US free trade pacts face opposition in Asia

Asian governments which seek to enter into free trade agreements with the US have to face strong resistance at home. Chee Yoke Heong explains the bases of the opposition.

US-LED free trade agreements (FTAs) continue to face stiff opposition 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 (TPP) Agreement that currently involves the US, Singapore, Brunei, Chile, New Zealand, Australia, Peru, Vietnam and Malaysia in an intensive series of talks.

Negotiators who were recently in Kuala Lumpur for the latest round of talks were confronted by protesters 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 subsidised US farmers who would deluge the market with their cheap rice.

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

Japanese opposition

Japanese Prime Minister Yoshihiko Noda's announcement on 11 November during the recent Asia-Pacific Economic Cooperation (APEC) meeting in Hawaii to enter into the TPP talks, also came amidst strong opposition even from within 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 November 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 revitalise 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 worries over a possible backlash especially from members of parliament who opposed the TPP, some of whom had threatened to defect from the Democratic Party if Noda goes ahead with plans to join the TPP.

To placate the anti-TPP lawmakers,Noda denied that Japan will join the TPP negotiations, saying it will only 'start talks with related countries toward participation in the TPP negotiations'.

Before the announcement, groups from various sectors which will be affected by the TPP had 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 around half the 722 members in both houses of parliament to oppose the TPP. Almost all opposition parties - the Liberal Democratic Party (LDP), the Social Democratic Party as well as New Komeito - opposed the TPP. The LDP has even threatened a no-confidence motion against Noda.

A major concern with the TPP 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 emphasised that Japan must be prepared to meet 'high standards' of liberalisation 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 subsidised, especially rice farming. The farming community, though numbering 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 TPP, 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) and cut some 3.4 million jobs.

Furthermore, opponents of the TPP maintain that the opening of the agriculture sector would not only be devastating on the livelihoods of millions but could also spell disaster for the culture, way of life and landscape of the countryside.

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

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

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

In the meantime, proponents of the TPP have been drumming up support for the accord.

The Ministry of Economy, Trade and Industry has estimated that Japan will lose 10.5 trillion yen ($136.1 billion) in exports in 2020 if it does not take part in the TPP, according to the WSJ report.

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

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

Protesters 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 January, according to a Christian Science Monitor report of 23 November.

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.

Chee Yoke Heong is a researcher with the Third World Network.

*Third World Resurgence No. 255/256, November/December 2011, pp 6-7