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RCEP: Pushback against corporate-led globalisation

RCEP member countries - WIKIPEDIA

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It is not enough, but it is a start, Jeyakumar Devaraj writes.

Malaysia was one of the 15 countries that signed on to the Regional Comprehensive Economic Partnership on 15 November.

The RCEP will come into force when at least six Association of Southeast Asian Nations (Asean) nations and three non-Asean countries ratify it. What is the significance of the RCEP to the ordinary people of Asean?

Some consider this a complicated issue – the RCEP agreement is a voluminous 700-page document, and it is tedious to plough through the stilted language. But it is important for leaders of social and political movements to understand the RCEP property, locate it in its historical context, and identify for our people the positive and negative aspects of this agreement.

The RCEP, like the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) and the other free trade agreements (FTA), is based on the neoliberal belief that whatever is good for investments and business is good for society. That has been the mantra of corporate-led globalisation over the past 35 years.

This belief leads to the downsizing of government services as neoliberals believe that businesses can provide all the goods and services that society needs in the most cost-effective way. Therefore, neoliberal ideologues argue that government policy should be as business-friendly as possible. (The coronavirus pandemic, however, has highlighted the serious defects in this approach to managing human affairs!)

Five ways the RCEP differs from existing FTAs

However, despite arising from a common neoliberal mould, the RCEP differs in some significant aspects from existing free trade agreements.

1. The RCEP defines “expropriation” much more strictly than existing FTAs and investment agreements

These existing agreements define expropriation to include any government action that affects the future profits of a foreign company. This is why Philip Morris could attempt to sue the Australian government for a billion dollar settlement over legislation pertaining to the packaging of cigarettes.

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This would be much more difficult under the RCEP as it specifies that any actions taken by the government to protect the health of its people or the environment cannot be deemed as expropriation even if the profits of certain firms are hit.

2. The ISDS mechanism is not part of the RCEP

The investor-state dispute settlement mechanism, which is a part of many FTAs and investment agreements, allows the foreign investor to bypass all the legal avenues in the host country and litigate the government in a tribunal set up overseas.

The RCEP requires all member nations to ensure that their judicial system gives a fair hearing to foreign investors and without excessive delay. The ISDS provision has been referred to a committee, which will make a decision within five years.

3. The RCEP is more relaxed in its intellectual property rights provisions

The Trans-Pacific Partnership (TPP) deal attempted to tighten up intellectual property rights provisions by, among others, introducing the concept of “data exclusivity”.

This means that the results of the clinical trials that enabled the originating company to determine the correct dosage schedule is deemed to be the property of the originator company. So even after the patent period is over, the pharmaceutical company interested in producing the generic version will have to acquire the rights to this data. That will increase costs and cause delays.

The RCEP does not mention data exclusivity. It also pushed back the attempt to extend a patent period beyond 20 years to “compensate” for delays in processing a patent application or in registering a medicine.

4. There is no requirement in the RCEP that government procurement must be opened to foreign investors

The TPP deal required governments to treat foreign companies equally in the awarding of government projects. The RCEP affirms the right of government to promote the development of certain sectors of the economy that are important to the nation.

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5. Unlike the TPP, the RCEP does not make ratification of the international agreement that criminalises the exchange of seeds among farmers a prerequisite for joining the trade pact

These are five examples of how the RCEP, though set in a neoliberal mould, represents a pushback to the prevailing trend in FTAs, which have been becoming more and more pro-corporate over time. (There could be more such examples – I haven’t gone through all the chapters carefully.)

Not that the RCEP is a fantastic pro-people agreement. It is not. There are many issues that progressives would be unhappy with, eg the treatment of knowledge as a ‘commodity’ that can be owned and monopolised by a corporation. Many progressives would consider knowledge as part of the commons – something built up by the contributions of many generations and therefore belonging to all.

And there is nothing in this RCEP that will slow the ongoing “race to the bottom” in our region. The RCEP does not address the fierce competition among Asean countries for foreign direct investments, which leads to increasingly generous tax regimes, tight control of workers’ wages and a certain disregard of environmental costs.

This is a little silly, even in capitalist terms – for consumer demand and government spending are important components of aggregate demand. The RCEP countries will generate a healthier market for all their businesses if aggregate demand in the 15 RCEP countries were to increase.

Enhancing aggregate demand would require mechanisms to ensure that wages and government revenue rise gradually across the RCEP region. But, at present, there is a reticence to increase wages or taxes because the country doing this unilaterally might suffer a comparative disadvantage and manufacturers might relocate.

The RCEP could resolve this issue by introducing a mechanism that requires all RCEP countries to increase over time, the share of national income going to workers and to the government. Unfortunately, there is no glimmer of such considerations in the RCEP.

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There is no need to take a nuanced approach to the RCEP if one believes the role of progressives is merely to present a clear, principled and spirited critique of any government policy or trade agreement that is based on neoliberal principles.

But if one believes that progressives should strive to become government, then we need to show the people we have the policies to steer our societies in a more equitable and just direction -without crashing the economy!

Progressive coalitions that come to power will face serious challenges in attempting to share societal wealth more equitably because the entire world had been integrated into the global capitalist economy.

Building a national economy that is more inclusive, democratic, environmentally friendly, and in which a larger portion of wealth created is used to provide a more secure safety net will require a redistribution of wealth back to workers and to the government.

But this might cause capital flight and a rise in unemployment. How do we, the progressives, create the conditions that will enable us to redistribute wealth more equitably despite our country being locked into the global capitalist economy where the big transnational corporations have enormous power?

Rome was not built in a day. The pushback against corporate-led globalisation evident in the RCEP is a step in the right direction, for it curtails a little, the rights of large corporations and increases the policy space of governments. It is not enough, but it is a start.

We need to strategise how we lobby for further such steps. Perhaps a good place to start would be to lobby that Malaysia does not ratify the CPTPP as many of its provisions are far more pro-corporate than the RCEP.

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