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Free trade or women's rights?

12 January 2018
After 30 years of neoliberal globalization, it has been increasingly acknowledged that austerity, privatization, deregulation of finance, markets and corporations, and trade and investment liberalization have had a devastating and discriminatory impact on women and have driven inequality. Recent large multilateral agreements, designed primarily to enable the unhindered flow of global capital, are significant barriers to the realization of the human rights of women.

By Kate Lappin*

After 30 years of neoliberal globalization, it has been increasingly acknowledged that austerity, privatization, deregulation of finance, markets and corporations, and trade and investment liberalization have had a devastating and discriminatory impact on women. United Nations experts, treaty bodies and international nongovernmental organizations have heard the persistent critiques of civil society groups and recognize that neoliberalism has a discriminatory and adverse impact on women. In a remarkable turnaround, even the International Monetary Fund is now conscious of the evidence that neoliberal policies are driving inequalities. It is now clear that neoliberalism is sexist and is simply incapable of supporting gender equitable and just sustainable development.

Neoliberal globalization has led to levels of inequality that have not been seen for more than 200 years. Eight men hold more wealth than half of all humanity; 1 percent of the world’s population owns more than the other 99 percent; 69 of the largest 100 economies in the world are corporations, and 10 of these corporations are richer than 180 countries combined. This level of inequality has been recognized as a threat to social cohesion, peace and democracy. Governments have made repeated commitments to address the adverse impacts of neoliberalism. Through the 2030 Agenda for Sustainable Development and the Sustainable Development Goals, governments have promised to reduce inequalities within and between countries (Goal 10); advance gender equality (Goal 5); eliminate poverty (Goal 1); and end hunger and achieve food security and sustainable agriculture (Goal 2); as well as prevent catastrophic climate change.  

Yet, before the ink had dried on the 2030 Agenda, governments proceeded with plans to deepen neoliberalism and bind future governments to the rules that produce the very problems they have promised to alleviate. Governments in all regions continued or commenced negotiations for plurilateral trade agreements that directly contradict the commitments they made, including this directive in paragraph 30 of the 2030 Agenda: “States are strongly urged to refrain from promulgating and applying any unilateral economic, financial or trade measures not in accordance with international law and the Charter of the United Nations that impede the full achievement of economic and social development, particularly in developing countries.”

Globally, there are more than 3,000 bilateral or multilateral agreements that govern global trade and investment. Recent large multilateral agreements such as the Regional Comprehensive Economic Partnership (RCEP) and the Trans-Pacific Partnership (TPP) have sought to expand the scope of agreements to provide for global governance over an increasing number of economic issues outside of the UN and World Trade Organization (WTO) systems. The agreements, designed primarily to enable the unhindered flow of global capital, are a significant barrier to the realization of the human rights of women. Advocates argue that trade agreements are designed to reduce barriers to trade and “level the playing field” by ensuring foreign investors are not negatively impacted by national laws or regulations that preference locals or that impact on foreign investors. In reality, trade agreements are designed for and by large multinational corporations that are able to displace smaller local businesses and which use their political power to gain significant advantages.

Trade agreements may provide benefits to people who have the capacity to capitalize on new market opportunities and workers classified as “highly skilled.” However, as women are less likely to hold large amounts of capital, are most commonly engaged in the informal sector, are less likely to have secure land rights and are more likely to benefit from public expenditure in health, education, water and energy, trade agreements have a discriminatory effect. In addition, trade agreements expose a large majority of the global population to violations of their human rights. In 2015, 10 UN Human Rights Council mandate holders voiced concerns about the impact of trade and investment agreements on human rights, jointly as well as in separate reports. The collective statement warned that trade agreements “are likely to have a number of retrogressive effects on the protection and promotion of human rights, including by lowering the threshold of health protection, food safety and labor standards, by catering to the business interests of pharmaceutical monopolies and extending intellectual property protection.”

