Britain Tied Further to US Missile Defence

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Britain Tied Further to US Missile Defence

The British-US Military Industry Relationship

Team Athena Wins Ground Based Air Defence System Contract

Corporate Conquistadors in Cancun

The Labour government has officially launched a Missile Defence Centre (MDC) as a joint government and defence industry operation. The Minister for Defence Procurement, Lord Bach, launched the project on July 18. Its purpose is to provide an interface between Britain and the US Missile Defence Agency (MDA), and as a forum for the exchange of ideas and capabilities between industries in Britain and the US, according to the MoD. The Ministry of Defence-led centre will also function as a "showcase" for specialist British expertise and equipment, which may be appropriated by the US for its Missile Defence programme. The MDC will also facilitate the exchange of information on the development of the US programme, which the MoD says will generate "the best technical advice for policy makers considering future options for the defence of the UK and Europe".

A "foundation group" of five major British companies with previous experience in missile defence are involved in the project: AMS, BAE Systems, INSYS, MBDA and Qinetiq. Other British companies and universities are to be invited to propose further participation in the MDC. The centre is a product of a Memorandum of Understanding (MOU) on missile defence between the US and Britain signed on June 12, 2003. Although questioned about the MOU in Parliament, Defence Secretary Geoff Hoon stated: "The details of the Memorandum of Understanding remain confidential between the respective Governments and I am therefore withholding the information in accordance with Exemption 1 of the Code on Access to Government Information."

Senior US and British military and industrial figures attended the launch, including Lt.Gen. Ronald Kadish USAF, Director of the US Missile Defence Agency, and Professor Sir Keith O'Nions, Chief Scientific Advisor to the Ministry of Defence.

Lord Bach said: "With the US programme running at some $8bn a year, the opportunities for UK industry are clear. In the Missile Defence Centre we are looking to develop a well-defined, directed, jointly funded hardware demonstration programme focusing on areas of UK expertise. In time, I hope that UK industry will play a significant role within the US missile defence programme."

In 2001, George W Bush decided that the US would abrogate its international obligations and withdraw from the Anti-Ballistic Missile Treaty 1972 in order to pursue the American Missile Defence programme ("Son of Star Wars").

In his speech to the US Congress earlier this month, Tony Blair dealt with the "special relationship" between Britain and the US, and his "feeling" of "a most urgent sense of mission about today’s world" by declaring that there "never has been a time when the power of America was so necessary". He may have felt that their "ultimate weapon is not our guns but our beliefs", but short of this ultimate weapon, he is tying Britain further to the use of the US’s own weapons of mass destruction and to US imperialist might and aggression.

The US base at Menwith Hill Station and RAF Fylingdales (both in North Yorkshire) are the two bases in Britain which are crucial to the American Missile Defence System. Two Space Based Infra-Red System (SBIRS) radomes have already been built at Menwith Hill Station.

The working class and people must demand an end to this "special relationship", the removal of all US bases from Britain, and must use all their initiative to oppose the "Missile Defence" programme.

According to a feature in the Financial Times prior to Tony Blair’s visit to Washington, the Prime Minister was expected to press George W Bush for shared access to some of the Pentagon’s hottest military secrets: technology ranging from the software source codes at the heart of the latest fight jets to electronic systems for controlling the digital battlefield.

The article points out that elsewhere in Europe, the prospect of close military ties between the US and Britain is viewed with "suspicion and envy". The FT says that if Britain and the US were to integrate defence industries, further doubts would be raised about London’s commitment to an independent European defence capability.

According to Alex Nicoll, assistant director of the London-based International Institute for Strategic Studies, "There will never be a better moment to press home this issue. We are at a peculiar juncture in history with the US and UK relationship so strong because of Iraq and continental European companies unable to build their US businesses for political reasons."

The FT says that BAE, Britain’s dominant military concern, was convinced that Tony Blair would have to use the window of opportunity to encourage greater co-operation, and that it will probably have to give up its independence entirely and merge with a larger US rival in order to gain full access to new military technology. BAE is already one of the top six suppliers to the Pentagon and benefits from some of the US’s huge research and technology spending. But, the FT reports, the problem for BAE is that the US does not want that technology leaking out to third countries, even its closest allies. Therefore, BAE argues that if the British government is buying into a US defence programme, the technological information should be forthcoming. Its chief executive told the FT, "Rightfully, because we are a good friend and loyal friend of the US, we should ask for that technology when we buy the kit."

