Written By: - Date published: 8:02 am, September 1st, 2016 - 49 comments
Categories: business, capitalism, Europe, Financial markets, Globalisation, tax, us politics - Tags: Apple, european union, ireland
The EU and the EC just sent a major pro-unity signal to the world.
One of the reasons countries group together is so they can ward off predatory multinational corporations, as Ireland is finding out.
Yesterday the European Commission released the results of its investigation into Apple’s tax liability in Ireland, and said that Apple must pay US$14.6 billion for skirting taxes. The EC determined that such a low tax rate was illegal because it created an illegal trade incentive.
There’s quite a lot you can do to help people in the EU with US$14.6billion. So that’s quite a lot the people had kept from them by Apple and the Irish government.
The decision will send shockwaves through the boardrooms of companies like Amazon and McDonalds that have extensive operations in Europe. Both are now being investigated for tax liability.
Both Apple and the Irish government intend to appeal the decision.
And now, apparently unrelated, the German Vice Chancellor has stated that a free trade deal between the European Union and the United States is pretty much dead.
The negotiations with the U.S. have de facto failed because we as Europeans naturally cannot submit to American demands.”
He added that in 14 rounds of talks, negotiators had not reached agreement on a single one of the 27 areas in the deal.
It’s not as if Germany isn’t committed to free trade, and he cited the free trade agreement with Canada, CETA, which is already largely negotiated and has similar provisions to those in the TTIP.
Even when the EU was more confident of settling the TTIP in July this year, they completely rejected the Investor State Dispute Settlement framework. Gianni Pittelli, the EU leader of the S&D group in the European Parliament, said in July:
ISDS is dead. It must be replaced by a new public and transparent system of investment protection, in which private interests cannot undermine public policy and which is subject to public law.”
That means actual judges.
I am sure Apple and the U.S. are remembering such statements now. A unified Europe is a fearless Europe, and they will never give up on the rule of law no matter how big you think you are. We can just imagine how this tax ruling would have gone if the EU had signed up to the TTIP and instead of being held to investigators driven by public policy, they could jack up their own hand-picked tribunal members and get away with it.
The two moves together – against Apple and against the U.S. – are no coincidence. This is a signal from remaining Europe that they still have the strength to muscle up and take anyone in the world on. The biggest country, the biggest taxpaying corporation. It’s also a major internal disciplinary signal to Ireland and others that they will be held to account if they undercut other members: tax will be enforced as the primary redistributive force, and such discipline will reinforce the strength of public policy itself to be done and be seen to be done. Ireland knew the rules, broke them, and was found out.
We could still see Obama force through our own TTP during his “lame duck” session. But at least in Europe, the case for rule-of-law internationalism, not unfettered corporate internationalism, has been put out there in neon to countries and corporations alike. Our own government stands exposed, while the EU stands up to them.
For those like Britain who want to break that unity, the signal is that they will no longer have the backing of the collective to stand up to the great political and corporate powers of the world. For those who stay inside the EU, follow the rules and you will be protected from biggest and toughest players on the planet. For the US and others, the word to them is clear: Union.