RCEP, which covers China, India, members countries of the Association of Southeast Asian Nations, Japan, South Korea, Australia and New Zealand, will impact a larger number of people than any previously proposed trade agreement. RCEP covers traditional trade issues including trade in goods, services and agriculture, customs, tariff­s and trade subsidies – but this represents only a small portion of the agreement. The agreement goes far beyond trade and seeks to impose an entire regulatory framework on member states that could dictate the extent to which governments can regulate every part of the economy in which the private sector operates. The chapters extend to intellectual property, standards and labeling, telecommunications, competition policies, financial services, e-commerce governance and, more recently, government procurement.

RCEP has implications for women throughout the region in addition to those in the member countries. It potentially represents a large shift in positions taken on trade by India and China within the WTO. India has been the most vocal Asian country defending nations’ rights to provide food subsidies and retain public stockholdings, as well as to produce the world’s generic medicines. In addition, RCEP represents a significant step toward the planned Free Trade Area of the Asia-Pacific. RCEP will serve as the basis for such an agreement, significantly disadvantaging least developed countries and small island developing countries that are not currently part of the negotiations. While the text of RCEP has not yet been released, chapters leaked online reveal that some negotiating countries seek to mirror, and even deepen, the chapters agreed upon in the TPP.

A leaked RCEP investment chapter contains clauses of what is known as the Investor-State Dispute Settlement (ISDS) mechanism. ISDS is a legacy of colonialism, whereby European corporations, led by Deutsche Bank, drafted what they called a “Magna Carta for investors.” Introduced in the late 1950s, ISDS appeared in many treaties between former colonial governments and newly independent governments as a means to prevent the nationalization of their multinational corporations’ physical property following independence. ISDS gives corporations the power to sue governments in secret tribunals if the governments pass any laws, policies or regulations that infringe on the capacity of corporations to profit. Recent lists of known ISDS cases show that corporations have used ISDS to avoid paying taxes, challenge public interest laws and policies, and prevent the remunicipalization of public services. Consumer laws, environmental protection laws and climate policies, labor laws, public health laws and food labeling laws can all potentially be regarded as infringing upon “investor rights.” In 2015, UN experts noted that governments are less likely to pass laws essential for women’s rights because of the fear of being sued. “We believe the problem has been aggravated by the ‘chilling effect’ that intrusive ISDS awards have had, when states have been penalized for adopting regulations, for example, to protect the environment, food security, access to generic and essential medicines … or raising the minimum wage,” the UN experts said in a statement. Drawing from the leaks and the experience of previous agreements and proposed chapters, we can be concerned that the RCEP may have the following consequences for women.

Deepening inequalities and reducing expenditures

Researchers who have analyzed the economic impact of existing preferential trade agreements have found that there “is a marked increase in the concentration of economic activity within countries following the formation of these agreements, which results in the deepening of economic inequality.” The reduction in tariffs denies governments an important source of revenue, as well as depriving them of an instrument capable of balancing the advantages foreign multinational producers have over developing countries. Tax revenue in the Asia-Pacific region represents a low 17.6 percent of gross domestic product, and any reduction in revenue will either have to be replaced by regressive taxes, such as goods and services or value added taxes, which have been found to have discriminatory effects, or reduced public services.

Tariffs can make up an important percentage of income, particularly in economies with underdeveloped tax systems and where tax incentives are used to drive foreign direct investment. Reduced public expenditure impacts most heavily on the poor and particularly poorer women. Funding cuts generally focus on reductions in subsidies, public wages and social protection payments. Each of these has a disproportionately negative impact on women and children, as women are more likely to claim social welfare payments, use public services and be employed by the public sector.

The costs of an ISDS case can have an enormous impact on public expenditure in developing countries. To date, the majority of cases heard by ISDS tribunals have been against developing countries and lodged by multinational corporations from developed countries. The awards have amounted to hundreds of millions, and even billions, of dollars. For example, $2.4 billion was awarded against Ecuador in a case brought against it by an oil company ordered to clean up its toxic waste. The award represents more than 6 percent of the small nation’s national budget – more than its health budget. Argentina has faced 53 claims totaling $80 billion after it introduced regulations to address a financial crisis that was pushing many people into poverty. The Philippines is reported to have spent $58 million in legal costs to defend two cases; this money could have paid the annual salaries of 12,500 teachers. While not all cases are made public, given the secretive nature of ISDS, we know that in at least 50 ISDS cases, claims of at least $31 billion have been lodged against states negotiating the RCEP. The RCEP will expose them to even more cases. Countries have also been denied access to tax revenue, with at least 24 countries being sued by corporations using the ISDS mechanism to challenge tax laws or attempts to collect tax. 

