Lisbon Treaty sacrifices Social Europe for competitiveness

DUBLIN MEP Mary Lou McDonald debated the Lisbon Treaty with former EU Commissioner and Director General of the World Trade Organisation and current Chairperson of BP and Goldman Sachs International, Peter Sutherland, in Dublin Castle at a National Forum on Europe event on 3 April.
  McDonald focussed on foreign direct investment and the implications of the treaty on Ireland’s ability to determine its own tax base. Here is the full text of her address:

Ireland’s place is in Europe. Proponents of the Lisbon Treaty who are endeavouring to reduce the debate to a discussion on whether Ireland’s place is in or out of Europe are doing the people of this state a huge disservice.
The Lisbon Treaty is the single biggest decision the Irish people have been asked to take on the future of Europe in the history of the Union. Central to this debate are the economic implications for Ireland, Europe and the wider world should the treaty be ratified.
Building a prosperous and equal economy is the core of our vision for Ireland. It is because we seek to build a sustainable democratic Europe, where economic development is based on social inclusion and cohesion, environmental sustainability, high-quality public services and real competitiveness, with greater economic control over management of the economy, that we cannot support this treaty.
 Foreign direct investment in Ireland is a significant factor in our economy, creating thousands of jobs in the pharmaceutical and IT sectors.  Proponents of the treaty have claimed that foreign direct investment will dry up if the Lisbon Treaty is rejected.  This is nonsense and serves only to distract attention from the content of the treaty. In France, following the rejection of the EU Constitution, inflows of foreign direct investment reached historic highs for two consecutive years.
Ireland can remain an attractive location for investment and our position in the EU will be secure long into the future.
However, it is clear that Ireland is facing the challenge of coping with an economy in transition. International circumstances, the sharp rise in oil prices, the declining value of the dollar and an international credit crunch pose serious challenges to our economy.
We had a slowdown in the construction and property sectors. However, the culprit is Government policy which has left the economy over-reliant on such cash cows. We have also experienced a significant string of job losses, particularly in the manufacturing and low-skill sectors.
What is critical now is that we develop a strategy for the next generation of jobs in the Irish economy. We need to integrate economies north and south. We need to create new ways to attract foreign direct investment. We cannot compete with the emerging economies on the basis of low cost. We must improve competitiveness by investing in infrastructure, education, research and development, and upskilling and retraining workers.
We will face these challenges as full members of the EU. However, the Lisbon Treaty, if ratified, will hinder efforts to ensure that Ireland is economically and socially successful.
The implications of the Lisbon Treaty for Ireland’s ability to determine its own tax base have been dismissed by proponents of this treaty. This has been a deliberate effort to shut down debate on this element of Lisbon. Fianna Fáil MEP Eoin Ryan sought the postponement of a European Parliament Report on a common consolidated corporate tax base until after the Irish referendum as he believed any discussion on this topic could have undesirable consequences.   
Let there be no doubt that the EU, having secured its position in relation to monetary policy, now has its sights set on fiscal policy. Tax harmonisation has been repeatedly endorsed by the European Parliament, including MEPs from Fine Gael and the Labour Party.  The EU Commission has drafted proposals for introducing a common EU tax base for company taxes, but it too has postponed its publication for the time being.
The Lisbon Treaty provides for qualified majority voting on laws governing foreign direct investment and international agreements on foreign investment. There are also growing concerns from Irish business regarding how the Lisbon Treaty will impinge on taxation, particularly Corporation Tax.
Article 48 of the Lisbon Treaty will permit the European Council to move from unanimity to qualified majority voting in key areas, including company taxation. Proponents of the treaty point to the fact that unanimity is required on taxation matters. What they fail to point up is that a mechanism to remove that very veto is also contained in the treaty.
It is my firm belief that the system of taxation is properly a matter for this state to decide. The Government ought to have secured an opt-out for Ireland on all taxation-related matters. They failed to do this. This could be properly addressed in a new treaty.
The EU has done much over the years to promote a more social Europe. Unfortunately, in the last decade these gains have been undermined by successive treaties that have sought to sacrifice Social Europe in favour of a narrowly-defined focus on economic competitiveness. The Lisbon Treaty will undermine progressive economic policy. It is time proponents of the treaty engaged honestly with the Irish people on these economic arguments.

