1. Negotiations
2. RCEP

A ’new’ recipe for trade

Economic & Political Weekly | 18 February 2017

A ’new’ recipe for trade

The Regional Comprehensive Economic Partnership (RCEP) is a free trade agreement (FTA) being negotiated by 16 countries in the Asia– Pacific region. These include the 10 economies of the Association of Southeast Asian Nations (ASEAN)—Brunei, Myanmar (Burma), Cambodia, Indonesia, Laos, Malaysia, Philippines, Singapore, Thailand and Vietnam. Additionally, Australia, China, India, Japan, Korea and New Zealand, all FTA partners of the ASEAN, are members of the RCEP.

India established an independent diplomatic mission in ASEAN in January 2015, which began functioning in Jakarta, Indonesia in April 2015. ASEAN is at the core of India’s Act East Policy. The ASEAN–India Investment and Services Agreement also came into force in July 2015. India already has an ongoing FTA with ASEAN, which was signed in 2009 and came into force in January 2010. So, outside the World Trade Organization (WTO), India is already in ambitious market access–oriented trade arrangements in the region.

Similarly, all the other five governments in the Asia Pacific have FTAs with ASEAN at a bilateral level. Recognising the centrality of ASEAN in Asia, when conceived, the RCEP was supposed to take regional economic integration to another level. It might now become a venue for Asian powers, such as China, to reassert their influence through rule-setting in the RCEP (Jatkar 2017).

RCEP Negotiations

The RCEP negotiations were launched alongside the East Asia Summit in Cambodia in November 2012. The first round of RCEP talks was held in May 2013 in Brunei Darussalam. Talks have been held with regular periodicity since then. The next round—the trade negotiation committee (TNC) meeting—will be in Kobe, Japan from 27 February to 3 March 2017. A series of TNC meetings will follow: 18th TNC in the Philippines in May, and 19th TNC in India in July. There is political agreement amongst the member governments to conclude the RCEP this year. This timeline tries to stay close to the Guiding Principles and Objectives adopted by the economic ministers at the launch of negotiations (MFAT nd).

The political leadership in India is well aware of the need to balance its presence between the RCEP talks and at the WTO headquarters in Geneva. But, with changes in thinking on economic partnerships in London, Brussels and Washington, it will have to think through its position on global trade in general and on the RCEP more specifically. It is already facing heat from those in the RCEP with ambitions of global economic leadership (Economic Times 2017).

Impacts on Livelihoods

As is typical with most trade agreements in the making, the details of the RCEP are not publicly accessible. Negotiating positions and draft texts stay with trade diplomats and government officials, or at most with industry representatives. Businesses have the negotiators’ ears. Ordinary citizens have to rely on occasional intentional disclosure of secret information by those within the system who believe people have a right to know, particularly when these trade agreements have implications for the lives and livelihoods of millions. From whatever is publicly known of the RCEP, there are wide-raging issues on the table, from trade, competition, investment, economic and technical cooperation, to trade in services and dispute settlement.

Expectedly, there are concerns too. Indian industrialists are nervous about tariff concessions that the Government of India might agree to, particularly with respect to China. They fear competition from cheaper Chinese goods. Australia wants many more tariff cuts than India has offered to make. But people outside the closed-door negotiations on both sides are not fully in the know. The internal architecture for the RCEP negotiations is not entirely open to the public. However, it is no secret that certain subjects are being discussed through subject-wise working groups. One such working group is the one on intellectual property (IP), wherein countries like Japan have made suggestions for stronger IP provisions such as patent term extensions, data exclusivity, and lowering of the patentability criteria (Knowledge Ecology International 2014). In the RCEP, Japan seems to be acting like the United States (US) did in the Trans-Pacific Partnership (TPP). This has health activists and patient communities across Asia concerned about its impacts on the accessibility of low-cost generics (Chatterjee 2015).

Seed savers in India are equally worried. For a country like India, where the small farm crisis remains a major concern, any higher standards on IP with respect to seeds will have to be very carefully analysed for their likely effects. This necessitates transparency and public consultation in negotiations, which is amiss.

