Tariffs can make up an important percentage of income, particularly in economies with underdeveloped tax systems and where tax incentives are used to drive foreign direct investment. Reduced public expenditure impacts most heavily on the poor and particularly poorer women. Funding cuts generally focus on reductions in subsidies, public wages and social protection payments. Each of these has a disproportionately negative impact on women and children, as women are more likely to claim social welfare payments, use public services and be employed by the public sector.

The costs of an ISDS case can have an enormous impact on public expenditure in developing countries. To date, the majority of cases heard by ISDS tribunals have been against developing countries and lodged by multinational corporations from developed countries. The awards have amounted to hundreds of millions, and even billions, of dollars. For example, $2.4 billion was awarded against Ecuador in a case brought against it by an oil company ordered to clean up its toxic waste. The award represents more than 6 percent of the small nation’s national budget – more than its health budget. Argentina has faced 53 claims totaling $80 billion after it introduced regulations to address a financial crisis that was pushing many people into poverty. The Philippines is reported to have spent $58 million in legal costs to defend two cases; this money could have paid the annual salaries of 12,500 teachers. While not all cases are made public, given the secretive nature of ISDS, we know that in at least 50 ISDS cases, claims of at least $31 billion have been lodged against states negotiating the RCEP. The RCEP will expose them to even more cases. Countries have also been denied access to tax revenue, with at least 24 countries being sued by corporations using the ISDS mechanism to challenge tax laws or attempts to collect tax. 

Displacing women’s subsistence farming

A central purpose of trade agreements is to open up agriculture and land to foreign investment. Many countries restrict foreign investment in land and provide leases or concessions to investors on a case-by-case basis. It is likely that RCEP, such as other trade agreements, will incorporate a “national treatment” provision that requires governments to provide foreign investors with the same rights and privileges as local investors. Consequently, unless governments provide a specific exemption in the agreement, land can be purchased by foreign corporations and individuals.

Among the attractions of Asian countries to foreign investors is the apparent abundance of cheap land. In fact, approximately 19 million hectares of land in Asia has been acquired in deals involving foreign investors in the last decade. In the period following the financial crisis, speculative finance rushed to the security of land, resulting in a 334 percent increase in cross-border real estate investments between 2008 and 2015, and investors intensified pressure on governments to enable foreign land investments. This makes small land holdings vulnerable, particularly where documentation of land tenure is not secured. Furthermore, the expansion of export-oriented crops has led to decreasing availability of land used for subsistence agriculture that is primarily tilled by women. Small-scale, subsistence farms of women are unable to compete with huge agrobusiness monopolies because of economies of scale and the benefits of large capital, coupled with pre-existing discrimination that means women are less likely to have access to inputs, credit, technology and information. Further, they are less likely to be able to fulfill the regulatory requirements that come with cross-border, digitalized trade.

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