The recent collapse of the Doha Rounds of trade negotiations at the World Trade Organization (WTO), while viewed by many from the developing South as welcome news, has also created more intense competition among member countries for preferential trade deals.

      Rich and powerful countries are disappointed with the slow pace of negotiations at the WTO and the recent impasse leading to suspension of trade talks only adds to their frustrations. This explains why the US, EU and other industrialized countries are stepping up their efforts to enter into bilateral negotiations and sign free trade agreements with other countries particularly those coming from the South.

      Free Trade Agreements (FTAs), despite the name, cover not only liberalization of trade in goods, but also a wide range of new rules for intellectual property rights, services, investments, and other sectors. In most cases, corporate interests and geopolitical concerns play a major consideration in choosing a country to enter an agreement with. This is to strengthen political and economic influences. Access to energy and mineral resources is another factor in signing FTAs. With the demand increasing and world market prices fluctuating, the need to align with countries r i ch i n o i l , gas, uranium and even water become a major consideration.

      FTA negotiations, unlike the WTO’s multilateral system, allow rich and powerful nations greater freedom to push poor and developing countries to adopt policies much worse than that of the WTO agreements. For developed countries, FTAs are better vehicles to get hold of areas they were not able to acquire through the WTO.

      To make it more appealing, FTA negotiations, in most cases, are conducted in utmost secrecy over discussions comparable, but more intensive, to the ‘Green Room’ process of the WTO. FTA agreements are kept from public knowledge until they are signed - thus making them difficult for the public or even parliamentary representatives to lobby for amendments.

New form of colonialism?

      FTAs and bilateral investment deals are not only considered economic instruments but more importantly, tools to advance rich and powerful countries’ corporate and geopolitical interests. Agreements between nations cover a wide range of issues that force countries to change laws and policies to open up their economies. Thus, weaker countries get the raw end of the deal, giving up policy space and loosing national sovereignty in the process. A good example of this is the highly controversial FTA between Thailand and the US (TUSFTA). Still under negotiations, TUSFTA once signed, will require a large overhaul of Thai intellectual property legislation. This is because of US demands on “TRIPS-plus” commitments on intellectual-property protection (IP) similar to that in the US-Singapore FTA, which would cover patents, data exclusivity, plant varieties, copyright and other issues.

      FTAs open vast opportunities for transnational corporations (TNCs) of developed countries. They provide them the immense authority to legally enforce rights in foreign markets - rights that can include buying state industries, delivering social services (such as education, health) accessing indigenous knowledge and resources, and many others that lead to further privatization and deregulation. Also, TNCs most often than not, extract profits from poor and developing countries and turn them into a pool of natural resources and source of cheap labor.

FTAs in Asia

      Fourteen bilateral and regional FTAs were ratified by Asian countries (except China) in 2005. Another seven were negotiated but not yet implemented. At present, 23 bilateral and regional FTAs are actively being negotiated by Asian nations, the majority of which are with non-Asian partners.

      In the Asia-Pacific Region, the race is now on among major powers (US, EU, Australia, New Zealand, Japan), medium powers (Singapore, Malaysia, South Korea, Taiwan), and emerging powers (China, India) to sign FTAs. This is not only to protect their economic and political interests, but also to strengthen their hold on poor and developing countries’ indigenous resources.

      A significant trend is also leading towards FTAs among regional trade blocs like the ASEAN, BIMSTEC and SAFTA. The US for example is aiming for a US-ASEAN free trade agreement while China, India and South Korea are also fast-tracking their own trade agreements with ASEAN. Japan, on the other hand, allotted funds for the Nikai Initiative which seeks to study a 16-nation Comprehensive Economic Partnership in East Asia.

Below are some of the key FTAs in selected Asian countries:

      Bangladesh recently signed a Preferential Trade Accord (PTA) with Iran and a Trade and Investment Framework Agreement (TIFA) with the US. Both these two countries (Iran and the US) are aiming for an FTA with Bangladesh in the near future. Neighboring countries like India and Pakistan are also keen on securing an FTA with Bangladesh while a bilateral agreement with Malaysia appears to be apparent. Bangladesh is part of both the BIMSTEC and the SAFTA.

      Cambodia has bilateral agreements with the US (Textile) and Switzerland (IPR), and recently signed a TIFA with the US. Preparatory talks for a bilateral investment agreement with Japan are ongoing. Cambodia, being a member of the regional bloc, is also involved in the ASEAN’s FTA with China and Korea.

      China is in FTA discussions with Australia, New Zealand, Pakistan, Chile, SACU, and the GCC. It is also trying to open discussions with Brazil, Iceland, India, Japan and South Korea. A partial trade agreement has already been concluded with Thailand, while the proposed FTA with India is still under study. China is close to signing a framework agreement on partnership and cooperation with the EU. It also has ongoing arrangements with the ASEAN and special agreements with Hong Kong and Macau.

      India’s first acknowledged FTA is with Singapore (CECA). It has limited FTAs with Sri Lanka and Thailand, and preferential trade agreements with Afghanistan, Chile and the Latin American bloc Mercosur. Like China, India is also set to sign an agreement with the ASEAN, while bilateral talks are ongoing with the GCC, Bangladesh and Mauritius. China, Egypt, Indonesia, Japan, Korea, Malaysia and SACU are also at various stages of talks with this emerging economic giant.

      Indonesia is one of the six original members of the ASEAN, and in virtue of this, is part of the regional blocs’ FTA with China and Korea. It will soon enter into a bilateral agreement with the US while currently holding talks with Australia, Japan and New Zealand.

