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Asia Pacific Research Network
Overview
Leaders from the United States, Malaysia, Peru, Australia, Vietnam, Singapore, Chile, New Zealand, and Brunei Darussalam (P-9) gathered in Melbourne, Australia from March 1 to 9 for the 11th round of negotiations on the Trans Pacific Partnership Agreement (TPPA) – a new multi-lateral free trade agreement (FTA) deemed as the “gold standard deal of the 21st century.”
The aim of the TPPA is to achieve economic integration and seamless commercial transactions in the Asia Pacific. It is a move by the US to bypass the slow-moving negotiations in the World Trade Organizations (WTO) and create a platform for a Free Trade Area of the Asia Pacific (FTAAP). The negotiators have focused on 21 working groups: business mobility, customs, competition, cooperation, e-commerce, environment, financial services, horizontal issues, government procurement, investment, intellectual property, labor, legal issues, market access, rules of origin, sanitary and phyto-sanitary measures, technical barriers to trade, and telecommunication[1].
Similar to the North American Free Trade Agreement (NAFTA) between the US, Canada, and Mexico, the TPPA will open all sectors of Asia-Pacific economies to foreign investment, remove barriers and tariffs restricting trade, and grant foreign investors and corporations the right to sue governments if their investments are threatened by the latter’s policies. Unsurprisingly, the TPPA has been called as “the NAFTA of Asia Pacific.”
Although the TPPA will require changes in the constitutions of the participating countries, the negotiations are carried out in secret. The US and the negotiating parties aim to sign the deal without any direct intervention and scrutiny from the public and agreed not to release the text until it has been finally completed and signed. Civil society is kept out of the negotiations and can access only leaked documents, such as one on US proposals. On the other hand, corporations are stepping up their lobby efforts to advance their interests. The US government in particular refused to release the text but allowed over 600 corporate ‘trade advisors’ full access to the documents.[2]
Nevertheless, more countries have expressed their intention to enter the negotiations: The Philippines, Taiwan, South Korea, Japan, and Canada. Their participation has yet to be approved by the P-9 countries.
The lack of transparency in the negotiations will render it difficult for the citizens and the civil society movements of the participating countries to hold their governments accountable for the results of the negotiations and the impacts on their economies and lives in general. With the heightened liberalization and deregulation plus the elevated status of investors, -will only worsen the impacts of the current crises by further stifling the rights of nations and citizens to self-determination and sustainable development. Their livelihoods, environments and rights shall be in placed in greater peril.
America’s Pacific Century through the TPPA
Deeply shaken by the current global crisis, the US looks towards Asia’s growing economies in the hope of tapping their markets to save its own economy. However, standing in its way is China's growing influence in the region and the possibility of an East Asian economic integration that will significantly impact US's sway over Asia Pacific. As a move to counter these obstacles, US Secretary of State Hillary Clinton announced during the November 2010 Asia Pacific Economic Cooperation (APEC) meeting in Honolulu, Hawaii that the US will pursue an American Pacific Century through renewed political, economic, and security ties in the region.
The Asia Pacific region is home to 61% [3]of the global population. It is the world’s largest market for US exports. Two-thirds of US agricultural exports go to this region, for instance. In 2010 US foreign direct investment (FDI) in Southeast Asia alone increased by USD23 billion[4].
For the US, Asia Pacific is an important market that the US has to protect and consolidate. JP Morgan Asset Management described the Asia Pacific as the 'workshop of the world' because most of the goods used worldwide are produced in the region. Encouraging investors to invest in the region, JP Morgan further described it as home to "commodity-rich Australia, technology-focused markets of Korea and Taiwan, and the fast-growing China"[5]. Although certain risks are present in investing in the region, its developing markets offer more potential for growth than the developed markets of the west.[6]
The US will use the TPPA, combined with increased military presence in the region, will utilize TPPA to re-channel the emerging Asian regionalism and to counter the expanding influence of China, thereby, securing US influence in the region.[7]
Impacts of the TPPA
Power to the People Corporations
The TPPA will be a trade and financial liberalization bonanza. It will grant corporations access to all economic sectors of the participating countries; and of course, the more powerful countries will reap greater benefits than the weaker ones. Aside from greater access, the TPPA will elevate the status of investors to equal or even superior to not only local businesses but also governments of the countries. This deal grants foreign corporations the right to sue governments when their investment interests are being threatened, and to demand that they be consulted before any law that might affect their investments is passed. It may even require governments to change their constitutions.