‘TRIPS-plus’ Rules

Some “leaked” IP texts on the table at the RCEP contain a clear “ask” for IP protection for plant varieties, which goes well beyond what the WTO’s IP rules (contained in TRIPS) require from its member countries. For instance, the draft text of an IP chapter as proposed by Japan and South Korea requires all members of the RCEP to either accede to or ratify over a dozen international IP-related agreements, including the International Convention for the Protection of New Varieties of Plants (better known by its French acronym UPOV) and particularly its 1991 version (Knowledge Ecology International 2014, 2015a). The UPOV 1991 is nowhere mentioned in the WTO TRIPS. This makes the proposal “TRIPS-plus.”

The UPOV 1991 gives primacy to the rights of corporate plant breeders over those of farmers. It puts restrictions on farmers saving seeds; they can only save for subsistence-level use and not for commercial production. No seed exchange among farmers is allowed. Researchers and other plant breeders can access the IP-protected seed only with prior permission from, and payment of royalties to, the holder of the plant breeder rights.

Seed companies from China, Japan, and Korea are also pushing for harmonisation of seed IP laws in the region through the Asia and Pacific Seed Association (APSA). In fact, India was the venue for the APSA Congress in November 2015, where the seed industry finalised its new IPR policy on plants. Its position paper recommends the adoption of the UPOV 1991 by member countries of the APSA (APSA nd). The National Seed Association of India—a member of the APSA—too holds the view that having no legal limits on farm-saved seed makes the breeder’s IP protection ineffective (NSAI 2014). FTAs like the RCEP are where transnational corporations can lobby several governments in one space for rules that limit farmer freedoms.

India’s Position on Seed IP

On the issue of IP in seeds, India has intentionally been kept out of the UPOV 1991.This is with the intent to protect both public scientists and farmer-breeders by allowing them to register the varieties bred by them. The domestic law in India, the Protection of Plant Varieties and Farmers’ Rights (PPV&FR) Act, 2001, includes “farmer” and “group of farmers” in its definition of breeder (Section 2[c]). Unlike the UPOV, economic rights therein are not merely granted to an industry innovator developing “new” crop varieties. India’s farmers have been made eligible for the IPR for their existing and newly developed varieties, even though local communities in India that reject IP over seeds see this as problematic. Nonetheless, the PPV&FR Act also creates a legal basis for farmers to seek “benefit sharing” if the varieties developed by them are used as base material by the seed industry to make new seed products. The UPOV does not provide for any such sharing.

In the RCEP, India seems to be holding on to its position on plant variety protection on the strength of its domestic law so far. Indian negotiators argue that the PPV&FR Act in being India’s sui generis law is WTO TRIPS-compliant. There is no scope politically for the Government of India today to go beyond the WTO TRIPS in the area of IP for seeds. Therefore, for the RCEP, India has suggested the following:

The Parties shall provide for the protection of plant varieties either by patents or by an effective sui generis [emphasis added] system or by any combination thereof, in accordance with the TRIPS agreement.

(Suggested Article 12, Knowledge Ecology International 2015b)

However, amongst the non-ASEAN members of RCEP, India is the only one that is not a member of UPOV. Predictably the RCEP negotiations will put additional pressure on India and other non-UPOV countries to join UPOV 1991, pushing them to go beyond WTO. Through the RCEP some of these countries are also seeking strict IP enforcement through border measures to be undertaken by RCEP governments for goods infringing IP. Any country entering into trade negotiations outside WTO in the present day has to anticipate that by their very nature and intent, FTAs today take the “asks” several notches up above what the WTO demands of its members.

WTO Future

WTO rules are taken as a baseline standard on which to build new trade relations bilaterally. Yet the future of the WTO as a multilateral forum for trade rules has itself come into question. In the words of its Director-General Roberto Azevêdo, there is “a lot of uncertainty ahead of us” (WTO 2017). The previous Ministerial Conference (MC10) of the WTO, held in Nairobi, Kenya in December 2015, had concluded with no clear way forward. The MC is the top-most decision-making gathering in the WTO, held every two years. The next MC is scheduled to be held in Buenos Aires, Argentina in December 2017. In preparation for the MC, Azevêdo has warned against protectionist policies that could come in the way of free trade.

