A lesson for TPPA from the 'salt laws' of India

COMMENT International trade is more than just the sale or the transfer of goods and services. It encompasses trade across borders using a framework that reconciles various laws, cultures and business practices.

It is pivotal that the adage ‘honesty is the best policy’ is adopted to ensure the fairest and best of practices. But how do we define ‘honesty’ in the context of international trade?

A formalised approach is necessary in trade negotiations and requires a set of laws and regulations which adopt the rules of transparency in all transactions. Issues of honesty, fairness and accountability are more critical than ever before.

The TPPA is characterised as a ‘trade liberalising vehicle’. This is despite the fact that its scope and breadth suggest that it will be more than a trade agreement.

The ongoing negotiations suggest that it will take the form of a regional trade agreement (RTA). Under the GATT/WTO system, there are only three categories of RTA: preferential trade agreement (PTA), free trade agreement (FTA) and customs union (CU).

The TPPA will not be a mere PTA, which typically imposes comprehensive and intrusive commitments by states to open their markets to foreign goods and services.

It may not be a CU because it will not require economic integration among members to the extent that they harmonise tariffs and non-tariff barriers on goods and services supplied by non-members.

It would therefore be safe to say that the TPPA will be a FTA. As such, it should reduce or even eliminate barriers to trade between members.

There is already an obsession with concluding FTAs, with many countries hoping this will generate mutual benefits. But we need to understand the ideological history underpinning this obsession.

Free trade was not the only ideology that had its obedient followers among laymen and the intelligentsia. At the beginning of the 16th century, when European countries began conquests of the New World, international trade activities were motivated by military and political power.

Trade in scarce goods - including spices, timber, grain, precious metals - was controlled and monopolised. Such monopolies, which were incidental to territorial expansion, led to atrocities and massacres.

This was the era of mercantilism. Trade was not free. This persisted until people took interest in Adam Smith's ideas or perhaps ideals of free trade. But were those ideals really talking about freeing people from subjugation?

When reality bites

It is true that free trade principles presuppose opening the market to foreign goods. Smith felt this was good, as states would gain from the comparative advantage of selling what it can best produce and buy what it has no advantage in producing.

Of course the simplicity of this argument was offensive to economists who have devised theories to test Smith’s hypotheses as well as those of his disciples.

But consider how those ideals were embedded in history. Britain was the first to open its market to foreign goods with the repeal of its corn laws. The laws protected corn producers in Britain and Ireland from foreign competition.

But the British did the opposite with regard to the production of, and trade in, salt in pre-independence India. Salt laws were introduced to allow salt produced in England to be exported to India at cheaper prices, while superior quality salt produced in India had to be exported to Britain.

Reportedly Indians who possessed more than a certain quantity of salt would be punished by the British authorities.

The ‘Salt March’ led by Mahatma Gandhi (left) was a stark reminder that the unjust salt laws were still in place as recently as the start of the 20th century.

Today, there is no more colonialisation by the west. But if we start allowing the developed world to dictate what the developing world should produce or not produce, the tragedy of the salt laws in India may be repeated.

The TPPA may reduce trade barriers for some goods from the US, but in the long run our ability to produce high quality products might suffer from a limited choice of raw materials. And our producers may be forced to buy only from US sources.

Many leaked documents have been circulated on the Internet, including those from a recent TPPA ministerial meeting in Singapore. These reveal how the US is bullying other nations to submit to its strong demands.

We therefore urge Malaysia not to sign away our rights by signing the TPPA.

ANAS ALAM FAIZLI is an oil and gas professional. He is co-founder of Blindspot and Bantah TPPA, and tweets at @aafaizli