US-Free Trade Pacts Face Opposition in Asia

By Chee Yoke Heong (TWN)

US-led free trade agreements continue to face stiff oppositions even as they gain traction with some governments turning to such pacts in the hope of boosting their sagging economies.

The latest is the Trans-Pacific Partnership Agreement (TPP) that currently involves the US, Singapore, Brunei, Chile, New Zealand, Australia, Peru, Vietnam and Malaysia in an intensive series of talks.

Negotiators from Malaysia and the US who are currently in Kuala Lumpur for talks were confronted by protestors at the venue of their meeting on 5 December.

The activists expressed concern that the TPP could spell disaster to local farmers especially rice producers as they would be unable to compete with heavily subsidized US farmers who would deluge the market with their cheap rice.

They said the push for stronger patent rights regimes will hamper access to medicines and that TPP will erode the government’s ability to regulate foreign corporations as well as put in place environmental and health regulations.

Japan Prime Minister Yoshihiko Noda’s announcement on 11 Nov during the recent Asia-Pacific Economic Cooperation (APEC) meeting in Hawaii to enter into the TPPA talks, also came amidst strong opposition even from his own ruling party, the Democratic Party of Japan.

The Party has engaged in a long and protracted debate over the merits of joining the pact, and its own TPP panel, in the week before the APEC meeting, could not come to a conclusion and only agreed to “suggest the government decide cautiously," according to a 14 Nov Wall Street Journal (WSJ) report.

In announcing the decision to US President Barack Obama, Noda vowed to "protect what needs to be protected, and win what we need to gain," as he tried to allay public concerns about the TPP.

"Despite many voices of concern, I decided to participate in the talks in order to revitalize the nation's economy and help create a prospering and stable Asia," Noda said.

The issue was so sensitive that the prime minister had delayed by a day before making the public announcement in Hawaii due to concern over the possible backlash especially from members of parliament who opposed the TPPA, some of whom had threatened to defect from the Democratic Party if Noda goes ahead with plans to join the TPPA.

To placate the anti-TPPA lawmakers Noda denied that Japan will join the TPP negotiations, but only to “start talks with related countries toward participation in the TPPA negotiations,” the World Socialist reported on 17 Nov.

Before the announcement, groups from various sectors which will be affected by the TPPA have actively exercised their political clout to influence the process. The Central Union of Agricultural Cooperatives sponsored a petition in parliament which succeeded in garnering support from 356 lawmakers, or half the 722 members in both houses of parliament to oppose the TPPA. Almost all opposition parties — the Liberal Democratic Party, the Social Democratic Party as well as New Komeito – opposed the TPPA. The LDP has even threatened a non-confidence motion against Noda.

A major concern with the TPPA is that participating countries will be required to liberalise almost all sectors such as agriculture if the US has its way. This was indicated by US Trade Representative Ron Kirk when he emphasized that Japan must be prepared to meet “high standards” of liberalization and to address US concerns regarding barriers to agriculture, services, and manufacturing trade, including non-tariff measures.

Japan’s agriculture sector is highly protected and heavily subsidized especially rice farming. The farming community, though only a few million farmer households, is nonetheless a key voting base. It has been estimated that about 90% of rice production would be replaced by imports under the TPPA, together with almost all of Japan’s sugar and wheat output, as well as beef, chicken and pork products worth 1.1 trillion yen ($14 billion) per year.

According to the Ministry of Agriculture, Forestry and Fisheries, the opening up of the agriculture sector to global competition will slash Japan’s GDP by 7.9 trillion yen ($102.8 billion) or about 1.6% and cut some 3.4 million jobs.

Furthermore, opponents against the TPPA maintain that the opening of the agriculture sector would not only be devastating on the livelihoods of millions but could also spell disaster to the culture, way of life and landscape of the country side.

While past bilateral trade agreements which Japan had signed with other countries have avoided sensitive sectors such as rice from tariff removals, there are doubts that these exemptions could be achieved under the TPPA and hence the opposition.

Because of the comprehensive nature of the talks which include wide ranging issues such as medical and financial services and government procurement which are on the table for negotiations, there are fears that the TPPA would affect the country beyond the heavily-protected agricultural sector. Fierce resistance to TPPA also come from professional groups such as doctors and pharmacists, who fear that the pact would result in the dismantling of Japan's universal health-care system and replace it with a market-driven one with adverse impacts on access to health services.

Differences among lawmakers over the TPPA also centred on the dilemma over the quest to strengthen ties with the US on the one hand against those who wish to see closer relations with China which is not a party to the TPP talks.

In the meantime, proponents of TPPA have drummed up support for the TPP. The Ministry of Economy, Trade and Industry has estimated that Japan will lose 10.5 trillion yen ($136.1 billion), or about a 1.53% loss in gross domestic product in lost exports in 2020 if it does not take part in the TPP, according to the WSJ report.

The business community on the other hand believes that the TPP agreement will help to open up export markets for auto and electrical machinery makers.

The next round of TPP talks will be in Kuala Lumpur from 5 to 9 December and concerned civil society groups and opposition members of parliament will be speaking out too.

While Japan grapples with its decision to enter into talks in the US-backed TPP, opposition against FTAs continue unabated in neighbouring South Korea even after parliament approved the South Korea-US FTA on 22 Nov.

Protestors held rallies in Seoul to denounce the passing of the bill ratifying the agreement. Deep divisions remain among the various parties on whether the FTA will benefit South Korea. Opposition political leaders, looking ahead to National Assembly elections in April and the election of a new president in December 2012, vowed to fight to kill the agreement, which takes effect on 1 Jan., according to a Christian Science Monitor report of 23 Nov.

Critics voiced concerns over reduced revenue collection as a result of lower car tariffs set out in the FTA. They also worried that further opening up of the South Korean market to large US companies such as Walmart could crowd out small businesses.