The Brussels Business, now shown in theatres and on television throughout Europe, reveals how the European Commission served the interests of European service companies years ago. How are things today?
Internal documents reveal the privileged access that the EU Commission grants global service players such as Deutsche Bank, IBM and Vodafone to its trade policy-making. Banded together in an influential lobby group, the European Services Forum (ESF), these big companies receive regular detailed and exclusive briefings on the EU’s free trade negotiations from key EU trade negotiators. The Commission’s trade department (DG Trade) even seems to grant ESF member companies access to sensitive negotiating texts. There are also strong indications that the Commission has been paying the travel costs of ESF staff and members to attend business summits abroad.
High-ranking Commission officials have repeatedly assured the ESF that they are “enthusiastic in working with the ESF”. DG Trade considers itself a “fervent supporter of the interests of the European services industry”1.
But many dangers lie in the ESF agenda. Further liberalisation of services markets could limit access to affordable essential services such as water and health care. It could prevent much-needed regulation and supervision in the finance sector, paving the way for future financial crises. It puts downward pressure on wages and labour rights, allowing for deregulated hiring and posting of workers across the globe. If the ESF proposal for investor-state dispute settlement becomes enshrined in EU trade deals, we could also see more costly corporate lawsuits challenging government legislation to protect the environment and public health. And yet the Commission seems to be pushing exactly this agenda.
An inseparable couple
Academics have named the relationship between the Commission and the ESF as one of “reverse” or “top down lobbying”: “where the public authority lobbies business to lobby itself”2.
A key routine for this purpose are the ESF’s quarterly Policy Committee meetings, where ESF members debate and decide positions and strategies. The Commission is always present in these meetings, often with several lead negotiators and other high-ranking officials, sitting next to lobbyists from TheCityUK, Telefónica, BusinessEurope and the like. Every six months, trade officials from EU member states join in, followed by a cocktail reception.
During these meetings, Commission officials give “candid” briefings3 about ongoing trade talks to ESF members. They also advise the ESF whom, when and how to lobby. In October 2011, for example, the head of DG Trade’s services and investment unit, Leopoldo Rubinacci, suggested the ESF should send a delegation to the next EU-India summit (“to show clear interests and pressure to the Indian negotiators and regulators”)4. At the time, the Indian government was preparing regulation to open India’s retail market to European supermarket giants – a move which triggered massive resistance from millions of street vendors and small shop owners fearing for their livelihoods. Corporate support was considered key to counter this resistance.
In October 2012, Director General Ignacio Iruarrizaga-Diez “encouraged ESF to pay a visit to Geneva and express its voice to the RGFS”. The acronym stands for the ‘real good friends of services’, a group of countries behind an initiative for a plurilateral agreement to liberalise services. The Commission felt that “business support to such an initiative would be crucial for its success”5.
Time and again it is the Commission which requests get-togethers with the ESF. In January 2012, for example, the lobby group met DG Trade’s director for services and investment, Rupert Schlegelmilch. According to the ESF, “the meeting was requested by Rupert”. “Rupert” wanted to “take the pulse of the services sector” on issues such as banking in the trade talks with Singapore6.
ESF: the Commission’s baby
As the Brussels Business documentary shows, the Commission’s affinity for the ESF is not new. In fact, it was the Commission’s idea to set up an EU-wide lobby for the services sector, to assist it in the negotiations for a global services agreement (GATS) in the World Trade Organisation (WTO) during the 1990s. One call from Leon Brittan, EU Trade Commissioner at the time, to Andrew Buxton at Barclays Bank – and the ESF was born7.
At the ESF launch meeting Brittan promised: “I am in your hands to listen to what are your objectives, your priorities for liberalisation […] I count on your support and inputs […] so that we can refine our strategy and set out clear, priority negotiating objectives which will make a difference in the international expansion of service business”8.
“Everybody believes that the lawmakers are the institutions [...]. But there is also another world behind that.”
Pascal Kerneis, European Services Forum, in “The Brussels Business”
According to Michel Servoz, DG Trade’s lead services negotiator at the time, “[f]or the Commission, the contribution of the ESF is absolutely decisive. We need them in permanence and a constant link or we simply cannot negotiate. (…) The positions of negotiation that we took, we verified them with ESF so that we could know whether it answered their need”9.
