What shape is the Trans-Pacific Partnership taking on and what impact will the election result have on whether or not New Zealand signs up?

For decades now National and Labour have had a cosy little arrangement when it comes to free trade. Both parties could count on each other to provide a solid bloc of votes in parliament to pass any bill implementing free trade agreements.

So any hyperventialting by the Greens, New Zealand First, the Maori Party or Mana counted for nothing. Jane Kelsey might get to write as many op-eds as she likes, but she has virtually no influence on the actual outcome of the free trade agenda. The solid National–Labour coalition ensures that the relevant legislation will pass.

But will this arrangement prevail after this election?

Clearly, if National is elected they will want to pass legislation implementing various aspects of TPP, in the event that the TPP treaty is finalised and signed between 2014 and 2017. Of course any such treaty will not be exactly as New Zealand wants since it will be a compromise between fourteen nations.

But the shape of the TPP treaty is starting to emerge. There will be a long drawn-out phase down of tariffs and quotas in agricultural products. The timing of the phase down will be dictated by Japan and the United States, and it will extend over many years, perhaps as many as twenty. Copyright terms will be extended to 70 years or more. State trading entities like Pharmac could lose at least some of their exclusive rights. There will be an international tribunal for major investment disputes.

For National this will be OK. Over time the US, Japanese and Canadian agricultural markets will open up. And provided the loss of the Pharmac monopoly is not too dramatic, it will be seen to be a good trade off.

So a National led government will want to pass any laws needed to implement TPP. They will be able to count on ACT and United Future if they are in Parliament. (How the Conservative Party might vote is unclear). But if National is dependent on the Maori Party, that could spell trouble. National may make supporting TPP an essential part of a coalition agreement with the Maori Party if they fear that the cosy arrangement with Labour no longer holds.

So will it hold?

This election could see Labour down in the low 30s as a percentage of the total vote. If a combination of Labour, the Greens, New Zealand First, the Maori Party and Internet Mana can form a government, Labour is only going to be 60% of the government, at most. All its likely partners have opposed every single free trade agreement over the last two decades. Collectively they could demand that Labour not support the TPP as a price of coalition. And could Labour resist such a demand?

What's more, if the Left (apologies to Winston who is not really left) do not have enough votes to form a government, would Labour still continue the cosy arrangement of supporting free trade agreements? Increasingly Labour activists, including their left leaning MP’s, oppose TPP. David Cunliffe, supported by Phil Goff and others, has positioned the party to be able to vote for TPP. But that is before the election. An election loss could well weaken the free trade faction in Labour.

Such a result would cause Labour to look deeply at it options, just as did with National when it lost in 2005. The Labour MPs will be looking at three terms in opposition. They will console themselves that this is the normal political cycle in New Zealand. But they will not be able to tolerate the thought of four terms in opposition. They will do whatever it takes to make themselves electable in 2017.

And in the event of an election loss, what will be the fate of Labour’s longstanding support of free trade when they weigh up what they will have to do for 2017?

Comments (7)

by Lynn Prentice on June 13, 2014
Lynn Prentice

The problem is with the TPP and its processes.

For long-time free-trade advocates inside the Labour Party like myself, I can't see how this agreement has anything to do with freeing of trade for NZ companies. From what I know of it, I'd describe it as a restraint-of-trade agreement as far as NZ is concerned in almost every aspect.

The only thing that is in it for NZ is the "..long drawn-out phase down of tariffs and quotas in agricultural products. The timing of the phase down will be dictated by Japan and the United States, and it will extend over many years, perhaps as many as twenty.". Or a considerably longer period.

Of course this only benefits one sector of our export economy as all of the virtually all other sectors of the economy already have effective free-trade with the other participants. Those other sectors will face restrictions to pay for agriculture at some time in the future possibly getting increased access to a few markets that still have trade restrictions.

What you fail to mention is that while NZ would commit to and put into law/regulation is a series of binding law changes. With what is known about the treaty, it looks like no recourse to withdrawing if other participants do not live up to their sides of the agreement. Which in the case of the US legislature is quite likely to happen considering their track record in the past and their rules about what other countries have to do before they consider such treaties. 

In the meantime we'd be subjecting ourselves to what looks like an arbitary international tribunial process. One that has an ability to override our local legislature on areas that affect our ability to restructure our economy and legislation in strategic ways and to prevent changes that may affect the profits of corporations.

Of course discussion of the benefits or otherwise of the TPP is going to be hard to have in public because of the undue secrecy of both the process of forging the treaty. Sure there has been a nominal 'consultation' with 'stakeholders'. But from the outside, this appears to have only been done with carefully selected people and groups who may benefit from the TPP at the expense of others in our economy and society. Furthermore even the ability of parliament to debate the decisions being made by the executive will be massively constrained by the continuing secrecy when they have to put through legislation to support it. 