Lisbon Treaty — poverty, public services and social inclusion

By Brian Carty
Employment & Social Affairs Researcher United Left/Nordic Green Left Group European Parliament

WHILE much of the debate on the Lisbon Treaty will focus on procedural and institutional issues, it is vital that we assess its social and economic content. More specifically, in weighing up the pros and cons of the treaty we need to ask ourselves what does the treaty say and what will it enable the EU to do on issues such as poverty reduction, social inclusion and public services.
It is also important that we put our answers to these questions into the more general policy context of the EU in recent years. We need to do this both to understand the intentions of those drafting the treaty and to get a sense of how they intend to use it if and when it is ratified.
There is little doubt that the social and economic direction of the EU in the last decade, like the rest of the world, has been right-wing. Not only are the Christian Democrats the largest grouping in the EU Parliament the composition of the European Commission is without doubt the most ideologically neo-liberal to date.
One of the key aims of this commission is to complete the EU’s fourth historic freedom: the free movement of services. However, as this includes public services such as health and education, the Commission has been experiencing some difficulty in achieving its objective.
Of course, neither the EU nor the Lisbon Treaty actually talks about public services. Rather they divide services into those of ‘General Interest’ (SGIs) and those of ‘General Economic Interest’. Regrettably, there is no clear or legally binding definition of what either of these categories mean or which services fall into which category. This is an important matter as, under Article 16 of the Lisbon Treaty, services of general economic interest will be subject to greater liberalisation, as the Commission will gain new powers to force member states to open specific services to competition.
Defenders of the Lisbon Treaty argue that health and education are services of general interest, and point to the protocol on SGIs as a positive mechanism for protecting health and education. Unfortunately, if the Lisbon Treaty is ratified it will be the Commission and ultimately the European Court of Justice who will decide, on a case-by-case basis, if vital public services (such as health and education) should be liberalised. It is already clear that these bodies take a very different view and are intent on placing health, education and other vital services into the services of general economic interest category.
Indeed, the detail of Article 188 highlights this fact. For the first time the exemptions on the inclusion of health and education in international trade agreements are lifted. Post-Lisbon, the European Commission could not only negotiate with developing world countries to gain access to their markets in services – including health and education – but other developed countries could secure access to European service markets, bringing with them more deregulation, privatisation and inequality.
Ireland already experiences the daily reality of two-tier, for-profit healthcare. Ratifying the Lisbon Treaty will not only undermine the universal health care systems in place in other EU member states (as recently acknowledged by British Labour Party former Health Secretary Frank Dobson) but will make it even harder to address the growing inequalities in our own domestic system.
In real terms, whether through Article 16 or 188, the Lisbon Treaty signals the final stage in the EU’s battle for access to member states’ public services, and the losers will be those most in need of vital public services.
Supporters of the Lisbon Treaty often point to Article 9, known as the Social Clause, as another protection against the negative consequences of neo-liberalism. Indeed, the wording of the article is positive and no reasonable person could oppose it. However, the issue is not whether the article sounds good, but whether it can be successfully used as a tool in the promotion of social inclusion and economic justice.
The concern many of us have with the Social Clause is that it will go the same way as the objectives of social cohesion and environmental sustainability in the EU’s 2000 Lisbon Strategy for Competitiveness. When the Commission launched this competitiveness strategy, it received a broad welcome for seeking to combine economic, social and environmental objectives. But by its mid-term review in 2005, it was clear that the Commission had abandoned the social and environmental elements, sacrificing them on the altar of a narrowly-defined concept of economic competitiveness. There is little doubt, given the ideological make-up of the EU Parliament, Commission and Council that the Social Clause will suffer a similar fate: nicely worded but never to affect any meaningful change in social or economic policy.
The Charter of Fundamental Rights provides even less protection than the Social Clause on the social rights front, despite the claims of those in favour of the treaty. In its analysis of the charter, the Institute for European Affairs argued that it “does not create any new rights” and that the social and economic rights in the Charter “do not give rise to direct claims for positive action”.
Its numerous limitation clauses, making its application subject to national law and custom, means that, contrary to claims made by its advocates, it will have little significant impact on the progressive promotion or expansion of social or economic rights. Ultimately, the European Court of Justice will decide when disputes between named rights arise, such as the rights to strike, conduct business and work. And as indicated in the court’s own judgment on the Lavall case, the Charter will do little to protect citizens from the social and economic impact of the EU’s neo-liberal economic policies.
As someone who works in the European Union, I understand the great potential which progressive social and economic legislation could make on the lives of millions of people across the EU who experience the daily realities of poverty, inequality, powerlessness and social exclusion. Indeed, I strongly agree with the sentiment that the EU can only be a credible force for good in the wider world if it addresses questions of social justice at home. When assessing the Lisbon Treaty the key question must be whether it strengthens the ability of the EU and its member states to promote social and economic equality, cohesion and justice. Sadly, it does not and on that basis should be rejected in order that a better deal may be renegotiated – one that makes combating poverty and inequality central to its actions rather than just its aims.