Lawsuits will neither be tried according to the laws nor through the courts of the ‘erring’ country. Rather, trials will be heard in international courts such as the World Bank’s International Center for Settlement of Investment Disputes whose arbitrations are held in secret. If a government loses, its citizens will have to foot the bill and pay the winning corporations through taxes.
The duty of governments to make important decisions in protecting their citizens should be fulfilled against the profit-driven interests of corporations. The effects of the attack on national sovereignty will be immediately felt by the citizens of the participating nations, as their governments are obliged to reformulate policies that will affect local economies, job security and social protection of workers, public services, and the environment.
Jeopardizing Local Agriculture and Food Security
The worries of local businesses such as the dairy and agricultural producers of New Zealand, Japan, and even the US are not at all unfounded. Trade liberalization will further open the gates of the local economies to the tide of cheap agricultural imports that will flood local markets. In the NAFTA, Mexican farmers lost their livelihoods because they could not compete with the more modern and subsidized agricultural industry of the US which dumped their agricultural products in Mexico.
Meanwhile, the so-called “extended intellectual property rights” (IPR) awarded to corporations, including agricultural giants like Monsanto, can be expected to discourage local agriculture, as proven by various experiences. Monsanto is known to sue farmers near its neighboring plantations for “stealing” their patented plants, when in reality it is the GMO plants that contaminate neighboring plants through cross pollination. With its superior resources, the corporate giant has the upper hand in law suits to discourage local farmers from planting and eventually to force them out of their lands. Terminator seeds produced by Monsanto will keep farmers dependent on its technology for them to be able to plant. Moreover, farmers cannot expect support and protection from the government since the corporation can sue the government to remove any farmer-protection policies that will affect its investments.[8]
For neoliberal economists, this is just an issue of rooting out weaker businesses from the market competition. However, for local producers, especially the small holder farmers, fisher folk, and workers, this means loss of livelihood, cultural identities and loss of traditional indigenous knowledge.
Attack on Jobs and Justice
Trade agreements should help bring genuine development and improve the lives of the citizens of the parties. However, the TPPA will do just the opposite. The liberalization and deregulation of economies can cause migration of industries to countries where the rate of profit is higher due to cheaper labor and raw material inputs. These countries also have weak environmental and labor protection laws. The migration of industries causes mass lay-offs in origin countries and a superficial kind of industrial development in the recipient countries. Such industrial shifts will not automatically spell a win for the workers of the countries where the manufacturing businesses migrate.
Looking at the NAFTA experience, US manufacturing industries moved to Mexico where labor is cheaper. Workers in the manufacturing cities of California, New York, Michigan, and Texas suffered lay-offs. Companies that stayed in the US threatened to migrate to Mexico and used this as a leverage to be able to freeze the wages and benefits of US workers. Workers in the Mexican maquiladores (export processing zones) on the other hand suffered severe exploitation. They had no labor rights, no health benefits, and worked for as long as 12 hours. Women were discriminated against by having to take pregnancy tests before applying for jobs.[9]
The collapse of local economies and communities caused by the flooding of imports and ecological breakdown will intensify rural-to-urban and international migration, as workers and communities move from one place to another in the hope of finding new sources of livelihood. This creates another set of compounding problems such as brain drain, international security, overcrowding of urban centers, food insecurity, downward pressure on wages, and even ethnic and racial discrimination against migrant workers.
Moreover, investor rights give corporations more leverage in pressuring the governments to change their labor and social protection policies if these are seen as infringing on investment opportunities. Corporations can use the carrot-and-stick tactic with a government: entice it with the supposed jobs and taxes that their investments will generate, on one hand, and threaten to file hefty lawsuits or look elsewhere for more ‘accommodating’ governments if it chooses not to give in to their demands. This is what exactly happened when the New Zealand government changed its labor laws upon being pressured by the Time Warner Company in filming the Hobbit movies. Aside from allowing the company to remove the actors’ rights to unionization, strike, and benefits such as holidays and sick pay, the New Zealand government also arranged a $25-million tax break for Time Warner when it threatened to shift filming elsewhere. [10]
Corporate Profit Over Public Interest
Citizens have the right of access to social services such as health care, access to water and energy supply, and education. Corporate control of social services will make these vital and important services inaccessible to the people, especially to the poor and marginalized sectors.
