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Trade laws that rob common people

Dr Gopal Dabade May 8 2017, 1:26 IST

If the RCEP talks materialise, they will give big companies a market access to over 3 billion people.

Trade between countries has existed since time immemorial. The World Tr­ade Organisation (WTO) is the only intergovernmental body that regulates trade between countries and has 164 member-countries globally. India, being a WTO member, agreed in 1995 to bring in changes to its laws related to trade.

As per the agreement, these changes came into existence in 2005, and beyond doubt, most of these “changes” were made to help big global companies achieve more profits. But, despite these modifications in trade rules at the behest of the companies, they are apparently not happy and content.

They just want more profits and they believe that can be achieved only by further diluting Indian laws that restrict big foreign companies from making unnecessary huge profits. This time, however, the changes are not being sought through the WTO but through plurilateral trade agreements.


Plurilateral trade agreements are trade negotiations where more than two countries are involved, but the number should be less than the total members of WTO. There are many such negotiations happening globally and India is currently negotiating the Regional Comprehensive Economic Partnership, otherwise also known as ‘RCEP.’

It is the proposed mega-regional Free Trade Agreement (FTA) between 16 Asia-Pacific countries including India, China, Japan, South Korea, Australia, New Zealand and the 10-member Asean bloc. These countries cover 50% of the world population and around 29% of the global GDP.

If the trade agreements materialise, they will give big companies a market access to over three billion people residing in these countries. It is feared that these deals would greatly help China as it will dump its excess capacity in several sectors, including steel, at a highly subsid­ised rate, thus harming the local indigenous industry. Also, some of the advanced economies in the RCEP group like Australia, Japan and South Korea are pu­shing for ‘WTO-plus’ demands.

Most of these trade negotiations are secret and have been crafted behind closed doors. In the last four years, no text/document has been made available nor has it been discussed in Parliament; so most political parties may not even know the existence of such negotiations.

The little information that is currently available about RCEP is mostly through leak­ed documents. While our political leaders tend to make grand promises, in reality they may not even know that the very government through which they may want to exercise
their powers is being diluted without their knowledge.

Among the several conditions, the most dangerous ‘clause’ is known as the “Investor State Dispute Settlement” (ISDS), which gives ample protection to big companies to sue governments in secret tribunals if the government passes any law, policies, or regulations that may deter the companies from making profits.

Remember, it is only the corporate that will have the right to sue the government while neither the people nor the government will have any right to sue the companies. Of late, the number of ISDS cases are on the rise, increasingly to avoid paying their legitimate taxes. Further, this law gives the investor the right to erode all local democratic institutions created to make laws, to protect locals and resolve disputes.

Vulnerable domestic laws
All ISDS operate outside of domestic law, where the corporate lawyers sit as judges in one case and represent the parties in the next. For example, the Philippines government was sued by Fraport (a German-based company that maintains airports in several countries) in September 2015. The Philippines government spent $58 million on legal cost for the case, as it had just expressed its desire to renegotiate due to allegations of corruption.

So, it is evident that all laws by local governments, such as labour, environment, health, land procurement and others, that are in place to protect the common citizen would be vulnerable. ISDS will eventually further perpetuate inequalities and exploitation.
The biggest challenge will be to protect the interest of the farmers as ‘seed sovereignty’ is itself being challenged by the RCEP. There are several Japanese and Korean seed companies that are insisting upon UPOV (International Union for Protection Of New Varieties of Plants), which is a European Convention that favours the grant of economic rights to seed companies.

RCEP will also have far-reaching impact on access to life-saving medicines. Japan and South Korea are already pushing for provisions like ‘TRIPS-plus’ rules that will increase the period of patent protection, thereby giving monopoly to big drug companies and dictating the drug price. Further, this would delay the introduction of generic version of the medicine and directly translate into higher cost of medicines.

All these changes would give large corporations the power to reach across borders and impose restrictions on a wide range of domestic policies.

This, in turn, will impact every known sector like the environment, agriculture, investment, telecommunications, labour and intellectual property.


The sixteenth round of RCEP negotiations is to be held at Hyderabad in June this year, where 16 member-countries will participate. One wonders if our parliamentarians know this and if they are listening at all?

(The writer is President, Drug Action Forum, Karnataka)

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