Quite simply the lack of transparancy and open debate about the benefits and costs in this proposed treaty is what will prevent the support of most in the centre-left. We could easily support the China free trade agreement (despite some fairly deep reservations) because the process was conducted visibly and the potential benefits clearly outweighed the potential costs. 

But far as I can see, the TPP is a vanity project by members of the government that appears to be more about prancing around on the world stage than actually doing anything for our economy now or in the future. All I see are costs and restrictions with a vague and probably forlorn hope that in a few decades it may wind up benefiting a few already wealthy members of NZ society.

by Katharine Moody on June 13, 2014
Katharine Moody

I think the TPP is far more than a vanity project - its much much more sinister than that. Support for it is support for (as Winston Peters coined it in the speech to TPP negotiators below) the "New World Order" - or as academia now describes it, "imperial globalism"; as US Pres. Bush explains (as quoted in below article), "Free markets and free trade are key priorities of our national security strategy" (Bush, 2002a).

http://mams.rmit.edu.au/gs97wp2i82aj1.pdf

http://nzfirst.org.nz/speech/address-trans-pacific-partnership-negotiators

 

 

 

by Lynn Prentice on June 13, 2014
Lynn Prentice

Oh I'd tend to agree katherine. This has little to do with trade and a lot to do with big power block manouvering. The problem is that MFAT are trying to play in that field, but are still trying to sell it as free-trade. But it is nothing of the sort. So free-trade advocates like myself in Labour are severely balking at it.

I did a fuller post about it at the free-trade level 

http://thestandard.org.nz/tpp-the-expensive-vanity-project-of-nz-diplomacy/

 

by Katharine Moody on June 13, 2014
Katharine Moody

Thanks for the link, Lynn. You are so correct to hold up CER as the ideal of FTAs - and I've often thought that fully transparent bi-lateral agreements are indeed the way to go.

I think Labour party members and strategists need to think more seriously about the ABN voter and what key issues motivate them toward this anything but National party vote. We (and I include myself in that category) all have specific (often one-off) reasons why we are ABN. And the TPP stand is one of those one-off type issues.

Hopefully, Labour will announce its intention to withdraw from the negotiations, or at least take a stand like NZ First that is clearly against the lack of transparency and pointing out the very real prospect of ceding our sovereignty (and happily also referring to NZ academics who have looked into it very seriously). Labour's stance on it needs to use this alarmist type of discourse that NZ First is using. The kind of mildly critical analysis (such as I read into your post on The Standard) won't move the ABN opponents of the TPP to give Labour their party vote.

You've make all the right points in comparing the TPP, to for example CER and the FTA with China, but TPP opponents see the hand of American imperialism as its biggest threat. In your post on The Standard, for example, you are right to point out that we'll be fully committed before they even begin their pork barrel politics, but I'd say we would be unlikely to get to any benefits some 10-20 years down the track because well before then we will be no longer sovereign - our government will be bankrupted through the cost of investor-market/court processes. We are far too small to play in this league and I doubt many NZers want to be a branch of the American imperial juggernaut.

by Rich on June 13, 2014
Rich

"Free trade" agreements make very little difference. The Chinese have been buying our milk products because they have surplus money, Western food is fashionable and they have limited domestic dairy production, not because we have a free trade deal. In the same way, we buy Saudi oil, not because we love the Saudis or have a deal to do so, but because we need it to fuel our cars.

None of the other major agricultural producers have any intention of opening their markets to us. Never have done.

 

by Peter Matthewson on June 15, 2014
Peter Matthewson

Given the secrecy surrounding the TPP Wayne Mapp probably doesn't know any more about it than the rest of us, however being a good loyal National man he assumes it will be good for us. That is a very dubious assumption, and if we care about our role in promoting well being and development in the Pacific it is an even more dubious assumption that it would be good for countries like Vietnam, Malaysia, Mexico and Peru.  What is particularly iniquitous is the likely inclusion of investor-state clauses which enable multi-national corporations to sue democratically elected governments in sovereign states for billions of dollars in secretive kangaroo courts. We should not be having a bar of it, see http://www.mintpressnews.com/latin-american-countries-put-front-corporate-lawsuits/170030/ . 

by DeepRed on June 17, 2014
DeepRed

In any case, do people really think the TPPA will make Tokyo and Washington suddenly abolish farm subsidies? Those maintaining the status quo are simply too powerful to challenge, just like in Europe.

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