Access to water and energy will also become costlier once big corporations take over through privatization. The residents of Buenos Aires, Argentina paid higher water bills after the US water company Azurix took over the operation of the water facility. When the local government attempted to cap water prices, Azurix with its King & Spalding law firm filed a lawsuit. The investor-state tribunal decided in favor of the water company and awarded it $165 million from the taxes of the Argentinean public.[11]
The TPPA will also endanger the rights of citizens on access to education. This basic right and also a social service that governments should provide will be for sale once corporations decide to profit from it. Liberalizing the education sector also raises questions on whether the education system is producing graduates needed for genuine industrial development, not just skilled labor for multi-national corporations. Already, the Vietnamese government allows foreign investment in its education sector to accommodate the demand of large multinational corporations for skilled labor.[12]
The TPPA could also impact on educational content, especially on the formation of the national consciousness of citizens. The TPPA’s demand that the media policies that support local cultural content be abolished could also be applied to education policies.
In health care, the stringent IPR rules that the US promotes extend the patent and data monopolies of corporations. This extension will delay the creation of generic medicines and allow big pharmaceutical companies to keep the prices of medicines high. It also allows corporations in general to apply evergreening tactics to hold on to their patents longer even without any improvement in the use and efficiency of their products. As a result, medicines that are highly needed such as anti-AIDS/HIV drugs will continually be out of reach for those who need them. New Zealand’s Pharmac, which buys medicines at low prices and sells them to citizens at equally low prices, could be dismantled once the TPPA is enforced.
Tobacco firms will enjoy more freedom in selling their goods by the abolishment of standard packaging rules countries set to control tobacco use. The strong tobacco lobby can sue governments with strict rules on tobacco packaging and demand the repeal of these laws.
Aside from flooding the local markets with cheap imports from foreign countries, the entry of unsafe food items because of the abolishment of proper labeling and lax border controls is also a concern. Agricultural companies for example will not be required to indicate whether their products were grown using GMO or not. On the other hand, the increase of food imports in the United States from Canada and Mexico caused by the implementation of the NAFTA was accompanied by an increase in food-borne illnesses. This purportedly stemmed from lax inspection of agricultural imports that entered the US.[13]
Environmental Plunder at its Finest
Liberalized economies and greater investor rights will allow large extractive industries to enjoy unbridled plunder of the natural resources and environmental destruction of their host countries. This will further deprive the people in host countries of their right to use their own natural resources for economic development and renders their communities more vulnerable to environmental disasters.
To accommodate NAFTA demands, the Mexican government amended the country’s constitution in 1993 to allow open-pit mining, foreign ownership of companies engaged in natural resources, and the sale of protected communal lands. This ushered in Canadian mining companies seeking to mine gold and silver in Mexico.[14] Despite people’s protest, Canadian-owned gold and silver mining company Minera San Xavier was able to operate at Cerro de San Pedro in San Luis Potosi, Mexico. The residents of Potosi were concerned that mining operations in an arid climate will deplete and poison the underground aquifer that they rely on for water supply. Even after the federal tribunal ruled that the mine should not proceed because it will violate important environmental laws, the Mexican government still allowed MSX to operate. After another series of legal battles and civil disobedience actions, the Mexican government was forced to give in to the people’s demands and closed the mine in 2009. In 2010, however, it was found out the MSX has once again started its operations with the backing of the Mexican officials and the Canadian embassy in Mexico[15].
Promoting Green Washing
The TPPA also supports the trade in environmental goods and services. This, however, does not mean that countries will enjoy easy access to technology and services in solving the climate crisis for example. The US proposes to extend the copyright terms and banning of parallel importation of goods from other countries without the permission of copyright holders[16]. These will enable corporations to hold monopoly over certain goods and service and charge higher prices for them. Moreover, the efficacy of these products in preventing or containing carbon emissions is still being disputed. With the TPPA, destructive and dirty technologies masked as “green” technologies such as “clean coal” power plants and large dams for hydropower will freely enter the participating countries. Dubious market mechanisms such as carbon trading can also proliferate.
