Dear Friends and Colleagues
RCEP Impacts on Food and Agriculture
The Regional Comprehensive Economic Partnership (RCEP) is a mega-regional trade deal being negotiated among 16 countries across Asia and the Pacific, including the 10 ASEAN countries and their trade partners: China, India, Australia, South Korea, Japan and New Zealand. If adopted, RCEP will cover half of the world’s population, including 420 million small family farms which produce 80% of the region’s food.
A new infographic from GRAIN predicts what this agreement will mean for food and farmers in the region, based on current leaked drafts. It discusses five expected impacts:
* Foreign investors will be given the same treatment as domestic investors, likely resulting in land grabbing.
* RCEP states are expected to adopt “UPOV 1991” under which farmers will not be allowed to save seeds of protected varieties or where permitted, must pay the seed companies royalties on farm-saved seed.
* The growth of mega food-park projects involving high tech farm-to-fork supply chains will exclude and even displace small producers and household food processing businesses in the dairy sector.
* RCEP will cut tariffs to zero on 65% of trade in goods, including farm chemicals, followed by a second phase to cut the rest, resulting in increased chemical fertilizer and pesticide use.
* Governments may not be allowed to limit the operation of supermarket chains that hail from other RCEP states, adversely affecting local markets.
With best wishes,
Third World Network
HOW RCEP AFFECTS FOOD AND FARMERS
The Regional Comprehensive Economic Partnership (RCEP) is a mega-regional trade deal being negotiated among 16 countries across Asia-Pacific. If adopted, RCEP will cover half the world’s population, including 420 million small family farms that produce 80% of the region’s food. RCEP is expected to create powerful new rights and lucrative business opportunities for food and agriculture corporations under the guise of boosting trade and investment. Several RCEP countries are also part of the Trans-Pacific Partnership (TPP), another mega-regional agreement setting some of the most pro-big business terms seen in trade and investment deals so far. While the fate of the TPP is uncertain, these two agreements may have to co-exist and there is pressure to align them on numerous points. What will this mean for food and farmers in the region?
1. Land will be grabbed
Most RCEP countries do not allow foreigners to buy farmland. Instead, foreign investors can get leases, permits or concessions with varying types of restrictions. The stakes behind this issue are high because companies and investment funds have been aggressively buying up farmland as a new source of revenue in the last years. In the RCEP countries alone, 9.6 million hectares of farmland have been acquired by foreign companies since 2008. Ownership provides corporations far more control than use rights, but it also drives up land prices and speculation, pushing small farmers out.
Two chapters of RCEP could have a decisive impact on access to land. According to leaked drafts, the investment chapterproposes a rule that each government must give investors from other RCEP states the same treatment as domestic investors (‘national treatment’). That means they should have the same rights to purchase farmland as domestic investors, unless the government carves out a special exception for this. The draft chapter also contains proposed ‘standstill’ and ‘ratchet’ clauses which, if adopted, would mean that governments have to lock in their current levels of liberalisation, and if they liberalise more than they commit to in RCEP they cannot go back down to the level set by RCEP. The services chapter draft also proposes that foreign service suppliers not be treated less favourably than domestic companies (‘national treatment’). This includes the ability to own farmland for a service-related purpose. Again, countries may be able to squeeze in an exception for agricultural land, but any such exception would be subject to negotiation and have to be agreed to by all parties.
If governments do not make reservations on these provisions for farmland, RCEP could seriously aggravate land grabbing in the region and sabotage agrarian reform processes that are currently under way in some countries. Currently, farmers asserting their rights to land are being subjected to human rights abuses, criminalisation, incarceration and even assassination. For this reason, there are deep fears that if RCEP is adopted, it will intensify militarisation in rural communities.
2. Seeds will be privatised, GMOs may proliferate
Farmers regularly save seed from one harvest to plant a new crop. Big seed and agrochemical companies like Monsanto and Bayer want to end this practice and force farmers to buy seed each season, so they can boost sales. They do this by lobbying governments to extend intellectual property laws to cover plants and animals. The global seed industry is highly concentrated today with three companies representing more than 60% of global commercial sales. ChemChina is currently in the process of buying Syngenta, one of the world’s top three seed firms. This means that China has a new vested interest in seeing seed laws strengthened under RCEP.
Leaked drafts of RCEP’s intellectual property chapter show countries like Japan and South Korea pushing for all RCEP states to adopt “UPOV 1991”, a kind of patent system for seeds. Under UPOV 1991, farmers are generally not allowed to save seeds of protected varieties. Where limited exceptions are permitted, farmers must pay the seed companies royalties on farm-saved seed. Depending on the country and the crop, royalties can represent a markup of 10-40% over the price of regular commercial seeds, which are already more expensive than farmers’ seed. Civil society groups estimate that UPOV 1991 would raise the local price of seed by 200-600% in Thailand and by 400% in the Philippines.
