Good decisions require sound analysis. This is especially the case with trade agreements that are complex and far-reaching. Debates over the Trans-Pacific Partnership have been short on facts and long on ideology. The Government needs to front up on the costs and benefits of TPP-11 before it signs.
Amongst all the words written about the Trans-Pacific Partnership (dubbed the TPP-11 after the US pulled out), there has been little analysis of the costs and benefits. Most of the rhetoric has been about vague notions of whether so-called "free trade" is good or bad, but not about the merits of this treaty.
As Nobel prize-winning economist Joseph Stiglitz pointed out, the benefits from trade agreements are grossly exaggerated.
Proper scrutiny is especially important because trade treaties are no longer just about tariffs and quotas – they include restrictions on government laws and policies that affect all New Zealanders. They also allow foreign corporations to sue our Government using Investor-State Dispute Settlement (ISDS).
There has been widespread public distrust over the fundamentals of the TPP and a majority of New Zealanders opposed the deal in February 2016.
Reform of trade agreements is under way. ISDS has been rejected by the European Union and leading developing countries.
Our Prime Minister has called the ISDS provisions "a dog", and the Trade Minister opposes them in future agreements. But the Government wants to sign TPP-11 anyway, apparently because they consider the gains for agricultural exports are worth it. This needs closer examination.
TPP-11 will reduce some tariffs, mainly for largely unprocessed agricultural commodities.
However, the deal is far from the "gold standard" initially promised by John Key, especially for dairy and meat. The gains for farmers are small and there is virtually no benefit for higher-value processed exports and manufactured products.
The reduced tariffs under TPP-11 would be phased in over 15 years. Using the Ministry of Foreign Affairs and Trade's estimates, TPP-11 would result in tariff reductions in the supply chain of $222 million per year by 2034. This is 1.1 per cent of New Zealand's annual agricultural exports.
Farmers will get some of those reductions, but overseas processors, importers and retailers will also grab a significant share.
The scale of these tariff reductions is not sufficient to stimulate new investment. They are far less in percentage terms than average monthly changes in foreign exchange rates, and fluctuations in milk powder prices at each global dairy trade auction.
Just looking at the benefits, TPP-11 would increase GDP growth by about 0.2 per cent of GDP growth in 15 years' time (using the US International Trade Commission's modelling assumptions, rather than the speculative assumptions used in modelling commissioned by Mfat).
This compares with an increase of 47 per cent without TPP-11 (NZ Treasury projections). An extra 0.2 per cent GDP growth by 2034 is insignificant.
There are also risks and costs from signing. Some of the most obvious disadvantages of the TPP have been removed in recent negotiations, such as extended copyright and longer protection for some medicines, but most of the original TPP remains intact. Only 22 out of more than 1000 provisions have been suspended.
TPP-11 would override important aspects of our sovereignty. The right of foreign investors to sue governments under ISDS remains in the TPP-11, even though the scope for cases over government contracts has been reduced.
ISDS still covers direct investment, shares, mortgages and bonds, intellectual property, concessions, licences, permits and other assets.
We should not allow foreign corporations to bypass our courts and sue our Government in an international tribunal. Even the threat of litigation is enough to "chill" government laws, as we saw in the attempt by Philip Morris to sue the Australian Government over plain packaging of cigarettes.
There are other problems. TPP-11 increases the threshold for screening foreign investment from $100m to $200m, allowing an accelerated sell-off of New Zealand's assets. Our Government would not be allowed to require the storage of sensitive data in New Zealand, raising privacy concerns. TPP-11 would lock in financial liberalisation, ignoring the lessons from the global financial crisis, and give foreign investors preferential rights to recover their funds in case of financial crises.
We live in an era of change. Future governments will need flexibility to address market failings, including rising inequality and climate change. New laws will need to respond to disruptions from technology, markets and society's expectations and ensure multinational corporations pay taxes and compete fairly.
We should not be locked into deregulatory trade agreements. It is time our international treaties support a well-regulated economy, built on principles of fairness, sustainability and democracy.
• Barry Coates is an economist, previous head of Oxfam New Zealand and former Green Party MP.