Further Privatization of the Commons
The extent of the IPR rules can lead to the further privatization of the commons for the benefit of corporations. According to the US-designed IPR rules, patent claims can be applied on animals and plants, and on diagnostic, therapeutic, and surgical methods for the treatment of humans or animals. With its vague pronouncement of what can be excluded from patenting[17], almost anything that corporations can think of monetizing will be patented and “owned” by them.
Timber companies could rush in and buy off tracts of forests, which they can cut down to create timber plantations at the expense of communities and indigenous peoples that are dependent on forests for livelihood.
In 1993, UK-based non-profit organization Society for Environmental Exploration organized a biodiversity conservation expedition in Vietnam called Frontier. During the ten-week expedition, ‘volunteers’ collected plant and insect examples from Tam Dao Nature Reserve and the Ba Be National Reserve and took them out of the country without getting appropriate permissions from authorities. It was later found out by Chris Lang, a British environmentalist who joined the expedition, that the samples were submitted to research institutions and are already being tested for their medicinal value. All of this happened without the knowledge of the people from the communities from which the samples were taken. [18]
The experiences of the Philippines and Papua New Guinea with privatizing the commons are worth mentioning as these countries are also in the Asia Pacific--potential members of the TPPA once it expands its membership.
In the Philippines, even without FTA rules to aid the process, US-based pharmaceutical company Neurex, Inc. has already patented the Philippine sea snail (Conus magnus) from which the pain killer SNX 111 or Ziconitide was derived.[19] Apparently, not only plant and animal life are being patented by corporations. Even human tissues are on the way of being ‘privatized’. The anti-leukemia drug was made by medical anthropologist Carol Jenkins and her company from the tissue samples of the Hagahai tribes people in Papua New Guinea without them knowing what they were giving Jenkins in exchange for the soap, candies, and chocolates. Through the help of NGOs, the Hagahais sued and were compensated. But the patent and the medicine remained with Jenkins and her company. With the TPPA, this practice can become commonplace. Suing companies will be more difficult as they are protected by the investor rights. [20]
Violation of Indigenous People's Rights
Foreign investments on agriculture and extractive industries often encroach on the ancestral lands and territories of indigenous peoples. The TPPA can worsen these attacks of corporations on the communities of indigenous peoples.
In Mexico, part of the constitutional changes that the Mexican government made in 1993 to accommodate the NAFTA was the removal of the Article 27 which protects Indian territories from sale or privatization. As a result, the indigenous population in Mexico is left unprotected from the loss of their remaining lands. Because of this, the Zapatistas called NAFTA “a death certificate for the Indian Peoples of Mexico.” On January 1, 1994, the day that NAFTA came into force, the Zapatista National Liberation Army declared war on the Mexican government. They stormed and occupied four county seats in the southern part of Mexico, Chiapas. However, their rebellion lasted only 12 days as the ill-equipped peasants were no match for the firepower of the Mexican army supported by the United States. Amnesty International recorded gross violations of human rights during the 12-day war and years after. Arbitrary arrests, summary executions, torture, and house-to-house raids were allowed by the Mexican government to subdue any rebellion in Chiapas.[21]
Conclusion
Free trade agreements (FTAs) are notorious vehicles of the neoliberal market-driven development agenda of economic liberalization and deregulation. They render the economies of less developed countries vulnerable to the onslaught of investments and cheap imported products from more developed countries. They create conditions that allow corporations to hinder national industrialization and sustainable development and violate human rights. ‘Free trade’ between unequal countries in this context is an unequal trade.[22] The unequal levels of development between countries gives the rich countries more leverage to expand and grow at the expense of the poorer countries.
It is imperative for the US to fast track the advancement of the TPPA negotiations primarily to restore economic growth through multilateral trade. The US experienced merchandise trade contractions, both in import and export trade, as repercussions of the global financial crisis on the US bilateral trade.[23] The US is active in the TPPA negotiation to ensure the provisions that will be advantageous to US corporate interests against new participants. Securing the US corporate interests may also spell favorable support of the US businesses to the reelection campaign of US President Obama for the November 2012 elections.
The Trans Pacific Partner Agreement will not solve the continuing crisis that the US is facing. In their hope to consolidate hegemony in the region, it can only lead to intensification of the conflicts in the region. For the people, the TPPA only means that there will be further plunder of their natural resources, collapse of their local economies, loss of jobs and increasing exploitation, privatization of social services and the public commons, and violation of their human rights.
