The just-inked Regional Comprehensive Economic Partnership (RCEP) has been described as the largest free trade deal no one ever heard of.
Originally slated as China's antidote to the Trans-Pacific Partnership (TPP), RCEP was much more complex, as the outcome shows. The massive size of the economies - China and India, the 10 nations from the Association of Southeast Asian Nations (ASEAN), Japan, South Korea, Australia and New Zealand – belies the lack of substance in the deal.
Four features stand out. The first, not even mentioned in some stories, is that India walked away last year. A free trade agreement with India via RCEP was hailed as the big prize in a deal in which almost every country already had a free trade agreement with each other. The latest quantitative assessment of India's withdrawal showed the minimal gains projected by routinely over-optimistic economic modelling has evaporated for all except New Zealand, whose projected benefits depended on the removal of all tariffs and are below the margin of error.
Even our Ministry of Foreign Affairs and Trade (MFAT) has downplayed its normal spin heavy promotion. Describing India's withdrawal as "a blow to New Zealand's RCEP objectives", MFAT admits the deal "does not therefore deliver significant new market access for goods exports as a result of tariff cuts". As a consolation, RCEP does, however, reduce tariff barriers for New Zealand exporters into one country, Indonesia, for a number of products.
India cited New Zealand's hard line demands on agricultural market access, alongside Australia, as one of the reasons it quit the deal, alongside the massive impact on its more than 100 million mostly subsistence dairy farmers – yes, 100 million.
However, the overriding reason was the potential for India's economy to be swamped by neighbouring China.
Second, some controversial aspects of TPPA have been stepped back in RCEP. There is no chapter on state-owned enterprises or government procurement, no right for foreign investors to enforce special rights through investor-state dispute settlement (ISDS), some intellectual property rights for Big Pharma are absent or diluted, the electronic commerce chapter left out some rules and is not enforceable.
That is a start. To give New Zealand's negotiators credit, they played a key role in resisting the right of foreign investors to sue. The policy of no ISDS was adopted as policy during the last term. That needs to be set into legislation this term, following a private member's bill proposed by New Zealand First during the TPP.
The third point is the flip side of that good news. RCEP is still based on the failed
hyperglobalisation model, which Covid-19 has exposed just as the global financial crisis did before. Highly integrated supply chains create deep interdependency, leaving countries without security and stripping away their domestic resilience. Corporate entities, most recently Big Tech and Big Pharma, secure greater rights with no responsibilities.
New Zealand's concentration of low value-added commodity exports to single large markets such as China and potentially fragile services industries of tourism and "export education" are not fit for the 21st century.
Which brings me to my final point. RCEP has again been negotiated under conditions of secrecy with many fewer leaks than the TPP. It has continued alongside the government-appointed Trade for All Advisory Board's review of New Zealand's approach. This review was quietly released last year and the Government has yet to respond.
The Government clearly plans on business as usual, especially under Damien O'Connor as the new Trade Minister. Negotiations with the European Union and United Kingdom follow the same old theme.
In recent weeks Nobel Prize-winning economist Paul Krugman has taken responsibility for promoting a hyperglobalisation model that has generated serious social and economic imbalances and populist backlash internationally, insisting this is not just a phenomenon of Trump and Brexit.
It's time the New Zealand Government recognised that reality and opened itself to a genuinely open and debate on alternative international trade models for Aotearoa New Zealand as well.
• Jane Kelsey is a professor of law at University of Auckland