Trade negotiations are tense affairs. There are always interested parties trying to get your ear, long nights spent arguing small but technical points, and the invisible but ever present political pressure. So it was in Brunei late August where the latest round of negotiations for the Trans-Pacific Partnership (TPP) was being held. I was there too.
What is the TPP?
The TPP is a big free trade agreement between 12 pacific nations: Australia, Brunei, Chile, Canada, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, the United States, and Vietnam. Japan being the latest to join (Brunei was Japan’s first negotiating round) and now Korea may join the group. Initially it started back in 2005 with just Chile, New Zealand and Singapore with Brunei tacked on soon after. So the agreement has been negotiated for a long time.
For the most part it seems like a regular free trade agreement (depending on your opinion of FTAs). This meant that the actual negotiations and texts were not available to the public. When it was revealed that the negotiations were looking at more than just tariffs and quotas that it would also cover industry regulation, various groups became concerned. Then in 2011 a draft of the agreement was leaked.
The leak was of special importance for the IP (intellectual property) chapter, the only chapter that seeks tighter regulation rather than deregulation. For a start, if we agreed to the TPP, New Zealand would have to import the USA’s copyright laws. The far reaching proposals would:
- severely limit parallel imports,
- make it illegal to bypass TPMs (Technological Protection Measures) like geoblocks,
- lengthen pharmaceutical patents to delay generic drugs, and
- introduce copyright terms of 100 years after the death of the creator.
IP is not the only concern. There are a number of issues surrounding food labelling (as in there could be none), investment (investors would have the ability to sue a government if it regulates the industry) and removing agricultural tariffs (for countries that don’t want New Zealand exporting to them).
These are extreme. In the two years of negotiating following the leak, we have had no concrete evidence, no information about the content of the current TPP beyond the small amount of information that can be gleaned from negotiators. So we – the various organisations opposed to the TPP – are shadow boxing at some very scary looking shadows while we are told by politicians to “relax”.
The Brunei Round
The Brunei round seemed disorganised right from the start.
At every round so far there has been a stakeholder day where interested parties can make presentations followed by a Q&A session with the chief negotiators. At first we were told that there would be no stakeholder day… then that the stakeholder day was a two-hour stakeholder session… then the presentations were cut from 15 minutes each to seven… then the venue for the session was changed… all in the few days leading up the Brunei round.
Later we would discover that the Q&A session we had prepared for would instead be a stand-up mingle event. This meant less access to negotiators (many of whom didn’t attend the talks or the stand-up event) and that when a question was asked, only those in earshot heard the answer and of course the language barriers.
I was there for Consumer NZ as a member of Consumers International and part of a wider group called the Civil Society. We were not happy about the set up.
Our group had to make camp in the lobby of the International Convention Centre where we could try to catch the ear of any passing negotiators. Literally lobbying. We also held daily press conferences for the assembled Japanese media (I only met one journalist who wasn’t from Japan), that is when we weren’t being moved out of the way so the Sultan could come through.
I should point out that the negotiators are very friendly and open to discussion with concerned parties. Consumers International held a lunch during the Brunei round for a number of negotiators and we were able to chat extensively with negotiators from Australia, Canada, Vietnam, the US, and New Zealand. Sadly the best intentions don’t cut it when the world’s largest economy is leaning heavily on the negotiations (when the US negotiator arrived at the lunch there were hushed groans as “when the US is around no one can talk freely”).
But the bus ride from the lunch back to the conference centre allowed us to have a good talk to the New Zealand negotiating team. They were cheerful despite having been negotiating until 4am the night before and rising for an 8am start to the next meeting (and the coffee in Brunei isn’t great).
As pharmaceutical issues were the main part of the negotiations in the Brunei round, the majority of presentations were on the fight for more generic medicines.
The new TPP rules would see longer patent terms for drugs, increasing the time before cheaper generic drugs can enter the market. Other elements of the TPP would further extend patents should a new use for the drug be found. All of these mean further barriers to the creation of generic drugs which, in some cases, can reduce the costs of drugs by huge amounts.
In New Zealand this would mean that PHARMAC would have to spend more of its set budget on non-generic drugs. Currently PHARMAC’s role is to manage the funding that District Health Boards set aside for spending on community, cancer, vaccines and, eventually, hospital pharmaceuticals. New Zealand has decided to operate within a fixed medicines budget because of that, PHARMAC needs to make decisions between competing priorities to achieve the best health outcomes for New Zealanders.
If fewer generic options are available then PHARMAC will have to make decisions about which drugs are no longer subsidised. Keep that in mind when you hear NZ Minister of Trade Tim Groser say that Pharmac won’t change. No, it won’t, but it just won’t be nearly as effective.
For my allotted seven minutes I spoke on copyright and IP issues.
The IP issues
New Zealand is a small market at the end of the line. We understand this because we see it every day, reflected in the prices we pay for imported goods and the length of time it takes for media to reach us. We are a long way from pretty much everywhere else in the world and other countries in the TPP face similar boundaries, if not of distance, then of language.
There is nothing in the TPP (from the leaked document or the small amounts of information from the negotiators) that would see those prices drop. The only thing that would happen is media companies would develop long-standing monopolies that would drive prices up.
