Is the Trans Pacific Partnership a free trade mirage?
by Gordon Campbell
If the Trans Pacific Partnership (TPP) trade deal was a new car you probably wouldn’t buy it, or at least not from this dealership. There will be no chance of a test drive with this baby. The pre-conditions for the TPP trade pact mean that New Zealanders will not be informed what is in the agreement before it comes into force, even though some ingredients could well render central government liable to being sued for compensation (in so-called investor/state disputes) if and when an offshore arbitration panel decides that the TPP conditions have been breached.
If the investor-state mechanisms are passed in anything like their current form, the TPP will enable foreign investors to sue us before overseas tribunals if this government ever tried – or any future New Zealand government ever tried – to pass laws to protect health, work safety or the environment, but which happened to cause foreign investors to lose money. This happened to Brazil in the recent past where the trading interests of foreign tyre makers was deemed by an arbitration panel to over-ride the interests of ordinary Brazilians at risk of disease from the mosquitos hatching within discarded tyres. It may happen in future to Australia, with respect to the tobacco packaging regulations it recently passed to protect public health.
The arbitration panels tasked with resolving such disputes can be very cosy affairs. They do things that judges would never be allowed to do. The panels are commonly comprised of trade lawyers who sometimes serve as the arbitrators, and sometimes as the advocates for the claimants engaged in suing member governments. Chronically, there is a risk of capture by the most well-heeled litigant.
Australia – thanks perhaps to its salutary experience of being burned by its 2005 bilateral free trade deal with the United States – has baulked at the investor/state provisions that New Zealand has apparently accepted, according to versions of the TPP texts that were leaked in June, via the US Public Citizen organization. These leaks served the additional useful purpose of provoking a response from Trade Minister Tim Groser.
On RNZ, Groser gave firm assurances that New Zealand would never sign up to anything that would compromise our sovereignty: “The New Zealand government will not sign any agreement that stops us now, or any government in future from regulating for public health or any other legitimate policy purposes. We will protect New Zealand’s legitimate rights to regulate.”
Note however, the repetition of the weasel word “legitimate”, which renders Groser’s assurance virtually meaningless, since it would be the overseas panels – and not the New Zealand government – that would ultimately decide what it is “legitimate”, and what isn’t. Groser went on to make the case for signing up to “ well designed” clauses that restrict our sovereignty. If such concessions are well designed, Groser argued, they will serve to re-assure prospective foreign investors that we will obey the rules – while at the same time the rules will afford similar protections to New Zealand companies investing offshore. At base, Groser was asking us to trust that he’ll get the balance right, and that he’d ensure the gains overseas to firms such as Fonterra would outweigh the potential risks, liabilities and restrictions involved here at home.
As it happens, Groser may not be around long enough to make good on his assurances. In September, Groser confirmed that he would be applying by year’s end for the top job at the WTO, to replace the outgoing Pascal Lamy who steps down in mid 2013. Arguably, as Labour’s trade negotiations spokesperson Clayton Cosgrove told Werewolf, this raises a conflict of interest:
“If he is [applying for the WTO job] one issue I think the government has to address immediately is who is going to lead the trade agreement negotiations around TPP. Because presumably there will be difficulties in a candidate running for the WTO and needing support, and at the same time trying to get the best deal he can for New Zealand. There’s a conflict of interest there. One of the things they are going to have to address if Mr Groser is going to toss his name in the ring, is how these negotiations are to be managed going forward.”
Indeed. To some, Groser’s apparent conflict of interest already hangs over the 15th round of the TPP negotiations, which are due to be held in Auckland in early December. Inevitably, the next TPP round will be a showcase for Groser to demonstrate his credentials for the top WTO post in front of key trade delegations from North America and Asia – at the very same time that he is meant to be fighting for New Zealand’s corner against the very same delegations. (Hard to be a beauty contestant and a cage fighter in front of the same crowd, at the same time.) At the very least, Groser should be taking his possible successor with him into the negotiating room in Auckland.
