President Obama has made a Trans-Pacific Trade deal is top eocnomic priority, but his own party has stared him down and now the entire deal hangs by a thread

For a man immersed in the nuanced arts of diplomatic speak and what are always called "sensitive trade negotiations", Trade Minister Tim Groser likes to call a spade a spade. Or a trade deal a bit of a mess. And that's his take on the Trans Pacific Partnership.

Early this morning New Zealand time the US House of Representatives denied President Barack Obama the fast-track authority he needs to get the TPP deal done. In a typically complex bit of US politics, the House voted against not the authority itself, but against a package of assistance for workers who might lose their jobs as a result of the free-trade deal.

It went on to support the fast-track authority itself -- which allows some hope for supporters that a procedural fix could yet be devised next week to get this through -- but that's likely to go nowhere. Without the workers' assistance, either the Senate or president himself could yet scupper any progress. It's hard to imagine how supporters can find a way through this (yet in US politics, there's almost always a deal to be had).

Within a few hours of the vote, Tim Groser was on The Nation saying just how pessimistic he now is about a deal being done. Look at this:

Groser: "... the fundamental problem is that there is extreme weak support inside the US Democratic Party for trade, and whether or not there is a procedural way round this, that's the rock in the road.

Lisa Owen: "If there isn't, what happens, if you can't get around that rock in the road?"

Groser:  "Assume they can't get around the rock in the road, obviously, we're not going to sign off on this until we know what the answer to that is. But let's assume for the sake of the discussion that's the case, well, we will not do TPP any time soon. It's as simple as that. And that will be a major opportunity lost for New Zealand, unfortunately, if that proves to be the case."

Which is as gloomy as I've ever heard Groser after so many years working on this deal. If they can't wrangle a procedural work-around in the next few days, this puts the TPP back at least two years... maybe even sinks it.

While estimates vary, it's hard to imagine this wouldn't cost New Zealand billions. It's also a political embarrassment for the very pro-free trade National Party. For all its talk of FTAs, deals with India, Russia and the Gulf States are all stalled. And now this.

In 2-3 years there will be different political leaders in some of the 12 negotiating countries and who knows whether the political will might remain.

I have mixed feelings about this. I accept how good trade is for peace and prosperity and the boost a deal like this could give a post-GFC world. But I also doubt how much access it would really give our agricultural exporters to the prized US and Japanese markets.

And whether this deal is now on the rocks or simply sunk, the lesson has to be that secrecy is no way to win in politics. I can accept to a point that negotiations by their nature need to be in confidence. I've argued in defence of that before. I mean, imagine negotiating a house sale by telling bidders the lowest price you're prepared to accept.

But you can't expose nations to, for example, law suits from multi-nationals that could undermine their very sovereignty and then be surprised when law-makers in said countries won't vote for the deal. And perhaps trade deals should stick to trade.

The potential for law suits by corporates is a downside risk any country with any brain or sense of national pride will be very wary of.

So after years of effort, what would be the world's biggest ever trade deal is now at risk of collapse. After the failure of the WTO's Doha Round it must leave trade negotiators wondering exactly how on earth they can kick-start world trade.

Comments (10)

by mudfish on June 13, 2015

If the US is the roadblock, what would it look like without them? I know that's a big part of the trade equation, but this started much smaller, maybe it just grew too big. The US can join later when they're ready...

by Fentex on June 13, 2015

If the TPP falls at the U.S Congress hurdle will that be the end of it or will we hear it bandied about that it merely means it needs more work to be more acceptable?

I wonder, if negotiators could bring themselves to admit it was D.O.A and give up on it, would they have the good grace to release it's final official form for us all to see exactly what was negotiated?

by Fentex on June 13, 2015

While estimates vary, it's hard to imagine this wouldn't cost New Zealand billions.

