Rethink RCEP, liberalization, ASEAN told

April 20, 2017

by IBON Foundation


Research group IBON today asked the Philippine government and other members of the Association of Southeast Asian Nation (ASEAN) to rethink plans of further deepening economic liberalization. This has only caused unprecedented production decline, poverty and joblessness while undermining national sovereignty, development planning, and public welfare and interest in the country and region.

IBON made the appeal as members of the ASEAN began their three-day meeting on the proposed Regional Comprehensive Economic Partnership (RCEP) in Bohol. The Inter-sessional RCEP Trade Negotiating Committee meeting is one of the events organized this month by the ASEAN to be held until April 21 leading up to the 30th ASEAN Summit that opens on April 26.

The 10-member ASEAN and its free trade agreement (FTA) partners China, Japan, South Korea, India, Australia, and New Zealand have been negotiating the RCEP to harmonize their already liberalized markets for goods and services as well as set uniform rules on investments, migration, intellectual property, dispute settlement and investment protection, among others.

IBON pointed out that decades of liberalization under previous FTAs and other neoliberal reforms in the economy have resulted in the underdevelopment of the Philippine industrial sector and the devastation of agriculture. The deluge of imported goods stunted the manufacturing sector, which in 2016 comprised just 23.2% of the gross domestic product (GDP) from 24.5% in 2000. Agriculture (with hunting, forestry and fishing) declined from an already low 14.0% to 8.7% of GDP during the same period as foreign agricultural products continued to flood the domestic market.

But what is even more distressing for the economy and national development under so-called new generation FTAs like RCEP are their institutionalization of rules that will make it even more difficult, if not impossible, for poor countries like the Philippines to implement policies that will develop its local industries and protect public interest, IBON said.

For instance, the group noted that the controversial investor-state dispute settlement (ISDS) provisions of the now-derailed Trans-Pacific Partnership (TPP) is reportedly being introduced in the RCEP mainly by the rich negotiating countries like Japan and Australia. This would allow foreign investors from other RCEP members to sue the Philippine government at an international tribunal for implementing laws that are deemed unfavorable to their commercial interests, argued IBON.

Aside from the practically unlimited monetary burden that such litigation will entail, the ISDS will also further weaken the country’s sovereignty to regulate investments in a manner that serves the national interest and public welfare. For instance, government could not just impose a mining ban to protect the environment without risking an expensive ISDS case filed by say an affected Australian mining firm, the group said.

There are other provisions in the RCEP that are deemed unfavorable to the Filipino people and of other ASEAN countries. Threat of more expensive medicine looms due to its reported provisions on intellectual property rights (IPR) that will allow extended patents on important and life-saving medicines. To illustrate, the cost of patented medicines to treat HIV/AIDS – now considered a “youth epidemic” in the country – is said to be more that 220 times the price of the generic version.

For Filipino farmers, RCEP’s IPR provision means even more expensive seeds that will contribute to their bankruptcy. When approved, RCEP will require the Philippines to join the 1991 UPOV Convention that essentially privatizes seeds and requires farmers to pay royalties for commercial seeds and bans farmers from exchanging with each other commercial seeds that they have saved from a harvest.

IBON also warned that these questionable and contentious provisions are not even being debated publicly as RCEP negotiations, like in other FTAs, are being held behind closed doors and shut down any meaningful public participation. The secrecy of the talks also means that there may be other provisions of the RCEP that are detrimental to the economy and the people but have not been exposed yet. ###