A £38 million Assessment Phase contract for Britain’s Ground Based Air Defence (GBAD) has been awarded to Team Athena, according to Space Daily (http://www.spacedaily.com/news/bmdo-03f.html). Team Athena is comprised of British and US companies including Lockheed Martin, INSYS and Advanced Systems Architects (ASA). Team Athena proposes "…a fully integrated and cohesive air defence system for the UK armed forces" as a solution for GBAD. A second Assessment Phase contract has not yet been awarded. In 24 months, one contractor will be selected to continue to the next phase.

At the end of the Assessment Phase, a single company will be selected to continue with the £1B Demonstration and Manufacturing phase for GBAD, the purpose of which is to update and integrate the current Rapier and HVM systems within a new Air Defence Command, Control, Communications, Computing and Intelligence (ADC4I) system. This next phase of the programme is scheduled to run between 2005 and 2010.

The EU Offensive for WTO-Investment Negotiations

Investment Watch July 2003 (http://www.corporateeurope.org/mai/conquistadors.html)

At the fifth World Trade Organization (WTO) ministerial meeting (Cancun, Mexico, September 10th-14th) the WTO membership will decide whether to begin negotiations on a multilateral investment agreement. Citing strong evidence that a WTO-Investment agreement is likely to have extremely adverse social and ecological impacts, a broad range of civil society groups (as well as a large number of developing country governments) are resolutely opposed to such a launch. The European Commission (EC), in contrast, is leading the push for a WTO-Investment agreement, reflecting the EC's determination to advance the (European) corporate agenda of creating new opportunities for the expansion of EU-based multinational corporations. Despite heavy doses of political spin, and assurances that it foresees only a mild, supposedly 'basic' agreement, a range of factors suggest that in the longer-term the EC hopes to transform WTO-Investment into an even more radically corporate-friendly agreement. One such factor is that EU corporate opinion - which the EC has relied on extensively in the formulation of its negotiating objectives and as such provides the underlying rationale for EC's agenda - is increasingly prioritising the launch of WTO-Investment negotiations, and desires a considerably more far-reaching model than that currently proposed by the EC.

The EC's obsessive pursuit of corporate-friendly multilateral investment agreements

Background
In Cancun, the green light to begin negotiations on a WTO-Investment agreement (and several other controversial issues, collectively known as the "Singapore Issues") will only be given if there is "explicit consensus" amongst the WTO membership in favour of this. At the previous WTO ministerial in Doha (Qatar), November 2001, the EU (and other proponents such as Japan) came within touching distance of forcing the launch of negotiations, only to be frustrated by rearguard resistance from India and other developing countries. The deferment of the decision to Cancun is a consequence of this. It is widely recognized that the EC - which negotiates on behalf of the EU - took the lead in the Doha onslaught, using power politics to sideline developing country opposition. The EC's determination to launch the Singapore Issues remains so great that there is immense concern that Cancun will bring a repeat of these unacceptable tactics. Indeed, it seems increasingly that the EC attaches far more importance to WTO-Investment and the other Singapore Issues than the individual EU member states do.

The origins of the EC's current WTO-Investment push date back to the mid-1990s, when the EC embarked upon a twin-track strategy of simultaneously promoting the adoption of multilateral investment agreements both within the OECD and the WTO. With the OECD project - the now notorious Multilateral Agreement on Investment (MAI) - grinding to a halt in late 1998, the EC instantly switched its focus to the WTO, and has since advocated a WTO-Investment agreement with almost religious fervour.

Revealing the EC's real agenda
The EC embellishes its push for WTO-Investment with a huge amount of 'pro-development' rhetoric, and argues that it is only pursuing what it claims is a basic, flexible agreement. In particular, its proposal suggests a 'narrow' definition of investment (e.g. excluding destabilizing short-term capital flows), a "bottom-up" negotiating mechanism - as in the General Agreement on Trade in Services (GATS) where WTO members choose which sectors to liberalize rather than choosing which sectors to exempt - and is silent on politically-charged issues such as the rights individual private corporations will inherit from the agreement.