Displacing women’s subsistence farming

A central purpose of trade agreements is to open up agriculture and land to foreign investment. Many countries restrict foreign investment in land and provide leases or concessions to investors on a case-by-case basis. It is likely that RCEP, such as other trade agreements, will incorporate a “national treatment” provision that requires governments to provide foreign investors with the same rights and privileges as local investors. Consequently, unless governments provide a specific exemption in the agreement, land can be purchased by foreign corporations and individuals.

Among the attractions of Asian countries to foreign investors is the apparent abundance of cheap land. In fact, approximately 19 million hectares of land in Asia has been acquired in deals involving foreign investors in the last decade. In the period following the financial crisis, speculative finance rushed to the security of land, resulting in a 334 percent increase in cross-border real estate investments between 2008 and 2015, and investors intensified pressure on governments to enable foreign land investments. This makes small land holdings vulnerable, particularly where documentation of land tenure is not secured. Furthermore, the expansion of export-oriented crops has led to decreasing availability of land used for subsistence agriculture that is primarily tilled by women. Small-scale, subsistence farms of women are unable to compete with huge agrobusiness monopolies because of economies of scale and the benefits of large capital, coupled with pre-existing discrimination that means women are less likely to have access to inputs, credit, technology and information. Further, they are less likely to be able to fulfill the regulatory requirements that come with cross-border, digitalized trade.

In addition, the removal of tariffs on imports means that subsidized food can flood a local market and displace women’s produce. The North American Free Trade Agreement (Nafta) was associated with two million farmers losing their land, resulting in high levels of internal and external migration. For women, this meant migrating into dangerous special economic zones where labor exploitation and violence against women has been well documented, or across borders to become migrant domestic workers. While foreign investment has led to large areas of arable land being developed for the production of food crops, far from enhancing the food security of local communities, investment in the agricultural sector has frequently been for the purpose of developing export industries that largely benefit large corporations. The expansion of commercial agriculture also leads to the depletion of communal land and resources, which women frequently rely on for the collection of fuel, water and fodder for medicinal purposes.

Further, these large-scale projects are often undertaken without sufficient consultation of women in local communities and without their free, prior and informed consent. Forced evictions and reductions of land and forest cause shifts in labor and migration patterns. Women leave their homes and work as laborers in factories or plantations or as domestic workers with substandard labor conditions. Militarization of land concessions, which allows intimidation and violence by armed security guards (including private security, state police and military), has also threatened the security of women human rights defenders involved in land disputes.

Intellectual property rights for corporations

For generations, women have saved seeds, shared them and developed a wealth of information around plant varieties and uses. This practice enables sustainability and biodiversity and reduces costs. For rural women in the Global South, 80 percent of the total seed supply is produced on farms. The popularity of cash crops and high yields means farmers are increasingly dependent on commercial seeds. They now face penalties, including criminal penalties, for practicing seed saving and sharing methods.

RCEP and other trade agreements currently being negotiated include intellectual property protections that go well beyond the requirements of the WTO agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS). If the TPP provisions are replicated in RCEP, states will be required to sign the International Convention for the Protection of New Varieties of Plants (UPOV91). The convention provides intellectual property protection for seeds and plants, which generally prohibits farmers from saving and sharing protected seeds, including seeds that they had been freely using prior to the protection being granted. UPOV91 allows agrifood companies to utilize both the plant breeder rights restrictions and patent protection. Effectively, it means that farmers must purchase new seeds every year.

While an exemption exists for small landholders who grow subsistence crops, the exemption applies only to landowners. The vast majority of women farmers are not landowners. Consequently, the provision exacerbates existing discrimination that precludes women from land ownership.

Currently developed countries within the RCEP – Australia, Japan, South Korea and Singapore – are signatories to UPOV91, while Vietnam is the only “developing” country within RCEP to have signed on to the convention. However, after years of pressure from both multinational seed corporations and developed countries seeking to impose the convention through trade agreements, Thailand has also recently drafted laws to comply with UPOV91. The draft law makes seed saving and sharing subject to criminal sanctions that can include imprisonment or a fine or both. Women farmers are faced with the choice of risking prison or going into debt annually to buy seeds that, if crops fail, could bankrupt them.

