Keith Woodford says the Trans Pacific Partnership is caught on American rocks. If it does sail again, he wants to see the fine print

Keith Woodford says the Trans Pacific Partnership is caught on American rocks. If it does sail again, he wants to see the fine print

By Keith Woodford*

Last Friday (12 June) was a bad day for proponents of the twelve-country Trans Pacific Partnership. To the surprise of many, the American House of Representatives has thwarted, at least temporarily, President Obama’s request for fast-track authority. Without that authority, other countries will not put forward their bottom line positions.

The irony is that the House has in theory offered Obama exactly the fast-track authority that he needs. However, the differences between the House and Senate versions of legislation are such that in reality he has been defeated.

The importance of fast-track authority is that the American Congress would then only be able to accept or reject the TPP without amendment. Without that agreement, ratification becomes unmanageable.

The issues that are causing so much controversy for the TPP in the USA have both similarities and differences to the TPP issues that divide New Zealanders. In both countries, big business is supportive. However, whereas in the USA there is widespread community concern about blue collar jobs, here in NZ the concern is about the power the big American corporates will be able to exert.

There could still be more twists and turns over the next few weeks before the US House and Senate take their summer recess, but time is running out. With the next presidential election only 17 months away, the likelihood is that the TPP will go to the back burner.

Perhaps that delay will be a good thing. Until now, most New Zealanders have had only a vague notion of what the TPP is about. But if negotiations do continue to move forward, emotions will surely rise. In that case, there is a real risk that the TPP will come to divide New Zealanders in a way we have not seen since the Vietnam War and Springbok apartheid issues of a previous generation.

The TPP is different to any other trade partnership New Zealand has been involved in. This deal is not just about free trade. It is also about geopolitics.

From an American perspective, the TPP is all about outmuscling China in the Pacific. The Americans want to bring as many Pacific Rim countries as possible under American influence.

President Obama has been explicit in recent days about this. On 12 June he said:  “These kinds of agreements make sure that the global economy’s rules aren’t written by countries like China; they’re written by the United States of America”. 

President Obama’s statement goes right to the core of why New Zealand needs to think hard about the TPP. The rules are being written by the Americans to benefit America. The Obama administration has also been explicit that it is about ensuring that American insurance companies, American financial companies, American pharmaceutical companies, and American ideas on intellectual property rights, all rule across as much of the world as possible. Linked to this, is that American corporations would be able to sue national governments who don’t play by these rules.

With most trade agreements, the benefits to New Zealand have been obvious in advance, and the results have delivered on the promise. CER with Australia and the China Free Trade Agreement have both been outstanding successes in advancing the New Zealand economy. It is not by chance that they are our two biggest trading partners. The benefits from ASEAN have been slower to come through, but they will continue to flow for many years. The recent free trade agreement with Korea is also likely to give considerable benefits. And historically, the Uruguay Round Agreement under GATT also brought many benefits to New Zealand in freeing-up international markets.

But this proposed TPP agreement is something quite different.  Our leaders have made some very general statements about the expected benefits, but the specifics are far from clear. And on the other side of the coin, there are widespread concerns about the amount of national sovereignty that we might be conceding.

It is all very well for Prime Minister Key to argue that Pharmac is not up for negotiation. In terms of anything specific, Pharmac will indeed probably get minimal if any mention. The devil will be in the detail of general rules which the United States can then use for subsequent leverage in relation to the dismantling of Pharmac. And those rules are secret.

There are sound pragmatic reasons why negotiations have to be conducted in secret. It would be impossible for twelve countries to negotiate with every negotiating step laid out in public. But what we do need is an absolute agreement from Prime Minister Key that all will be available for public scrutiny before the agreement is signed, and that there will be no secret side agreements.

There are six countries within the TPP with whom New Zealand already has free-trade agreements. Most of these come under the ASEAN umbrella. That leaves three additional TPP countries of importance to New Zealand. These are the USA, Japan and Canada. The other two of somewhat lesser importance are Mexico and Peru.

When the TPP was first touted back in 2005, our then Labour Government told us that it would bring big benefits from dairy access to the USA. Back then, this might have been a prospect, but the USA is now very competitive on international markets, and is itself a global exporter. Regardless of any free trade agreement, we won’t be exporting much dairy to the USA.

More recently, Trade Minister Groser has been having a crack at Canada for its regulated dairy industry.  He described their dairy industry as belonging in the former Soviet Union. This remarkable statement received considerable international press and did not go down well in Canada.