The EC's 'basic' model is nevertheless highly dangerous. Civil society argues that, because of the liberalizing dynamic of WTO negotiations, even a so-called 'basic' WTO-Investment agreement will greatly undermine the right of nations and communities to regulate the entry and performance of foreign investment and investors in their territories.

History shows us that most successful economies have mitigated the negative impacts of inward foreign investment, and accentuated its positive impacts, by (for example) restricting which sectors investment flows into, by forcing foreign investors to assist in the development of local industry (by, for example, mandating technology transfer, or joint partnerships), and positively discriminating in favour of local companies and investors. Yet such interventionist measures are precisely those that even a 'basic' WTO-Investment agreement would constrain. A fledgling economy deprived of the ability to use such measures has little defence against the economies of scale enjoyed by multinational corporations, greatly damaging the prospect of developing prosperous, democratically-controlled and ecologically-sustainable economies, not just in the South but in the North also. Furthermore, just like GATS itself, the EC's proposed "GATS-style" negotiating mechanism will still cause the progressive, effectively irreversible erosion of policy flexibility, and lock-in existing investment liberalization, in effect foreclosing the prospect of returning to less neo-liberal regulatory frameworks for managing foreign investment.

The events now unfolding in Argentina and other Latin American countries, for example, where there is growing demand for more socially-just policies following the failure of the neo-liberal economic model, demonstrate how crucial it is that economies refrain from permanently binding investment liberalization within the WTO. Indeed, it is the potential for even a 'basic' WTO-Investment to permanently lock-in and multi-literalise neo-liberal policy that makes it such a profoundly dangerous agreement; the global neo-liberal architecture cannot be fully complete without it.

The 'basic' model is only the beginning
Moreover, despite the fact that the EC's 'basic' model would be bad enough, there is a growing amount of evidence that the EC has much higher ambitions. The following quote is taken from an internal EC paper - penned only two weeks after the official collapse of MAI negotiations - that Corporate Europe Observatory (CEO) obtained early in 1999:-

"...even if a perfect result is not achieved in a first agreement, the main point is to get investment rules firmly implanted in the WTO. Further improvements of these rules and additional liberalization can be part of future agendas, once we have basis from which to work."

Recent developments inside the WTO also give cause for concern that the EC is hoping to build a 'slow-motion MAI'. Normally, before embarking on negotiations, it is usual for WTO members to agree what the final agreement ought to roughly look like, to prevent a wildly unexpected end result. However, the EC has caused controversy by arguing that WTO members need only agree on superficial issues (such as the number of negotiating meetings) to allow negotiations to start. This is clearly an attempt by the EC to artificially create the "explicit consensus" it craves at Cancun. Yet an (intended?) side-effect of such an approach to negotiations is that, if adopted, the final form of the WTO-Investment agreement will not be pre-judged, potentially opening the door to the emergence of a "high standard" (i.e. exceptionally corporate-friendly) agreement. As Walden Bello noted in a recent presentation, the EC's proposal is tantamount to asking for a "blank cheque". (Such an outcome would not be unprecedented in WTO jurisdiction; the deeply controversial TRIPS agreement is testament to what can happen if the power players within the WTO are handed an open-ended negotiating mandate on an issue of high corporate interest.)

"One official privately admitted that the EU and Japan, the main proponents for the investment negotiations, have agreed to deliberately avoid any detailed discussions on what a future investment pact should cover so not as to antagonize any wavering WTO members, leaving the scope of an agreement to be determined in the negotiations." International Trade Daily, June 18th, 2003.

In light of this, the alarming revelation that the EC and Japan are deliberately avoiding discussions on substantive issues (see above), and comments from Trade Commissioner Pascal Lamy (the EC's chief negotiator) such as "What the final result will be I can't say", understandably cause great concern given the EC's historic determination to build a "perfect" WTO-Investment agreement.

The tactical positioning of the US on the WTO-Investment issue further undermines the EC's assurances that it only wants a 'basic' agreement. The US, which has been strategically quiet on the issue, now says that it will engage in any WTO-Investment negotiations that arise, but that its cooperation and support is conditional on the agreement including a very broad definition of investment, and the requirement that any negotiated elements of the agreement be of the highest (i.e. most corporate friendly) standard. Hence, it seems contradictory for the EC to promote a 'basic' model at the same time as pushing for an open-ended negotiation in which the US will undoubtedly insist on features beyond those currently proposed by the EC. Indeed, there is growing concern that the EC and US are colluding on this issue; it could, for example, be politically very useful for the EC if it can position itself as the more 'moderate' protagonist of the two.