The WTO’s ongoing trade talks started at its MC4 in 2001 as the Doha Development Round (DDR), which was meant to make trade fairer for the non-developed world. Development concerns were inserted in the WTO agenda after much struggle by both developing country negotiators and representatives of global civil society. But, to those pushing purely trade interests, this is seen as unnecessarily burdensome on what they believe the WTO ought to be—a trade organisation alone.

While trade negotiations like the RCEP are seemingly impervious to the concerns of the wider world, these provide an attractive alternative venue to expand on issues hitherto kept out of the WTO. Negotiations outside the WTO, in spaces like the RCEP and the Transatlantic Trade and Investment Partnership (TTIP), are venues for the IP maximalist agenda. There is a real risk of the spillover effect of such FTAs on the future agenda of the WTO. With FTAs, it will become even more difficult to make trade development-friendly, both inside and outside the WTO. Lack of meaningful progress on the DDR at the WTO will only add to its redundancy.

Mega Regional FTAs

The RCEP will establish itself as one of the largest regional free trade areas of which India will be a part. Yet it is only one of the three mega regional FTAs that are on the drawing board amongst different sets of countries today. The other two are the TTP and the TTIP. Significantly, all three are outside the WTO, though all the negotiating members across these agreements are part of the WTO (Table 1). In fact, developed countries continue to push for a set of new issues at the WTO that are in line with their agenda in the FTAs.

The overlap of membership across these FTAs is of critical import, as is the difference—the RCEP is sans the US, and the TPP sans China and also without the US now. All the other countries from the Asia–Pacific region in the RCEP, namely, Australia, Brunei, Japan, Malaysia, New Zealand, Singapore and Vietnam, are still participating in the TPP. They will seek to bring the RCEP at par with the TPP. For instance, the Shinzō Abe government in Tokyo is very keen that the RCEP enables free trade just like the TPP.

The TPP was important to the Barack Obama-led administration as its “return to Asia” strategy. In the words of the then US trade representative, “we hope it will not only set a new standard for those who are currently in TPP or might be part of it in the future, but raise the game of all countries” (OUSTR 2015). Transnational corporations such as Cargill Inc, CropLife America, The Dow Chemical Company and others, in their letter to former US President Barack Obama, insisted that “the final TPP agreement must contain strong substantive and enforcement-related intellectual property provisions that are clear, specific and enforceable” (Business Roundtable 2011). There has been a complete rethink on the TPP under President Donald Trump’s America First Trade Policy. In his first week in office, he signed executive orders to withdraw the US from the TPP.

The TTIP is likewise a high-standard Obama-era FTA being negotiated since 2013 between the US and the 28 members of the European Union (EU). Under Trump, the US and the EU have released a joint report assessing where the two sides are together on a transatlantic partnership (European Commission 2017). The TTIP, among other things, aims to increase trade in IP-intensive goods and services, and for that purpose “improve” IPR. The EU’s position paper on IPR reveals the intended “co-operation with regards to multilateral and third-country IP issues” (European Commission 2015). If and when the two are able to iron out their current differences on IP, it will mean only higher and not the lowering of IP standards worldwide. In any case, in their respective bilateral FTAs with other countries, they insist on “TRIPS-plus” provisions on IP.

In this context, the RCEP, by itself and with the developments around it, has all the ingredients for tighter IP controls and for not-so-free trade. The end result of this recipe will not be digestible to many. India and other countries have also to give due attention to what goes into such regional FTAs. Trade negotiators also have to continue to work at making the WTO and its trade rules palatable. The ultimate test of the rules and policies is whether these really serve people on the ground.

Shalini Bhutani (emailsbhutani@gmail.com) is a legal researcher and policy analyst.

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