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Supermarket watch Asia – a quarterly email bulletin for social movements about developments in food retail and distribution in Asia produced by GRAIN

#3 - August 2016
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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 at: https://viacampesina.org/en/index.php/actions-and-events-mainmenu-26/stop-free-trade-agreements-mainmenu-61/2101-lvc-declaration-on-trade-markets-and-development

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. 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. 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.

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. 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.

News brief

Thai-Pan takes government to court

Ariane Kupperman-Sutthavong, Bangkok Post

The Thai-Pesticide Alert Network (Thai-Pan) filed negligence and dereliction of duty complaints against the Department of Agriculture to the Administrative Court in early June 2016. The complaints were filed after finding that more than half the fruit and vegetables awarded a government "Q mark" for quality contained harmful residue levels, according to network coordinator Prokchol Ousap. Tests conducted by Thai-Pan over the past three years found harmful residue levels in a lot of the produce, said Ousap.

 
Foreign retailers expand business, meet few barriers in Vietnam

VietnamNet

Vietnamese retailers have cried out for help in recent days, saying they have to compete fiercely with foreign retail chains, while the barriers to protect domestic retailers are insufficient. In principle, Vietnamese agencies have the right to refuse the proposals of foreign retailers to open second and subsequent outlets. However, since there are still no detailed regulations, Vietnamese retailers enjoy few protections—in spite of the spirit of the Vietnam’s WTO commitments. In many cases, foreign retailers have even opened supermarkets right next to Vietnamese-owned supermarkets.
 
Asian nations sweeten to idea of sugar taxes on fizzy drinks
 
Avantika Chilkoti, Financial Times

Some of Asia’s biggest soda-guzzling nations are preparing to impose taxes on fizzy drinks as the backlash against the industry mounts in a movement reminiscent of the anti-tobacco campaign. The $560bn global soda industry has come under attack worldwide as doctors and policymakers fret about the mounting toll — on health as well as government coffers — of obesity and diabetes.

A sugar tax in Mexico has cut the consumption of sugary drinks by an estimated 12 per cent and raised more than $2bn in tax receipts. Berkeley in California, France and Chile have introduced similar taxes.

The UK has scrapped plans to introduce a sugar tax of up to 20 per cent but companies will be expected to reformulate their products to reduce sugar content.

Many liken the threat to the industry of greater taxes and regulation with curbs on tobacco — and say they could prove just as detrimental to the likes of Pepsi, Coca-Cola and other fizzy drink manufacturers.

However, while cigarette makers have mitigated the impact of regulatory burdens in the rich world by ramping up sales in emerging markets, moves in Asia suggest the war on sugar may prove more globally consistent.

Governments are looking to implement some form of sugar tax in Indonesia, India and the Philippines, where the soft drinks industry is worth an aggregate $18bn, according to Euromonitor, making it a vast potential market still only a fifth of the size of that of western Europe.

Proposals are most advanced in the Philippines, where the House of Representatives is set to rule on introducing a 10 per cent excise tax on all sugar-sweetened drinks.
“In India and Southeast Asia the prevalence [of obesity] is lower [than in Europe and the US] but the increase in prevalence over the past decade in many cases is alarming,” says Bruce Lee at the Johns Hopkins Bloomberg School of Public Health.

Discussions are at an earlier stage in Indonesia, which scrapped a “luxury tax” on sweetened drinks in 2004, and India, where a government committee led by chief economic adviser Arvind Subramanian recommended a 40 per cent levy in December.

Drinks makers are braced for a big dent in sales if the measures go through. Mexico, which introduced a tax on sugary drinks and junk food two years ago, has become the benchmark for other emerging markets.
Analysts caution that any new measures in Asia could have other unwanted consequences, however, deterring investments from multinational groups that governments have been eager to attract.

Some warn that the new measures in India let domestic brands off the hook. The added duty targets aerated drinks, a category dominated by multinationals such as Pepsi and Coca-Cola; packaged juices, which are largely produced by local players such as market leader Dabur, would not be affected.

“The agenda is not transparent and my hunch is there is an element of protectionism,” says Saurabh Mukherjea at Ambit Capital, the Mumbai-based brokerage.

Coca-Cola in India has slammed the suggested taxes as being detrimental to Prime Minister Narendra Modi’s “Make in India” campaign to draw foreign investors to the country, adding that the group and its bottling partners create employment for about 200,000 people.

In Indonesia, where producers are already battling slowing growth and currency volatility, the proposed taxes are expected to deal a blow to the industry. New brands such as Peruvian Big Cola have heightened competition and industry lobby groups say any additional tax would throttle the market.
“The category is still very small,” says Triyono Prijosoesilo at the Association of Indonesian Soft Drink Producers. “People change their choice of beverage easily — if they feel that a packaged tea becomes very expensive, they can switch into water or non-packaged beverages.”

Industry analysts further question whether a tax would deter sweet-toothed Indians and Indonesians who tend to add large quantities of sugar to traditional unpackaged drinks.

“Even tea in Indonesia is with sugar,” says Ade Elimin at PwC in Jakarta. “Indonesians love sugar — they like sweet drinks.
In India 70m adults have diabetes, the world’s highest number behind China.

Experts warn that the associated healthcare costs can be ruinous. World Health Organisation estimates suggest the family of a low-income Indian adult with diabetes could spend as much as 25 per cent of their income on diabetes care.
With growing evidence of the harms of sweetened food and drink, experts emphasise the importance of discouraging consumption when the industry is still fledgling — as it is in much of emerging Asia.

“There is evidence that sugar is both an acquired taste and potentially addictive,” says Mr Lee at Johns Hopkins. “It is best to act before you even acquire the habit.”
Indian state imposes “fat tax” on burgers, pizza, other fast food
 

Reuters
                                                                             
The Indian state of Kerala has introduced a tax of 14.5 per cent on junk food in an attempt to tackle obesity and earn money, with the move expected to hit the customer base of international fast food chains like McDonald's, KFC and Pizza Hut. The need for the so-called “fat tax” is explained by the fact the state currently has the second-highest obesity rate for children in India.
 
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