How the largest trade agreement in history will affect developing countries and the development sector.
By Dhivya Kanagasingam, Programme Officer, ARROW
The TPPA is the largest trade agreement in history involving 12 countries; Canada, the United States, Mexico, Chile, Peru, New Zealand, Australia, Singapore, Malaysia, Vietnam, Brunei and Japan. It may also expand its membership to South Korea, Taiwan, Philippines Colombia, Thailand, Laos, Indonesia, Cambodia, Bangladesh and India, all of whom have expressed interest in joining. Countries in the current partnership encompass 40% of the world’s economy. The TPPA, as of now, potentially affects the lives of 792 million people and yet the public was left in the dark throughout the negotiation process. On the other hand, 605 corporate advisers representing 382 corporations were allowed access to the text to protect their clients’ interests.
The TPPA is particularly concerning to the developing countries in the membership, as it forces them to adopt provisions they might not be ready for and had little opportunity to shape as it was designed primarily by developed countries with their own interests in mind. It will significantly reduce policy space developing countries have in advancing social and environmental concerns, which will have negative consequences to the health and wellbeing of the most vulnerable groups, such as women and girls.
Countries usually conduct an assessment of costs and benefits before embarking on a Free Trade Agreement (FTA) such as the study commissioned by the Malaysian government on the economic impact of the Trans-Pacific Partnership (TPP). Malaysian trade surplus was found to be significantly reduced if they joined the TPP compared to if they did not. The study defends joining by claiming that despite the reduced balance in trade, this would be compensated in the expected gains in GDP. However, 90% of these calculated GDP gains are based on the assumption that most non-tariff measures (NTM), such as subsidies, will be reduced or removed. This is however not the case.
For an example, the United States will still be allowed to provide domestic subsidies to their rice farmers, which will allow them to export rice to other TPP countries below the cost of production. Developing countries on the other hand do not have the financial resources to provide domestic subsidies to the extent developed countries can and the ability to protect their own farmers through tariffs on imported rice will be removed under the TPPA. This will essentially wipe out rice farmers in developing countries. And this is just one crop in one sector.
The consequence of the removal of tariffs to our work in the development sector is also linked to the reduction in public revenue, which will affect governments’ capacity and ability to invest in social sectors and poverty reduction measures. This could also potentially lead to reduced capacity of developing countries to implement the Sustainable Development Goals (SDGs), which aims to use a public-private method of funding.
Cuts in quotas, tariffs and other protective policies under the TPP will create massive competition from established foreign firms for nascent manufacturing industries in the developing country members of the TPPA. Access to higher paying jobs in developing countries will be limited if these countries are unable to diversify into other sectors.
There is a perception that liberalization of the agriculture sector will increase food security in developing countries as the cost of certain crops will be reduced. In fact the opposite is true. Studies have shown that farmers forced to compete in the global market tend to switch to cash crops which have contributed to low overall increases in food production. Signing the TPPA also comes at the cost of food sovereignty as it limits the rights of people and communities to decide on food and agriculture policies, to land and productive resources, to sustainable production and livelihoods, and to social and environmental justice.
ISDS is the mechanism through which the TPPA will be enforced. It will enable governments and foreign investors from TPPA countries to sue other TPP member states for non-compliance. For example, if Vietnam does not comply with the Goods Chapter, other TPP countries and foreign investors will be able to sue Vietnam under ISDS at an international court. TPP countries can then raise tariffs on exports from Vietnam until it complies. States can also be held liable to foreign investors for changing, amending or introducing laws that result in losses in expected profits which can cost governments millions in legal fees alone.
High enforceability of the TPPA is particularly concerning to our work in the development sector because if it clashes with human rights, climate change or labour treaties, even though they are meant to be equal at the international level, the economic sanctions linked to the TPPA will ensure it will be implemented above others.
The TPPA text favours the rights of foreign investors above public interest and even safety, as the ISDS will allow foreign investors to erode policy space that might affect their bottom line. Anything from forcing factories to use a scrubber on their chimneys to reducing carbon emissions to increasing minimum wage to banning a toxic chemical can be seen as a form of indirect appropriation because it reduces investors’ profits.
Can this happen in our region? Just last September, a case from India resulted in an international tribunal asking the commercial arm of the Indian Space Research Organisation (ISRO) to pay Bengaluru-based space technology firm Devas Multimedia Pvt. Ltd $562.5 million in damages because the Indian government canceled a corruptly acquired license.
The TPP will strengthen monopolistic intellectual property rights (IPRs) beyond the already restrictive provisions of the Trade-Related Aspects of Intellectual Property Rights (TRIPS) agreement of the World Trade Organization (WTO). IPRs are a widely used insertion in trade agreements with the position that it promotes innovation. However, studies have found IPRs on existing technologies lead to a subsequent reduction in scientific research and product development.
As for how IPRs affect the health sector, an area of major concern is access to affordable medicines. The TPPA will provide pharmaceutical firms extension in patency rights allowing more monopoly over drugs; without generic competition, there is little incentive to bring drug prices down forcing consumers and healthcare providers to pay higher prices for more drugs for longer.
There are many ways the TPPA will likely affect the lives and health of women and their SRHR. Increased access to cheap, un-unionised and unregulated labour in developing countries will affect women disproportionately as women mostly take up low wage, informal sector jobs.
Women will be vulnerable to further gender-based pay discrimination in the competition for cheaper exports across the region which will also impact labour rights and social benefits such as health and insurance coverage. This is compounded by other intersectional factors such as race, caste, class, sexual orientation, gender identity, migration, disability and others.
The TPPA could also result in the denial of right to health for all, including women. Reduced access to medicines such as anti-retroviral treatment and cancer treatments as a result of extensions in monopolistic patents and other regulatory protections for pharmaceutical companies under TPPA could essentially make them unaffordable to the majority of people in developing countries, especially women.
Under the TPPA, the health sector is susceptible to be opened up to privatisation and corporatisation, further impinging on women’s access to quality and affordable health services, including SRH services. TPPA provisions can impede the protection, promotion and fulfilment of women’s rights, laws and policies, as corporations can challenge progressive laws through ISDS, put governments in compromising situations and make women more vulnerable.
Through our advocacy, we know first-hand the lack of political will many governments have in tackling issues of health, labour, human and environmental rights. Under unfair and preferential trade agreements such as the TPPA, we can expect smaller outcomes from the wealth of work we do. It’s imperative to raise awareness around these implications, especially as more developing countries are now poised to join the TPP.
-Use the Trade Policy Review Mechanism to monitor national trade policies of developing countries while also using human rights as “analytical models” to properly assess the impact of trade rules on the enjoyment of human rights in these countries.
-Engage with the guiding principles on human rights impact assessment of trade and investment agreements, 2011 and the UN Guiding Principles on Business and Human Rights.
-Engage with other CSOs working on the TPPA to bring in intersectional perspectives and foster cross movement collaborations.
-Insert issues around unfair and preferential trade agreements including the TPPA in statements and calls to draw awareness on how they impede our work at the national, regional and global platforms.