Is the TPP merely a pipe dream ? New Zealand’s own chief negotiator Mark Sinclair evidently thought so, judged by a leaked 2010 cable in which Sinclair lamented to US Deputy Assistant Frankie Reed there was a public perception a US free-trade agreement would be an ‘El Dorado’ for New Zealand’s commercial sector, but that ‘the reality is different’ and that New Zealand must ‘manage expectations’ about the benefits of such an agreement. At best, Sinclair indicated the TPP offered an opportunity to ‘put the squeeze’ on Japan and South Korea – to open up their agricultural markets, which the cable considered to be a remote prospect.
For a succinct summary of all the above in about four minutes flat, this is essential viewing – click here to view video
Is the TPP worth the candle to the US, in trade terms – such that the US would be inclined to make any meaningful concessions to New Zealand ? As this analysis helpfully explains, a TPP without Japan is relatively insignificant in any direct economic sense to the US, primarily because the US already has free trade agreements with the important TPP members (Chile, Singapore, Australia, Peru, Mexico and Canada) and with New Zealand, there is little need. This country chose to remove most of its trade barriers unilaterally in the 1990s, without receiving much in the way of tangible gain for doing so. True, the TPP offers the US minor trade openings in Malaysia and Vietnam but even these are problematic since Vietnam will only give ground on the TPP plans to reform state owned enterprises if the US drops its tariffs on Vietnam’s footwear exports.
Essentially, the TPP’s real value to the US appears to be as a forum for setting in place a number of non-trade practices – in government procurement, in patenting and copyright, in investor-state dispute arbitration etc – that would be of prime benefit to its own commercial lobbies. In that sense, the TPP is about securing and advancing the commercial interests of multinationals and their lobbyists – which have not been seen beforehand to be suitable subject matter for the trade obligations between nations. (Trying to get the WTO to sign onto these same kind of “Singapore provisions” created havoc a few years ago at the WTO’s Cancun meeting.)
Longer term, as US President Barack Obama made clear during the recent presidential debates, the TPP is of some use to the US in strategic terms to counter the rising power of China in the Asia Pacific region. Eventually, it may serve as a platform for a genuine Asia/Pacific deal that includes China, on terms the Americans can only hope will be satisfactory to them. Yet at present, neither China nor India would tolerate many of the current ingredients of the TPP.
The TPP is new territory for us, though. Unlike Australia, Canada, Peru, Chile, and several other members of the TPP, New Zealand is a virgin when it comes to free trade pacts with the United States. For the others, their FTA experience with the Americans – Canada inside NAFTA, the Aussies within their 2005 trade pact – has left even the trade lawyers and conservative analysts in those countries with a healthy scepticism about what the morning after might feel like. New Zealand has no such knowledge. As a result, even to query what we may be getting ourselves into with the TPP tends to be interpreted here as opposition to trade itself. It is as if New Zealand would rather be screwed by the US than never to know what it is like to be in a relationship with the most powerful economy on earth. Pure free traders at heart ourselves, we have a thing for the Bad Boy of the trade blocs. Maybe with us, it will be different.
In Canada, Peter Clark [pictured left] is one such prominent free trade advocate and conservative analyst, well known there for his advisory role to and for the federal government, during the passage of NAFTA. In recent months he has become increasingly critical of the TPP process and its prospects for Canada. Werewolf interviewed Clark by phone from his law firm in Ottawa. At heart, New Zealand is assuming that any trade offs it makes will be rewarded with greater access to farm markets in North America and Asia. Does Clark believe our faith in the TPP’s ability to make progress on agriculture is well founded ?
“I believe that its based on hope,” Clark replied, “ which is never a sound negotiating strategy. There is a lot of opposition in the United States to providing greater access to Fonterra…[which] has an uphill battle. The United States will play them [the New Zealand negotiators] along. We live next door, we know how they operate. They’ll play them along for as long as possible. If they do get access its going to be some sort of additional carve out from the TRQs (tariff rate quotas). It won’t be free and open access – and it will come with a 15 or 20 year phase out of the tariffs and the quotas. There’s a strong dairy lobby in the United States, and its mixed between what you see based on what the dairy exporters in the US want, and what the dairy farmers want.”
