The jagged edges of the TPP

Trade Minister Tim Groser was smooth and soothing on Q+A this morning, talking about the proposed Trans-Pacific Partnership (TPP). Like the skilled politician he is, the average viewer is likely to have been reassured that the Government is doing a wonderful job to further New Zealand’s interests.

Minister Groser did an excellent job of hiding the jagged edges. Trust us he cooed. We’ve got the best and most experienced negotiators.  There are only upsides for New Zealand. All is well, we’re a safe pair of hands.

And, he is right to some extent. New Zealand has benefited from trade agreements and are well represented in the negotiations. Yet there are real dangers, real potential downsides. They can’t be wished away or simply ignored.

Not a Free Trade Agreement (FTA)
My biggest frustration is the continued insistence of politicians and the mainstream media in calling the TPP a FTA.

The underlying message is that New Zealand has done so many successful TPAs in the past, our experienced negotiators should be trusted to do another one.

Another message is that since New Zealand already has low comparative tariffs, there are only upsides for us.

Nothing can be further from the truth. The name TPP itself signifies that it is a “partnership” rather than a FTA.

Previous FTAs have, at the margin, dealt with services, investor-State relations, visas, etc. The TPP is expected to have only about 5 of its 26 chapters deal with traditional trade issues.

The rest are about reaching beyond the border, to influence or constrain the ability of governments- from the way it makes laws to changing laws, policies, regulations, and standards in the future. The TPP gives power to corporate interests over soverign governments, backed by private international tribunals, in areas such as labour laws, environmental protection, public health, public services, professional licensing, government procurement, and consumer safety. The TPP thus moves the focus from state-state relationships in FTAs to corporate-state relationships in the new “partnership” model.

The TPP is meant to be a “high standard, 21st century trade agreement” rather than simply a FTA. From its genesis in NAFTA, expansive new regulatory constraints and investor offshoring protections on behalf of “the 1%” corporate interests have grown to now be dominant in the TPP.

Secrecy

Another subtle effect of positioning the TPP as another FTA is justifying secrecy during negotiations. Trade treaties have always been negotiated in secret to achieve trade-offs. The final agreement has been presented to Parliament as a done deal, making democratic discussion and scrutiny largely irrelevant.

In comparison to FTAs, international treaties about much of the subject matter of the TPP- from labour laws to intellectual property to banking regulations- have been marked by transparent, inclusive discussions at a draft stage. Experience has shown this to be the best way to deal with these complex areas, more in the nature of public policy and soverign control.

Infojustice said it well:

Our argument is not that TPP is worse than FTA negotiations, but rather that FTA processes are the wrong standard for assessing the legitimacy of the TPP intellectual property chapter negotiations. This is because the IP chapter in the TPP, like ACTA, is not a trade agreement. It does not adjust tariffs and quotas – it sets new international limits on domestic regulation, regardless of whether such regulation discriminates against, or even affects, trade. (emphasis added)

As Minister Groser himself said, the TPP is hugely complex. This makes public analysis even more important at the draft stage. The way things are going, many of the fish hooks are going to be hidden and their full implications will be unexpected and painful.

Political deal
More than any FTA, the TPP will be about doing a political deal. The big trade-offs will reflect the political compulsions and interests of each participant. For example, what will New Zealand have to give up to retain Pharmac? Politically, that’s a no-go area for New Zealand.

It’s this political angle that makes me nervous. This Government does not have a vision or priority for New Zealand’s digital economy. It seems to be content in extrapolating our past dairy successes to define our future, perhaps with some value-add thrown in. That makes contentious issues like intellectual property- hugely important for the US- a chip that New Zealand may trade in for gains in other areas or defending Pharmac/Fonterra.

Time will tell. Unfortunately, at that time it will be too late to do anything other than look at a done deal. And the TPP is forever, impossible to alter unless all participants agree to the change.

Former InternetNZ CEO and current Mega CEO Vikram Kumar posts his personal take on events at Internet Ganesha.