On whose behalf?
Certainly, it remains a fact that many (if not the large majority) of developing countries are opposed to or at least very uneasy about WTO-Investment, and most major development NGOs are scathing about the agreement, whilst EU industry is (as we shall see) very much in favour of the idea.

In fact, ever since the beginning of its WTO-Investment campaign, the EC has been keen to court industrial support, and private sector perspectives have been directly and extensively consulted in the shaping of the EC's proposals. During 1999-2000 the EC conducted a comprehensive survey of 10,000 large businesses from the EU to ascertain their ambitions with regard to a WTO-Investment agreement. More covertly, the EC also championed the "Investment Network" (IN), a heavily corporate-oriented body which the EC clearly wanted to use to help generate direct, executive-level support for their WTO-Investment campaign. Limited, stripped-down minutes to IN meetings were released by the EC only after heavy pressure from CEO and other NGOs was successful in unlocking access to the full, revealing minutes of the first IN meeting. The EC has not ruled out the re-activation of the presently-dormant IN should WTO-Investment negotiations begin:- "It is difficult to predict today whether the IN will need to be reactivated in case negotiations are launched at Cancun." Indeed, as experiences with GATS and the European Services Forum (ESF) demonstrate, the EC does not hesitate to directly involve the private sector once WTO negotiations are underway.

Moreover, the natural sympathies of many senior EC officials seem to lie with the corporate world. For example, Robert Madelin - the official responsible for sustainable development in the EC's trade department - recently (April 9th 2003) had a lead speaking role at the strategy-oriented, private sector seminar "Cancun: Multinationals In The Firing Line Again?" Hosted by public relations firm APCO, the seminar boasted opportunities for corporate staff to have questions such as "What will the protestors be doing and saying?" and "What should you do and say?" answered.

The problem with the EC's close relationship with business is that it institutionalises the one-sided corporate agenda to the exclusion of other stakeholders' priorities. This democratic deficit is particularly pronounced given the overwhelming strength of the civil society critique against a WTO-Investment agreement.

Sidelining civil society
The arguments against WTO-Investment are so strong that a broad coalition of civil society groups and NGOs, from both the North and South, and with backgrounds ranging from mainstream to radical, resolutely oppose the launch of negotiations.

Despite this, the EC presses on determinedly, responding not only with its development-friendly rhetoric - cynically describing its proposed WTO-Investment model as an "Investment for Development Framework (IDF)" - but also by pointing out that it has a negotiating mandate (dating back to 1999) from the EU member states. However, it increasingly seems that WTO-Investment is not such a priority for individual EU member states. Asked why, therefore, they are letting the EC push such a controversial and potentially destabilizing agenda, they point to the EC's mandate and the fact that their ambivalence on the issue is not a good enough reason to retract that mandate. This circular, 'plausible deniability' further undermines the accountability of the EC.

The effective exclusion of the civil society and developing country viewpoint, and the promotion of the corporate agenda, is unfortunate enough in its own right. However, it is all the more worrying because it tells us a lot about where the EC's WTO-Investment strategy is probably heading; it hardly seems realistic that the EC will be satisfied with a 'basic' model.

Finally, it is likely that many of civil society's questions about the EC's true WTO-Investment agenda would be answered if the EC committed itself to public-interest transparency and released internal documents related to its preparation of possible WTO-Investment negotiations. CEO has since the summer of 2002 pursued access to these documents, but the EC claims that releasing them would harm "international relations". The European Ombudsman has now started an investigation into whether the EC's secrecy is violating EU's public transparency rules.

WTO-Investment and the corporate perspective
"I do not want to leave any doubt about the continuing great interest of the (multinational) business community in an international investment framework as declared times and again in preparation of the WTO Doha and Cancun context (BIAC, UNICE, ICC etc)" Kristian Ehinger, Business and Industry Advisory Committee (BIAC) to the OECD, May 2003

As will be demonstrated shortly, it seems that WTO-Investment is increasingly a priority for European corporate lobby groups. However, compared to the feverish levels of corporate campaigning that were witnessed during the MAI, support for WTO-Investment seems fairly low profile, particularly at the global level.

