New Zealand drug-buying agency Pharmac may not be hit with any changes under the Trans Pacific Partnership deal being negotiated with United States, although the finer details of the Pacific trade agreement are yet to be ironed out, Prime Minister John Key says.
The New Zealand government over the weekend welcomed a commitment from US President Barack Obama that he wanted negotiations between the nine existing countries in the TPP concluded before the US Presidential elections in 2012. News that Japan, the world's third largest economy, would seek to join TPP was also welcomed.
Prime Minister John Key this morning said a Trans Pacific Partnership deal with the US would open up "huge opportunities for jobs and growth" in New Zealand. However, as normal when taking questions on the TPP, Key was soon asked what changes there might be demanded of New Zealand drug-buying agancy Pharmac under any deal with the US.
“We’ve always demonstrated in the past we can negotiate very good deals. We did it with Australia, we did it with China, and other countries. So I’m not anticipating major changes to Pharmac,” Key said on TVNZ's Breakfast programme.
“I’m not even necessarily anticipating any changes there. We need to make our way through the finer details. But there’s always a give and take in every deal, that’s the nature of these things. But on balance of benefits, it has to benefit New Zealand otherwise we won’t do it, and we’ve demonstrated in the past we can. It’s not in our interest, I believe, to get rid of Pharmac,” he said.
New Zealand would be looking for a better free trade deal with the US than Australia got – a deal in which major industries such as sugar were left out.
“We’ve all been talking about high-quality agreement, and that means everybody’s in for pretty much everything. So hopefully that will work out well, but there’s a lot more negotiation to go,” Key said.
Australian exports to America fell 19% from 2008 to 2010, while New Zealand exports to America fell 17% over the same period. See Tim Hunter's piece in Stuff for more detail.
Australia signed its free trade deal with America in 2005.
Finance Minister Bill English, who is representing New Zealand at APEC this week along with Trade Minister Tim Groser said he was cautiously optimistic about TPP with the US following the weekend's progress, which could have headed in the opposite direction. English praised Groser and New Zealand trade officials for their work behind the scenes in the lead-up to the APEC meeting.
English said there were two bits from the weekend that mattered: One was a commitment to paper from the US that they wanted to sign a comprehensive and ambitious agreement, while the second was Obama putting his weight behind the agreement and bringing the timetable for completion forward to before the US Presidential election in 2012.
The final agreement with the US when it was reached next year was unlikely to include Japan, which announced over the weekend it would consider joining the TPP.
“The New Zealand position has been other countries can come in if they go through the process of getting themselves ready to come in, which means being ready to sign up to a comprehensive agreement," English said about the Japanese.
“Japan couldn’t say, ‘we want to come in but we’re not going to talk about agriculture’. When they’re ready to sign up to what the existing nine have agreed to, then it will be OK,” he said.
Sticky issues to come
The discussion over the weekend did not deal with any of the “sticky” issues such as company vs state arbitration and agriculture.
“When officials start their meetings again, they now know there’s some urgency about resolving some of those issues. But there’s any number of them,” English said.
“Officials tell us that the hardest bits will be left until the end. The important thing there is, they all know the issues are sticky – the political leaders – but the fact that Obama’s got in behind it certainly helps. There’s been quite a strong expression of political will," he said.
“These people are all looking for levers they can pull to get growth moving. Whatever their views were about free trade in the past, it now looks to be one of the few things that could help them.”
During APEC discussions, which are continuing today, English said there had been discussion of the sovereign debt crisis in Europe.
“I’ve had the opportunity to talk to some large companies, as well as politicians. They are more balanced [than discussions with the IMF] because they’re growing," English said.
“It’s reasonably similar to how we [NZ] look at the risks there that you have to watch, but the opportunities in these faster-growing economies are good, and if you take them you will be able to grow,” he said.
Further integration within APEC would help.
“There’s Indonesia with 240 million people and growing at 6%. That’s an economy that’s been fairly self-contained, and now more and more people are able to trade with them,” English said.
APEC countries were worried about the situation in Europe, but did not expect to be knocked over by the crisis there.
“It’s not quite as relevant here, as it is when you’re sitting in Washington,” he said.
There was a leaders’ meeting scheduled today, during which the global economy would be discussed.
“We expect to get a sense of two things: One is how much they are worried about Europe, and to what extent the surplus countries are considering being part of the solution. The second thing is getting a measure of what the Chinese are actually going to say about the Chinese economy, what the Russians are going to say about the Russian economy [etc]," English said.
'The US is eyeing Pharmac'
Meanwhile, Auckland University law professor, and TPP critic Jane Kelsey, said the documents released over the weekend gave no new information on the secretive trade deal talks.
“The first official statements about the TPPA negotiations have told us nothing we haven’t already gleaned from leaked documents, analysis of speeches from politicians and corporate lobbyists, and our own discussions with delegations,” Kelsey said in a media statement.
“They do confirm their goal is to set a straitjacket on the policies and laws that future New Zealand governments can adopt," Kelsey said.
“We already know that the targets include Pharmac, tobacco control laws, restrictions on foreign investment, tighter environmental protections, GM and food labeling, industry, regulation of oil exploration and construction standards, and many other areas where market-friendly regulation has failed. We need to see the draft texts so we can properly assess their implications and if they are not in our interests the government should be required to walk away. That’s is the least we should expect in a democracy,” she said.
The APEC process, which gave privileged access to the corporate sector and excludee all others, had compounded the secrecy that had surrounded the TPPA negotiations, Kelsey said.
“The buzz-word ‘transparency’, which is strewn throughout the APEC and TPPA documentation, should be relegated to the dustbins of hypocrisy. The CEOs of the major corporations and the business lobby groups have had privileged meetings with the officials, ministers and leaders to push their cause," she said.
“New Zealanders should be outraged that our right to decide our own future is being dealt with this way.”
(Updates with interview with Finance Minister Bill English, comments from Jane Kelsey, link to previous Doubleshot interview on TPP concerns, video of Key)