Calls for TPP transparency are code for destroying it, says Groser

Campaigners against the Trans-Pacific Partnership trade negotiations want the negotiating texts made public to help ensure the process fails, says Trade Minister Tim Groser.

"Those people who are opposed to the agreement want access to the texts so they can blow it apart," he said in an interview with BusinessDesk ahead of a speech today to the ABAC Business Leaders meeting in Auckland where he rejected analysis challenging the claimed benefits of a TPP trade deal.

His comments come after Labour leader David Cunliffe was blocked in Parliament yesterday from debating release of the negotiating texts for the 13-nation TPP negotiations, which could create a new Pacific Rim free trade agreement that extends more deeply than past FTA's into investment, regulatory, and other areas requiring a balance between national sovereignty and expected economic gains.

Auckland University law professor Jane Kelsey, a leading international anti-TPP campaigner, released a letter overnight signed by Opposition party politicians in seven of the negotiating countries: Australia, Canada, Japan, Malaysia, Mexico, New Zealand and Peru.

While New Zealand Green Party MP's are among the signatories, Cunliffe and other Labour MP's are not.

Groser defended the need for confidentiality in trade negotiations. The secrecy around the TPP was "no more secret" than other FTA negotiations, although the span of issues in the TPP was wider, the former trade negotiator said.

"Anything worthwhile in life, as any adult with adult experience knows, when you're trying to get people to shift positions or agree on something which they're not comfortable with, requires discretion," said Groser.

"So the idea that doing all this in the glare of publicity would help the process is naïve, except that my view is that ... actually these people (TPP opponents) are smart," said Groser. "They want this to be done in the full glare of transparency to increase the controversy to the point where it's unmanageable and will destroy the agreement.

"They're not asking for transparency, quote unquote, because they really want to see the texts carefully and contribute to a good discussion. They want to screw the negotiation and destroy it."

While negotiating texts were not released, the government was regularly briefing stakeholder groups confidentially, including TPP opponents and Labour's trade and foreign affairs spokespeople, Phil Goff and David Shearer, who are maintaining Labour's traditional bipartisan support for trade liberalisation.

While the TPP negotiations might not succeed, Groser said he was "increasingly comfortable" with progress in the areas where there was greatest concern, including the ability of corporations to sue governments over policies that had an impact on their profitability.

He had repeatedly stated that New Zealand would not sign a deal that compromised the ability of the public drug-buying agency Pharmac to operate.

"I'm becoming increasingly more comfortable that I will be able to ... say 'none of these terrible things have come to pass and it's a pretty good deal; and we're going to have to fiddle around with this, that and the other and the cost of that will be X dollars, but this is one-20th of the gains we're going to get out of this'."

Groser accepted that estimates of a $5.16 billion economic gain from TPP were unlikely to be correct, following analysis published last week by the Sustainability Council of New Zealand suggesting the benefits might only be a quarter of that and the costs of the deal had not been factored in.

"Forget the precise figure," he said. "What matters is the direction of travel. It could be less and it could be substantially more."

Experience with other FTA's showed econometric modelling was as likely to undershoot as overshoot the benefits to New Zealand.

"Trying to model trade negotiations still under negotiation, when not even those directly involved in the negotiation know the outcome, means judgment is requirement on what assumptions to use. Clearly, if you approach modelling from a pre-conceived political starting point, you can input assumption to give you whatever answer you want."

Modelling was also unable to predict how a new trade agreement might change behaviour.

"While I can never prove it, it is inconceivable that two of China's largest dairy companies would be investing the thick end of half a billion dollars in new 'greenfields' dairy processing companies in New Zealand without the (NZ/China) FTA," said Groser. "One could say a similar thing about Fonterra's decision to invest in 33 giant dairy farms in China - very hard to believe that would have happened without the huge expansion of trade in the FTA which has stimulated commercial players' interest in investment."

Growth in China-New Zealand two-way trade was between 11 and 17 times greater than predicted when the FTA was signed by a Labour-led government in 2008.

Official advice in 1979 had suggested there was little point in the Australian Closer Economic Relationship agreement, and there had been similar scepticism about the Singapore-New Zealand FTA. Yet neither would be questioned today.

"No econometric model could pick up these dynamic, often political economy effects."

While Groser accepted the Sustainability Council's charge that it was hard to model the effects of a TPP deal on investment flows, he rejected the suggestion it could undermine effective financial regulation.

"No it won't, because our ability to maintain a prudent financial system trumps trade policy every time."

Likewise, the TPP wouldn't allow companies to sue governments over legitimate public good actions, such as raising corporate tax rates or regulating for environmental impacts.

(BusinessDesk)