TPPA and Impact on Agriculture,
Food Security & Environment
BRIEFING TO PAKATAN RAKYAT MEMBERS OF
PARLIAMENT
"Trans-Pacific Partnership Agreement (TPPA) and Its
Pervasive, Across-the-Board Implications for Malaysia"
26 June 2013
Lim Li Ching, Third World Network
Impact on agriculture and food
security
TPPA and subsidies
 Subsidies cannot be negotiated under

FTAs, only under the WTO (as
subsidies are not partner specific)
Therefore, countries like the US and
Japan, which highly subsidize their
farmers, will continue their agriculture
subsidies
TPPA and zero tariffs
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The TPPA will aim for reduction of tariffs to
zero, including for agricultural products
Most developing countries have higher
tariffs compared to developed countries, so
have to reduce more as tariffs become
zero/negligible
US likely to require removal of 100% of
tariffs on its agricultural products, unless
listed and agreed to as an exception
US FTA threat to rice farmers
in Malaysia
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Malaysian position in failed US-Malaysia FTA
negotiations was to exclude rice
At the time, not much import of US rice into
Malaysia
But, US demand for rice tariffs to be reduced
to zero (over a period of time)
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Malaysia had tariff on imported rice of 40%
US rice highly subsidized, with export price
below cost of production
Predicted effect of FTAs on
agriculture

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Colombia: Farmers could experience overall
57% reduction in income and 35% reduction
in employment among workers in 9 major
agricultural sectors, if US proposals were
accepted
South Korea: With US FTA, total annual
production amount of local agricultural
industries would drop US$ 1-2 billion/ year,
and “it would be inevitable for some 70,000
to 140,000 people currently engaged in
farming businesses to lose their jobs”
Experiences of Mexico under
NAFTA (1994)

US grains are sold with dumping margins of
>25% because of its subsidies
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E.g. rice is subsidised to an amount equivalent
to 72% of cost of production
Before NAFTA, Mexico was self-sufficient in
maize and bean production
Imports of subsidised maize from USA have
nearly tripled under NAFTA
Every year, nearly 3 million tons of harvested
Mexican maize is left to rot as it can’t
compete with cheap US maize
Experiences of Mexico under
NAFTA (1994)
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Genetically modified maize from the US has
contaminated traditional varieties
99% soybeans, 80% of rice now imported,
displacing local production
Imports rose over five times for soybean, wheat,
poultry and beef
Nearly 3 million Mexican farmers have left the
land since NAFTA began
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Result: increased emigration, rural poverty and
illegal drug production
Mexican countryside has lost 1.3 million jobs
since NAFTA, mainly of small and subsistence
farmers
Impact of other chapters

Services chapter
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Intellectual property chapter

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Liberalizing financial services could mean less
access for small farmers to affordable credit
UPOV 1991 and impact on access to seeds
Government procurement chapter

Could open government purchasing of food (e.g.
for military/public schools or hospitals etc.) to be
supplied with farm products from TPP countries, to
our farmers’ disadvantage
Impact of other chapters

Investment chapter

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Could open more land to foreign ownership
Dispute settlement chapter

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Makes almost all TPPA chapters enforceable
via state-to-state dispute settlement
When a case is lost at the international
tribunal for violating the TPPA, then tariffs can
be raised on exports
Impact on environment
Impact of investment chapter

Requirement to allow investors from other
TPPA countries to invest in all sectors unless
listed and agreed to as an exception

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Requirement to treat investors fairly and
equitably

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Foreign ownership of land e.g. Peru-USFTA
Interpreted as standstill on regulation
Expropriation provision
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Environmental laws, regulations and policies
could be found to be expropriation
Impact of investment chapter

Proposal to restrict technology transfer
requirements (unless exceptions agreed)
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Impact on National Policy on Climate Change,
National Policy on Environment, National
Green Technology Policy
Investor-state dispute settlement

70% of the over USD719m paid out under
USFTAs and BITs are from challenges to
natural resource and environment policies
Case examples

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Vattenfall vs. Germany: Swedish power
company sued German government for €1.4
billion plus interest after its coal-fired electricity
plant in Hamburg-Moorburg was made to comply
with stricter environmental regulations. German
government settled in 2010 by reducing its
environmental requirements.
Vattenfall also sued Germany for US$4.8 billion
after the government decided to phase out nuclear
energy in Germany following the Fukushima
nuclear disaster in Japan.
Case examples

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Ethyl vs. Canada: Canada was sued for its ban
on a polluting chemical. It settled by reversing the
ban, paying US$13 million to the company and
issuing a statement for use in advertising that
“current scientific information” did not demonstrate
the chemical’s toxicity.
SD Myers vs. Canada: Canada was successfully
sued because of its temporary ban on PCBs (to
assess obligations under the Basel Convention).
Canada paid the investor US$5 million for the lost
profits it would have made during the 16-mth ban.
Case examples

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Metalclad vs. Mexico: Mexico was successfully sued
for failure to allow a toxic waste dump in an area with
unique biodiversity and water that could have been
polluted. Mexican govt had to pay the foreign investor
US$15 million; tried to recoup cost from local authority.
What about Lynas? Licence given subject to a number
of conditions, including compliance with safety
provisions of the Atomic Energy Licensing Act 1984 and
Environmental Quality Act 1974. If Lynas’ licence is in
future revoked for failure to comply with these, or other,
Malaysian laws, may lead to a claim of expropriation of
its licence and any future profit expected to make.
Impact of other chapters
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Intellectual property chapter

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More technologies could be patented, and
patents would last longer – impact on
access to environmentally sound tech
Patents on plants and animals, UPOV ‘91
TBT and SPS chapters

May impose additional restrictions
including the information that can be
required by government regarding GM food
Impact of other chapters

Services chapter
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May require services regulations at all levels of
government (including local government) are
based on objective and transparent criteria (rather
than environmental ones) and that these are not
more burdensome than necessary
May restrict ability of federal, state and local
governments to use licensing fees (including for
use of natural resources) to raise revenue/crosssubsidise or discourage unwanted activities in the
sectors liberalized
Impacts of other chapters
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Regulatory coherence chapter
Exceptions chapter
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Based on past USFTAs, the US will not
allow the general environment exception to
apply to the investment or IP chapters
Dispute settlement chapter
Preamble
What about the environment
chapter?
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Most studies on the environmental effects
of NAFTA provide negative or uncertain
conclusions regarding benefits: can’t solve
significant environmental problems; failure
to strengthen domestic environmental laws
Does not counter the problems for the
environment that other chapters, including
the investment chapter, will bring
Thank you!
www.twn.my
www.ftamalaysia.org