If Canada does join the TPP, then over time it will surely have to dismantle its dairy industry regulations. However, the notion that NZ will benefit from this is greatly flawed.

Currently, Canada produces about 8 billion litres of milk per annum of which nearly all is consumed within the country.  Take off the production shackles, and Canada could soon produce 20 billion litres, with much of that going to exports. In any case, it will be the Americans who will ship fresh milk across the border while the new Canadian industry gets itself organised, rather than New Zealand sending milk powder across the sea.

One of the big problems for New Zealand in our approach to the TPP is that our negotiators have got locked into a mind-set that has become irrelevant. Our bureaucrats and their political masters have failed to keep up with the reality that the dairy world has changed. Neither the US nor Canada is going to be an important destination for our milk.

Of course trade does already flow freely between New Zealand and the USA for most of our agricultural products. America is our biggest market for beef, which incurs minimal tariffs of 4.4 c per kg.  Lamb enters duty free. Wine incurs modest tariffs but the real issues for New Zealand wine in the USA are brand recognition and internal logistics. Kiwifruit incurs an 8.5% tariff.

If the TPP does find its way out of the American rocks, then our Government will have to do a lot more to explain and define the benefits. And New Zealand’s citizens will want to see the fine print.

At least the Government knows where it stands. In contrast, Labour is not quite sure how to position itself. For the Greens, and their new co-leader James Shaw, this is the perfect issue on which to rally the troops. 

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Keith Woodford is Honorary Professor of Agri-Food Systems at Lincoln University. He combines this with project and consulting work in agri-food systems. This a regular column here. His archived writings are available at http://keithwoodford.wordpress.com

We welcome your help to improve our coverage of this issue. Any examples or experiences to relate? Any links to other news, data or research to shed more light on this? Any insight or views on what might happen next or what should happen next? Any errors to correct?

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"...this is the perfect issue on which to rally the troops." Someone better rally the troops!

The Greens I think/hope are very much no. I have no idea why Labour is so clueless / unable to make its mind up however.

If big business likes this thing, that is good enough reason for me to rejoice if it goes t...s up.

If I understand what is being described then Pharmac will be illegal under the TISA, and NZ government and Pharmac liable for damages/punishment under the TPP Agreement.

Yep, this isnt a trade agreement, its a golden key for every American vested interest and corporation there is to do what they want, in effect a world taxation system. The only ppl Ive seen who like the idea are Republicans in Congress and the Senate that should tell you how bad it is.

Well if this is the case then forget the TPP. Just regroup and concentrate on a FTA with Japan and India would be a lot more profitable, and productive. We also need to revisit the FTA with Russia, and get our factories of the blacklist with the Russian authorities.
It would change the power of NZ at negotiating if USA was chasing us for a FTA to try and recover the TPP.

".......or in this case, dispute settlement and intellectual property deals that pretend to be about trade) ......"

http://krugman.blogs.nytimes.com/2015/06/13/regulation-and-arbitrage-imp...

Really just about everything I read says it isnt about trade but IP lockdown and the ability to Pillage freely.

From an American perspective, the TPP is all about outmuscling China in the Pacific. The Americans want to bring as many Pacific Rim countries as possible under American influence.

Informed public debate cannot start soon enough for those financially committed to the NZ/China trade deal - where would our wholesale milk buyers appear from if fast track approval is granted to POTUS?

Steven H, the goepolitics of this is quite large, too large to go into here.
Very, very simply
America has been trying to get Russia into the EU but Putin refuses because "he will not be a pupet of the US just like the rest of Europe"
Putin has offered the EU to join him in the EEU (Eurasian Economic Union). That's got the US terrified because a Eurasian trading block could cut the US out alltogether. Note that Europe and Russia have land borders whereas Europe and the US are separated by the Atlantic..
As a consequence the US is out to destroy the Russian economy. The US caused the problem in Ukraine because a lot of the Russian pipelines go through Ukraine.
Russia is now trying to find an alternative route called the Southern Stream but the US blocked that so they are trying for a third route.
The intention of the US is to
Impose sanctions on Russia to hurt its economy which it has done.
Now block off any other access for Russian energy to Europe and bring in gas supplies from Qatar and Iran (that is why the US is cosying up to Iran - Russia is a bigger target). Qatar needs to go through Syria and that is why we have a civil war in Syria.
This has pushed Russia away from Europe and into the arms of China.
Because the US navy dominate all the trade sea lanes China is going overland called "The Silk Road"
Look at the map - Russia, Europe, China, India etc they all have borders whereas the US is stuck out in the Atlantic/Pacific.
America is rapidly loosing its world power status and is fighting hard to save it. I believe they will ultimately start WW3 if that what it takes.
Then you have to look at the Petrodollar, China and the IMF SDR and on and on and on.
Hard to do this subjuct justice in the comments section.
But i hope i have made the situation more clear. But as you can see the US are causing wars everywhere trying to achieve their objectives and we are being draged in with them.