ESF access to sensitive trade negotiating texts
There is ample evidence that since the start of the GATS negotiations in 1999, the Commission has shared sensitive negotiating information with the ESF, while keeping the wider public and even EU member states in the dark10. These bad habits haven’t died.
In October 2011, ESF members asked if they could see the draft text of the EU-Ukraine free trade agreement. According to an internal ESF document, the Commission “agreed to look at the possibility”11. In a follow up email, ESF advisor Anthony Wise suggested that “a small selected group of ESF member representatives could come to look at the text, without taking copies, at the Commission.” He added: “I believe this may have happened for previous agreements at a similar stage”12.
Earlier in the year, ESF representatives had met with DG Trade’s Director General, Jean-Luc Demarty. ESF chairman Christoffer Taxell “made the point that, if the EU were to negotiate efficiently and effectively on services, the Commission must find a way of disclosing to EU private sector interests the detailed content of offers (oral and written) by third countries.” Offers relate to the opening up of markets and deregulation of service sectors within countries that the EU is negotiating with. Taxell stressed that offers in “highly regulated sectors” were of “particular importance”. According to an internal ESF document, “Mr Demarty said that he took this point: it would be important to find a ‘pragmatic’, ‘very discreet’ approach to meeting this need”13.
The wider public is not blessed with such pragmatic services from the Commission. Trade negotiating texts and positions are concealed: for negotiators to express themselves freely on the basis of mutual trust, as the Commission claims. Yet, it seems to be happy to share sensitive information with corporate lobby groups such as the ESF (see Corporate Europe Observatory’s lawsuit challenging this practice and the Commission’s defence).
Public money for private trips
The ESF is also taken on Commission missions abroad. For example, EU Trade Commissioner Karel de Gucht invited ESF chairman Christoffer Taxell “to join me on a mission to strengthen the EU’s business presence in the South East Asia” during the EU-ASEAN business summit in Cambodia in April 2012. “Tapping in [sic] the growth of these [ASEAN] emerging markets should be a key objective for EU business”, de Gucht explained. He advertised the business summit as “an excellent opportunity” for businesses to “directly convey their views, concerns and wishes to the political leaders”. All fees were to be covered by the Commission.14
The ESF is used to such invitations. Its managing director, Pascal Kerneis, had just been part of a ‘vision group’ of ‘eminent persons’ set up by the EU Commission and the Indonesian government to make suggestions for future free trade negotiations between the two. Four ASEAN countries – Indonesia, Malaysia, the Philippines and Thailand – are among the top-10 priority countries ESF members want to open up. Amongst other things, they want to abolish laws requiring foreign companies to hire local labour or enter the market through joint ventures, measures to create jobs and promote development. Liberalising financial services is another key priority for the ESF.15
US & Japan: whetting private sector appetite
For countries not (yet) on the ESF wish list, the Commission plays the role of whetting private sector appetite and pushing industry to rally behind its own agenda. Trade with Japan is a case in point. Due to low growth and strong competitors in the Japanese market, EU services companies have not pushed actively for the upcoming EU-Japan trade talks16. But the ESF signed a joint industry letter to back the Commission’s push to launch these negotiations – against growing opposition in the European Parliament and concerns among EU member states.
All through 2011 and 2012 the Commission had nagged the ESF to come out of the closet on free trade with Japan. In the summer of 2011, it urged the lobby group to get involved in the ‘scoping exercise’ during which EU and Japanese negotiators determined the parameters of the future talks. The Commission urged that “detailed business input already at this early stage of the discussions will be key”. It was “more difficult to raise new issues that will not be put into this ‘exercise’ and in the forthcoming negotiating mandate to be given by the European Union Member States.” The Commission also stressed that “this request for your input is a rather unique engagement at an early stage of discussions”. Broader consultations would only take place once member states had given green light to negotiations.17
The Commission undertook a similar lobby campaign toward the ESF to prepare the looming EU-US trade talks. According to internal ESF files from April 2012, DG Trade’s services unit was “very eager” to receive direct input from services companies about US regulations they wanted to get rid off. The ESF secretariat explained to its members: “A trade agreement with the US will be unlike other agreements in that it will be deeper, the Commission therefore needs specific information on each sector in order to tackle and frame the correct issues from an early stage”18. With hardly any tariffs left hampering EU-US trade, the upcoming negotiations are expected to go “deeper” in bringing down standards and rules considered obstacles to trade – from food safety to internet privacy. The Commission has already encouraged the ESF to lobby regulators in the EU and on the national level to pave the way for this “regulatory cooperation” with the US19.
