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Trade agreements similar to RCEP are designed to favor foreign multinational corporations’ interest over the public interest, hence, tend to erode democratic decision-making.
Indirect expropriation, and the Fair and Equitable Treatment (FET) standard – a principle protecting foreign investors from arbitrary decision-making or outright abusive treatment by the host State – are used and unjustly invoked to ensure that public goods, such as water, remain in the hands of private profiteers.
The experience of some States who had signed the people’s rights to public goods over to the private sector provides a stark warning: States have been sued for millions of dollars for acting for the people’s basic human right to access to public goods, even where the private provider was shown to have failed to fulfil its contract, or had broken the law.
“The Indonesian people have already paid trillions of Rupiah to foreign companies who have sued the government using existing trade agreements, such as in the Cemex case. So why enter into an even larger agreement,” asked Abdul Somad, president of the Jakarta water sector workers union, SP PDAM Jakarta.
In a previous article, Somad stressed that “the people of Jakarta won a great victory when the Supreme Court ordered that Jakarta water must be returned to public hands. SP PDAM Jakarta supports the steps taken by the Jakarta Governor in this direction.”
In some 18 chapters, the RCEP addresses a range of topics including agriculture, industrial policy, intellectual property, e-commerce, and foreign investment. However, despite its far-reaching remit, and clear implications in the domestic policy space of member countries, no negotiating texts nor country positions have been made available to public scrutiny. Negotiators have been trying to conclude this ambitious trade treaty among 16 countries in the Asia Pacific region over the past six years.
At the negotiations in Bali, trade unions from Indonesia continued the demand for access to texts and parliamentary scrutiny of the RCEP, as well as raised the following concerns.
Efrida Gusti Handayani, from the Indonesian union of power producers, PP Indonesia Power, highlighted that free trade deals such as RCEP could impact working conditions in the power sector. Government regulation of working conditions or wages in power facilities run by private companies could fall foul of the FET clause in the investment chapter.
“In Egypt, French company Veolia challenged the government for its decision to increase the minimum wage and demanded more than USD 140 million in compensation using investment provisions of a bilateral investment treaty,” she stated.
RCEP aims at drastically reducing import duties. Trade unions in Indonesia are concerned that as reduced import dutiescausesimport surges in countries like Indonesia, pressure on the country’s productive sectors brought by competition from imports could further contribute to the trend ofcontractualisationof and low wages among workers. After all, intense competition from imported goods has been used as justification bymanagementof companies to decrease wages, expandcontractualizationof work, and to outsource work – actions which all have resulted in the denial of social security cover among this informal workforce.
Dwi Eksan Fauzi, from the Federation of Indonesian Worker’s Struggle (FPBI), shared evidence of how foreign investors, including from South Korea, often operate without respecting workers' rights and existing regulations in Indonesia. He argued that giving them protection under investment rules in RCEP would only make it worse for workers in Indonesia, and other developing countries. The Investor-State Dispute Settlement (ISDS) mechanism proposed under the investment chapter allows for investors to raise lawsuits against governments when their expected profits are at stake.
“RCEP will give privileges to foreign investors to come to Indonesia without responsibility towards the Indonesian economy and its workers,” Dwi concluded.
The PSI delegation to the RCEP round in Bali included Daskim and Dadang Irawan from SP PDAM Jakarta, Widhiyanto and Hardin from SP PLN, Efrida Gusti Handayani from PP Indonesia Power, and Susana Barria, PSI Asia Pacific trade campaigner.
Their statements can be found here:
For more information on Trade Justice in Asia Pacific from a trade union perspective, see the website of Unions for Trade Justice (https://tradejusticeunions.org/) and subscribe to the UTJ list- serve by following this link: UTJ mailing list.