Gordon Campbell on the TPP deal reached in Atlanta

If the TPP was the Rugby World Cup, the New Zealand team probably wouldn’t be making it out of pool play. While the final details will not emerge for a month, the TPP is offering disappointing returns for New Zealand… and over a very long phase-in period… of up to 25 years in major areas important to us, even though many of the concessions we have made would take immediate effect. Typically, Prime Minister John Key has already been spinning the “93% tariff free” outcome across the TPP region, as if that situation was entirely due to the TPP deal. To get that figure, Key is adding all pre-existing tariff reductions and adding them to the TPP. To take a relevant example… 80% of US trade with other TPP members is already duty free.

Yes, the TPP has helped to knock a few points off the tariffs facing our exporters. Yet some of those alleged dollar gains may well have been made regardless over time – and without the negative baggage of the concessions in the non-trade areas (intellectual property, copyright extensions, investor-state dispute mechanisms etc) that the TPP deal also brings in its wake. The annual dollar returns being trumpeted by TPP advocates should be being treated with a few handfuls of salt. It will be a further month before the details are translated and legalled (and while corporations and the parliaments of member countries are fully briefed) before the contents are finally opened up to public scrutiny. Over the period from now until 2030, even the rosier projections for New Zealand see the TPP adding only about 1% per annum to this country’s GDP.

In the meantime, we have got the general gist. On our biggest export commodity – dairy milk powder – we have achieved almost zero extra advantage in the Japanese, US or Canadian markets. As Trade Minister Tim Groser confirmed on RNZ this morning, there will be a 25 year phase-in for the whole milk powder access we’ve “won” to the US market. Any small market opening by Canada – and this has been mainly in liquid milk and yoghurt – will almost certainly accrue to US dairy producers. Over the final phase of the dairy negotiations we actually lost ground – as the US buckled to the pressure from its own dairy producers, and as Canada failed to bail out the Americans by making any significant changes to its own system of dairy supply management.

Look at the contrast. While New Zealand dairy industry leaders ie Fonterra are treating the dairy deal as a disappointing but better-than-nothing deal for this country, Canada’s dairy farmers not only held the line, but secured a massive compensatory payoff on top, for their pains:

“We have been successful in protecting the three key pillars of supply management — being production controls, price controls, and import controls,” ‘[ Canada’s Trade Minister Ed] Fast said.

In exchange for opening up 3.25 per cent of the Canadian market, the Conservatives agreed to compensate dairy farmers to the tune of $4.3 billion over 15 years — a much more generous package than they received in the Canada-EU trade deal.

So… while failing to achieve any significant – or immediate – market gains for our major export commodity, we have made major concessions on intellectual property, the operations of Pharmac and on investor state disputes. In each case, things could have been far worse: but that doesn’t mean the concessions we have made are insignificant, or good.

Pharmac. Thanks to the Australians – who dug in on this issue – a two tier solution was achieved on the market exclusivity term for the cutting edge medicines called biologics. (These drugs include the likes of the expensive new lung cancer drug Keytruda.) For some countries – including Australia and New Zealand – this exclusivity term will remain at five years. Competitors will be able to produce ‘bio-similars” during these periods, but will be restricted as to when these can be brought to market.

By preserving the current five year term, the superficial response is to say this will not change the rules for Pharmac. However it remains to be seen how the two track model functions in practice, when it comes down to availability. Will Pharmac really be able in practice to access these medicines at the same price during the three year window that has nominally been opened? Moreover, Pharmac’s operations will certainly be changed by the Transparency Annex to the TPP deal, which will open up Pharmac’s purchasing decisions to legal challenge by multinational drug companies if and when their products are turned down.