In the end, trade between nations should be fair and equitable. Economic development from trade deals should benefit the people and foster national industrialization and sustainable development in developing countries. We need to be vigilant and united in exposing and resisting the rusting old neoliberal swindle glittering as a gold standard deal.###
Oppose the US-Lead TPPA!
Uphold National Sovereignty!
Citizens’ Rights over Corporate Rights!
Protect Local Industries! Promote National Industrialization!
Protect Local Farmers and Food Sovereignty!
Protect Access to Social Services!
Stop Corporate Environmental Plunder!
[1] Kesley, J. (2011). Transpacific Partnership Agreement Negotiations: A View from New Zealand. http://www.converge.org.nz/watchdog/26/05.htm.
[2] It’s Branded as a Trade Agreement, but What’s Really at Stake?:TPP’s Investment Rules Harm the Environment http://www.citizen.org/documents/fact-sheet-tpp-and-environment-2-12.pdf
[3] http://www.unescap.org/stat/data/syb2011/I-People/Population.asp
[4] Hervandi, R. (2011). US Direct Investment in Southeast Asia Increased by $23 Billion in 2010. http://aseanmattersforamerica.org/us-direct-investment-in-southeast-asia-increased-by-23-billion-in-2010/648
[5] Why Invest in Asia Pacific? http://www.jpmorganassetmanagement.co.uk/Investor/OurInvestmentRange/InvestmentsByRegion/Asia-Pacific.aspx
[6] Ibid.
[7] Kesley, J. (2011). TPP and the Anti-US Strategy. http://www.scoop.co.nz/stories/WO1111/S00589/tpp-and-us-anti-china-strategy-conclusions.htm
[8] Monsanto Terminator Technology -Worldwide Famine & Starvation. http://www.ethicalinvesting.com/monsanto/terminator.shtml
[9] Amadeo, K. (2012). Disadvantages, Problems, and Negative Effects of NAFTA. http://useconomy.about.com/od/tradepolicy/p/NAFTA_Problems.htm
[10] Clark, A. (2010). New Zealand changes labour laws to save filming of the Hobbit Movies. The Guardian. October 31, 2010. http://www.guardian.co.uk/business/2010/oct/31/warner-bros-new-zealand-hobbit-film.
[11] http://www.citizen.org/documents/fact-sheet-tpp-and-investment-and-services.pdf
[12] Trends in Vietnamese Education Reform. http://www.nesovietnam.org/dutch-organizations/general-market-information/trends-in-vietnamese-education-reform
[13] http://www.citizen.org/trade/article_redirect.cfm?ID=1894
[14] http://ottawa.mcc.org/miningjustice/casestudies/cerrodesanpedro
[15] http://ottawa.mcc.org/miningjustice/casestudies/cerrodesanpedro
[16] TPPA-Rewriting the Global Rules on IP Enforcement. http://occupytppa.wordpress.com/2012/02/18/tppa-rewriting-the-global-rules-on-ip-enforcement/
[17] Each Party may only exclude from patentability inventions, the prevention within its territory of the commercial exploitation of which is necessary to protect public order or morality, including to protect human, animal, or plant life or health or to avoid serious prejudice to the environment, provided that such exclusion is not made merely because the exploitation is prohibited by law. http://keionline.org/node/1093
[18]Pleumarom, A. (1999). The Hidden Costs of the ‘New’ Tourisms. Third World Network. http://www.twnside.org.sg/title/hidden.htm.
[19] Bengwayan, M. (2001). Companies rush to patent wildlife of the Philippines. GM Watch. January 25, 2001. http://www.gmwatch.org/latest-listing/1-news-items/568-companies-rush-to-patent-wildlife-of-the-philippines.
[20] Ibid.
[21] Campbell, G.(1996). The NAFTA War: http://www.tc.umn.edu/~fayxx001/text/naftawar.html.
[22] http://www.globalissues.org/article/44/some-regional-free-trade-agreements
[23] James, W.E. US Trade and Global Economic Crisis, ADB Economics Working Paper Series, ADB Publishing, 2009. http://beta.adb.org/publications/us-international-trade-and-global-economic-crisis
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