Come clean on trade before the election

In the two days before the election, New Zealand MFAT negotiators will attend a negotiations meeting in Japan on the successor to the failed Trans-Pacific Partnership Agreement (TPPA), now called the TPP-11. The negotiations are shrouded in secrecy but we know that officials from eleven governments aim to agree which parts of the treaty will be suspended until (and if) the US re-joins.

It is customary practice that governments should try to avoid taking pre-emptive decisions just before an election, particularly those that bind the decisions of the incoming government. At the least, they consult with opposition parties. However the current Minister for Trade, Todd McClay has ignored customary practice, even though the Green Party, Labour, NZ First and the Maori Party have all made it clear that they have concerns over TPP-11. The National government has consulted and has not even disclosed when the negotiating meeting will be held (21-22 September).

The Greens have submitted an OIA calling for the government to release its position on negotiations before the election. But there is no accountability from the government on New Zealand’s position. This matters because decisions taken at the meeting will be difficult if not impossible to reverse. Around the time of an election, there is an added responsibility for the government to act in the broader interest of New Zealand, not in the interests of a single political party or the US.

This continues government’s desperation to see a TPPA at any cost. Just last month, Todd McClay said he was confident that the TPP-11 governments would agree the unchanged TPPA, as it was when it was signed, even though the US had withdrawn. This made no sense especially since the US had insisted on a long agenda of benefits for multinationals to include in the TPPA. New Zealand and other countries would have had all the costs of the deal but none of the benefits (small though they were) from access to US markets.

Fortunately other negotiators gave priority to their countries’ interests. They insisted on changes to the TPPA. At the last negotiating meeting in Sydney, they have already agreed to suspend the extension of protection for biologic medicines, like KEYTRUDA, which was a demand of the US pharmaceutical giants.

Other policies will be discussed, including the extension of copyright laws, from lifetime plus 50 years to lifetime plus 70 years. This would add costs for New Zealand consumers and taxpayers, amounting to $55 million according to MFAT, and possibly far higher. Other provisions that are likely to be targeted for removal include restrictions on State-Owned Enterprises and rules on government procurement.

Deeper changes are required. The most significant provision is the controversial Investor State Dispute Settlement (ISDS) mechanism. The US itself last week signalled that it is looking to remove ISDS from its renegotiation of the North American Free Trade Agreement (NAFTA) through the creation of an opt-in clause. This follows the EU’s rejection of ISDS in trade agreements, and the decision by India, South Africa and Indonesia to unwind their ISDS commitments in Free Trade Agreements. There is no reason to keep ISDS in the TPP-11.

Beyond the approach of suspending provisions that are favourable to the US and its multinationals, there are other problems with TPP-11. The Labour Party has raised the issue of a change to prevent non-residents from buying existing houses in New Zealand. This is an existing provision in the Free Trade Agreement with Korea, and is proposed for inclusion in TPP-11. Despite a clear signal from Labour and the Greens that a ban on non-resident purchases would be part of a future policy, the government did not register an exception. That would have created the flexibility to include such a ban if required in future. Other countries have an exception that allows them to prevent foreigners from buying residential homes and other property – Australia (p.5) Japan (p.14) and Singapore (p. 11).

But many more changes are needed to the TPP-11 than just allowing government to ban foreigners from buying existing residential houses. There are provisions throughout the TPP-11 that would affect future laws on GE and labelling, patents, E-commerce and the Internet, IT and data storage, local government permit and licences, etc. We live in a time of disruption to markets and major challenges arising from inequality and climate change (which is not mentioned once in 5400 pages of the treaty).

The negotiations to suspend problematic issues is not the right approach. If issues like copyright extension are not beneficial for the 11 countries, they should be removed, rather than just suspended. There is little to lose. The US is offering only a small opening of market access – the equivalent of production from three large dairy farms and a total of around $50 million reduction in tariffs in 15 years time. The risks and costs to NZ are far higher.

Fundamental changes are required to a future trade agreement beyond the framework of TPP. The Greens would engage with other countries, particularly Japan, on a stripped down agreement that focused on the core trade issues of tariffs and quotas, within a framework of fair and sustainable trade.