Trade unions vs industry: 1 vs 20 meetings
Does DG Trade have an equally open door for other interests? To find out, Corporate Europe Observatory asked the Commission for lists of meetings with the ESF and with trade unions which had taken place in 2012. Once the Civil Society Dialogue Meetings are deleted from both lists (they are irrelevant for influencing policy) and the meetings with the ESF which were missing from the Commission’s list are added (were they forgotten or concealed on purpose?), the result is striking. In 2012, the Commission accepted just one meeting with trade unions on the issue of services trade. In contrast, it met more than 20 times with the ESF. If that is not privileged access, then what is?
When the Commission meets concerns about its aggressive services liberalisation agenda, it reacts with ignorance and mockery. A staff member of the European Federation of Public Service Unions (EPSU), told Corporate Europe Observatory about one of the Commission’s Civil Society Dialogue meetings: “When I voiced concerns over the way public services were being dealt with in the EU’s trade policy, one of the officials basically said ‘there is no going back to the Soviet Union’”.
Thank you for Korea! Thank you for Canada?
In the Brussels Business documentary, there is a telling scene in which the ESF’s Pascal Kerneis moves routinely amongst ministers at some global gathering and bumps into former EU Trade Commissioner Catherine Ashton (see the above screenshot). They greet each other heartily. When Kerneis introduces ESF chairman Christoffer Taxell, the latter says to Ashton: “thank you for Korea”.
The EU’s free trade deal with Korea entered into force in summer 2011 and is considered the most far-reaching agreement ever signed by the EU. The ESF was amongst its most fervent supporters, praising the deal for the far reaching market access it grants to EU companies. Trade unions and public interest groups had warned that the agreement would contribute to financial instability and had repeatedly stressed Korea’s negative track record for the repression of its workers.
The next round of ESF applause could be for CETA, the Comprehensive Economic and Trade Agreement between the EU and Canada. Negotiations are in their final stage and while resistance against CETA is growing on both sides of the atlantic, the EU Commission “is calling for active support to the negotiations from the European private sector”. It argues “that this agreement will be going even further than the EU-Korea FTA in many respects, notably in services”20.
ESF: “proud” of its CETA lobby success
CETA is the first trade agreement where the EU Commission has accepted a so called negative list approach to services negotiations. This allows for far reaching liberalisation and privatisation dynamics through the back door because it automatically opens all service sectors, which are not explicitly excluded from the deal (‘list it or lose it’), including services which are not even developed yet. No wonder EU member states were “struggling to understand all possible case scenarios” and had “difficulties in identifying all existing restrictions at various EU local levels for services related to utilities (water, waste, etc.)”, as the ESF informed its members21. The lobby group, on the other hand, celebrates CETA’s negative list approach as something to be “proud” of – “after years of advocacy in that direction”22.
No wonder, the ESF is up in arms to defend CETA and has alerted members to share the necessary information “to be ready to push on key areas should the Canadians start to pull back”23. According to a leaked negotiation paper, one such key area is Canada’s relatively high level of financial market regulation and supervision, which the EU is trying to undermine. It seems the Commission has internalised one of the ESF’s key messages: “financial services must be a top priority for the EU”24.
Cutting the ties
The intimate links between the ESF and the EU Commission reveal how far EU trade policy is run by a small group of unelected bureaucrats and corporate lobbyists. This practice not only hampers well-informed and meaningful public participation in policy-making, it also leads to a trade policy that, while catering for big business needs, is harmful to people and the environment in the EU and the world. MEPs and civil society groups should roll up their sleeves and kick the ESF out of the Commission’s bed.
