TPP shows net benefit for countries dominated by SMEs

The text of the Trans-Pacific Partnership shows a number of concrete steps to help small and medium-sized enterprises pursue global opportunities and connect with regional supply chains.

It will be a boon to countries such as New Zealand, where about 95% of businesses are SMEs, NZ Institute of Economic Research (NZIER) deputy chief executive John Ballingall says.

SMEs get their own section in the vast 30-chapter document, which includes a commitment for each signatory government to set up a special committee with the sole purpose of promoting opportunities to SMEs. That will be backed by seminars, workshops, websites, identifying commercial partners in other TPP countries and helping small businesses establish their credentials. 

Specifically the TPP says signatories will: "facilitate the development of programmes to assist SMEs to participate and integrate effectively into the global supply chain". The committees must convene within one year of the TPP coming into force, it says.

Another chapter, on competitiveness and business facilitation, requires the governments to establish a committee to look at ways to promote trade and investment, and economic integration, which specifically refers to "recommendations aimed at enhancing the participation of SMEs in regional supply chains."

"TPP is not just about helping big business," Mr Ballingall says. "Ninety-five percent of our businesses are SMEs – the point is that the TPP will directly or indirectly make business easier for those companies. Small changes for a lot of SMEs adds up to more economic activity, more jobs and higher wages – that should not be overlooked."

Mr Ballingall says he is "firmly of the view the TPP is a net beneficial thing for the New Zealand economy," even though the country didn't get the concessions it sought for the dairy industry, New Zealand's biggest source of exports.

"There will be a lot of focus on the short-term elements such as decreases in tariffs, but the TPP sends a clear message to the global economy that regional integration is essential and we cannot afford not to do it," he says. "It's a really positive signal to the global economy."

The 12 signatories to the TPP - the US, Japan, Canada, Mexico, Chile, Peru, Australia, New Zealand, Malaysia, Vietnam, Singapore, and Brunei - represent about 40% of the global economy. Critics charge that its intellectual property provisions are anti-consumer and rules around investment allow companies to bring lawsuits and extract penalties from governments that fail to meet their obligations under the deal.

US president Barack Obama is expected to face a tough fight in the US Congress to get the deal over the line, having said he wants to sign the TPP as soon as a 90-day notification period expires for fast-tracking the required legislation.

Trade Minister Tim Groser says the government will release a "legal summary" of the TPP in coming days. Among the documents released overnight was an explanation and detail of "potential costs associated with copyright and administrative provisions relating to Pharmac," the state drug buying agency.

Mr Groser calls it "a complex document" and said understanding the agreement's legal obligations "will require careful analysis of all documents, given the inter-relationship between many provisions" in the TPP.

On the copyright provisions, which extends the protection to drug companies for the new generation of drugs known as biologics, Mr Ballingall says that in any trade deal "there are trade-offs," but New Zealand's right to protect its environment and public services "is pretty well protected."

Auckland University law professor Jane Kelsey, a leading opponent of the TPP, says the government had run "a snow job" on the TPP and the actual document shows up "major holes" in the government's explanatory fact sheets.

She says the chapter on state-owned enterprises will "create major problems for SOEs", the agreement's general exception provisions provide "only weak protection for public health or environmental measures at best", and special rights for foreign investors, such as those in Japan and the US, will pose "major problems for a future government wanting to regulate in the public interest" in New Zealand, where light-handed regulation is the norm.

(BusinessDesk)