Trade Minister Tim Groser and his counterparts from eleven other countries gather in Maui this week to finalise the Trans-Pacific Partnership Agreement (TPPA) ahead of an informal deadline of the US Congress's August recess.

I would say they have a 90 perc ent chance of pulling it off now that President Obama has Fast Track authority. But it's far from a done deal.

The Minister knows whatever he signs off on can't be undone at home. But politically, National needs bi-partisan support to legitimise the unpopular agreement.

The Labour caucus released its policy on the TPPA through TVNZ on Thursday (as distinct from the more detailed policy the Labour Party conference passed several years ago). A flurry of spin proclaimed Labour would not support the TPPA "if it undermines New Zealand's sovereignty".


The policy contains five carefully worded conditions. Only one is a true red line - the right to regulate foreign investment in residential land. Even that is a Clayton's protection, because it's already been signed away in the Korea Free Trade Agreement, and China is entitled to the same treatment.

Instead of promising to address Labour's concerns, Groser confirmed on Saturday's The Nation that the government has agreed to the same terms in the TPPA. Its arrogance in not trying to bring the largely sympathetic Labour caucus on board may come back to haunt it.

The rest of Labour's principles you can drive a bus through.

'Pharmac must be protected' is as vague as National's saying it will defend the 'fundamentals of Pharmac'. Health spokesperson Annette King has been conspicuously and uncharacteristically silent on the TPPA, despite its potentially huge health and budgetary impacts.

On The Nation Groser downplayed any additional medicine costs as minor and long term. But preliminary analysis by health economists calculates every extra year of data exclusivity for the seven most costly biologic medicines would divert another $25-50 million from the health budget into the pockets of Big Pharma.

New Zealand currently grants five years data exclusivity. The US is asking for 12. Even a compromise at eight would add $125-250 million to the current medicines budget. Biologics is a growth area, so the cost would increase exponentially over time.

Labour's condition that 'corporations cannot successfully sue the Government for regulating in the public interest' is vacuous. We know investors from TPPA countries will have such rights that are enforceable through notoriously unpredictable tribunals.

Groser admitted an investment dispute might succeed before a rogue tribunal. Does Labour's principle mean it will now oppose the TPPA because an investor-state dispute might succeed - which would be meaningful but a radical change of position - or only once New Zealand loses a dispute some time in the future, which would be futile?


Third, 'the Treaty of Waitangi must be upheld' - by whom? The Waitangi Tribunal, when considering urgency for a claim lodged by prominent Maori last week, was not convinced the Treaty exception that Labour included in previous agreements is robust. The Tribunal proposed an urgent independent review that the Crown has yet to accept. Again, Labour Maori MPs have been silent.

Labour's fourth ambiguous requirement is 'meaningful gains' for farmers through tariff reductions and market access. Groser likewise says he won't sign without 'commercially meaningful' dairy access, but the way he describes it would justify almost anything. The best-case scenario by the US Department of Agriculture, assuming Japan, the US and Canada removed all their tariffs, is a 0.01per cent increase in New Zealand's GDP by 2025. Hardly 'meaningful'.

There are many other policy problems Labour ignores. Can New Zealand introduce a capital gains tax or impose capital controls in a financial crisis? Will the SOE chapter allow Labour to establish the proposed state-owned KiwiAssure and rebuild a genuine public broadcaster? Are stricter intellectual property laws likely to stifle business innovation?

Labour has two options. It can state categorically that it does not support the TPPA. It has enough evidence, even without being allowed to see the text, that it will not meet the five principles and will 'undermine New Zealand's sovereignty'. Or Labour's caucus can hide behind claims that it needs to see the fine print, knowing by then it's too late.

Assuming the government puts the TPPA to a vote in the House (which it doesn't have to do) a 'no' vote by Labour would have no legal effect because the Executive alone has the power to ratify.

Groser seems to assume the Labour caucus will fall into line. If Labour is to have any credibility, Andrew Little needs to have the guts to announce it will oppose the TPPA, and he needs to do so before the TPPA ministers conclude their meeting in Maui on Friday.

Jane Kelsey is a law professor at Auckland University.