In other words, New Zealand will be promised much, yet may ultimately get little that’s tangible from the TPP on farm access in North America – and that little will be coming a long way further down the track. Nor is there much prospect of the US granting dairy access to New Zealand as a consequence of Canada dismantling its extensive dairy and poultry subsidy schemes and thus opening North America farm markets up to unfettered free trade. Gordon Ritchie, one of the architects of NAFTA and a former Canadian trade ambassador has recently written about the unlikelihood of Canada doing anything significant about its farm support subsidy scheme. The Americans didn’t get it under NAFTA, and won’t get it this time, either. Mainly because it would be political suicide for Canadian PM Stephen Harper. Ritchie ‘s words will read quite poignantly to any New Zealand farmer forced to go cold turkey by Roger Douglas in the 1980s:
I suspect that very little of the [Canadian dairy] quota is today owned by the original recipients. Most is owned by newcomers, often including the sons and daughters of the original quota holders, who have paid in full for the quota they have obtained, often by borrowing heavily. These inflated capital costs have weighed heavily on their financial performance, depressing returns in the industry despite some modest efficiency gains in recent years. It would be interesting to see a current analysis of the total value that has thus been baked into the system, but past studies have calculated amounts in the billions of dollars. To suggest that these producers (and investors) who have bought and paid for these quota rights could simply be stripped of their property overnight through a [TPP] trade negotiation is patently absurd.
Democracy likes sunlight. Apart from the negotiating teams though, only the business lobbies that stand to profit from the pact’s provisions have enjoyed any two way access to the TPP’s relevant documents. The public have been forced to rely on leaked drafts of the TPP texts for any insight at all into the nature of the discussions. Peter Clark has described the secrecy surrounding the TPP as “bizarre and unprecedented” and elsewhere as “a theatre of the absurd”.
As mentioned, the TPP in its current form would seem to restrict our ability to pass health and environmental legislation here at home that might affect foreign investors in future – a trade-off we would be making in the hope of winning access to similarly dubious investment opportunities in other countries. Even so, our Parliament will be unable to verify those alleged net benefits before or even after it comes into force – because incredibly, there is a four year freeze on public access to the TPP documentation. Logically, the role of our Parliament would merely be to re-align our laws, regulations and entitlements to comply with the TPP’s provisions.
This is not only absurd, but unsustainable. Once the US Congress seeks to ratify the TPP contents, all will need to be revealed. That process is still far in the distance. After four years and some missed completion deadlines already, the TPP has made little substantive progress. Hope springs eternal, regardless. According to Australian PM Julia Gillard, the expected completion date is now October 2013 – but in the immortal words of The Castle, tell her she’s dreaming. To Werewolf, Clark confirmed that only three of the TPP’s extensive list of chapters has so far been completed – the ones on Small and Medium Size Enterprises, Co-operation and Administration. – and these largely have to do with only administrative matters. In saying so, he assured me, he was not reliant on leaks but on asking friends involved in the negotiations. “I say “Well how’s it going, how many chapters have you really finished? [Answer :] Just this one, this one and this one.’ What does it mean ? Oh, next to nothing. They’re fluff.’
The agreed content of the really contentious issues (which are to repeat : on copyright and patenting, investor/state provisions, state owned enterprises, agriculture etc) remain only half done, at best. This is worth keeping in mind given that reportedly, the much derided Doha Round had reached an 80% level of completion before hitting the wall. After four years of very slow progress, the TPP has yet to prove it will not go the same way, and it would be for the same reasons : some countries simply aren’t buying what the US business lobbies are trying to peddle them.
What makes the TPP even more of a gamble than some trade arenas of the past is that while the US and its business lobbies are driving the pace and the content, they are doing so in something of a legal vacuum. As Clark confirmed to me, Congress has not formally authorized US participation in the TPP. As he has said:
Negotiating trade agreements with the US if the administration has not secured Trade Promotion Authority (TPA) from Congress is fraught with risk and with uncertainty. It is folly. That the Obama administration has not yet asked Congress for their blessing and guidance makes the TPP negotiations a crap shoot.