Women’s health and access to medicines

Trade agreements seek to harmonize intellectual property rights awarded to corporations and remove hard-fought TRIPS provisions designed to give developing countries flexibilities in the implementation of intellectual property rules. The intellectual property provisions within the TPP, if replicated within RCEP, would have a profound impact on women’s rights. The provisions within the TPP extend the period of protection for medicines and protections for small variations, and provide additional periods for testing and licensing.

Women’s health outcomes are threatened by trade agreements that enable the privatization of health services and reduce access to generic and subsidized medicines. Trade agreements increasingly include service chapters that require state services to be opened to foreign investment if any part of the industry is currently provided by the private sector. Women’s access to affordable medicines is threatened, particularly by the inclusion of the two largest providers of generic medicines, India and China, in RCEP. Monopoly protections awarded to pharmaceutical companies will significantly increase the costs of medicines, which will particularly impact on the poorest. One study found that the TPP will drastically reduce the percentage of HIV-positive Vietnamese with access to antiretroviral therapy from 68 percent to 30 percent. In Malaysia, the price of the breast cancer drug Herceptin could go from $2,600 to $44,000. Evidence suggests that when health care is privatized or becomes more costly, rural and low-income families are less likely to spend on women’s reproductive health care.

Intellectual property rights have been awarded for traditional plants and medicines used by rural and indigenous women for generations, but “discovered” by foreign corporations (or foreign corporations who have purchased the rights from researchers). For example, women in northern Thailand have used a traditional root, pueraria mirifica, for various hormonal problems, including those related to menstruation, menopause and fertility, and, consequently, have some of the lowest breast cancer rates in the world. They often sell the product at local markets. In 2004, the United States was awarded a patent for the plant, including for simply drying or pulverizing it.

Deregulating and privatizing services

The liberalization of trade in services is a key provision of RCEP. The purposes of the trade in services chapter and related provisions are twofold. First, to increasingly privatize services such as water, energy, health and education. And second, to remove the regulations on those services that might relate to costs, licensing requirements, environmental impacts, health standards, competencies of the provider, accessibility and technical standards.

RCEP may replicate or even go further than the trade in services chapter and domestic regulation disciplines contained in the TPP. The chapter goes beyond the WTO’s General Agreement on Goods and Services, in that the GATS listed services to be liberalized, while recent chapters drawn from the TPP cover all services unless specifically excluded. In addition, the WTO allows for domestic regulation that is in the public interest, while trade agreements restrict this to regulations that are “objective,” “transparent” and “not more burdensome than necessary.” A regulation that requires water to be provided to poorer or rural communities, or sets pricing rules, may be deemed “burdensome” or not “objective.” Meanwhile, the “ratchet” provisions of trade agreements also prevent governments from introducing new regulations or deciding to create publicly owned services in areas that have private investors operating. The principle that investors must receive “fair and equitable” treatment is the most used principle in investors’ successful claims against nations. The principle is used to protect investors’ “legitimate expectations,” which includes an expectation that regulations won’t change (even following a democratic electoral change) and that nations will utilize state power to protect investor profits. When governments seek to reverse privatization, or remunicipalize essential services, in order to meet their human rights obligations, they are exposed to the risks of ISDS cases, as has occurred in Argentina and Mexico.

The privatization of public goods and services has had discriminatory effects, because women are users of those services, because quality public services are able to reduce the impacts of discrimination and because when governments abdicate their responsibilities to provide health, education, water, energy, social services and care, women are generally expected to provide the cushion that will sustain lives and economies in their absence.

Preventing affirmative action

RCEP may limit the capacity of governments to meet their obligation to use temporary special measures and to eliminate discrimination. Article 4 of the Convention on the Elimination of All Forms of Discrimination Against Women (CEDAW) obliges governments to use “temporary special measures” or affirmative action to eliminate discrimination against women. The CEDAW Committee has elaborated on Article 4 through the convention’s General Recommendation 25, making it clear that temporary measures may be required until equality of outcomes are achieved in relation to all substantive articles.

