TPPA is not about ‘free trade’

Stuff | 7 Feb 2016

The New Zealand government should be more realistic about the benefits of the Trans-Pacific Trade Agreement

TPPA will only deliver for us if we are honest about it. But our government and business leaders aren’t.

Yet, New Zealand needs them to be utterly clear-eyed and realistic about this trade and investment agreement.

Rod Oram believes a lack of transparency over the TPPA could damage New Zealand’s honest reputation.

Only then can New Zealand be an honest broker helping to turn TPPA into the 21st century agreement we need it to be.

Here are some of the major gaps between NZ’s rhetoric and reality about the TPPA.

It is a Free Trade Agreement. No, it isn’t. Too many tariffs and other barriers remain for it to deserve the accolade. Rather, it is a “managed trade” pact, argues Martin Sandbu, one of the best analysts at the Financial Times of London, in this article

It will remove barriers to trade. But we already sell lots to middle class Americans and Japanese, which are said to be the big prize.

While TPPA might help a bit, it will perpetuate agricultural subsidies, which are the far greater distorter of trade for our primary sector. It will also hinder the World Trade Organisation’s efforts to push back against subsidies.

It will make us wealthy. No, it won’t. By 2030 it could lift our GDP by 0.9 per cent. With TPPA, we’d hit that target by January 1, 2030. Without TPPA we’d hit the target three months later.

Moreover, the government’s forecast of 0.9 per cent relies on heroic assumptions about easing non-tariff barriers. Analysis of this is coming thick and fast. Here’s a recent example from Tufts University in the US,  and this from the Petersen Institute, the most respected, most apolitical of Washington trade think tanks,

The Investor State Dispute Settlement process has been around for years in other trade agreements, so there’s nothing to worry about. Yet the EU halted its FTA talks with the US because it said ISDS was a “very toxic issue.” It came back to the table with a bold proposal for a proper international judicial system for settling disputes.

We are about to start negotiating an FTA with the EU. Logically it will make the same judicial proposal to us. We should eagerly embrace it and actively push for the TPPA to follow suit.

The TPPA’s US-inspired intellectual property rules are fine. No, they aren’t, says Bill Wright. He is a trade policy analyst at the Cato Institute, one of the most right wing of economic think tanks in the US.

The Chinese will want to join TPPA. Not as it stands. They are very opposed to the US centric thrust of TPPA on IP and many other issues. The Chinese want a far bigger say in the world’s trade rules for the 21st century, either by forming their own regional grouping, or by heavily changing TPPA.

Congress will likely endorse TPPA, after a big fight in the session after November’s presidential election. Really? Plenty of Republican congressmen are already opposed. Lobbyists from tobacco, pharmaceutical and other US sectors that feel short-changed by TPPA are pushing for big changes to it. But that would cause the pact to unravel.

If they can’t get changes, more Republicans will join the ranks of the opposed. Those numbers will also swell as the presidential election campaign gets ever more populist. This will also turn some of the very few pro-TPPA Democrats against it. The two leading Republican candidates and the two leading Democrats presidential candidates are already opposed.

Only the political left are unhappy with TPPA. Ah, so the Cato Institute, pharmaceutical and tobacco companies, and the EU are left-wing? The reality is fact-based, real world, analysts, companies, government and organisations are identifying plenty of problems with TPPA.

But our government and business leaders are insisting TPPA will be a bonanza, bigger even than our Free Trade Agreement with China. At a bare minimum they are setting themselves up for severe disappointment and serious loss of credibility. They are blinding themselves to the massive work that has yet to be done on TPPA.

Worse, they are devaluing New Zealand’s reputation as an honest broker in international negotiations. Yet that is our greatest strength in the global system. It means we get taken seriously. It means we achieve far more than a country our size should.

TPPA damages that hard-won record. We will regret it.

 – Sunday Star Times

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