Clark expanded on this situation to Werewolf. The White House, he says, hasn’t had fast track Trade Promotion Authority since 2007, which is the same year that Congress released its bipartisan demands on trade in five separate areas, all of which must be met by any trade agreements seeking ratification. Normally though, Congress attaches even more conditions. Very recently, Clark says, he’s seen correspondence from a number of US Congressmen to US Trade Representative Ron Kirk asking him to address [within the TPP] some of Canada’s recent court decisions on pharmaceutical patents. The Congressional scrap on the TPP, Clark predicts, will be over Big Pharma patents and dairy access. Both these areas are of major significance to New Zealand.
Faced with the prospect of an ever-proliferating set of Congressional conditions, the Obama administration signalled in February this year that in order to pass the TPP, the President would need to renew the Trade Promotion Authority. This would put all of the US eggs in one basket and expose the TPP to a straight up and down vote in Congress within 90 days of the deal being signed, and with no amendments.
Obviously, that is a highly risky path. “But if he waits to do it until its finished,” Clark says, “ we’re negotiating in Las Vegas. It will be a casino. That’s how they operate. They build Christmas trees and they hang wishlists from these things. And the only way you can keep this more or less under control is to get Trade Promotion Authority, where you know what you’re dealing with. With the TPP as it stands,” Clark concludes, “we really don’t know what we’re dealing with.”
Good to know. It means that any credulous TPP boosters in New Zealand need to remain aware of the capacity of Congress to either amend the gains and the trade –offs that New Zealand thinks it may achieve, or to vote down the deal in its entirety. “Ignore the risks of negotiating without Trade Promotion Authority at your peril,” Clark advises.
As for us….as is common with our international treaties, the TPP will be passed in New Zealand by an executive order in council, and not by a parliamentary vote. “Treaty making is a heritage, believe it or not, of the royal prerogative,” says Auckland University constitutional law expert law professor Bill Hodge. “ “Indeed in the American Constitution it is expressly given to the President to sign treaties and declare war, but there is a check and balance and they have to be ratified [by Congress]. ” That’s not the case here. “It is a direct lineage of unfettered, totally discretionary royal prerogative to exercise treaty making power overseas, because that’s something the executive does, historically.” Ultimately that ability is based on holding a majority in Parliament. Parliament’s main role will be to subsequently bring laws into alignment with such treaties – whose provisions, Hodge adds, are increasingly being recognised by the courts as forming a part of the notional, common law, even without those provisions being explicitly embedded in domestic law.
The level of degree of secrecy surrounding the TPP text and negotiations would – in the unlikely event that the intended levels of secrecy can be sustained – render any informed debate on the TPP in Parliament impossible. Both Groser and Labour’s Clayton Cosgrove have tried to portray the current cone of silence as being normal practice in trade negoitiations. To Werewolf, Cosgrove likened the TPP secrecy measures to the ‘behind closed doors’ practices of union/employer bargaining, and as a necessary part of our “nothing ruled out, nothing ruled in” approach to the negotiations.
This will come as news to the Americans, who have already stipulated that the TPP’s rules on government procurement will apply only to the federal level, and not below it. (Thankfully this should mean that our local city and regional councils will therefore be safe from being hauled in front of an investor-state dispute tribunal in Geneva.) Given the political realities, the Obama administration will also almost certainly yield no ground on changes to its footwear, domestic textiles and sugar tariffs, and to the protectionism around shipbuilding and coastal crewing enshrined in the Jones Act of 1920. Not to mention its high tariffs on car and truck imports that serve to protect jobs in the US auto industry directly on pricing, while also creating US jobs indirectly, by forcing Asian car and truck makers to re-locate their plants to the American mainland. There are any number of other “no go” areas for the Americans. Here’s a small example by Greg Rushford called “Obama’s Double Standard On TPP” from that well known left wing news outlet, the Wall Street Journal. And if you can’t behind the WSJ’s paywall, the gist of Rushford’s article can be found here.
The TPP doesn’t lack ambition. Its more than 20 chapters aim to set new binding rules on – to name just a few – foreign investment, intellectual property patents and copyrights, pharmaceutical purchasing, government procurement, how financial markets should be regulated, how state owned enterprises should operate, and what core labour and environmental standards should be recognized by signatory governments. This is in addition to the more traditional stuff of how goods and services are to be traded, and what tariff, quota and phytosanitary standards should be allowed to govern access to markets.