The committee provided a nonexclusive list of possible measures that may be taken to comply with the provision: “The term ‘measures’ encompasses a wide variety of legislative, executive, administrative and other regulatory instruments, policies and practices, such as outreach or support programs; allocation and/or reallocation of resources; preferential treatment; targeted recruitment, hiring and promotion; numerical goals connected with time frames; and quota systems.”

Governments use a range of policy techniques to advance rural women’s access to land tenure and markets and to support their local production. As the government is the largest buyer in most markets, pro-women procurement can benefit rural women’s livelihoods and help to retain their local industries. However, the inclusion of government procurement chapters means that all government procurement, apart from defense or other identified industries, must treat foreign investors equally, and governments are therefore prevented from preferencing local industries. Recently, the Indian government reportedly expressed concerns about the proposed government procurement chapter within RCEP, precisely because of the impact it could have on their capacity to procure from marginalized women and other groups. Similarly, a number of governments have introduced lower land taxes or registration fees when women are registered as landholders or co-owners. The “National Treatment” provisions could prohibit such incentives unless they are also extended to foreign investors.

The CEDAW Committee has noted that states must not just focus on preventing direct discrimination or enabling equality of opportunities. They must create substantive equality – “an enabling environment to achieve equality of results.” Nations must therefore address indirect forms of discrimination where, ostensibly, neutral policy decisions lead to unequal outcomes and widen gender and other inequality gaps. For example, a decision to privatize water might not be explicitly discriminatory, but it nevertheless constitutes a form of indirect discrimination if the decision results in women, who routinely bear the burden of water collection, having to walk additional miles to collect water and increasing the amount of unpaid work they do. The committee has also noted that achieving substantive equality may require universal public access policies in the provision of public goods. In its General Comment 20 on nondiscrimination, the committee suggests that “ensuring that all individuals have equal access to adequate housing, water and sanitation will help to overcome discrimination against women and female children, and persons living in informal settlements and rural areas.”

Affirmative action may also be subject to costly ISDS lawsuits, should it be seen to reduce the profits of foreign investors. South Africa, for example, was sued by a group of Italian companies arguing that provisions in the Mineral and Petroleum Resources Development Act, which required 50 percent of mining shares to be sold to black South Africans as part of the Black Economic Empowerment legislation, were illegal under the Italy-South Africa and Benelux-South Africa bilateral investment treaties. The South African Constitutional Court had previously ruled that the compensation provided to the investors was adequate and did not amount to expropriation, and yet the threat of the lawsuit being held in the World Bank’s secretive International Center for the Settlement of Investment Disputes forced the government to negotiate a settlement and reduce the quota to 26 percent. South Africa has since decided to cancel all bilateral investment treaties containing ISDS mechanisms. Any attempt to remedy existing levels of exclusion for women using affirmative action tools could similarly be subject to a lawsuit.

ISDS has been commonly used to challenge decisions made by governments in relation to the licensing and regulation of extractive industries. Women have been at the forefront of movements to prohibit extractive industries in their communities and movements to seek remedies and clean up their environments, and are detrimentally impacted when investor protections come ahead of their human rights. Similarly, corporations responsible for the provision of water and energy have been able to sue governments when their licenses have been revoked for noncompliance. This includes failure to provide services to rural communities, which are not a profitable target group for corporations. Subsequently, trade agreements limit the capacity of governments to ensure rural women are provided with essential resources, goods and services. The UN Independent Expert on the Promotion of a Democratic and Equitable International Order suggests that “far from contributing to human rights and development, ISDS has compromised the State’s regulatory functions and resulted in growing inequality among States and within them.”

Women’s labor rights

Preferential trade agreements are designed to facilitate greater market competition and the freer flow of global capital, enabling increased access to resources and cheap labor in signatory countries. Investors are attracted to the comparative advantage of cheap, nonunionized and unregulated labor provided by countries such as Cambodia, Myanmar and Vietnam. Consequently, preferential trade agreements push down wages in an attempt to compete in a race to the bottom for cheaper exports across the region, not just in signatory countries. If other countries wish to continue to attract investment, they need to reduce costs. Export industries often have little cost margin, meaning that wages and conditions are targeted.

