Civil society interventions on the RCEP

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Focus on the Global South | 30 May 2017

Civil society interventions on the RCEP

In the recent “RCEP 18th Round of Talks,” members of civil society organizations and social movements presented their positions vis-à-vis the RCEP during the official Stakeholders’ Engangement, focusing on its impacts on trade, labor, and resources. They argued against the RCEP as it will give more power to already powerful corporations while making worse the state of employment and labor conditions for workers. Its bias in favor of income and market growth will also endanger the country’s resources, such as aquatic resources. The articles below are based on the presentations made in the said event, with few changes to fit the newsletter style.

Impact of RCEP’s Investor State Dispute Settlement Mechanism (ISDS)

Joseph Purugganan
Head of Philippine Office
Focus on the Global South

The Investor State Dispute Settlement Mechanism or ISDS remains one of the most toxic elements of RCEP and other new generation free trade and investment agreements. RCEP through ISDS will make corporations, many of them with annual revenues bigger than the GDPs of most countries in ASEAN, more economically powerful than the governments in these countries. These corporations are being given the ‘right’ to sue governments over public policies and regulations in secret ad-hoc tribunals. These tribunals, or more accurately, corporate courts have handed down million-dollar rulings that have penalized governments over regulatory actions to defend public health, pursue more inclusive development, protect the environment, and uphold public interest in general.

Over the last decade, we’ve seen a dramatic increase in the number of ISDS cases. In 2016, investors initiated 62 known ISDS cases, a figure higher than the 10-year average of 49 cases (2006-2015). UNCTAD estimates that the total number of publicly known arbitration cases against host countries has now reached 767. The signing of more investment treaties, including FTAs with more expansive investment chapters like RCEP, are partly to be blamed for the rise in ISDS cases. Clearly, these agreements have emboldened corporations to use this mechanism to challenge the States’ right to regulate. More than 60 percent of awards handed down by these tribunals in favor of corporations are between US10 million and over a billion. Add to this the enormous cost of litigation, then it wouldn’t be hard to surmise the tremendous strain these cases exact on public budgets and therefore on the ability of governments to support development goals and the public welfare.

ISDS is a tool only for corporations. There is no recourse available for communities that face the negative impacts of these investments. They cannot challenge these corporations in the face of human rights violations, destruction of the environment, loss of livelihoods resulting from these investments.

We commend the efforts of certain countries, notably India Indonesia and the Philippines, in[J2] pushing for processes that aim to rebalance the need for investments and for policy space anchored on the governments’ right to regulate. These efforts show that governments are now taking a more balanced and cautious approach towards trade and investment treaties; and that public policies are paramount to corporate interests. RCEP therefore with its expansive investment chapter and ISDS will constitute a step back from these progressive efforts.

Focus on the Global South together with Trade Justice-Pilipinas, a broad platform campaigning for just trade and investment policies, strongly urge the governments negotiating RCEP on behalf of their people to reject ISDS, resist the corporate agenda underpinning these talks, and instead work together to pursue and scale up efforts to rebalance and overhaul investment policies towards a more just, equitable, and inclusive development.

Impact on Public Health and Access to Medicines

Ana Maria Nemenzo
Coordinator
Woman Health Philippines

Access to medicines is a vital component of quality health care. The heavy cost of health care is borne by Filipino households; about 56 to57percent of total health expenditures are drawn from private out-of-pocket. Of this out-of-pocket expenditures, about 60 percent are for medicines alone, obviously the largest single item of health care.

About a third (31 percent) of all reimbursements from Philhealth, the National Health Insurance Program, are for medicines, making medicines the second largest item in payments by Philhealth.

A past drug price survey (year 2005) revealed that prices for originator brand medicines were on average 15 times greater than international reference prices, while lowest-price generic equivalents were still more than six times the reference price.

A study conducted by the European Commission in 2010 revealed that the level of availability of essential drugs in public health facilities at all levels was only 25.3 percent.

This is why we campaigned for the passage of the Cheaper Medicines Law (Republic Act 9502), which was approved in 2008. The Universally Accessible Cheaper and Quality Medicines Act of 2008 is considered a landmark legislation that upholds the people’s right to health and access to affordable and quality medicines. Through this law, government affirms its constitutional mandate “to protect public health and when the public interest or circumstances of extreme urgency so require… adopt appropriate measures to promote and ensure access to affordable quality drugs and medicines for all.”

We oppose any and all TRIPS plus provisions in any free trade agreement that has provisions that violate people’s right to health and quality healthcare enshrined in our Philippine Constitution (Article 2 Section 15, and Article 13 Section 11).

We ask all involved in RCEP negotiations to reject any and all potential TRIPS-plus provisions in the RCEP now under negotiations that undermine our national laws and the Philippine Constitution that protect the right to health and the State’s commitment and obligation to public health as an overriding developmental concern and a guaranteed national policy.

Impact on Jobs and Workers’ Rights

Josua Mata
Secretary General
SENTRO

ASEAN projects itself as a sharing and caring community. But the things being secretly negotiated in RCEP do not reflect this.