That last point is worth remembering. The TPP negotiations on agriculture are something of a double-edged sword for New Zealand. Any moves to enhance our dairy access overseas are bound to attract counter-claims to lower our bio-security and food safety provisions here at home – with respect to pork and poultry in particular. “Phytosanitary barriers are a big issue for Canada, “ Clark says. “ There’s a pretty strong belief that’s there no real scope – given these barriers – to increase agricultural exports [to New Zealand] in other areas. That’s a problem. People look at where’s the balance ? “
The Pork Board will not be the only target in the TPP negotiations. New Zealand agencies that stand to be affected by the TPP include the drug-buying agency Pharmac, the multinational dairy co-operative Fonterra, and our existing systems for protecting the environment, consumer rights and labour rights. If New Zealand wants to make gains in agriculture the trade-off could also entail swallowing some US-driven copyright and patent demands on intellectual property that go well beyond our WTO TRIPS obligations. Such concessions could conceivably hobble our new and innovative, value-added digital industries. In particular, the US seems to be using the TPP to force on member nations the very same (or worse) mechanisms to deter online copyright infringement that New Zealand has just fought so hard to jettison from our Copyright Act.
Thankfully, the leaked texts in June indicate that New Zealand is currently holding its ground on IP, against US pressure. On other fronts though …the US business lobbies and their political allies in New Zealand are certain that you’ll be very, very happy with the TPP. So many opportunities if you’re just prepared to give a little, here and there. So lie back and enjoy!
One corporate that stands to lose from the TPP changes to IP rules (and the related practices of parallel importing) is The Warehouse. There have been concerns expressed here and also here that (in the name of a crackdown on piracy) the TPP will compel major changes to the practices of parallel importing that are central to the Warehouse’s business. Not to mention to its continued ability to deliver its “everyone gets a bargain” prices to customers, on genuine branded products.
It is not only retailers who stand to lose. Everyone who buys online – DVDs, music, books, cosmetics, jeans, shoes etc – would be affected by any substantive change made in this area. Parallel importing currently enables retailers and ordinary citizens to purchase lawfully made items directly from legitimate licensees situated offshore, rather than via the local franchise holders. This ability delivers genuine competition between suppliers of the same or similar goods, and offers real benefits to consumers.
New Zealanders have enjoyed the right to parallel import since 1998, when the Copyright Act was amended, thereby allowing non-pirated goods made lawfully overseas to be imported without the express consent of local copyright owners. It is called free trade, and the TPP – in the name of free trade – appears bent on restricting it. As Mike Powell, chief executive of The Warehouse told Werewolf : “ If anything was done in TPP to impact that, I would see that a restriction of trade, and I thought the TPP was about freedom of trade. I’d be surprised if it the TPP did [impact on parallel importing] and I’d be concerned if it did. “
And what reassurances has he been given by government after he contacted them with his concerns? ”Well, they won’t give re-assurances in total, and I respect that. Trade negotiations are always fairly confidential. We’ll find out.” As Powell explains, The Warehouse goes to other countries and buys genuine products legitimately. “Basically, we’re taking advantage of either currency differences, or of the multinationals own pricing policy in different markets…If that got stopped, it would be a restriction of trade. And I would be shocked.”
In his view, the competition keeps the suppliers honest. Without parallel importing, would New Zealand revert to the way it was before the Copyright Act got changed in 1998 to allow it – essentially, a Sleepytown where the local rights holder was virtually able to use their position as an exclusive import licence ? “Well, by default,” Powell says, “ you almost end up there, don’t you?”
Regardless, the Key government has been seriously considering making changes to the parallel importing regime:
The Ministry of Economic Development commissioned Australian economist Henry Ergas to carry out a study on the parallel importation regime last year, spurring further fears that a change is being considered as one possible trade-off in the [TPP] negotiations. The Sunday Star-Times was denied access to the document, completed in August 2011 and described in parliamentary papers simply as “an assessment of the likely impact of changing NZ parallel importation laws”, under the Official Information Act.