The loss of parallel importing would naturally be a huge hit, with libraries affected more than other institutions. The lack of competition in the market would keep prices high but beyond this there are further barriers to New Zealanders and consumers from other TPP countries.
TPMs, Technological Protection Measures, are placed on various media to control who is able to consume that media and in what way. This could be region locks on DVDs or online videos or it could be copying protection to stop piracy.
Under current New Zealand laws circumventing TPMs is legal: (emphasis mine).
“Devices that control the mere access to copyright material are not protected… Consumers will continue to be able to circumvent a TPM to undertake a permitted act because there is no prohibition on possessing and using a circumvention device. Consumers are not, however, able to make, sell or distribute a circumvention device if they know or have reason to believe that the device will be used to infringe copyright.”
Permitted acts are everything except breaking the copyright laws. So if you want to just watch something, like a TV show, then you are allowed to get around any TPM that restricts your access to that show. So you can use a service like Unblock-US or Global Mode and access Netflix to get TV shows completely legally (you may be breaching Netflix terms of service, but they’ll probably just be happy to be getting more money).
The TPP would make it illegal to circumvent TPMs. That means you could be charged for watching legally purchased media in the same way as if it had been pirated. So your multi-zone DVD player would now be illegal. So would any clever ways that you access the US iTunes store or Netflix.
When Breaking Bad (the international hit TV show) finally wound up in the US the show last show was broadcast in New Zealand on Sky’s Soho channel. To watch the Soho channel in HD quality costs a consumer a total of $66.90 per month. To watch the same thing on a legal internet streaming site like Netflix costs a small fraction of that amount.
Stronger copyright laws and imposing penalties won’t see this monopoly broken down or the price lowered.
To quote not-yet-Prime-Minister John Key from back in 2003 in regard to the parallel importation of films:
“[The New Zealand public] want to enjoy a movie that is current and not wait to see it in 9 months’ time, when it has gone from being fashionable to unfashionable. They are not interested in watching a movie that has already been bagged by movie critics on radio stations and television. Who wants to see The Lord of the Rings 2 years after it has come out?”
He’s right (or he was, now he’s in power he’s actually in favour of the amendment that he was arguing against in 2003). Where in the restriction of parallel importing, or in the tightening of laws around TPM circumvention, are the benefits for the consumers?
New Zealand is a country that is told to wait for content. For example the highly anticipated new TV series Marvel’s Agents of S.H.I.E.L.D is now out in the US, and while a New Zealand TV company owns the rights (or potentially the option for the rights), we are still left waiting for the content on our screens.
Since Burnei there have been a number of “inter-sessional” meetings taking place. These have been closed off with no input from external groups. When trade delegates met in San Francisco, none of the numerous copyright groups based in that city (like EFF) knew it was on.
The idea is to get the TPP signed off at the APEC meeting which is happening… right now! We were told this over and over in Brunei that the TPP would be signed off in October when the politicians get together and can make political concessions that the negotiators can’t. That is not happening. Now we are hearing “by the end of the year” as the signing date.
However, according to Inside US Trade:
“Trans-Pacific Partnership (TPP) countries on Oct. 2 wrapped up a nine-day inter-sessional meeting in Mexico on intellectual property (IP) issues, where they did not make significant progress in the area of pharmaceutical IP protections, sources said.
… One informed source said TPP countries have already scheduled two future IP inter-sessional meetings, one in late October and another in November.”
Further, as Obama was not at APEC our own John Key was in charge of the TPP meetings. With due respect to Key, all this does not bode well for the agreement being signed soon.
John Key has said that:
“You wouldn't want to bet the ranch on the fact a deal is agreed by the end of the year but let's see. Let's see the momentum we can generate”
He also called on pro-free trade business groups to speak up. To speak up in favour of the deal we know nothing about, which seems odd. Especially as businesses might not be in favour of the deal when the tariffs are agreed upon:
During their work to compile work plans for advancing talks on contentious areas, the ministers discussed market access that covers tariff elimination rules and intellectual property rights among others and agreed on the tariff elimination rule despite each TPP country having its own sensitivities.
Japan faces strong domestic pressure to retain tariffs on imports of rice, wheat, beef, pork, dairy products and sugar to protect domestic agriculture, but the latest development could bring challenges to the country's attempt to protect them from cheaper foreign products.
While in the US, certain businesses have actually read the agreement (as part of the US government’s process for international trade deals) no New Zealand company has seen the text. Does that seem fair to New Zealand businesses?
"If we accepted a low quality deal, sure it might make the process go a bit quicker but the long term results would be significantly diminished and no one is going to start this process up again.
"It's either get it right first time or live for a long time with a poor quality deal. I don't think we want to be in that position.”
Sadly, despite his cautious words as Chair, Key also concedes that it might be different if Obama was there because (and I paraphrase) “He’s so awesome”.
“How can there be trust in American delivery on the deals its leaders propose to others when Congress messes capriciously with the authority of the US government?”