Copyright extension. Under US pressure, we have expanded our copyright term from 50 to 70 years. As some US commentators are already saying, these and other measures in the intellectual property chapter will have a chilling effect on innovation, will place greater restrictions on what counts as fair use, and will criminalise some activities that were hitherto not criminal in either their intention or their effect. While New Zealand is banging about dairy access as part of its traditional role as an exporter of raw agricultural products, the rest of the global economy is seeing a future in adding value and promoting its service industries… And on that score, our innovators stand to lose more than they gain from the intellectual property rights dimension of this deal. The TPP entrenches the position of existing intellectual property owners.

Investor state dispute mechanisms (ISDS). Thanks to Malaysia, the grounds on which investor state disputes can be brought have been tightened. Vexatious and frivolous cases will be reduced. In particular, governments that seek to regulate the marketing of tobacco can no longer be sued by the likes of Philip Morris for doing so. The cosy relationships between tribunal lawyers and corporates bringing legal action have also been challenged by the final wording.

These changes were long overdue. However, they address only the most blatant ways by which these secretive, unelected trade tribunals impinge on the sovereignty of the countries concerned. The inherent risk from these tribunals remains, and that risk is increasing. More and more ISDS cases are being brought worldwide, and the amounts of money at stake have also been increasing.

US Senator Elizabeth Warren drew attention to this trend earlier this year:

From 1959 to 2002, there were fewer than 100 ISDS claims worldwide. But in 2012 alone, there were 58 cases. Recent cases include a French company that sued Egypt because Egypt raised its minimum wage, a Swedish company that sued Germany because Germany decided to phase out nuclear power after Japan’s Fukushima disaster, and a Dutch company that sued the Czech Republic because the Czechs didn’t bail out a bank that the company partially owned.

The Bilcom case in Canada – discussed in this column last week – remains a clear example of the risk that the TPP will now pose to any future New Zealand government that seeks to protect the environment and in the process, affects the profit expectations of foreign investors. Thanks to the TPP, that disgruntled foreign investor should now be able to sue our government and have every confidence of success. Read this and be worried.

President Barack Obama now has 90 days to convince Congress to ratify this deal. The TPP will face a Congressional vote in February, just as the US presidential primary season begins. Obviously, it will be harder for Obama to gain Republican votes at that time than a few months ago… when he won cross party for fast track trade authority. If the TPP vote splits more along party lines, more of the Democratic minority may rally to the President’s cause – but given that fast track authority only squeaked through Congress by a handful of votes, there is a real risk that the TPP will be defeated.

It would be very, very easy for Republicans to (a) denounce the deal’s lack of any overt measures on currency manipulation. This could be seen as a virtual reward to China for bad behaviour that has boosted its exports and arguably cost American jobs (b) vilify the auto parts rules of origin reached by Japan and the US as being a threat to American jobs and (c) regard any small concession to New Zealand on dairy as a threat to the livelihoods of hard working, God-fearing US dairy farmers. The TPP still has this one last major hurdle to clear before we can assume it is a reality.

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13 Comments on Gordon Campbell on the TPP deal reached in Atlanta

  1. From my perspective the TPP is more than that.

    The new parameters under TPP (as so-far disclosed) multi-nationals will now have the ability to buy (invest) in all New Zealand land and can take a case internationally if they don’t get their own way.

    I’m not sure where that will leave the OIO.

    And what about ACC as the monopoly – must that now also be put on the chopping block for overseas insurance companies to buy?

    Remember, that Government is proposing to drop (delete) our commitment to the rule of law and the sovereignty of Parliament in the Supreme Court Act. The government has explained that those provisions being constitutional in nature were out of place in the new Judicature Modernisation Bill and their place would be in the Constitution Act

    If Parliament were simultaneously amending the Constitution Act to include those provisions, we might rest more easy – but it is not though.

    With TPP, for example, Farmers can go broke at any time because of manipulated prices in the global market (and prices are the key to success irrespective of any trade deal) multi-nationals can then buy the land but then also have the advantage of access for their newly-owned products to the now wider markets.

