Frances O'Grady
Frances O'Grady has questioned the free trade discussions between the EU and US (Reuters)

The head of the Trade Union Congress (TUC) has voiced concerns over the effect any trade agreement between the EU and US would have on labour laws.

Giving evidence to the parliamentary committee examining the potential impact of the Transatlantic Trade and Investment Partnership (TTIP) on the UK economy, Frances O'Grady said she was worried that the deal would lead to a levelling down of labour standards.

She pointed out that the US has only ratified two of the eight fundamental conventions of the International Labour Organization (ILO). Among those tenets it is yet to adopt are the right to organise and collective bargaining, as well as the minimum age convention.

O'Grady said US workers are "disadvantaged compared to the social provisions in the EU". US labour unions have contacted the TUC in an effort to ensure negotiations are geared towards improving the labour situation on their side of the Atlantic.

Any trade agreement the UK is part of, said O'Grady, should seek to level-up on standards, meaning those bilateral partners that don't have employment laws as rigorous as those of the EU should strive to adopt them.

O'Grady spoke of an incident in South Korea in December 2013, when Korean police attacked the national offices of the national trade union with tear gas and detained more than 100 striking railway workers. The EU and South Korea entered into a free trade agreement two years earlier.

"It appears the enforcement of labour standards amounts to strongly worded letters. We need to be clear about what the objective of the trade agreement is. We're looking for opportunities to increase fair trade, wages and living standards," O'Grady said.

She called for more incremental, inclusive discussions, conducted on a sector-by-sector basis and with the full involvement of all "social partners".

EU and US officials have frequently said that TTIP does not pose a threat to standards – environmental, social or labour.

Alongside O'Grady at the hearing was Sean McGuire, the Brussels Director of the Confederation of British Industry (CBI), who confirmed that while the removal of non-tariff barriers will likely account for 80% of the potential benefit of TTIP, his organisation is not calling for wholesale harmonisation of regulations and standards.

Rather, the CBI hopes TTIP will eradicate the need to duplicate processes on both sides of the Atlantic in order to legally export, thus reducing costs for exporters.

McGuire came out strongly in defence of the investor-state dispute settlement (ISDS), which protects investors' overseas assets, but which critics say takes local governing authority away from the government, placing it in the hands of private tribunals.

Without such a clause in TTIP, it may be difficult to negotiate it into agreement with countries perceived as being more risky for investment, such as India and China, McGuire said.

However, he did say that the CBI would back an adapted form of ISDS which broadly favours the victor, financially. A report commissioned by the Department of Business, Innovation and Skills and authored by the London School of Economics notes that "even when investors are required to pay the costs of the tribunal, considerable legal fees can still be borne by the 'winning' party".

McGuire voiced support for an ISDS system in which the losing party would bear the legal costs.

Meanwhile, the European Trade Commissioner Cecilia Malmström will today unveil a new transparency initiative for TTIP negotiations, as IBTimes UK reported last week.