The Debate

5 Hidden Costs of the RCEP to People and Planet

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The Debate

5 Hidden Costs of the RCEP to People and Planet

Trade negotiators are meeting next week in South Korea to discuss the RCEP, which could impact billions of lives.

5 Hidden Costs of the RCEP to People and Planet
Credit: Flickr / globalwaterforum

The mega-trade deal currently being negotiated by 16 countries in the Asia-Pacific region and set to be finalized in 2018 officially aims to create a “modern, comprehensive, high-quality and mutually beneficial economic agreement.”

But with talks going on behind closed doors and lacking democratic oversight, the resulting deal is likely to put corporate profit before public interest. As it stands, the Regional Comprehensive Economic Partnership (RCEP) would grant businesses the right to bypass national laws, including environmental ones, and sue governments whenever they feel these laws are restricting financial gains.

The countries involved are the ten members of the Association of Southeast Asian Nations (ASEAN), along with China, India, Japan, Korea, Australia, and New Zealand. RCEP could therefore impact the health, livelihoods, and well-being of almost half the world’s population.

Like other trade agreements, RCEP focuses on trade and investment liberalization, intellectual property rights, services, competition policy, and would influence how governments regulate our economy. While information is limited, leaked documents allow us to identify five key threats that RCEP could pose to people and planet

1. Locking in Secret Corporate Tribunals

If signed, RCEP would grant corporations rights to bypass domestic legal systems and sue governments in international tribunals. Investors have already launched 50 lawsuits in secret tribunals against governments, worth at least $31 billion. India has been sued for charging companies taxes, Australia for enacting public health legislation, and Indonesia for stopping harmful mining projects (pdf).

Indonesia was also required to pay $337 million (the equivalent of 38,593 Indonesian teachers’ salaries for one year) to multinational building company Cemex because it refused the corporation’s takeover of a local company.

More than a third of these cases are targeting environmental laws. RCEP would exacerbate this trend.

2. Driving a ‘Race to the Bottom’ on Social and Environmental Protections

Leaked documents show that the RCEP has no binding measures to ensure companies protect the environment and enforce labor standards, but does limit governments’ ability to regulate these areas.

While social and environmental protection depends on a number of political and economic factors, there is increasing evidence that corporate trade deals have a negative effect. A recent IMF report found that “capital liberalization reforms increase inequality.” Another study of 148 developing countries found not only that workers’ rights were declining, but that cuts in one country reduced labor standards in countries elsewhere, providing “clear evidence of a race to the bottom.”

When it comes to protecting the environment, a similar fear about loss of competitiveness in the global free market economy undermines many sustainability policies.

3. Putting the Climate at Risk

As the effects of climate change become increasingly visible, we need to urgently transform our economies, focusing on community and socially-controlled renewable energy

RCEP would instead increase trade in fossil fuels, aiming to reduce 90 percent of tariffs and import taxes and restrict export controls. Given the neoliberal ideology underpinning the deal, which focuses on profit, goods produced with high carbon emissions will not be penalized. In addition, RCEP would enable governments to challenge each others’ climate-friendly energy regulations as “barriers to trade.”

Without regulations and initiatives to support clean transport and technologies, the deal will also contribute to rapidly growing shipping and aviation emissions. According to the World Trade Organization, “more open trade will most likely lead to increased CO2.”

4. Increasing Corporate Control of Agriculture

Small-scale and peasant farming sustainably feeds much of the Asia-Pacific. RCEP would work against this by favoring industrial agriculture

Under the North American Free Trade Agreement (NAFTA), cheap American agribusiness products flooded Mexico’s markets, contributing to 1 million farmers losing their livelihoods between 1993 and 2005. Millions of small farmers are predicted to be hit by the RCEP trade deal in a similar way.

RCEP’s investment and services chapters could also open up agricultural land to foreign investment by companies, increasing the pressure for land grabbing.

Some countries are pushing for RCEP to include a commitment to adopt the 1991 Union for the Protection of New Plant Varieties Convention, a system of seed patenting that undermines farmers’ rights to save and share certain seeds, threatening their food security.

5. Endangering Lives with Higher Prices for Medicines

Access to affordable healthcare is a human right and key to achieving the UN Sustainable Development Goals.

Yet leaked drafts of RCEP’s negotiating text on intellectual property reveal that Japan and South Korea are pushing for rules that would extend patent monopolies beyond the current 20-year period. According to Medecins Sans Frontieres, these measures will “prevent the flow of affordable generic medicines from producer to patient and push up the cost of medicines.”

Potentially millions of people will not be able to afford life-saving medicines.

Deals like RCEP must therefore be replaced by a new trade system — one which is based on the cooperation of people, direct fair trade networks between producers and consumers, decent jobs, a sustainable environmental policy, human rights, responsible energy and food sovereignty for local communities.

Sam Cossar-Gilbert is International Program Coordinator for Economic Justice and Resisting Neoliberalism at Friends of the Earth International and co-author of the 2016 report The hidden costs of RCEP and corporate trade deals in Asia (PDF).