Well said Mike B. You should read Power, Terror, Peace and War: America's grand strategy in a world at risk by Walter Russell Mead.

You have to put the geopolitics into place when talking the TPP. NZ has a valuable place in the world as we are the gateway to Antarctica and the Southern Oceans. US will always want a presence here regardless.

Do we really want to be under more American rule.

If NZ walked (or look to have) away from the TPP I think some other countries would be follow suit, US would then bend over backwards to recover the deal on the basis of national security.

We should be asking Murray Macully why we are not trading with the Russians as we traditionally have.

NZ's greatest bonus is strategic military. We are a backdoor into Asia, and Australia and Indonesia are buffer zones. If Asia/Indo wanted to strike out against anywhere in the world it really needs to have Australia and NZ in it's pocket, otherwise any opposing army could build strike and reserve bases in NZ/Australia. The distance is a logistical nightmare unlike Kuwait they can't just build troop and tank bases in the country next door and drive over the border, even building air base one helps the longer range equipment. NZ, unlike Australia, is narrow so not to hard to watch borders from several strategic locations. It's hard to sneak over hundreds or thousands of miles of open water.
We can't be starved out. We still have (some) industrial and technological infrastructure, so a crippling strike (eg against a capital or industrial center) would be of minimal effect. Things are still rough enough to encourage partisan actions and the country is big enough that it would take quite an effort to deal with that issue quickly (ie any major nation wanting to attack needs it's resources on the front line, not fighting guerilla warfare in the southern Oceans).
The other powers know this, and why they seek control.

I agree that we need to be seen to walk away from TPP and TISA, not cosying up to China but there's not a country that's got into bed with the US and woken up with more than they bargained for.

Who needs to fight a hot war anymore?
Didn't you know China owns Auckland already!
Its all about resources dear boy.
Think of all that fresh water
That black oil
And enough fish to sink your ship.

Doug - these guys are keen to fight a hot war. I'd say a lot cheaper than the $9 million/day the US is currently spending "fighting" ISIL.

http://www.telegraph.co.uk/news/uknews/11672642/Simon-Mann-We-can-use-me...

snip from Doug ...

"Do we really want to be under more American rule."

That's it alright. We have hitched the cart up to the wrong pony if we think US hegemony will save the day. A TPP is not in NZ's sovereign interests !

The Government, void of vision, actively subverts the open democratic process to support the morally and fiscally bankrupt US and their corporation's thirst for unbridled power and profit.

You wait, US troops stationed on NZ soil in the not too distant future !

The TPP is different to any other trade partnership New Zealand has been involved in. This deal is not just about free trade. It is also about geopolitics.

From an American perspective, the TPP is all about outmuscling China in the Pacific. The Americans want to bring as many Pacific Rim countries as possible under American influence.

http://www.economist.com/blogs/banyan/2011/11/free-trade-agreements

Well written Keith, just a bloody shame it has taken the media/journo's this long to present this issue to New Zealanders (most of whom have never heard of the TPPA).

A few months back I went on a protest march, my first. I didn't do it for political reasons, simply for my belief that NZ should remain a sovereign country. The problem is that most of the protesters were holding banners (used Labour/Green election cards on the back) as a means of showing the public why the TPPA should not be signed.

It became political, which it should never have been. Yes, National are warming their toes with America's elite; however, this should have been a protest ignoring political beliefs which would be counter-productive for any National voters looking on. There goes those 'wacky lefties' one would hear them cry.

Instead, business people, lawyers, medical professionals and other highly regarded individuals in NZ have signed and presented a petition to the government to refrain from signing the TPPA - all ignored might I add. Even the federated farmers have called for more transparency as Japan and USA could strike a deal to leave NZ farmers in the cold.

http://thediplomat.com/2014/07/the-tpp-and-japanese-agriculture/

What I am astonished by is how these so-called democratic countries have progressed this far without one iota of democracy in sight!!

So while we're all talking about changing our flag, the very symbolism of what New Zealand is as a sovereign nation the very same government is in the process of selling what few rights we have left to a few wealthy corporates.