There are a number of explanations for this. An immediate and extremely relevant factor is that there is simply no need for the EU corporate lobby to push hard while the EC, with a (presently) secure negotiating mandate, is carrying the issue forward aggressively within the WTO. However, other factors include the political dynamics of the wider WTO negotiations, and the different positions held on the WTO-Investment issue by the US and EU corporate lobbies.

The 'ideal' WTO-Investment agreement, and US industry hesitance
>From the corporate perspective, the 'ideal' WTO-Investment agreement should include a very wide definition of investment, enable free access to foreign markets, require that (once inside a foreign market) investing companies be treated as well as domestic companies, endow the investor with significant legal protection, and incorporate mechanisms by which the investor can invoke arbitrations against the host government ("investor-to-state" dispute settlement.) Additionally, the ideal investment agreement should lock liberalization in permanently, be designed to expand its coverage over time ("progressive liberalization"), prevent host governments from stipulating "performance requirements" on incoming investment (e.g. measures to ensure the local population benefits such as mandatory joint partnerships with local companies), and allow the unfettered repatriation of profits. Needless to say, an investment agreement with such "high standard" features profoundly restricts the extent to which governments and communities can exercise democratic control over their economies.

Given that even the EC's 'basic' model - which falls far short of the corporate ideal - is controversial inside and outside the WTO, it is highly unlikely that the corporate ideal will be attained overnight. This is why the US corporate lobby remains at best luke-warm about WTO-Investment; US corporations already enjoy the exceedingly "high standards" of investment liberalization and protection found in NAFTA (North American Free Trade Agreement), US-negotiated FTAs (Free Trade Agreements), US-negotiated BITs (Bilateral Investment Treaties) and potentially in the hemispheric FTAA (Free Trade Area of the Americas.) They are concerned that a weaker WTO-Investment agreement will legally and/or politically undermine US attempts to continue negotiating such high standards of treatment for US corporations. There is also concern that prematurely pushing for an agreement within the WTO will damage longer-term attempts to build what corporations would consider an 'ideal' WTO-Investment agreement, as well as destabilizing 'safer' WTO deliverables such as service liberalization (GATS) and reductions in industrial tariffs. In fact, one powerful US lobby group recently came out against the launch of talks at Cancun, and another has argued that the WTO should (at least initially) focus only on a comparatively uncontroversial core set of investment issues to ensure that these are of the highest quality. Many other US lobby groups, while not being completely silent, are saying very little indeed about WTO-Investment.

EU industry leading the charge
In contrast, leading EU lobby-group UNICE (Union of Industrial and Employers' Confederations of Europe) has now listed the launch of negotiations on a relatively high-standard WTO-Investment agreement as one of its four top priorities for the remainder of the Doha round, stipulating that greater market access is more of a priority to it than investor protection. UNICE's positive stance can be added to other powerful, supportive voices such as the International Chamber of Commerce (ICC) - which in March 2003 announced its intention to push for an extreme, corporate-friendly WTO-Investment agreement - the Business and Industry Advisory Committee to the OECD (BIAC), the Transatlantic Business Dialogue (TABD), the European Services Forum (ESF), and a number of other influential lobby groups from both inside and outside Europe.

In addition to the prioritisation of the issue by UNICE and ESF (and tacit support from the European Roundtable of Industrialists, ERT), there is quite a lot of evidence that EU industry has been promoting WTO-Investment rather heavily. According to one TABD participant the push for TABD endorsement of WTO-Investment came from its EU bloc, with the final position statement (which is structurally identical to the BIAC statement oddly) being a product of EU corporate enthusiasm and US nervousness about existing investment treaties not being undermined. (It may therefore be the case that the tactical restraint shown in the TABD and BIAC statements is in fact the hallmark of US influence.) Similarly, the September 2002 endorsement of WTO-Investment by AEBF (Asia Europe Business Forum) came after many years of the European private sector repeatedly bringing the issue to the table, only to be shunned by their Asian private-sector counterparts. Furthermore, and perhaps most revealingly, provisional results from the 2003 member survey of the EABC (European-American Business Council) show that, only when the results are disaggregated along US-European lines, does it become apparent that WTO-Investment is now the top priority of its European members, but barely a priority at all for its US members.

