Mega trade and investment deals destroy local markets

Supermarket watch Asia bulletin, Issue 3, Aug. 2016

Editorial: Mega trade and investment deals destroy local markets

The growing number of bilateral and multilateral trade and investment agreements in the Asia Pacific region is helping to build a global procurement system for retailers. However, these new agreements are also granting foreign retailers access to host countries and facilitating the vertical integration of agriculture. Many of these new multilateral trade agreements, such as the Trans-Pacific Partnership (TPP) and the Regional Comprehensive Economic Partnership (RCEP), serve the interests of big agribusiness and retail.

The global food industry is highly concentrated. A handful of corporations dominate food supply chains stretching from large monoculture farms to supermarkets, thus enabling retail chains to undercut local producers by sourcing from cheap production centres for the lowest price. In contrast, local procurement policies allow governments to purchase farm products from local farmers; provide guaranteed prices; and maintain stockpiles and distribution systems in the public interest. However, these kinds of policies will be prohibited under the new free trade agreements.

Another dangerous aspect of mega-trade agreements like the TPP and RCEP is their proposal to allow foreign investors to sue governments at an international tribunal, known as an investor-state dispute settlement (ISDS) chapter. These investor suits can be for unlimited cash damages and compound interest. If the proposals are accepted, ISDS mechanisms would allow foreign investors to sue TPP and RCEP member governments if they choose to enact regulations that disadvantage foreign investors, e.g. by reducing their profits. This would apply even in cases where countries attempted to protect the public interest, for instance adopting a soda or sugar tax on the processed food industry to enhance public health (as Chile, Mexico and South Africa have recently done and as countries in Asia are keen to do).

This issue of Supermarket watch Asia bulletin highlights the impacts of trade and investment agreements on farmers, fishers and street vendors. We begin with a statement from the international peasant movement La Vía Campesina on trade, markets and development, which was issued during the Fourteenth Session of the United Nations Conference on Trade and Development (UNCTAD), 17 – 22 July 2016 in Nairobi, Kenya. We then look at how Hanoi, Vietnam has criminalised street vendors who are already threatened by the expansion of foreign retailers caused by new trade regulations. Finally, we examine the experience of a food safety organisation in Thailand that is suing the Thai government over its failure to protect food safety with regards to fruits and vegetables sold in supermarkets.

ACROSS THE REGION

LVC declaration on trade, markets and development

La Vía Campesina

Globally, more than 80% of smallholders operate in local and domestic food markets, with the majority trading through informal means. These highly diverse markets are the ones through which most of the food consumed in the world transits. They operate within territorial spaces that can range from local to transboundary to regional and may be located in rural, peri-urban or urban contexts.

These markets are directly linked to local, national and/or regional food systems: the food concerned is produced, processed, traded and consumed within a given space and the value added is retained and shared there, helping to create employment. They can take place in structured arrangements or in more ad hoc or informal ways, which provide greater flexibility for smallholders, fewer barriers to entry and more control over prices and market conditions. They perform multiple functions beyond commodity exchange, acting as a space for social interaction and exchange of knowledge. These are the most important markets, especially for rural women, when it comes to inclusion and access, contributing significantly to our fulfilment of our right to food and nutrition.

Despite their importance, informal markets are often overlooked in data collection systems, which impacts negatively on the evidence base for informing public policies. As women smallholders mostly operate in informal markets, their essential contribution to food systems, including food distribution and economic growth, remains largely invisible in trade and development policy-making processes and they face particular socio-economic barriers in accessing resources and marketing opportunities resulting in further marginalization and violation of their rights. Given their importance for food security and smallholder livelihoods, public policies and investments should be oriented towards strengthening, expanding and protecting local and domestic peasant-fed markets.

Read the full text of the declaration... 

Vietnam: Banning the street vendors from Hanoi’s sidewalk

GRAIN

An integral part of Hanoi sidewalks, street vendors can be spotted throughout the city. According to a survey by Hanoi’s Department of Trade, there are about 5,000 vegetable sellers and about 9,000 fruit sellers operating in the city’s inner district. Of these, 93 per cent are women and 70 – 80 per cent are from surrounding provinces.[1] These street vendors provide valuable services for city residents, selling them diverse products—from fresh fruits and vegetables to ready-to-eat pho (a typical Vietnamese noodle dish).

In July 2008, the Hanoi city government started banning street vendors from 62 streets. They argued this regulation was needed in order to “beautify” the city, ease traffic congestion and improve urban sanitation and food hygiene.[2] The ban has made street vendors semi-legal and subject to sanctions. However, city government failed to develop any alternative to the loss of employment for these street vendors despite the fact that street vending has created countless jobs and contributed significantly to social stability. Moreover, many Hanoi residents rely on street vendors to provide them with seasonal food.[3]

The regulation thus seems both misguided and difficult to implement; the vendors continue to work although forced to adapt by being more mobile to avoid repression. This law of banning hawkers is part of a wave of economic transformation resulting from free trade and the arrival of global fast-food chain.[4] Such laws are being enacted against small traders around the world including in the city of Lagos, Nigeria, where it is having a devastating impacts and generating popular resistance.[5]

Supermarket watch Asia is a quarterly email bulletin for social movements about developments in food retail and distribution in Asia produced by GRAIN. Click here to view the full issue and subscribe.