- 1. ESF report of the meeting with Leopoldo Rubinacci – New Head of Services & Investments Unit in DG Trade, dated 27 January 2011. On file with CEO.
- 2. Woll, Cornelia (2011): Who scripts European trade policy? Business-government relations in the EU-Canada partnership negotiations, in: Hübner, Kurt (ed.), Europe, Canada and the Comprehensive Economic and Trade Agreement, 41-58, p. 48.
- 3. ESF minutes of the meeting with European Commission regarding a Services Plurilateral, Friday, 1st June 2012. On file with CEO.
- 4. ESF draft minutes of the 51st meeting of the ESF Policy Committee, Brussels, 27th October 2011, dated 2 November 2011. On file with CEO.
- 5. ESF minutes of the 55th meeting of the ESF Policy Committee, Brussels, 16th October 2012, dated 26 October 2012. On file with CEO.
- 6. ESF additional report of ESF activities, dated 21 March 2012. On file with CEO.
- 7. Wesselius, Erik (2001): Behind GATS 2000: Corporate Power at Work, p. 8-9.
- 8. Brittan, Sir Leon (1999): speech at the ESF launching session, 26 January.
- 9. Lietaert, Matthieu (2009): New strategy, new partnership. EU Commission and the City of London in trade in services policy, paper prepared for the PSA annual conference, 7-9 April, Manchester, p. 15.
- 10. Wesselius, Erik (2001): Behind GATS 2000: Corporate Power at Work, p. 10.
- 11. ESF report of the 51st meeting of the ESF Policy Committee, 27th October 2011, dated 2 November 2011. On file with CEO.
- 12. Email from the ESF’s Anthony Wise to the Commission’s Leopoldo Rubinacci, dated 25 November 2011. On file with CEO. Obtained via the EU’s access to documents regulation.
- 13. ESF report of the meetings with director general DG Trade Jean-Luc Demarty, and head of services unit Leopoldo Rubinacci, 24 February 2011, dated 17 February 2011. On file with CEO.
- 14. Letter of EU Trade Commissioner Karel de Gucht to Christoffer Taxell, chairman of the European Services Forum, dated 22 February 2012; ESF additional report of ESF activities, dated 21 March 2012. Both on file with CEO.
- 15. ESF report of the meetings with director general DG Trade Jean-Luc Demarty, and head of services unit Leopoldo Rubinacci, 24 February 2011, dated 17 February 2011. On file with CEO; Kerneis, Pascal (2012): Doing Business in Malaysia & in ASEAN Economic Community: Priorities of the EU Services Sectors, presentation at the EU-Malaysia Trade Forum, Kuala Lumpur, 26 April.
- 16. ESF circulation to ESF Policy Committee members on the issues of the EU-Japan FTA – Conclusion of scoping exercise towards the launch of bilateral trade negotiations, dated 1 June 2012. On file with CEO.
- 17. European Commission letter to ESF on the issue of the scoping exercise consultation, dated 12 July 2011; ESF electronic mail to the ESF Policy Committee on DG Trade Industry Consultation on ‘scoping exercise’ on possible EU-Japan FTA – ESF Draft Response, dated 6 September 2011.
- 18. ESF electronic mail to the ESF Policy Committee on the ESF draft contribution to the EU-US consultation, dated 28 March 2012. On file with CEO.
- 19. ESF minutes of the 54th meeting of the ESF Policy Committee, 20th June 2012, dated 21 June 2012. On file with CEO.
- 20. ESF electronic mail to the Policy Committee on the issue of the EU-Canada Comprehensive Economic Trade Agreement, dated 8 September 2011. On file with CEO.
- 21. ESF electronic mail to the Policy Committee on the issue of the EU-Canada Comprehensive Economic Trade Agreement, dated 8 September 2011. On file with CEO.
- 22. ESF news flash N° 2011/01. On file with CEO.
- 23. ESF electronic mail to the Policy Committee on the issue of the Canada negotiations, dated 29 March 2012. On file with CEO.
- 24. ESF report of the meetings with director general DG Trade Jean-Luc Demarty, and head of services uni Leopoldo Rubinacci, 24 February 2011, dated 17 February 2011. On file with CEO.