Polity by Rob Salmond


Too much to swallow on the TPP

As Public Address readers will have seen, Labour has announced it will not support New Zealand joining the Trans-Pacific Partnership Agreement unless it meets five conditions:

  1. Protecting Pharmac
  2. No corporate litigation against NZ law changes
  3. NZ still allowed to restrict land sales to foreigners
  4. Te Tiriti upheld
  5. Meaningful gains for NZ farmers

David Farrar broadly agrees with these conditions, and even wants to add another:

  1. No changes to New Zealand IP laws that would hurt our internet experience.

Here’s my personal take on this: There is no way the TPPA will meet those five or six conditions. No way. That means Labour will be opposing, not supporting, the agreement that makes its way finally out of the smoke-filled room. And I think that is a good thing. Here’s why.

First, New Zealand has no credible bargaining chips on free trade. When we ask another country to make a concession, and they ask “or you’ll do what?,” we have no answer. That’s because New Zealand unilaterally dismantled most of its tariffs and other trade barriers in the 1990s, without asking for anything in return. Who was the author of such a self-defeating, masochistic exercise? Why, none other than MFAT’s trade negotiations surpemo of the time, one Tim Groser.

Now, thanks to Groser and friends, we show up at these negotiations with a long list of things we need, and nothing to trade for them. It’s like showing up naked to a strip poker game, or going to the store with a shopping list but no money. I’ve written academically about this error before.

That means when New Zealand turns up at the TPP and demands the agreement include this thing but exclude this other thing, the rest of the room has no incentive to pay attention. Countries, like people, respond to incentives. No incentive; no response.

Second, the agreement Labour and David Farrar is seeking, with…

  • no extra rights for Big Pharma or other firms harmed by our social legislation;
  • no extra rights for Americans with spare cash to invest globally;
  • no extra rights for American copyright holders;
  • but still with gains for our dairy farmers in the US, harming US farmers;

…is not the slightest bit palatable to the US Senate. If the agreement meets Labour’s bottom lines, it fails the Senate’s. It’s that simple.

Yes, it is possible there will be a TPPA agreement that the Senate can ratify, and that several other countries can ratify, too. But that agreement will not do what Labour needs, meaning Labour will inevitably end up opposing this deal.

I’m ultimately pleased about that, despite being an advocate, in general, of freer trade. That’s because this deal is not ultimately about creating freer trade; it is ultimately about restricting trade. Here’s Paul Krugman on this aspect of the TPPA:

In any case, the Pacific trade deal isn’t really about trade. Some already low tariffs would come down, but the main thrust of the proposed deal involves strengthening intellectual property rights — things like drug patents and movie copyrights — and changing the way companies and countries settle disputes. And it’s by no means clear that either of those changes is good for America.

On intellectual property: patents and copyrights are how we reward innovation. But do we need to increase those rewards at consumers’ expense? Big Pharma and Hollywood think so, but you can also see why, for example, Doctors Without Borders is worried that the deal would make medicines unaffordable in developing countries. That’s a serious concern, and it’s one that the pact’s supporters haven’t addressed in any satisfying way.

On dispute settlement: a leaked draft chapter shows that the deal would create a system under which multinational corporations could sue governments over alleged violations of the agreement, and have the cases judged by partially privatized tribunals. Critics like Senator Elizabeth Warren warn that this could compromise the independence of U.S. domestic policy — that these tribunals could, for example, be used to attack and undermine financial reform.

So I’m pretty clear that, given its current position, Labour will oppose the eventual TPPA text. The bigger question is: what will Labour do in government if it passes? Unraveling an agreement like this is massively harder than opposing it in the first place. Sadly, my own guess is that, if National saddles us with an agreement that does undermine our social legislation or our rights to regulate who owns our country, then Labour will be pretty much stuck with it.

Note: While Labour is a client of mine, I have played no part in formulating its position on the TPPA. This post represents my views alone.

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