I don't find it hard to imagine it saving us billions. I remain convinced that the TPP is constructed against NZ's long term interests by the U.S's intentions to leverage it as a weapon to circumscribe China's opportunities by advancing investment in the U.S system of governance via inhanced I.P regulation and corporate proxies.

It's also a political embarrassment for the very pro-free trade National Party.

I don't see that - you can't, if you support the TPP, fault National for it's failure. They seem to have done as much as they could to further it. Of course I dislike what I suspect of the TPP so I would find fault with National if it succeeds and my suspicions be borne out. Where you find fault is dependent on your opinion of the value of the TPP I would think.

by Rich on June 13, 2015

And that will be a major opportunity lost for New Zealand

Not really.

If the TPP got signed, are US accountants suddenly going to start calling their clients and telling them to switch to that Xero app from New Zealand?

Or Hollywood greenlight that 15-part adaptation of The Silmarillion?

Or US teenagers go and buy the next Lorde album instead of Taylor Swift?

Or even the US buy all the milk and coal that the Chinese aren't buying any more and drive the price up accordingly?




by Thomas Beagle on June 13, 2015
Thomas Beagle

I can accept to a point that negotiations by their nature need to be in confidence. I've argued in defence of that before. I mean, imagine negotiating a house sale by telling bidders the lowest price you're prepared to accept.

When we talk about openness in treaty negotiations, we're not talking about seeing all of the internal documents that individual parties (like the NZ government) might have. As you point out, revealing our bottom lines and thinking might weaken our negotiating position.

Rather we're talking about seeing the draft texts, proposals and counter-proposals that are presented as part of the negotiating process. These don't contain anything that the negotiators haven't already seen. i.e. we want the same access that all of the negotiating countries already have. 

The only people they are secret from are the people of the countries of the people involved and, in most cases, from their elected representatives too. I believe that it is this secrecy that is unacceptable in a democratic and open society.


by barry on June 13, 2015

It is an embarrassment for this cargo-cult government when yet another of the gods fail to deliver.

They have been lucky for the first 2 terms with terms of trade that any previous government would have gone to war for.  They also had a free-trade deal with China just starting to deliver, and another with Korea well advanced.  Not to mention Australia collapsing, which has caused the rapid population increase that has fuelled the growth of the last 2-3 years.

But now the luck has turned against them a little and they might actually have to do something to get real growth.

by DeepRed on June 14, 2015

The TPPA was a genuine free trade agreement until Japan and the US came into it, with farm subsidies & quotas being the worst offenders by a long margin. Farm subsidies in the US will probably only be scrapped when all the citizens of Texas agree to melt down their weapons and trade in their utes for Priuses and Teslas.

The Aussies found out the hard way that most of their primary produce was shut out of the US-Oz FTA, while cars could be exported freely. The latter is now meaningless, with every single Aussie car maker about to throw in the towel.

by KJT on June 14, 2015

Hopefully if the TPPA never gets passed, New Zealand will have , fortunately, dodged a bullet.

by Gordon Reynolds on June 15, 2015
Gordon Reynolds

Trade deals perhaps should be "Trade Off Deals" and this one would have required many for us including opening NZ up to the huge US agricultural industry (lobby).

For every NZ job lost when we have to take imported products, NZ taxpayers foot the unemployment.


by Fentex on June 16, 2015

Gordon Campbell reports a very instructive quote from the U.S...

On Sunday, US Labor Secretary Thomas Perez made the over-riding purpose of the TPP very clear on ABC’s “This Week’s” interview, as reported by the Wall St Journal:

“I’m confident that we’ll move forward in this,” Mr. Perez said. “America needs to set the rules in the global economy, that’s why the President has been fighting for this.”

Exactly. That’s the TPP in a nutshell. America setting the rules in the global economy, while John Key and his mates struggle for the scraps.

Precisely my feelings - the TPP is not in NZ interests and has not been ever since the U.S joined in negotiations and has tried to steer it away from being a free trade agreement to being a U.S trade allegiance.

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