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Pressenza | 1 October 2022
No to TPP-11! Chile’s battle for sovereignty
by Jorge Molina
For economics doctor José Gabriel Palma, the TPP-11 is nothing more than ensuring that whatever the nature of any future government; whatever the will of the majority of Chileans; whatever any new government programme says on economic and environmental matters; whatever the will of a future government to implement its programme, any measure of any kind or nature, however logical, urgent, necessary or democratic it may be, if it affects the profitability of any international or ‘internationalised’ Chilean conglomerate, they will have the right to compensation. That is what it is all about. The rest is just a story.
The TPP-11 is a plurilateral economic integration treaty, promoted by large international corporations and governments. It is based on a legal or trade agreement between different countries in the Asia-Pacific economies. This treaty brings together economies such as: Australia, Canada, Mexico, New Zealand, Singapore, Malaysia, Peru, Japan and Vietnam, as well as large multinational companies such as Bayer-Monsanto, Forestal Arauco, etc… Several of these countries have already joined this treaty, but its implications for them and for Chile are different and not progressive. The TPP-11 is presented as a free trade agreement between 11 Asia-Pacific countries, with which Chile already has bilateral free trade agreements (FTAs), Chile being the only country that, without joining the TPP, has FTAs with the other 10 countries that would join it. But in its provisions, the TPP contains several political aspects that make it more than just a trade agreement. Although the TPP-11 would open the customs of the other 10 countries that integrate it to 3011 Chilean products and also Chilean customs to the import of foreign products, lowering customs tariffs between these countries, which could reach zero, this is only an apex of the treaty.
This does not mean major changes; on the contrary, it means securing the neoliberal model and the actors already installed in the signatory countries. The latter, with the implementation of ad hoc tribunals, dominated by the big corporations, who will be the ones to convene them as they need. This implies an inability of states to take public policy measures without having to respond to international tribunals and compensate for any repercussions on the profitability or income expectations of these companies. The approval of the TPP-11 would be focused on promoting foreign investment in the country, but this in no way means a solution to the economic crisis, since it only provides incentives to make juicy deals with the natural resources of so-called developing countries, such as Chile.
The recent experience of the countries that have already ratified the TPP-11 and begun to operate, has demonstrated the character of this treaty and its pro-business tribunals, which is nothing more than an insurance for large corporations on their profits and markets, tying countries to their current forms of economy, dominated by oligopolies and the average of the economic powers that act there.
Although the treaty explicitly allows for the regulation of public, economic and environmental policies that governments can take in practice. The ad hoc tribunals that have been formed tend to rule in favour of the companies, who call on them to make the various governments that have violated their profitability or their profit expectations pay multi-million compensations with the taxes of the working class. According to Van Harten, by 2020, only 27.5% of the legal interpretations of these tribunals are favourable to states, indicating a pro-corporate bias.
Following Chile Better off without FTA, the reasons to oppose the TPP-11 are:
1.The CPTPP or TPP-11 is a blank cheque that will determine many aspects of life and coexistence in our country for terms that have no end date. The treaty will have to be renegotiated periodically with the aim, explicit in the text of the treaty, of giving more guarantees to foreign companies. This will allow Chile to be permanently pressured to grant new concessions to foreign investment. It is this permanent expansive character that the name of the treaty refers to when it includes the adjective “progressive”, not to supposed objectives of social progress.
2. Chile will be pressured to change its legislation, regulations and even public policies, or to pass certain laws and regulations, in order to provide greater guarantees to foreign capital. If it resists, it may be sued by the other countries or by the other countries’ companies in international and private courts. This is an unacceptable loss of national sovereignty.
3. Chile should consult with foreign governments and companies on all legislative, regulatory and public policy projects and take their comments into account.
4. The TPP-11 affects the rights of indigenous peoples, as most of the mega investment projects are carried out in indigenous peoples’ territories. The State of Chile must carry out consultation based on the UN Declaration on Indigenous Peoples, Convention 169 and indigenous peoples’ own law, among others; all of which implies effective participation and binding agreements.
5. Pharmaceutical companies will prolong their monopoly periods and high prices on medicines, because Chile will not be able to grant health registrations to generic medicines if there is any litigation over patents related to a medicine. Pharmaceutical companies will thus be able to initiate litigation to prevent generic authorisations.
6. The TPP-11 imposes a much harsher version of the Plant Breeders’ Law (UPOV or Monsanto Law) that will eliminate fundamental rights of peasants and leaves the door open to the privatisation of peasant varieties.
Some of the provisions that the seed companies are seeking to impose are:
– To make possible the privatisation of peasant seeds, since the ownership of one variety extends to any other that is “not clearly distinguishable from it”.
– Severely restrict the use of privatised varieties by peasants and small producers, as they are obliged to buy seed at least every other year, and in many crops, such as vegetables and flowers, they will have to buy every year.
– Prison sentences of up to 3 years in case of infringement.
7. The TPP-11 will make it difficult or impossible for Chile to maintain the ban on GM crops for consumption (today only seeds are multiplied for export). We will be exposed to the dangers not only of GM crops, but also to the immense load of pesticides used on them, including carcinogenic pesticides such as glyphosate. We will also be exposed to the introduction of GM marine species and GM animals.
