Jane Kelsey: Forget refresh - trade policy needs total rethink

Trade Minister Todd McClay was handed a toxic portfolio by his predecessor. Photo / File
Trade Minister Todd McClay was handed a toxic portfolio by his predecessor. Photo / File

Former Trade Minister Tim Groser had a "take no prisoners" approach to trade policy. The contempt with which he treated critics of the Trans-Pacific Partnership Agreement left a toxic legacy for his successor Todd McClay.

The new minister is trying to stamp his own more congenial brand on the portfolio with a euphemistically phrased "refresh" of New Zealand's trade policy strategy. The process has been quietly under way for some time, but surfaced publicly this week with meetings in Wellington and Auckland.

This is the perfect time to launch a fundamental rethink of New Zealand's trade policy that starts from first principles. The groundswell of opposition to the TPP reflects a crisis of legitimacy in secretly negotiated agreements that are seen as pro-corporate and anti-democratic. Rallies for Democracy around the country on Saturday that link the TPP to climate action, te Tiriti o Waitangi, social justice and workers' rights are the latest manifestation of that disquiet.

Even long-time champion of the Government's approach, Stephen Jacobi, agreed on Morning Report this week that people's deeply held concerns would need to be addressed in the review and congratulated the minister for being brave enough to do so. Instead, we are presented with an anodyne "refresh" that focuses solely on commercial interests and quarantines the rest.

The minister and senior officials in the Ministry of Foreign Affairs and Trade are in a state of denial. It's not enough to keep repeating that New Zealand is a trading nation. Stronger monopoly rights over medicines and Hollywood blockbusters, special rights for foreign investors to sue governments in controversial offshore tribunals, handcuffs on financial regulation or foreign investment in property have nothing to do with "free trade".

The minister said those concerns were not part of their "refresh" and should be raised for each individual agreement. Perhaps he hopes people won't bother given the futility of trying to influence the TPP negotiations.

Likewise, those who took the only opportunity available to them and presented submissions to the select committee examination of the already-concluded TPP. The draft select committee report set out their concerns in some detail. The final version was purged of any critical substance, reducing the report to a piece of Government propaganda.

Opting for a bland "refresh" is a high-risk strategy. The model of ever-expansive free trade and investment deals is in meltdown internationally. The TPP may never make it through the US Congress. The German and French ministers have written off its counterpart, the Transatlantic Trade and Investment Partnership, as dead in the water.

Brexit puts the lie to the notion that deep integration is irreversible, once alienation reaches breaking point. So do the growing number of governments who are withdrawing from bilateral investment treaties and substituting alternatives that balance regulatory sovereignty, social priorities and the economic interests of foreign and domestic investors through new model treaties or by using their own domestic courts.

The National Government is gambling that it can ride out these reversals and continue with an updated form of business as usual. Who knows at this time what a Labour-led government would do.

Both would do well to take heed of Financial Times journalist Martin Wolf, a former high priest of free trade whose 2003 book, Why Globalisation Works, extolled its virtues. Last week in the Financial Times Wolf warned, "Those of us who wish to preserve both liberal democracy and global capitalism must confront serious questions. One is whether it makes sense to promote further international agreements that tightly constrain national regulatory discretion in the interests of existing corporations."

He expressed sympathy for leading US economist Larry Summers' view that, "international agreements [should] be judged not by how much is harmonised or by how many barriers are torn down but whether citizens are empowered".

Principles like these, which are replacing our Government's outdated view, would form a fitting basis for a new trade policy that can create broad and lasting public support for our future international economic relationships.

• Jane Kelsey is a professor of law at the University of Auckland.

- NZ Herald

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