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May 25, 2014 | by  | in Features Homepage | [ssba]

A TPPAin the arse?

New Zealand is dependent on foreign trade to support our economy. Extractive industries came first for the kauri, gold, whale oil and seal furs. Following colonial wars of dispossession against Māori, the land was then terraformed into being suitable for the production of meat and dairy for the market of the British Empire. Britain took almost all our meat and dairy, until in 1973 it joined the European Economic Community. Aotearoa pivoted to Asia for trade from the 1970s and became highly respected around the world as tough but innovative trade enthusiasts. Following the Rogernomics reforms of agriculture, almost all tariffs and subsidies were removed from the New Zealand economy because the country could no longer afford them. New Zealand’s reputation in the area of free trade became purer than pure, the holy grail and the greatest example of free trade to the world. With this context in mind, it might not surprise you that the TPPA is not something being forced on New Zealand, but was in fact the creation of New Zealand trade negotiators. Initially between the Pacific Rim countries of Brunei, Singapore, Chile and New Zealand, it piqued the interest of the United States, who expressed interest, leading to the current fit of excitement by our government.

The TPPA isn’t the world’s first Regional Trade Agreement, not by a long shot. The European Union is a customs union, with a shared currency and no tariffs between member states (filthy subsidies, though; filthy, filthy subsidies). NAFTA (North American Free Trade Agreement) created a free trade zone between Canada, Mexico and the United States under Bill Clinton. Mercosur has created a free-trade zone incorporating most of South America. The problem with RTAs is that they tend to be dominated by the interests of the larger states. The EU is dominated by Germany, NAFTA by the United States, and Mercosur by Brazil. The WTO (World Trade Organisation) actually frowns on RTAs, and prefers that states work towards bilateral (state-to-state) trade agreements, in order to work towards the WTO’s overarching goal of a completely free-trade world.

So a small, relatively niche RTA gained the interest of the United States, and following them, Australia, Vietnam, Peru, Malaysia, Mexico, Japan, Taiwan and Canada entered negotiations. China also wants in on TPPA negotiations, but the United States is resisting. New Zealand has allowed the United States into the TPPA negotiations to try to gain the Hogwarts House Cup of our trade negotiators for four decades: Free Trade with the USA. Previous attempts have been scuttled by David Lange refusing to allow nuclear ships to enter our waters, and Helen Clark refusing to invade the Middle East with George W Bush. Essentially, the TPPA is our silver medal, a backdoor way to try to get free trade with the United States.

The benefits of free trade are so well known, they are almost a cliché. More trade, more jobs, more economic growth. If the TPPA was purely about the reduction of tariffs, and the elimination of subsidies (filthy subsidies), it would have my full support. But it is not, and the TPPA has a dark side. The TPPA contains provisions introduced by the United States relating to intellectual property, pharmaceuticals and investor–state arbitration. There are also complaints that as trade negotiations go, the TPPA has set new standards in terms of secrecy and lack of disclosure to the citizens of states who may enter into it. Intellectual-property changes would make it easier for members to sue each other in the other nation’s courts over issues in dispute. Multinational corporations could sue governments that disadvantage the corporation with legislation or regulations relating to intellectual property or copyright. The provisions relating to pharmaceuticals would require New Zealand to disestablish Pharmac. Pharmac purchases drugs on behalf of the New Zealand government as cheaply as possible, filtering down to you in the form of cheap, readily available drugs and medicines. This would be destroyed in favour of American drugs which may be more effective, but also far more expensive under the TPPA.

Of the potential negatives of the TPPA, the investor–state arbitration is possibly the most damaging. If a government changes the law in a way that disadvantages a product, say for example tobacco, the tobacco company or its host government could then sue the offending country’s government for hundreds of millions of dollars in that country’s own courts. This is, without a doubt, a damaging attack on the sovereignty of the nation state. The freedom to regulate and legislate for our own people would be seriously harmed by entering into the TPPA. The TPPA would also have a destructive effect on how New Zealand manages its environment, regarded as one of the most pristine biospheres left on the Earth. Water quality, energy usage and oil-drilling decisions could all be challenged under investor–state arbitration provisions.

New Zealand is a nation of free traders, with an economy built on the lifeblood of international trade. Without it, our country would be a third-rate banana republic. We have, however, become so invested in our reputation as the world’s most ideologically pure free traders that we have lost sight of the reason our country pursues free trade: to make our country richer, not poorer. I would argue that the primary reason our country is pursuing the TPPA is to gain backdoor entry to free trade with the United States. There is no need to accept a trade agreement with the kind of fish-hooks the TPPA has in it. As of last month, China is now the world’s largest economy according to the IMF. We already have free trade with China. In the coming decades, the United States will come to us asking for a free-trade agreement; we need only wait. Only fools rush in to harmful Regional Trade Agreements.


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