Negotiating an agreement that would lead to job losses for the working people is not reflective of a "caring and sharing community." Consider the following:

First, my country, the Philippines, is participating in the RCEP negotiations without having a clear agro-industrial policy. Not knowing which industries are capable of withstanding intensified competition could lead to another round of de-industrialization similar to what the country experienced right after it had joined the WTO.

Second, the inclusion of provisions prohibiting investment performance requirements such as the hiring of local workers and ensuring use of local content would severely restrict our country’s ability to promote full employment.

And third, the severe loss of revenues from foregone tariffs and the pronounced shift to digital platforms as well as the privatization of government services that RCEP will promote would lead to hemorrhaging of employment in the government sector.

All these should be considered as red lines that should not be breached.

Negotiating an agreement that would harmonize standards—labor, health, and safety standards—as the least common denominator is not reflective of a caring and sharing community.

From the leaked documents that we have seen, we believe that RCEP would lead to the decrease in or stagnation of wage rates to make us “competitive”.

It would further expand contractualization in almost all sectors and would open migrant workers to more vulnerability.

We must have standards and we must have it at the highest level possible. Anything that would undermine this should be considered as red lines that should not be breached.

Having an ISDS that would allow corporations to challenge domestic regulations and more expansive IPR rules that would lead to higher cost of medicines is not reflective of a caring and sharing community. This is another line that should not be breached.

Finally, turning people into mere spectators while their lives are being bargained away is definitely not reflective of a caring and sharing community. Even efforts to engage only with "experts" would reduce us to mere spectators.

SENTRO believes that all these point to the fact that there is no place for RCEP in a caring and sharing community that ASEAN believes it is.

But should negotiations persist, then RCEP should be discussed with the full participation not just of the respective parliaments of participating countries but more importantly of the people who would be affected by this treaty.

Impact on farmers and small food producers

Myrna Dominguez
Policy and Advocacy Officer
Asia Pacific Network for Food Sovereignty

Members of civil society hope that our governments will listen to what we say. Yet, at the back of our minds we know that they already have their neoliberal frame of thought. Nevertheless, we hopethat they will listen to us.

Our network rejects RCEP not because we are against international trade but because what we want is a trade agreement that respects the rights of the people, that brings about real development—a development that uplifts the lives of the marginalized, especially the small farmers and fishers; not a development that gives corporate business control over our lands, forests, and water at the expense of our small food producers.

Anywhere you go in Asia you can see how resources are grabbed from small food producers by corporate businesses, yet this is call development? So we ask again, development for whom?

We are also not against regional integration, but what we want is a regional integration that will truly benefit the people. A regional integration that respects cultures of peoples, respects communities, and respects peoples’ rights and sovereign will.

Unless thispremise of development changes, then we risk losing our planet earth.

Impact on Philippine Fisheries

Rizalito Lopez
Program Coodinator
Tambuyog Development Center

Further opening up fisheries, coastal, and marine resources to foreign investment will largely depend on the strength of the management regime of a country. The management regime in fisheries and coastal resources in the Philippines, considered still to be de facto open-access, encourages further depletion of fish stocks and degradation of marine and coastal habitats.

Presently, intrusions into municipal waters by commercial and destructive fishing vessels is prevalent, inspite of higher penalties under the newly amended fisheries law or Republic Act 10654. Many fishing vessels have illegal, unreported, and unregulated status.

Moreover, developed countries may have better market access, technology, or management procedures. Foreign companies that process and market fish would find it attractive to invest in fishing vessels in countries like the Philippines to diversify and secure more control over their sources of supply. In such situation, they will be able to operate fishing vessels more profitably while exercising control over the entire value chain.

Local small-scale fishing industry players will find themselves in a most difficult situation here since they would eventually lose out to foreign competitors in both export markets and the local processing industries in the Philippines. Since most of the investments are geared toward the export market, the impacts of resource extraction should be given due consideration.

Indeed, foreign investments in fisheries and aquaculture could contribute to employment and foreign exchange earnings to a certain extent. But investors are profit optimizers. Firms would cease to operate once profits are no longer attractive because the fishery and natural resources are already degraded due to unsustainable practices. Oftentimes the firms would leave without incurring accountability in restoring[c3] natural resources. We are all aware of the cases of abandoned mines, or those fishing companies leaving and transferring their capital investment to another country, because their target marine species like the blue-swimming crab and shrimps have been depleted. Policies for internalizing the social and environmental costs in doing business and investments that utilize natural resources must therefore be developed and enforced.

Another point is that fish is a cheap source of protein in the rural areas in the Philippines. An export-driven investment environment in the fishery and aquaculture sector may also have serious implications for domestic food security and fisheries’ sustainability.

In the midst of these impending threats, we call upon the governments involved in RCEP to craft investment policies that are geared more towards strengthening the sustainable management of fishery and aquaculture resources, promoting inclusive growth for industry players compliant to socially responsible and environment-friendly standards, and a balance between the objectives of domestic food security and those of export earnings .

Read the full newsletter here (pdf)