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Business analysis and comment from Herald columnist Fran O'Sullivan

Fran O'Sullivan: TPP anything but plain sailing

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Devil clearly in detail but the upfront approach the US Chamber of Commerce is taking to talks is welcome.

Dame Jenny Shipley questioned whether the TPP could attract China. Photo / David White
Dame Jenny Shipley questioned whether the TPP could attract China. Photo / David White

The US is in the box seat for the Trans Pacific Partnership Agreement (TPP) negotiations but despite the Americans' clear negotiating clout - obvious on the outskirts of the TPP talks at SkyCity Convention Centre - things are not plain sailing.

The powerful US Chamber of Commerce has made it clear that the TPP deal is important to America's future success and job creation.

"Nearly 40 per cent of US merchandise exports go to the other 10 countries participating in the TPP talks, and the sooner we get a deal in place that removes trade barriers and levels the playing field for American companies, the better," the chamber posts.

The US has been demonised as the heavy-handed bogey at the TPP talks.

But it is interesting to look at the four critical issues that the chamber - which represents America's most powerful business interests - wants addressed at the 15th round of talks taking place in Auckland.

•Comprehensive market access: The US has sensitivities in apparel and footwear and commodities such as sugar and dairy. The chamber says if America is to achieve its high ambitions in intellectual property, cross-border data flows, and state-owned enterprises (SOEs) the US Administration will have to "screw up its courage and improve its market access offers".

•Protections for intellectual property: The chamber believes intellectual property is the cornerstone of innovative economies fuelling everything from life-saving medicines to blockbuster films to green technologies. "This means ensuring the provisions to protect IP are comprehensive, commercially meaningful, and provide genuine incentive for innovation."

•Cross-border data flows: The chamber believes that despite billions of individuals and businesses relying on the movement of data across borders as part of today's global economy, the international legal and policy framework has not kept pace with the rapid changes in technology. "The TPP agreement represents an opportunity to set a new, unified standard that will promote increased trade and investment."

•Competitive state-owned enterprises: It maintains SOEs that operate in competition with private actors must be held to the same commercial standards as private firms. "The final TPP agreement must enforce a level of discipline and transparency which will prevent anti-competitive behaviour and remove government favouritism. Anything short of enforceable provisions in this area would be a failure by the TPP countries to address some of the most significant barriers to fair trade and investment today."

The devil is clearly in the detail but the upfront approach the US Chamber of Commerce is taking to the TPP talks is welcome.

The US agenda is in fact plain to see from the US Trade Representative Office down. Where it is not, negotiating texts have been deliberately leaked to flush out controversial issues. This is important as the TPP has morphed into effective "semaphore" for the competitive model which the US is promoting as it battles with China for supremacy in driving the economic integration platform for the Asia-Pacific.

This wasn't where it started out when former Labour Trade Minister Phil Goff first got President George Bush's Administration to agree to join the TPP talks. Back then it was simply P4 Plus - a mechanism which the key players hoped would be the pathfinder to a Free Trade Agreement for the Asia-Pacific (FTAAP).

That's still the hope, but the Regional Comprehensive Partnership (RCEP) launched at the recent East Asia Summit proposes a different (and China centric) mechanism for linking the major Asia Pacific players (minus the US).

Right now the NZ Government takes the position it can "have its cake and eat it too", seeing the RCEP as not only an end in its own right but also as providing competitive pressure to get a conclusion to the TPP talks.

But the US integration model is much more prescriptive than RCEP promises.

Former National Prime Minister Jenny Shipley - quoted in the Global Times - cast doubt on the TPP's viability saying it would need to integrate China's economy to become an effective international trading platform.

Dame Jenny - who is also an independent director of China Construction Bank - questioned whether the TPP could attract China. " ... I think China only is likely to come to a Trans Pacific Partnership if it were a much bigger arrangement. I think it's probably a second, third or fourth step. Frankly there's still a big question to whether this project will get off the ground anyway," Shipley said.

The geostrategic issues are important. But at the nitty gritty level of the TPP talks, sources suggest it is proving difficult to get agreement on just how far economic integration should go if the resultant agreement is to ultimately be a docking station with the RCEP agreement.

Within New Zealand there has been plenty of anti-TPP ballast in the news media. But the NZ business sector has been bizarrely absent from the public fray. Suddenly there has been a flurry of media events to promote a business perspective.

First the open letter to the Prime Minister signed by 50 business leaders supporting the NZ negotiating position in the TPP talks, then the launch of a website designed to promote the upside of trade to Kiwis - including the TPP - and finally a joint statement by the NZ and Australian farming lobbies arguing for the elimination of all agricultural and food product tariffs and the reform of non-tariff measures.

There's a fair degree of proselytisation of the free trade mantra. But not a great deal of nitty gritty about the NZ negotiating positions and the trade-offs that will be necessary in the end game of the talks.

If the TPP is in New Zealand business' interests - as I believe it is - the business sector needs to step up both its public and private advocacy.

On the outskirts of the TPP talks there are suggestions that a two-tier system for stakeholder engagement has evolved.

The top tier includes the trusted quasi official stakeholders which each economy appoints as a listening board for the talks. The second tier - including critics - will be included on Friday at the Stakeholders Engagement Day.

There are four parallel streams: intellectual property; environment, labour, goods; health, investment; and intellectual property, transparency, benefits, e-commerce.

Twenty-six of the presenters are from New Zealand with just two of them - the redoubtable law professor Jane Kelsey, who is banging on about her exclusion from Sky City until that time, and activist Penny Bright - among those who are also likely to be carrying a protest banner outside the talks. These position papers should also be publicly posted in the interests of a transparent debate which is not simply PR speak.

- NZ Herald

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