Some of the debate about whether parallel importing abets counterfeiting has arisen in Australia and appears to be being driven by copyright holders trying to use the TPP ( and the piracy/counterfeiting issue) to maintain their commercial grip on the supply chain. Yet the issue of counterfeits being sold via retailers, Powell believes, has no relevance to New Zealand’s retailing situation.
It didn’t start out with all these worries. The TPP began life in the mid 2000s as a tentative agreement between four small and quite different economies : Brunei, Chile, New Zealand and Singapore, aka the P-4. Today, the TPP club now consists of the United States, Australia, New Zealand, Brunei, Chile, Peru, Singapore, Vietnam and Malaysia, Mexico, Thailand and Canada with Japan as an interested onlooker and potential joinee.
Prime Minister John Key has promised that New Zealand will not agree to any deal that does not deliver us gains in agriculture. Yet he also accepts that in some areas, there will be a long phase-in period for some countries. Ultimately, Key has said, the deal may also need to be “shoved” over the line by political leaders during its final phase.
As another conservative analyst – Dr Stephen Grenville of the Lowy Institute in Sydney – pointed out earlier this year, the TPP agenda is not about the kind of matters (eg quotas, tariffs, phyto-sanitary standards etc) that usually form the agenda of formal attempts to free up global trade:
[These] ‘add-ons’ to the trade liberalisation agenda are intrinsically different in character. Is the TPP the best forum and are these the right set of issues? The TPP seems an ad hoc and accidental forum into which the US has inserted its own priorities. . Will the mix of issues in the TPP suit Australia’s interests? It may…. if they coincide with America’s. But we need to go into these negotiations recognising that our bargaining power to influence the rules is minimal and pointing to America’s many instances of protection will do us no good.
Even its best friends would probably concede that the TPP has something of an identity problem. Not even the US team speaks with a single, unified voice about key items on the TPP agenda. Over the intellectual property copyright and patent provisions in the TPP for instance, Hollywood is already at war with Silicon Valley.
That dissent over IP is merely the tip of the iceberg. As mentioned, the TPP will face ratification problems at home, especially if the final version requires significant concessions by US farmers, manufacturers and service providers. The fact the Obama administration is supportive of the TPP will cut little ice with a Republican-dominated lower House. This is especially so, given that any TPP deal struck in late 2013 would be lining up for ratification in the midst of the mid-term elections of 2014. Signing off a major trade deal that contains fish-hooks for US farmers, auto companies and Rust Belt manufacturing looks even less likely when you consider the geography of the Senate seats up for grabs in those 2014 mid-terms.
Totting them up is very instructive. According to the Washington Post, 20 Senate Democrats will face re-election in 2014, and 13 Senate Republicans. Six of those 20 Democrats come from red states and another six from swing states, while only one of the 13 Republicans comes from a state that isn’t a red state. So out of 33 Senate races, 24 will be being held in either red or swing states – and yet New Zealand is blithely expecting to derive TPP concessions that allow New Zealand greater access to the farm markets in red and swing states, slap bang in the middle of closely fought mid term election battles ? Good luck with that.
It is very nice that Obama likes the TPP. Yet his own Democrats currently occupy nine out of the ten Senate seats most in danger during the mid terms and the Democratic Party is already wary about the likely labour standards chapter and overall implications of the TPP. The outcome of the 2014 Senate races hold out the prospect of the Republicans winning an upper house majority. Is Obama really likely to risk having to run the last two years of his presidency with both houses stacked against him, in order to pass the TPP? Incidentally, the ‘highly endangered’ Senate list happens to include Max Baucus of Montana, who was out in New Zealand this year trying to woo New Zealand into making concessions on the TPP.
In other words, we probably need to get real. And the reality is that the political climate in the US appears poisonously opposed to ratifying a TPP deal anytime before….oh 2015, or even later. Keep that in mind when we’re being told how New Zealand may need to make concessions on IP or on Pharmac or on Fonterra to win access to North American farm markets – or when TPP cheerleaders cite how many zillion dollars New Zealand potentially stands to gain from the negotiations. To all intents, the TPP looks like a mirage.
