The fog of secrecy around the Trans Pacific Partnership has always triggered concern about what New Zealand may be willing to give away in these talks, without any substantive Parliamentary debate of these concessions beforehand. The potential losses are one thing. Yet on RNZ this morning, Victoria University economist Geoff Bertram put the spotlight on the other side of the ledger, onto the alleged gains that the TPP will bring in its wake – some $5 billion by 2025 according to Trade Minister Tim Groser. Bertram has discovered that the study on which those gains were based appears to be seriously flawed.
Only a quarter of the alleged gains, Bertram told RNZ, stand up to serious scrutiny. To date the government has largely relied on a publication by the Peterson Institute on the benefits of the TPP to participating countries. The Peterson study can be accessed here. Bertram and his associates have examined the basis of the Peterson methodology and found it wanting. As he told Morning Report:
From my point of view, the interesting thing in trying to weigh the costs and benefits up is how much benefit is there. There’s a study produced by the Peterson Institute in 2012 which the government has relied on quite heavily – which gave Tim Groser that $5 billion number – so I went back and spent a bit of time reading that through, and worked out how they got their numbers. And to the conclusion that really, there’s no credibility to most of them….. On foreign direct investment, which is one third of the gains they are promising from the deal, they’ve invented a totally new economic theory…where moving a dollar from the United States to New Zealand doubles its productivity and generates a huge amount of output out of thin air. I don’t believe that proposition would stand up to any sort of serious analytical scrutiny. That’s a third of the gains.
Another third of the alleged gains, Bertram says, come from the removal of regulatory barriers. Yet much of the TPP content, he noted, entails the imposition of stronger regulatory provisions in areas such as intellectual property rights and in patent terms for pharmaceuticals that are likely to impose significant costs. Such provisions underline the unique nature of the TPP. Those in favour of the deal – in government and among parts of the corporate sector – may routinely invoke the rhetoric of free trade to promote the TPP, and depict its critics as being anti free trade. At best, this is naive wishful thinking on their part. Because, as Bertram – and other commentators have pointed out as well – the TPP is not really a free trade deal at all, certainly not in the sense of the China/New Zealand free trade pact. If anything, as Werewolf reported last year in an exclusive interview with the conservative free trade guru Professor Jagdish Bhagwati, much of the TPP runs directly counter to the aims and procedures of the WTO Doha Round. Many TPP provisions are actually trade restrictive protections, in that they re-inforce and extend the existing powers of US corporate interests, and entail trade dispute resolution mechanisms likely to undermine the WTO arbitration system. (Bhagwati was especially annoyed on that point.) As Bertram sums up:
About a quarter of the claims that they [the Peterson Institute] make…I can see where that comes from. Reasonable people can disagree about the details, but their analysis up to that point makes sense and is line with the established literature. Beyond that, there is three or four billion dollars that they’ve plucked out of thin air for New Zealand, and hundreds of billions they’ve plucked out of thin air for the Trans Pacific partners as a whole. I think it’s a pity when economic models which are a very elegant and sophisticated way of thinking about very complicated issues, are turned into what is essentially a propaganda device.
Hopefully, the Peterson Institute – who are not normally guns for corporate hire – will respond to Bertram. That way, we may at least get some semblance of the public debate about the TPP and its potential gains and losses to this country, that we are simply not getting in our Parliament.