Stephen Jacobi: What Labour's not seeing in TPP deal

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An open letter to Andrew Little, Labour Party leader, on the TPP.
Tariff reductions and/or elimination for items such as wine cannot be easily dismissed. Photo / Natalie Slade
Tariff reductions and/or elimination for items such as wine cannot be easily dismissed. Photo / Natalie Slade

Dear Andrew,

Thank you for clarifying your opposition to the Trans Pacific Partnership (TPP) on your blog post "My thoughts on the TPP". In the interests of open and respectful debate, I would like to comment on your key points:

Labour is a party of free trade. This isn't a product of the last couple of high-profile Trade Ministers in Labour Governments. It goes back the full 80 years since we first formed a Government. We have always championed the cause of better access to markets and free trade.

There can be no argument with this. I myself (as a public servant) worked directly for former Trade Minister Jim Sutton and can attest to the tough debates with the Alliance Coalition partner about the merits of free trade. It is this long history of bipartisanship which makes some of us, both inside and outside the party, so disappointed with your decision.

The National Government has handled the negotiations of the TPPA appallingly. Seven years of total secrecy have aroused natural suspicion about its contents. The Government did nothing to inform New Zealanders about the negotiation, the issues, progress - anything in fact. The 6000 pages of agreement were dumped in November last year and academics, NGOs and citizens have been left to work their way through the document and form their own conclusions.

Read more:
Andrew Little On the TPPA

People are invariably afraid of what they don't know and the long and tortuous negotiating process was hopeless in this regard. The 6000 pages of text were released, with plain-language descriptions, some three months ago, much earlier than other FTAs. Of course NGOs and citizens have to come to their own assessment and this has been assisted by the release of the National Interest Analysis, which provides further insight. The proper place to come to judgment is in the course of the ratification process. This is exactly what has happened with other FTAs.

The deal is worth less to New Zealand than the Government touted. Extending copyright will add costs to libraries and universities. The cost of pharmaceuticals to NZ will rise.

The analysis of TPP has been done by the same officials who advised the previous Labour Government and may advise the next. I suggest, but agree it is a matter of debate, that the extra costs to universities and libraries arising from the copyright change is marginal at best when compared with the other benefits. (Some in the industry are already saying the Government's estimation of the costs of copyright are too high). It is not clear pharmaceutical costs will rise since there is little change to Pharmac or to the patent and data protection regime for medicines: at the end of the day the costs to individual Kiwis are determined by Pharmac and the Government. The Government is on record as saying these costs will not rise. You should hold them to account for that.

An email from an acquaintance, a strong pro-free trader and pro-TPPAer, suggested I "take note" of the Canadian Trade Minister's statement on the agreement. The minister, Chrystia Freeland, set out how she is dealing with the TPPA - meeting with unions, businesses, NGOs and holding town hall meetings. She called for a non-partisan debate. All of which I thought was a fantastic idea and was happy to note. Still, I did wonder why my friend hadn't also sent it to the National Party asking them to take note.

If this was me (!), the point I was making was that the Canadian Government, while having reservations about a deal signed by its predecessor, was proceeding to sign TPP and allow the ratification debate to continue. As I understand it you don't want the Government to sign TPP, which will prevent the ratification debate. Your comments this week have been far from non-partisan. The Government has already committed itself to a process of outreach and hui around the country to discuss TPP as a prelude to the parliamentary discussion.

I have read a lot of the TPPA myself. The free trade aspects are naturally attractive, even though the deal on dairy is hopeless, meat is a little better and the rest amounts to not much considering it is an agreement covering 800 million consumers and 40 per cent of the world's GDP. The benefit of genuine free trade agreements is the potential to create new markets that previously didn't exist.

I agree that the dairy aspects of TPP are not as good as they could have been and as we had hoped. But they are in the view of the negotiators and the dairy industry the best that could have been achieved in the circumstances. Dairy still benefits more than any other sector from tariff cuts in key markets and the establishment of new tariff quotas. The meat deal - specifically beef to Japan - is a significant market opening about which the industry has welcomed. Without this we will not be able to compete with Australia which already has an FTA with Japan. To call the rest "not much" is a serious underestimation - tariff reductions and/or elimination for horticultural products including kiwifruit, wine, wood products and seafood cannot so easily be dismissed. Addressing tariff and non-tariff barriers for manufactured products such as health technologies and agricultural equipment is also significant.

This will result in the creation of new markets as you suggest.

Two things that disturb me are, first: The restriction on New Zealand legislating to regulate land sales to non-resident foreigners (Labour's policy is to require them to build a new house, not buy an existing one, and we would be unable to do this under the TPPA).

Labour's clearly signalled "bottom-line" for TPP was it should provide for restrictions on land sales to non-resident foreigners. This is possible under TPP: a future Government could if it wished apply a stamp duty or other tax to restrict these sales. Opinion is divided on whether an outright ban could be introduced, but there is a ready alternative to meet Labour's policy position.

And secondly the requirement to allow other TPPA countries, their citizens (including corporates) to have a say on changes to many New Zealand laws and regulations ...

Constraints on law-making and opening up our political system to overseas interests is unheard of.

TPP does provide for our partners to make their views known on any measure which may be introduced that could have an impact on trade. But these provisions are far from "unheard of". They are already enshrined in the World Trade Organisation (WTO) and other FTAs concluded by Labour including the China FTA. They are what make it possible for New Zealand to be consulted on changes affecting our exports to other markets such as subsidies under the Farm Bill or a discriminatory labelling or levy system. Importantly these provisions retain the right of the Government to continue to regulate: the Government may have to listen to the views of trading partners but not necessarily heed them. Bottom line is we do this already and have been doing so for years now.

For instance we would have to let Carlos Slim, the wealthy Mexican telecom company owner, vet any regulation of our telecommunications industry.

Not quite. The Government is required to publish notice of its proposed changes as it does in the Official Gazette, but not advise everyone personally. Mr Slim may offer comment if he wishes. The Government still decides.

As a social democratic party, we have always stood for effective parliamentary democracy. That means a system that is accountable only to those who elect its representatives and which serves all citizens, not the privileged and the elite.

There is no arguing with this either. In this case it is the democratically elected Government of the day which signs and ratifies treaties. The Parliament is invited to consider and pass the legislation, which gives effect to the treaty's obligations. TPP is no different in this respect from any other treaty whether in the field of human rights, climate change or labour. A future Government may also leave TPP after due process albeit with the loss of benefits this would entail.

I hope you will consider these points.

Yours sincerely

Stephen Jacobi

Stephen Jacobi is executive director, NZ International Business Forum www.tradeworks.org.nz

Debate on this article is now closed.

- NZ Herald

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