    NZ and our Parliament does not retain its sovereignty

    For the multi-nationals under TPP, it’s almost as though fertile and developed islands (NZ) have suddenly arisen from the sea and the land can be bought (acquired) and products produced are then theirs to export – A tremendous advantage.

    Land is our future and they aren’t making any more and in fact many countries are losing it and urgently need more – Japan as just one example.

    Food security and water for countries in the future is going to be crucial – Land is the key.

    It doesn’t mean that New Zealander’s can’t play the same game but we, and our companies, are just a small minnow in a very large global pond full of sharks.

    There is no equality in nature – the strong will always dominate the weak.

  2. The much touted $ benefits are all tiny numbers at some future date – pretty much rounding errors. There may well be gains for some sunset type industries but on the IP side (sunrise) which is really the future of all business we have been handed another level of constraints.

    What I think the TPP does is to make the international stage safer for transnational companies and corporates.

    NBR has a story “Lobbies welcome TPP” which I don’t think is intentionally satirical but besides government trade people the only ones who know what is in the TPP are the lobbyists.

    What would also be good to know is how TPP is such a fine deal when there is a TTIP in the northern hemisphere – again to make the rest of the world “safe” for US monopolies and other transnational businesses.

    It is always good to reduce trade barriers but arguably the TPP is much more subtly putting up new IP barriers that a knowledge based economy will definitely regret.

  3. Extending copyright protection from 50 to 70 years for recorded music, songs, film and books won’t hinder innovation ; it will preserve income streams for local creators of these works ( eg. something you made at 18 won’t be taken away when you may most benefit from it, at 68). Not the same thing as IP protection on technical and biological patents at all. One of the few gains, but probably something we would have gained anyway – if this Govt understood the value of original creative works and their export potential.

  4. Footnote : Theoretically and as mentioned, Congress could hold its ratification votes in February. However, today’s Washington Post is reporting from its Hill sources that the House and Senate votes on the TPP deal will not occur until April 2016, at the earliest. If so, this would push the TPP ratification process into an even more polarised phase of next year’s presidential campaign.

  5. @martin
    It comes down to what you regard as a reasonable trade-off between the individual and the social good. All artists, no matter how creative stand on the shoulders of what went before, and owe something to the culture to which they belong. Copyright & patent rules as strict as those in the TPP drafts on IP will inhibit innovation. Here’s one unexpected example :

  6. @Martin

    That’s not correct. Copyright protection currently extends for 50 years from the death of the creator, and is to be extended to 70 years.

  7. J Mc G – “China is not a party to the agreement so the reference to currency manipulation isn’t relevant.”

    It may not be relevant to the treaty itself, but it will be very relevant to Obama’s opponents in the GOP – “If China gets to play fast and loose with its currency valuations, why don’t we?” will be the general response from those who seek to hamstring him.

  8. Copyright protect is commonly counted in years after death of the creator. It was extended in the USA – The Sonny Bono Bill? -to seventy years when major entertainment IP was starting to ‘run out’ and was going to enter the public domain. The people who created it were long dead.

  9. Amazing how so many heads of unions (and the other heads) have not read or sign the TPPA but can only say good things.”That’s ignorant”.
    Its not been disclosed and the people of NZ are an effected party.
    The resources don’t belong to the people that are signing them over to the oligarchy.
    Its not worth the paper it is written on, its not lawful.
    Now all they have to do is convince the people it is.

    Congress is corrupt.

  10. I was listening to U.S. radio and heard that citizen rights groups and
    cancer patients are calling a clause in the TPP the “death clause” because,
    apparently, generic-drug competition is stifled by altered and longer patent
    dates for existing drugs and manufacturers.

    Cancer patients are saying their drug requirements are so very expensive and
    this “death clause” means they now have to wait longer for generic drug
    competition to come to market and they simply can’t afford that time – hence
    the description the “death clause”.

    There are numerous things I discovered including that the effect of the TPP
    actually globalises dairy – From the broadcast I didn’t grasp how that works
    but the US people have seen it in documents and there must be something to

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