Possible reasons for the greater level of EU enthusiasm include the competitiveness of EU foreign investment exports compared to the US, a more multilateral outlook and, probably most importantly, a determination to ensure that the standards of market access and legal protection experienced by EU corporations investing abroad does not fall too far behind the high standards currently enjoyed by US corporations.

EU and US industry uniting to save the Doha Round
This disjuncture between the US and EU corporate viewpoints is particularly relevant in the context of the wider WTO negotiations. It is widely held that the Doha round of negotiations as a whole is in trouble, and commentators are starting to talk about Cancun becoming a repeat of the Seattle ministerial, which collapsed as a consequence of irreconcilable disagreements between WTO members. This time, there are high tensions between developed and developing countries over issues such as agriculture and access to medicines, as well as the Singapore Issues themselves. Additionally, spats between the US and EU both inside and outside the WTO (for example on Iraq, the Foreign Sales Corporation WTO case and the GM food WTO case) are casting a shadow over proceedings, although it would be naive to assume that these US-EU rifts will prevent the US and the EU from working together in Cancun.

Given the perilous state of the Doha round, corporate lobbies have started to unite across borders to help prevent the round from collapsing. This can be seen in a recent flurry of transatlantic and global joint statements. The most high-profile of these to date has been the initiation of a joint campaign to bring the Doha round to a successful conclusion by six of the world's most powerful lobby groups:- ICC, ERT, UNICE, Nippon Keidanren (Japan), BRT (the US Business Roundtable) and CCCE (Canadian Council of Chief Executives.) This campaign began with a direct address to the G8 leaders in Evian in May/June 2003. Other alliances include the ERT-BRT declaration on the eve of the EU-US Summit (June 2003), and a joint statement by the UK and German national business federations in association with two leading US lobby groups.

These groups recognize that the best way to 'save' the Doha round is for WTO members to focus on resolving key negotiating blockages (in the area of agriculture in particular) and to move forward in less controversial areas such as services and industrial tariffs. This fact, combined with the need for these transatlantic and global corporate alliances to produce strong, united position statements, explains why the issue of WTO-Investment (with its uneven distribution of support between US and EU corporations) hardly figures at all in these statements. .

However, despite the 'masking' effect of these joint declarations, and the fact that the EC is currently leading the corporate agenda through the WTO, there is good reason to believe that corporate campaigning will increase post-Cancun should the EC successfully force the launch of negotiations. As UNICE's investment policy advisor recently stated, "Business is already interested in the issue and it will become even more interested once the negotiations are launched in Cancun."

Certainly, industry has already shown its willingness in the past to adjust its enthusiasm for this issue in line with the mood inside the WTO. Whilst a shock, short-term progression towards a high-standard agreement would undoubtedly stimulate great interest from the corporate lobby, industry appears ready to 'dig in' for the long-haul. In fact, a number of lobby group position statements explicitly recommend building up WTO-Investment in multiple stages - rather than pushing for everything at once - and even in statements that make no such recommendations there is often an implicit acceptance that this is the way their dream WTO-Investment agreement will have to be built. .

Thus, whatever the starting point of a WTO-Investment agreement, the EC and the corporate lobby are likely to progressively press for its expansion, with the EC (as well as the US) repeatedly upgrading its WTO demands in line with the ever-higher standards demanded by the corporate agenda. .

Countdown to Cancun
Not much time is left before the decisive WTO summit in Cancun. In order to get the EC's mandate for promoting WTO-Investment negotiations withdrawn, one or more EU governments would have to break ranks. But while an open rebellion by EU governments, causing a major political crisis, is unlikely to happen before Cancun, intensified civil society pressure could have a major impact. The fact that a united civil society opposes the launch of WTO-Investment talks effectively undermines the EC's claims that it is pursuing a sustainable development agenda on behalf of the global environment and the world's poorest. In Cancun itself, this lack of legitimacy may also help to strengthen the resolve of developing country governments to continue blocking the launch of these negotiations. Some EU governments, one can hope, may try to reign in Trade Commissioner Lamy's use of bullying tactics, and limit the freedom he has to use other issues as bargaining chips, which would make it harder for him to force developing country governments to give in. In any case, mass demonstrations, actions, happenings and other protests will be crucial to underline the global opposition to corporate-cantered trade and investment rules, so see you in the streets of Cancun and cities around the world! .