8. It will make it more difficult to regulate the use of pesticides in Chile by incorporating, as the only grounds for regulation, information based on “science”, discarding the precautionary principle accepted in the European Union, Chile’s trading partner, and invoked in treaties signed by our country.
9. The TPP-11 severely restricts a country’s ability to protect or strengthen its state-owned companies if this affects the interests of state-owned or private companies in another member country. The exceptions entered by Chile are marginal.
10. The TPP-11 severely restricts labour rights to the minimum identified by the ILO declaration in 1998, leaving out fundamental rights such as strike, retirement, rest, paid holidays and others. Chile will be pressured to remove these from its legislation in order to achieve cheaper labour; it may also be sued by foreign companies if it maintains these rights and the companies consider that this affects their profits.
11. The major reforms that we want in Chile (education, health, pensions, water, fishing, etc.) will be strongly hindered by the argument that they are expropriation.
All major reforms require changes in regulation or ownership that would affect foreign companies. Our country should decide democratically and sovereignly in this regard, but the CPTPP would prevent this by deepening the guarantees and powers granted to foreign companies that invest, settle or trade with Chile. Especially, but not exclusively, Chapter 9 gives unilateral powers to foreign companies to prevent any process of legislative or regulatory change that they consider to affect their profits, i.e. “expropriation”. The guarantees provided by the FTAs already in force have allowed that, on the basis of legislative decisions or public policies adopted in a pandemic, several transnationals (among others, Ohio National Insurance, for the withdrawal of annuities; Met Life, for the same reason; Groupe Paris Airport and Vinci Airports, for regulations at Pudhauel Airport) have already sued or announced claims against the State of Chile in ICSID. By having an expansive and deepening character, the TPP-11 gives greater opportunities and legal force to the power of transnationals to block any legislative or constitutional change that responds to demands for social change.
12. Intellectual property legislation should eliminate the right to remain silent in civil proceedings.
13. The PPT does not recognise the constitutional status that Chile gives to human rights treaties, nor does it automatically recognise other international commitments made by Chile, even those that have constitutional status. All these commitments can be challenged and Chile can be sued if it persists in respecting them.
14. Studies on the impact of the TPP-11 project that the economic benefits of the TPP would be marginal to nil, even in a study requested by DIRECON/SUBREI. None of the claims made about improvements in the country’s economy and workers’ welfare have been backed up by serious, independent studies.
15. The bulk of the new exports promised by the TPP-11 correspond to agro-exports. The Piñera government presented this as the creation of “new and better jobs.” However, according to official figures, exports have created neither new nor good jobs and have created serious environmental and health problems. The promises made about new and better jobs as a result of the CPTPP have no basis in the actual performance of the Chilean economy.
The so-called Chilean agro-export miracle since 1986 has been characterised by a spectacular growth of exports (almost 8 times between 1986 and 2018) and simultaneously by the stagnation of the agricultural labour force in figures ranging from 650,000 in winter to 850,000 workers in the period December – March. At the beginning of the “agro-export miracle”, agriculture provided around 20% of jobs nationally; today it provides less than 10%. The work provided by export agriculture is also of very poor quality. According to ODEPA, in the fruit industry (the main agricultural employer and exporter) only 6.4% of women workers and 28% of men workers have permanent contracts. According to the Library of Congress report, 51.5% of men and 78.5% of women employed in agriculture have a contract for 3 months or less; and 30.2% of jobs (29.2% for men and 33.2% for women) do not have access to a written employment contract. In addition, agriculture is the sector that pays the lowest wages. Although the wage gap with other branches of production has narrowed, ODEPA indicates that “In 2015, the average wage of those employed in the economy was 1.58 times higher than that of the agricultural sector. In certain economic activities, such as mining, its workers earn three times more than those in this sector”.
16. It is argued that in the TPP-11 the most dangerous points for Chile and its citizens have been eliminated. This is false. The treaty expressly states that all 30 chapters are in force; these were not changed, but only 20 extremely harmful provisions were suspended. These provisions can be reactivated through future rounds of renegotiation, and especially if the United States returns to the treaty. The announced accession of China and Britain may mean new provisions detrimental to national sovereignty.
Article 1 of the TPP11 states that the provisions of the Trans-Pacific Partnership Treaty, signed in Auckland on 4 February 2016 (“the TPP”) are incorporated by reference into and form part of this Treaty. Article 2 of the TPP11 details the 20 suspensions that apply, but which apply only “until the Parties agree to terminate the suspension of one or more of these provisions”. It then adds in a footnote “for greater certainty, any agreement by the parties to terminate a suspension shall only apply to a party after the conclusion of that party’s applicable legal proceedings”. It is therefore a falsehood to say that in TPP11 the most dangerous points for citizens have been removed. The 30 chapters (653 pages) were not changed but only 20 provisions related to intellectual property of biological medicines and internet use and access were SUSPENDED, but other articles that go in a similar direction are maintained. Moreover, the negotiations made it clear that for the US the suspended provisions are non-waivable.