It could get worse if RCEP moves closer to what was negotiated in the TPP, something which four RCEP states have already agreed to. TPP requires states to allow patents on inventions “derived from plants”, which means genetically modified organisms (GMOs). Right now, GMOs are illegal in all RCEP member countries except for Australia, India, Myanmar and Philippines, plus several provinces of China and Vietnam. And while it’s likely that RCEP will have a chapter aiming to harmonise food safety standards, we have not seen any drafts and do not know how it will regulate GMOs. All of these moves would lead not only to higher seed prices but a loss of biodiversity, greater corporate control and a possible lowering of standards for high risk products such as GMOs.
3. Small dairy and other farmers will go out of business
India is home to 100 million small farmers, most of whom keep livestock. Up until now they have been the backbone of India’s dairy sector, but that situation is now changing. Costs of production are going up while prices paid to farmers are going down, driving many small farmers into dire straits.
RCEP will make things much worse. Frustrated with New Zealand’s failure to conclude a bilateral trade deal with India, NZ dairy giant Fonterra -- the world’s biggest dairy exporter -- is now looking to RCEP as a way in to India's massive dairy market. It has openly stated that RCEP would give the company important leverage to open up key markets that are currently protected such as India’s, where it would go head to head with India’s dairy cooperative Amul. As a result, many people fear that Indian dairy farmers will either have to work for Fonterra or go out of business. They will not be able to compete. Similar concerns face dairy farmers in Vietnam, where Fonterra has been investing heavily to increase its presence.
At the same time, some RCEP members like Japan and Australia not only subsidise their farmers tremendously, they also have food safety standards that are incompatible with the small-scale food production and processing systems that dominate in other RCEP countries. This may lead to the growth of mega food-park investments that target exports to such high value markets, as is already happening in India. These projects involve high tech farm-to-fork supply chains that exclude and may even displace small producers and household food processing businesses, which are the mainstay of rural and peri-urban communities across Asia.
4. Fertiliser and pesticide use will go up
Fertiliser and pesticide sales are expected to rise sharply in Asia-Pacific in the next few years, from $100 billion to $120 billion per year by 2021. Agrochemical use is heaviest in China and growing rapidly in India, while imports by the Mekong sub-region are also on the rise. China’s acquisition of Syngenta, the world’s top agrochemical company with more than 20% of the global pesticide market, puts the country in a particularly sensitive position within RCEP.
Beijing will want high levels of ‘market access’, being negotiated under the trade in goods chapter of RCEP, to capitalise on its new position. In January 2017, China already announced that it will scrap export tariffs on nitrogen and phosphorus fertiliser in order to boost its market share abroad. RCEP trade ministers have promised to deliver a deal that immediately cuts tariffs to zero on 65% of trade in goods, followed by a second phase to cut the rest. Farm chemicals are bound to be part of this, resulting in increased residues in food and water, more greenhouse gas emissions and further depletion of soil fertility.
Furthermore, if leaked intellectual property drafts are adopted, RCEP may increase the patenting of other inputs like veterinary medicines, farm machinery, microorganism-based products and agricultural chemicals, and extend their patent terms, making them more expensive.
5. Big retail will wipe out local markets
Over the past five years, Asia-Pacific accounted for more than half of the world’s new food retail sales. Japan is leading this trend, with 7-Eleven and Aeon at the top of food retail sales in the region. Aeon Agri Create, the agriculture production arm of Aeon, has been establishing farms in Japan and Southeast Asian countries like Vietnam. Aeon even aims to push ‘ICT farming’: the use of computers and communication technologies to manage farm operations. In India, the opening up of food retail, including e-commerce, to foreign direct investment (FDI) is almost complete, although many states are yet to adopt FDI in multibrand retail. RCEP would strengthen these trends further.
According to leaked drafts, RCEP’s services chapter may make it impossible for governments to limit the operation of supermarket chains that hail from other RCEP states (‘market access’). Furthermore, the trade agreement may make it illegal for a member government to require a service supplier like Alibaba or Aeon to have a ‘local presence’ in its country or to source food from local producers.
If precedents set by TPP are followed, ICT farming may be boosted under RCEP measures aimed at promoting regional supply chains and e-commerce. China’s Alibaba has just invested $1.25 billion in an online food delivery service, which will rely on more and more high tech facilities that are disconnected from seasons and from local markets. All of these developments pose a real threat to small traders and retailers in Asia.
What to do?
RCEP will usher in a wave of corporate concentration and take over of Asia’s food and agriculture sector. Corporate concentration, as experience in the other regions shows, brings less real choice and higher prices for consumers. In the food sector, it also brings important health and environmental costs from pesticides, excessive processing and chemicals, as well as downward pressure on wages and prices paid to farmers.
The answer is not to reform RCEP but to reject it because it relies on and pushes a corporate model of agriculture that no amount of tweaking will change. Instead, we need to implement policies and initiatives that enable people-led food and agricultural systems to flourish. Only then can trade policies be drawn up to serve these systems – not the other way around.