The Trans Pacific Partnership trade deal is one of those litmus issues that has always had more to do with one’s place on the political spectrum than with any imminent reality. To date, the Greens have opposed (a) a wide range of the leaked content of the TPP (b) the secretive way it has been negotiated and (c) the undemocratic way in which any final document would be ratified. Labour has shared some of those concerns, but while remaining generally supportive of the deal itself. To date, Labour has restricted its criticisms to the (limited) role of Parliament in its ratification, and the possible fate of Pharmac in the bargaining process.
National has, for its part, been very enthusiastic about the TPP, while still giving assurances about Pharmac being protected. Even so, at the outset of the December 2012 Auckland meeting of TPP negotiators, NZ Trade Minister Tim Groser publicly – and unilaterally – announced the government’s readiness to change some of the “transparency” issues to do with Pharmac’s operations. As this article explains, even a benign-sounding term such as “transparency” can still expose Pharmac to litigation from drug companies and impinge on its discretion to seek cheaper medicines for New Zealand consumers.
For the TPP’s friends and foes alike though, the end now seems nigh. The TPP is in its fifth year of negotiations and this week, one of its last hopes of reaching a conclusion any time soon went over the cliff. For most of 2014, the stalled talks have been reliant on the US and Japan completing a bilateral pact that could then be taken back to the TPP bargaining table as the template for a range of mutual concessions by participating countries. Instead, the bilateral pact itself fell apart.
This latest failure has led some observers – such as Bank of Montreal chief economist Doug Porter – to conclude that the TPP itself is now effectively dead in the water.
The stalemate in the US/Japan deal was over car exports and farm exports, with the latter being the main reason why New Zealand is in the TPP at all. Access to farm markets in Japan would be the rationale for us making concessions on other fronts. The detail of this week’s failure is instructive. For the umpteenth time, the failure reveals just how little the TPP has to do with “free” trade. If you want to see political and corporate self interest in action, check out the Japanese news service summary (link above) of the horse trading that was attempted:
Under the TPP negotiations, Tokyo has sought to shield tariffs on rice, wheat, beef and pork, sugar and dairy products to protect the domestic farm industry from an influx of inexpensive foreign equivalents, while the TPP aims for zero tariffs in principle.
At crunch, here was what was on the table: if you let me keep my protectionism on sugar, I’ll let you keep yours. And if Japan also then buys US rice and wheat from US farmers, then that bribe will enable Japan to retain its own domestic tariffs on those same products:
Tokyo will likely be allowed to retain tariffs on sugar, which the United States also regards as sensitive, and is considering importing more rice and wheat from the United States in exchange for retaining their tariffs, according to negotiation sources.
Then we get to the bit that’s of most interest to New Zealand, the dairy trade : For dairy products, Tokyo and Washington are likely to be able to find common ground by setting lower tariffs for a certain amount of imports, the sources added.
“Lower tariffs for a certain amount of imports.”….??? In other words, New Zealand would face a quota, and see tariffs lowered on our goods, but not abolished. And you can bet that even that miserly gain will be phased in over 10 or 20 years, to give Japanese farmers time to “adjust”. Yep, that sounds like a great deal for New Zealand, and a fine reason for us making concessions on drug patents, copyright provisions etc and all the other TPP fish hooks, big and small.
In the end, the big players – Japan and the US – simply couldn’t strike a balance between their levels of protectionism and market access for their beef and pork farmers, and for their respective auto industries.
Thankfully, all of this manouevring is happening in a dead end street. As Doug Porter says in the link above, the chances of the TPP countries pulling a deal together in the next three years are slim. One chronic reason being, the Obama administration has no authority to conclude this deal even if member countries could agree on the content – which they don’t. The US currently lacks the Trade Promotion Authority for Obama to clinch the terms of the deal. All year, he has shown no real interest in seeking TPA, and Congress is hardly of a mind to relinquish its role in vetting the deal, and to simply hand the terms of the TPP deal over to Obama. Nothing very personal about that. George Bush only got TPA by the skin of his teeth in 2002, from a supposedly friendly Congress.
The lack of TPA remains a crucial gap in the US position. What it means is that regardless of the wishlists of US corporates, the political mechanism for delivering them the TPP outcomes they’re seeking doesn’t yet exist. The only way the TPP is ever going to get passed without the US Congress pulling it apart clause by clause (or by trying to impose its will on member countries via certification or other means) is if Obama gets Trade Promotion Authority, which reduces the role of Congress to a straight vote to either accept or reject the completed deal its entirety.
Yet to repeat: Obama will not get TPA from a Republican dominated Congress that’s been set in chronic oppositional mode for years, and member countries will simply not allow Congress to effectively rewrite the deal by certification abroad, or by ratification at home. That’s why many member countries of the TPP (eg Japan) have been just going through the motions of late, and refusing to expend their domestic political capital to clinch it, when they know the US can’t deliver.
Interestingly, sections of the mainstream US media and conservative think tanks are blaming the current TPP impasse on the US, not Japan. Such as for example, the Cato Institute’s harshly critical piece on the US bargaining posture. Also, here’s the Trentonian newspaper sounding off, and blaming the recent US/Japan impasse on Obama wanting to look tough domestically, at least until the US midterm elections are over in November:
Behind the obstinacy displayed by the U.S. side are midterm elections scheduled for Nov. 4, which have made it difficult to offer compromises to Japan.
The administration of U.S. President Barack Obama is facing growing calls from Congress and industry groups to maintain an unbending stance during negotiations.
Amid these demands, some politically powerful livestock industry groups and lawmakers with ties to them have even suggested Japan should be excluded from TPP negotiations if it does not agree to eliminate all tariffs on agricultural products.
How can these domestic, excessively anti-Japan hard-liners be quieted? Obama’s leadership qualities will be tested in the quest for compromise in the negotiations.
You bet. Meanwhile, our leaders are still standing around on the sidelines, waving their hands in the air and claiming that this corporate-driven, atavistically nationalist bunfight is still somehow about “free” trade. In fact, both left wing and right wing groups in New Zealand should be breathing a sigh of relief that the TPP seems to be dying on its feet.