For now, China is the immediate target of what is a security pact as much as it is a trade pact. Here’s Stephen Grenville of the Lowy Institute again :
There is another worrying aspect of the TPP negotiations. It is widely accepted that China will be unable and unwilling to accept the rules on intellectual property rights and state-owned enterprises. The US discussion downplays this issue, seeing it as just a matter of time before China will change in ways that enable it to meet the TPP’s ‘platinum standard’. But with China initially excluded, it would be easy to interpret TPP as an element of a China containment strategy, especially as Vietnam (which would seem to have the same issues on intellectual property and state-owned enterprises) has been accepted as an inaugural member.
The China aspect needs urgent clarification. Unless a way can be found to signal that there is a realistic prospect of China joining and that China would be welcome to do so, we need to recognise that this will be seen by China as containment. Is this our intent?
In New Zealand, something close to bipartisan agreement exists between the two major parties on trade issues, says Labour’s trade negotiation spokesman Clayton Cosgrove : “You don’t play politics with it. [trade]. Labour he adds, “has a proud history back to Mike Moore and beyond of being free traders.” In Cosgrove’s view, “The TPP potentially offers massive opportunities in terms not just of agriculture, but government procurement.”
All the same, bottom lines do exist for Labour on the TPP, though. “Pharmac has to be protected,” Cosgrove says. “ IP. Investor /state. SOEs, and how they are treated. The treatment of the foreign ownership of land is obviously a large one for us. So is agricultural access. And we’ve always said New Zealand must always retain the ability to legislate and regulate in the public good…”
Cosgrove wouldn’t be drawn into discussing anything that has emerged to date about the negotiations. “I’m not going to get into speculation about texts, based on leaked texts or draft texts or old texts that haven’t been verified and that have come out from that rather strange group [Public Citizen] in Washington – and they are – who’ve leaked what they alleged to be text. The Minister’s response was well, I won’t be stupid enough to facilitate those things happening. I would have to say – and some would accuse me, which is not correct, of siding with the government – that’s a very very high level of commitment. You could argue the Minister has boxed himself right into a corner. “
Since no one is talking about scrapping Pharmac, Labour’s commitment to Pharmac amounts to what, exactly ? Cosgrove : “To its core ability to bulk purchase in a single desk fashion medication, as it does now…” .So does that mean protection for Pharmac to do its job as it currently does ? Not really. “ It may mean if you look at the Aussie example, that issues are negotiated around transparency and decision making …I’m not offended by that, because transparency and accountability need not necessarily impact on what Pharmac does.” [ See the Werewolf story in this issue on TPP and Health for signs of how the TPP’s ‘transparency’ goals could well impact severely on Pharmac, and on the health budget.]
Labour, Cosgrove confirms, supports the TPP with the reservations mentioned. Given that Labour and National both support the TPP process, any subsequent TPP deal would become a serious bone of contention in any prospective Labour /Greens coalition government – and in election year 2014, to boot. The outcome of that conflict would determine whether New Zealand could ever muster the political will to exit the TPP at some future date, and wear the consequences. As constitutional law expert Bill Hodge points out, the TPP may contain provisions that bind future governments – but as with any international treaty, it will also almost certainly contain exit clauses that could be activated by any future government prepared to ride out the consequences.
“They may have to give a certain amount of notice, but generally future governments can get out, ” Hodge says. Anzus strikes him as a classic example. ”A new government can say we’re opening the books on these things, and are giving notice that we no longer consider ourselves bound.” On current indications however, the Labour parliamentary caucus seems to be far more united behind the TPP than it ever was behind Anzus.
Such debate on the TPP are still to be had, both inside and beyond the Labour Party. Come December, battle will be rejoined in Auckland in the next round of the negotiations. Negotiators, analysts, business lobbyists and politicians from all points of the compass will be there, including Peter Clark from Canada. To Clark, the style of the negotiations signifies its intended outcomes. “The Americans are running this as a ‘hub and spoke’ type deal. They’re negotiating separately with everybody, on nearly everything. They occasionally have sessions where they get together to deal with the text, but there’s a big, big element of bilateralism in the United States approach.” It is a bait and switch, potentially. “If I was a US negotiator, I would be making New Zealand hang on until the very last minute, to keep them co-operative and complacent on the other issues. “