That, on the other hand, is the conclusion of the East Asia Forum. This is echoed by Jane Kelsey from the University of Auckland. When I asked her how the US shutdown was going to effect the TPP negotiations this was one of her issues:
“The presence of Obama would have intensified the political will to do the deal. That would have been vital given the many outstanding issues.
“The budget crisis shows the problems with Congress. Obama does not have fast track negotiating authority, without which Congress can pick apart any 'final' deal. He was expected to move for fast track (formally Trade Promotion Authority) around now. But clearly the Republicans, especially the Tea Party who do not like such deals, are in no mood to make anything easy for him. It would be madness for any other TPPA country to sign a deal if Obama can't guarantee to deliver.”
Jane also mentioned that the political leaders are not scheduled to be together again for some time. There is a WTO meeting in Bali in December which is potentially the “end of the year” line we are suddenly hearing.
“What was unlikely to happen, is now impossible. That is likely to become the next significant political bargaining session. But trade ministers don't have the same weight or cache as political leaders.”
China isn’t part of the TPP but their presence is felt. Jane doesn’t believe that China want to be part of the TPP and some see the TPP as a hedge against China moving into more Asian markets. This isn’t much of a worry for New Zealand as we already have a FTA with China.
And so we trudge onwards towards a new deadline.
The TPP talks have concluded at APEC and we now have the statements from both the trade ministers and the leaders.
The Trade Minister’s report to the TPP leaders is full of lots of the usually woolly words you’d expect:
“The common vision and joint commitment of the TPP Leaders to a state-of-the-art agreement that establishes high standards and new disciplines has guided our work.”
And the occasional bit of unintended comedy:
“Ministers, negotiators and officials will continue to actively engage stakeholders in our respective countries, ensuring the transparent process to which Leaders are committed.”
But it does contain some actual information too (emphasis mine):
“On goods market access, Ministers have agreed on a timeline for progress in order to accelerate the pace of their work and finalize the overall package on the timeframe Leaders envision. Much progress has been achieved, but agreement remains outstanding on treatment of the most sensitive products.
“…At the same time, negotiators are continuing to make progress toward packages that will provide TPP countries access to one another’s services, investment, temporary entry, and government procurement markets. Access to services and investment markets is being negotiated on a “negative list” basis, which assumes access unless countries take an exception. Ministers recognize the substantial benefits that liberalizing services sectors can have on enhancing regional and global competitiveness, and each TPP country has successively improved its market access offers over the past year.
“…To help promote production and supply chains and trade among the TPP countries, and to support jobs across the region, Ministers have agreed that negotiators will construct a single tariff schedule and have common rules of origin. …In addition, to support the development of value chains among TPP members, negotiators are far along toward agreement on such issues as customs, express delivery, e-commerce, and standards.
“…The TPP countries have agreed on ways to improve our regulatory practices, promote transparency, and conduct regulatory processes in a more trade-facilitative manner, as well as to coordinate approaches in specific sectors.
“…Expanding the participation of [small and medium-sized enterprises] in regional trade will be helped by the enhancement of access to specific, relevant, and user-friendly information and resources about the TPP and its benefits.”
So lots of work still to do. And it seems that the emphasis is on those local tariffs and, importantly, tariff exclusions. Every politician on earth seems scared of pissing off farmers.
On the other hand the Leader’s Statement is short and has almost nothing in it. Here is the final paragraph (emphasis mine):
Stakeholders across the region have provided valuable input to TPP negotiating teams both onsite at rounds and in our respective countries. As we work to conclude these negotiations, we will further intensify consultations with stakeholders to craft a final agreement that appropriately addresses the interests of our citizens. We look forward to review and consideration of the outcome of our work, consistent with each of our domestic processes.
The word “citizen” is interesting as all of the discussions and statements from politicians have been about business and not individuals. I’m still at a loss how this deal will be good for the consumer.
This is a fight worth joining. The best way is to be loud. So let’s say something loud up front:
WE ARE NOT AGAINST FREE TRADE
The opposition to the TPP is not a minority far left movement as the government would have you believe: “a small group was opposed to the TPP but they were opposed to the China FTA and to free trade generally.” This is an oft-repeated slogan along with “billions of dollars in economic benefits” that has no meaning and is simply a placeholder answer to too many criticisms.
We simply don’t have enough information to support this deal. The opposite of this, that we can’t protest it because we don’t know if it’s actually bad, doesn’t fly for me. By the time we discover that it’s a terrible deal, it’s too late.
After the talks John Key said:
“Like a lot of these issues, left in a vacuum people can create uncertainty and therefore a fear factor which is very difficult for us to combat until we can go through point by point and say here is the counter-argument.”
“People” haven’t created uncertainty, the complete lack of information coupled with some scary leaks have created the uncertainty. This lack of transparency is the basis for the It’s Not Right campaign, the latest in a long line of international campaigns to stop the TPP.
Jane Kelsey is one of the leads in the opposition to the agreement. Her press releases (sometimes printed in the Herald) are an excellent source of information and she has a lot of inside knowledge. She also writes sometimes for the Daily Blog.
Sadly none of these efforts are as catchy as Japan’s J-Pop song:
Hadyn Green usually writes here under Field Theory, but for this article he’s wearing his Consumer NZ hat.