TPPA and Impact on Agriculture, Food Security & Environment

BRIEFING TO PAKATAN RAKYAT MEMBERS OF PARLIAMENT

"Trans-Pacific Partnership Agreement (TPPA) and Its Pervasive, Across-the-Board Implications for Malaysia"

26 June 2013

Lim Li Ching, Third World Network

Impact on agriculture and food security

TPPA and subsidies Subsidies cannot be negotiated under

FTAs, only under the WTO (as subsidies are not partner specific)

Therefore, countries like the US and Japan, which highly subsidize their farmers, will continue their agriculture subsidies

TPPA and zero tariffs The TPPA will aim for reduction of tariffs to

zero, including for agricultural products Most developing countries have higher

tariffs compared to developed countries, so have to reduce more as tariffs become zero/negligible

US likely to require removal of 100% of tariffs on its agricultural products, unless listed and agreed to as an exception

US FTA threat to rice farmers in Malaysia Malaysian position in failed US-Malaysia FTA

negotiations was to exclude rice At the time, not much import of US rice into

Malaysia But, US demand for rice tariffs to be reduced

to zero (over a period of time) Malaysia had tariff on imported rice of 40%

US rice highly subsidized, with export price below cost of production

Predicted effect of FTAs on agriculture Colombia: Farmers could experience overall

57% reduction in income and 35% reduction in employment among workers in 9 major agricultural sectors, if US proposals were accepted

South Korea: With US FTA, total annual production amount of local agricultural industries would drop US$ 1-2 billion/ year, and “it would be inevitable for some 70,000 to 140,000 people currently engaged in farming businesses to lose their jobs”

Experiences of Mexico under NAFTA (1994) US grains are sold with dumping margins of

>25% because of its subsidies E.g. rice is subsidised to an amount equivalent

to 72% of cost of production Before NAFTA, Mexico was self-sufficient in

maize and bean production Imports of subsidised maize from USA have

nearly tripled under NAFTA Every year, nearly 3 million tons of harvested

Mexican maize is left to rot as it can’t compete with cheap US maize

Experiences of Mexico under NAFTA (1994) Genetically modified maize from the US has

contaminated traditional varieties 99% soybeans, 80% of rice now imported,

displacing local production Imports rose over five times for soybean, wheat,

poultry and beef Nearly 3 million Mexican farmers have left the land

since NAFTA began Result: increased emigration, rural poverty and

illegal drug production Mexican countryside has lost 1.3 million jobs since

NAFTA, mainly of small and subsistence farmers

Impact of other chapters Services chapter

Liberalizing financial services could mean less access for small farmers to affordable credit

Intellectual property chapter UPOV 1991 and impact on access to seeds

Government procurement chapter Could open government purchasing of food (e.g. for

military/public schools or hospitals etc.) to be supplied with farm products from TPP countries, to our farmers’ disadvantage

Impact of other chapters Investment chapter

Could open more land to foreign ownership Dispute settlement chapter

Makes almost all TPPA chapters enforceable via state-to-state dispute settlement

When a case is lost at the international tribunal for violating the TPPA, then tariffs can be raised on exports

Impact on environment

Impact of investment chapter Requirement to allow investors from other TPPA

countries to invest in all sectors unless listed and agreed to as an exception Foreign ownership of land e.g. Peru-USFTA

Requirement to treat investors fairly and equitably Interpreted as standstill on regulation

Expropriation provision Environmental laws, regulations and policies could

be found to be expropriation

Impact of investment chapter Proposal to restrict technology transfer

requirements (unless exceptions agreed) Impact on National Policy on Climate Change,

National Policy on Environment, National Green Technology Policy

Investor-state dispute settlement 70% of the over USD719m paid out under

USFTAs and BITs are from challenges to natural resource and environment policies

Case examples Vattenfall vs. Germany: Swedish power company

sued German government for €1.4 billion plus interest after its coal-fired electricity plant in Hamburg-Moorburg was made to comply with stricter environmental regulations. German government settled in 2010 by reducing its environmental requirements.

Vattenfall also sued Germany for US$4.8 billion after the government decided to phase out nuclear energy in Germany following the Fukushima nuclear disaster in Japan.

Ethyl vs. Canada: Canada was sued for its ban on a polluting chemical. It settled by reversing the ban, paying US$13 million to the company and issuing a statement for use in advertising that “current scientific information” did not demonstrate the chemical’s toxicity.

SD Myers vs. Canada: Canada was successfully sued because of its temporary ban on PCBs (to assess obligations under the Basel Convention). Canada paid the investor US$5 million for the lost profits it would have made during the 16-mth ban.

Case examples

Case examples Metalclad vs. Mexico: Mexico was successfully sued for

failure to allow a toxic waste dump in an area with unique biodiversity and water that could have been polluted. Mexican govt had to pay the foreign investor US$15 million; tried to recoup cost from local authority.

What about Lynas? Licence given subject to a number of conditions, including compliance with safety provisions of the Atomic Energy Licensing Act 1984 and Environmental Quality Act 1974. If Lynas’ licence is in future revoked for failure to comply with these, or other, Malaysian laws, may lead to a claim of expropriation of its licence and any future profit expected to make.

Impact of other chapters Intellectual property chapter

More technologies could be patented, and patents would last longer – impact on access to environmentally sound tech

Patents on plants and animals, UPOV ‘91 TBT and SPS chapters

May impose additional restrictions including the information that can be required by government regarding GM food

Impact of other chapters Services chapter

May require services regulations at all levels of government (including local government) are based on objective and transparent criteria (rather than environmental ones) and that these are not more burdensome than necessary

May restrict ability of federal, state and local governments to use licensing fees (including for use of natural resources) to raise revenue/cross-subsidise or discourage unwanted activities in the sectors liberalized

Impacts of other chapters Regulatory coherence chapter Exceptions chapter

Based on past USFTAs, the US will not allow the general environment exception to apply to the investment or IP chapters

Dispute settlement chapter Preamble

What about the environment chapter? Most studies on the environmental effects

of NAFTA provide negative or uncertain conclusions regarding benefits: can’t solve significant environmental problems; failure to strengthen domestic environmental laws

Does not counter the problems for the environment that other chapters, including the investment chapter, will bring

Thank you!

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