Nafta provides a good example of the likely consequences of preferential trade agreements that include countries at different stages of development. While labor productivity grew after the signing of the agreement and exports increased, wage compensation in Mexico declined by 20 percent between 1994 and 2011. As women comprise an increasing percentage of workers in export industries, they are most likely to experience the downward pressure on wages, conditions and rights.

The investor-state dispute regime has also been utilized to challenge increases in wages and conditions (for example, in the case of Veolia versus Egypt), and UN experts have noted that such cases have a “chilling effect” on governments. As women make up the largest percentage of minimum and low-paid workers, they depend more on state wage-setting mechanisms.

Gender-equal trade?

Governments are starting to recognize that trade agreements may have an adverse impact on women’s human rights. Consequently, the Canada-Chile and Chile-Uruguay free trade agreements have included new gender equality chapters, and it appears that Canada may seek to include a chapter on gender equality in any renegotiated Nafta. The RCEP does not include a proposed gender chapter, nor does it include the largely ineffectual chapters on labor or the environment that are included in the TPP. However, the Canadian gender chapter, like the labor chapter, is unenforceable and of little or no value.

The UN Conference on Trade and Development analyzed the chapters and found these major deficiencies:

(a) Specific gender-related standards that could affect trade under the agreements are not included and, instead, reference is made to the implementation of gender equality commitments included in global conventions.

(b) Milestones or specific goals are not included.

(c) Dispute settlement mechanisms do not apply to the trade and gender chapters.

(d) Harmonization of gender-related legislation between the parties is not mandated.

(e) Potential impacts of trade liberalization pursued under the agreements on women’s well-being and economic empowerment are not addressed.

There are too many provisions in RCEP that pose a danger to women to remedy it with a gender equality chapter. It is increasingly recognized that trade agreements must undertake ex-ante and ex-post gender audits, as well as human rights impact assessments, if they are to serve the people. RCEP has had no human rights, gender or even economic impact assessments. A full impact assessment would identify multiple potentially adverse gender and human rights consequences of RCEP. A gender chapter can’t salvage the agreement. However, a people-centered trade agreement, based on solidarity, is possible. In that context, a gender equality chapter would need to include the following at a minimum:

  • All state parties must ratify the Convention on the Elimination of All Forms of Discrimination Against Women, and the Optional Protocol to CEDAW.
  • All parties shall adopt, maintain and implement laws, regulations and any other measures to fulfill their obligations under CEDAW.
  • Remedies shall be made available to women who suffer discrimination or other human rights violations as a result of the actions of investors, which must include civil and criminal sanctions.
  • Nothing in the agreement shall apply to, or restrict, measures that a party adopts or maintains in their efforts to comply with CEDAW, and measures taken to comply with the gender chapter shall be excluded from all restrictions arising from the agreement and cannot be the subject of a dispute.

The UN Human Rights Council has passed a resolution to elaborate a binding treaty that regulates transnational corporations and other business enterprises. Accession to that treaty, when finalized, should be a precondition for entering into any trade and investment agreements in the future. And while a global system to protect investor rights has been established through the Investor-State Dispute Settlement procedures, no global system exists to hold investors to account for their violations of women’s human rights.

Conclusion

RCEP claims to be a “21st century” trade agreement, addressing modern trade issues. Yet the major 21st century threats to communities – climate change and vast and deepening inequalities – will be aggravated by the agreement. By limiting the power of governments to govern in the interests of the community and environment, and cementing a regulatory framework designed to advance the interests of multinational corporations and only the wealthiest people, trade and investment agreements deepen gender inequalities.

RCEP will be beneficial for very few people but will do particular harm to populations that are most excluded by capitalist economics – women, indigenous peoples, migrants and those without capital or political power. If nations in the Asia-Pacific are genuinely committed to meeting the human rights commitments they have made to women, they will not proceed with RCEP and instead urgently implement economic policies designed to redistribute power, resources and wealth between men and women, and between rich and poor.

This article was published in the Strategic Review, the Indonesian Journal of Leadership, Policy and World Affairs

* Kate Lappin is PSI Regional Secretary for the Asia Pacific region

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