’s just to “return to precrisis levels of unemployment.”

Pre-crisis, some 633 million workers, or 21.2% of the world’s workforce, were struggling to feed their families on less than $1.25 per person per day. Thanks to the global financial crisis our planet is now home to an extreme 215 million workers living in absolute poverty.

The crisis has hit youth the hardest. The unemployment rate globally for those aged between 15 and 24 has jumped up nearly two percent in the last year to 14%. And women still face significant barriers to get decent jobs and wages.

The Millennium Development Goals or MDGs, are global development targets to address issues such as poverty, health, education, gender equality. Set in 2000, the task of reaching the goals by 2015 looks tougher than ever, especially for the world’s workers.

The UK Government’s Department for International Development (DFID) set an ambitious goal last year to cover 50 million people with social protection plans over the next three years. It’s a good start but serious global leadership will be needed during the review of MDG progress this year to gather the resources to fill this global black hole with green and decent jobs, and quality public services. It sounds like the world needs a Robin Hood Tax more than ever.