A new report by the Centre for Research on Multinational Corporations (SOMO) presented today at the European Parliament reveals that with the signature of the Free Trade Agreement (FTA) between the EU, Colombia and Peru, there is a great risk of increased economic instability, tax evasion and even laundering of drug money.
In next week’s plenary session in Strasbourg, MEPs will vote on the FTA between the EU, Colombia and Peru. GUE/NGL MEP Jürgen Klute said this morning at a press conference that financial services liberalization prevails in this agreement. "It is absurd that while the EU is legislating to regulate and control the financial markets, we subscribe at the same time such an obsolete agreement, with the same neoliberal policies that have done so much damage to our people."
Speaking at the press conference, Belgian MEP, Philippe Lamberts, Greens/European Free Alliance, said this FTA is like going “Back to the Future”, it is, he said, document which seems rooted in the 1980s or ‘90s, with little cognisance of the financial and economic free-fall of recent years. Asked if this was a consequence of lobbying, Lamberts said it was a case of lobbying within the Commission itself, more so than external lobbying by interest group.
He added that the ideological battle at the root of this FTA is between a hangover group of market liberals previously led by Charlie McCreevy the former European Commissioner for Internal Market and Services from 2004–2010, and a more contemporary group of social democrats attempting to leverage greater regulation of the financial system. Lambert argued that the un-reformed free marketeers are led by Catherine Day the current Secretary-General of the European Commission. Day he said, is symptomatic of a class of influential civil servants for whom deregulation is the preferred norm, a class resistant to what Lamberts views as essential financial regulation in the modern age.
The report, drafted by researcher Myriam Vander Stichele, reveals that in the case of other trade agreements with third countries at least some mechanisms are included to combat money laundering, the fight against organized crime and illicit flows of money. According to Vander Stichele, it is incomprehensible why this trade Agreement signed with Colombia and Peru, two of the main global cocaine producers, does not include any specific regulations to combat financial crime.
The FTA with Colombia and Peru, which will be put to a ratification vote next Tuesday in Strasbourg does not include any specific articles that obliges signatories to take measures against tax evasion. "On the contrary, this FTA could open the door to significant tax evasion, and in developing countries such as Colombia and Peru, this can mean a leak of finance essential to public expenditure" said Vander Stichele.
In this regard, Klute said that now when European citizens are being forced to make major austerity efforts, which mainly affect the poorest, "it is hypocritical to provide TNCs with new markets, which are characterized by tax evasion and the use of tax havens. Moreover, facilitating entry to the EU of criminal capital will not help to solve the European crisis, but will most probably make it worse."
The report concludes that the FTA gives no assurances on fiscal control, such as mutual cooperation in monitoring capital flows, which could reveal the impact of these new liberalization measures or detect flows of illicit money. Nor is any action planned to prevent financial crises, large capital withdrawals, excessive speculation or money laundering.
Klute emphasized the fact that since the beginning of the negotiations, social movements and NGOs have completely rejected the agreement to an extent never seen before in the context of other trade agreements. This report on the financial chapter of the FTA shows that this agreement also runs counter to EU efforts to regulate the financial sector and control toxic or criminal assets. "It is a poorly negotiated agreement and it should be rejected" concluded Klute.
The report is available here
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