      Japan has existing FTAs with Malaysia, Mexico, Singapore and very recently, the Philippines. It has initiated talks with Brunei, Indonesia and Vietnam, and is working on a bilateral trade investment with Cambodia and Laos. The FTA with Thailand was finalized but not signed, while talks with South Korea have stalled. Other countries on Japan’s FTA negotiating list include Australia, Brazil, China, Chile, India, Kuwait, and Switzerland. It is also eyeing powerful regional blocs like the GCC and the ASEAN.

      South Korea has signed FTAs with Chile, Singapore, ASEAN and EFTA. Talks are ongoing with Japan and the US, while it hopes to start negotiations with China, India, Israel, Mexico and the Latin American bloc Mercosur.

      Malaysia is currently negotiating with Australia, Pakistan, New Zealand and the US after signing an FTA with Japan. It is also planning to initiate talks with Chile, India and Korea.

      Myanmar is a member of BIMSTEC and the ASEAN. It is in exploratory talks with Japan and India for a possible FTA in the future.

      Nepal earlier signed an agreement with India called the India-Nepal Treaty of Trade, and will soon enter into FTA talks with Pakistan. Under the South Asian Preferential Trade Arrangement (SAPTA), it received concessions in duty on maximum items from Pakistan. Nepal is also part of both the BIMSTEC and SAFTA.

      Pakistan is a major FTA player forging agreements with Sri Lanka and Turkey, and early harvest schemes with China and Malaysia. It is also part of regional trade blocs, ECOTA and SAFTA. FTA talks are already initiated with Indonesia, Malaysia, Singapore, Thailand, Russia and the GCC. Negotiations with the United States, however, seem difficult and not yet finalized.

      The Philippines recently signed its first comprehensive FTA with Japan (JPEPA). It previously signed a TIFA with the United States and is part of the ASEAN-China and Korea-ASEAN agreements. Although not regarded as a key player in the FTA scene, the Philippines has had 40 FTAs or bilateral investment agreements since the 1960s. Future FTAs would most likely be with New Zealand and the United States.

      Like Pakistan, Singapore is another country playing big on FTAs. It already has bilateral agreements with Australia, India, Japan, Jordan, Korea, Panama and the US. It is part of the four-country bloc P4 (with Brunei Darussalam, Chile, and New Zealand) and has an FTA with the European Free Trade Association (EPTA) grouping of Iceland, Liechtenstein, Norway and Switzerland. Recently concluding talks with Qatar, Singapore also has ongoing talks with Bahrain, Canada, Egypt, Kuwait, Mexico, Pakistan, Peru, Sri Lanka and the UAE.

      Sri Lanka has bilateral trade agreements with Egypt, India, Iran, Pakistan and Singapore. It intends to negotiate an FTA with Bangladesh and seeks to iron out issues with the US for a bilateral trade agreement. Sri Lanka is also part of regional trade groups BIMSTEC and SAFTA.

      Thailand has forged free trade agreements with Australia, China, India and New Zealand. Deals with Chile, Morocco and Peru are to be initiated, while the highly controversial agreement with Japan is due for signing. Amidst popular opposition, a US-Thailand FTA is also underway.

FTAs economic benefits, overstated?

      According to FTA advocates, joining FTAs can lead to a country’s economic growth as it leads to greater trade, increased specialization and access to global value chain. However, experiences of countries with existing FTAs have shown that the economic benefits of FTAs may be overstated.

      Studies have shown that benefits from FTAs tend to favor big businesses and corporations than farmers and workers. A good example is South Korea whose many FTAs have not contributed to jobs for its unemployed youth. Mexico is another documented case that has lost 1.5 million agricultural jobs since joining NAFTA. In Morocco, companies closed down and people lost their jobs as a result of its FTA with the US.

      For one, an FTA is not even crucial to a country’s economic growth. This was shown by China, who was not even a signatory of the General Agreement on Tariffs and Trade or an original member of the WTO, but has been registering a 9 percent annual growth rate over the past 25 years.

      Vietnam is another good example. Only due for WTO membership at the end of 2006, and FTA accession by 2009 (AFTA), Vietnam’s economic growth is at 5 percent and has attracted more foreign direct investments (FDI) than Mexico – a country whose existing FTA (NAFTA) and WTO membership has only contributed to its one percent economic growth per capita between 1993 and 2003.

      The case of China and Vietnam clearly shows that FTAs are neither necessary nor sufficient for economic growth. Governments need to look at internal factors affecting economic growth rather than forged FTAs with industrialized countries. Factors like improving governance, strengthening institutions and investing resources towards agricultural productivity.

Dealing with FTAs

      Dealing with FTAs has been a challenging task for members of civil society organizations (CSOs) around the world. For one, national, regional and international linkages are hard to maintain as FTAs are restricted to countries where they are being negotiated. Also, establishing common goals and campaign strategies proves to be difficult, given the varying contexts of FTAs.

      However, given the lack of public information on the text on free trade agreements, CSOs can work more on gathering information and making deeper analysis on FTAs and their possible impacts not only to the economy but also on human rights and the environment. In particular, studies can be conducted on the role of TNCs in influencing and gaining from FTAs and other bilateral agreements.

Furthermore, CSOs can also collaborate on:

1)  Developing popular education materials and other tools for awarenessraising on FTAs;

2)  Exchanging information about studies conducted and experiences gathered on FTAs;

3)  Creating a databank and a map of existing FTAs, particularly in Asia, that will include its main agreements and impacts;

4)  Joint events/actions against a specific FTA during international events like the World Social Forum, World Food Day;

      FTAs are a reality and thus cannot be easily wished away. The number of FTAs is proliferating at a rapid pace and will only increase in the coming years as long as multilateral deals remain in disarray. However, FTAs may also be improved and structured to really benefit both negotiating parties for their mutual benefits. What is needed are governments whose political will and genuine concern is for their people, and trade negotiators who will carefully consider the serious impacts of trade agreements on the quality of life of their constituencies before making any trade-offs.