17. The extractivism promoted by the TPP-11 is an accelerating factor in global warming. It is estimated that the agro-industrial food system is responsible for between 44% and 57% of global greenhouse gas (GHG) emissions, including deforestation, conventional crops, waste, refrigeration, processing and transport, especially transport linked to agro-exports. In Chile, forestry companies are also responsible for the proliferation of land in sacrifice and drought.
In the Paris Agreement, Chile committed itself to reducing its CO2 emissions and its carbon footprint. New mining, meat industry and agribusiness projects, encouraged by substantial investment guarantees, as well as projects in the energy sector aimed, among others, at the Green Hydrogen business, high in emissions and water use, go against these commitments, threatening the present and the future of the country’s inhabitants. The Chilean Senate, through a draft agreement, has also expressed its willingness to declare the country in Climate and Ecological Emergency. The University of Chile, the Catholic University, the UFRO and the University of Magallanes have already done so, as have two regions of the country. New Zealand, Japan and Canada have declared Climate and Ecological Emergencies. These TPP partners may be able to reduce their carbon footprint internally, but their improvement in future prospects will come at the cost of new negative externalities in Chile, derived from the high-water requirements and the intensive use of hazardous pesticides, among other requirements of these businesses. The ecological crisis finds the people living in Chile at high risk and fulfilling 7 of the 9 factors of vulnerability to Anthropogenic Climate Change defined by the UN. We have low-lying coastal areas; arid and semi-arid zones; forest areas; territory susceptible to natural disasters; areas prone to drought and desertification; urban areas with atmospheric pollution; and mountainous ecosystems. The country’s temperature is increasing at an average of 0.23°C per decade; rainfall is decreasing by 4 millimetres per year, and the desert is advancing southward by 0.5 km per year. Eighty-seven per cent of the country’s glaciers have experienced decreases in mass or volume, while 70 per cent of the country’s reservoirs are in deficit. According to the General Water Directorate (DGA), 168 communes have been declared in water scarcity, affecting 1,296,166 people, more than 7% of the population and covering 24.4% of the country’s territory.
18. Official figures, those of the World Bank and the Mining Competence Council indicate that while FTAs may have activated the Chilean economy until around 2010-2011, they have subsequently had a negative effect that has resulted in a significant process of impoverishment of the country in the last decade.
The main reasons given for approving the TPP-11 and other trade agreements have been to improve the trade balance, improve employment, increase GDP. Figures periodically provided by the Central Bank and other public entities (e.g., INE) indicate that these objectives might have been achieved in the first years after the signing of free trade agreements, but that in the medium and longer term the situation has been reversed and the impacts have been null or negative. What is most significant, however, is that the analyses presented to support the TPP-11 and other FTAs have not taken into account the evolution of the current account and balance of payments, which is a much better indicator of the evolution of the country’s economy and wealth than GDP or the trade balance.
The trade balance evolved positively until 2010 and started a decline in 2011 that has tended to deepen in the following years. The trade balance in recent years has been similar to or lower than in 2003, before we could feel the full impact of FTAs, and has been negative in 4 of the last 10 years. The recovery of the trade balance in 2020 is not considered indicative, because it is the product of a drastic reduction in imports of goods and services due to the COVID 19 pandemic.
The evolution of employment linked to foreign trade has not shown a positive development either. The main export areas are mining and agriculture. In point 15 we explain how agricultural employment has stagnated since the 1980s. Regarding mining, figures from the Mining Skills Council and the Chilean Copper Commission indicate that mining employment grew until 2013, exceeding 200,000 workers. Subsequently it has been declining, reaching approximately 140,000 in 2019. Importantly, the number of directly employed workers has stagnated below 50,000 workers. The growth of the copper workforce came about through the number of subcontracted workers, so the quality of employment delivered by mining, like that of agriculture, has deteriorated significantly, thus removing any basis for FTAs creating “new and better jobs”.
In relation to GDP, figures provided by the World Bank indicate that the country’s GDP growth rate has declined significantly since 2010, averaging less than 1% in the 6 years leading up to 2020, a year in which there was a GDP decline of over 6%, but which we excluded from the analysis because of the impact of the pandemic on the economy. Analyses seeking to support FTAs have not considered the evolution of the current account, which is a much more reliable indicator of the evolution of the economy and especially of the wealth that remains in the country. The current account is the sum of everything that enters the country (mainly foreign investment, export earnings, profits abroad of Chilean capital) minus everything that leaves the country (mainly the cost of imports, profits earned and exported by foreign companies, capital outflows for investment by Chilean companies abroad). According to figures from the Central Bank of Chile, the evolution of the current account shows that it has been negative since 2011 and that between 2011 and 2019, Chile has exported more than 76 billion dollars more than what has entered the country. In other words, between 2011 and 2019 Chile became 76 billion dollars poorer. According to the Central Bank itself, the determining reason for the current account deficit is the export of profits by foreign companies. This outflow of capital has been so significant that if we take the period 2003 – 2019, we can see that Chile has returned all foreign investment and has given foreign companies, so far, at least 20 billion additional dollars. We also highlight that the export of profits has been higher than the growth of GDP.