• The TPPA – Not Just A Free Trade Deal

    As our new Prime Minister heads for her first APEC meeting, the talk is all about the Trans Pacific Partnership Agreement (the TPPA) and whether or not it can be revived, even without the participation of the United States.

    Our new government seems to hope so, even though there seems little chance that Donald Trump will relent on his decision to have nothing to do with it, meaning that the main benefit we were promised – free access to the US market for our dairy products – is therefore off the agenda.

    Let us be clear about one thing.  Those who have hitherto opposed the TPPA have nothing against free trade as such.  While the benefits of free trade are often overstated, and many economies (including, for example, post-war Japan) have seen advantage in protecting, at least for a time, their developing industries against foreign competition, it cannot be disputed that free trade is in principle to be supported.

    New Zealand has at times been unduly naïve in opening up our markets to foreign competition, with the result that we have little left to offer or negotiate with when a TPPA comes along – but, as the world’s most efficient producers of dairy produce, we have much to gain if we can obtain free access to the world’s biggest markets.

    The trouble with the TPPA, though, is that it is not just a free-trade arrangement.  As Jacinda Ardern and her ministers have recognised, it is the extra baggage it carries that is the problem.

    The deal offered by the TPPA involves much more than removing tariffs and other barriers to trade.  It also requires the parties to provide within their domestic economies an unimpeded level playing-field for international corporations.

    This may sound innocent enough, but what it really means is that any interference with the “free market” by national governments is outlawed.  The result is that the TPPA is in reality a charter for multinationals, giving them carte blanche to do what they like and able to object to any measure that limits their operations or places them at a disadvantage.

    Our economy, it is clear, exhibits a number of common practices that could fall foul of these provisions.  Our use of cooperatives to market some products – dairy products or kiwifruit – could come under attack, as would our use of an agency like Pharmac to negotiate, on behalf of the whole community, prices of pharmaceuticals.  Regulating the sale of certain products, such as cigarettes, would be similarly vulnerable.

    The TPPA goes further.  Multinationals who believe that they have been disadvantaged by government action can take our government to special tribunals – and if they can show that their profits will suffer, they can force the government to change New Zealand law to suit them, even if that means that the government must go back on promises made to voters.  So much for democracy, self-government and sovereignty.

    This is the notorious Investor-State Dispute Settlement procedure (ISDS) that Jacinda Ardern has signalled she will try to change before she will agree to sign up to a TPPA – but she will not find it easy to secure the change and will come under great pressure to sign up even without it.

    There is of course no objection to seeking agreement on the rights and duties of foreign companies that wish to trade in our country – but that should not mean a one-way advantage for those corporations at our expense.  Rather than giving rights to foreign companies far in excess of those enjoyed by our own companies, such a treaty should focus on the obligation of foreign companies to comply with our laws, and to observe the rules laid down by our own sovereign government.

    If the TPPA drafters insist on the ISDS provisions, it is vital that our Prime Minister takes a stand, and refuses to sign.  In doing so, she could strike a vital blow, not just for New Zealand, but for everyone.  Others might then have the courage to follow suit, and that could mean the end of so-called trade deals, now and in the future, that violate the principles of democratic government by allowing multinational corporations to decide what is and is not the law of the land.

    Bryan Gould

    4 November 2017