Can We afford Not to Adopt the TPPA?

A key issue may not be what is in the TPPA, but that by not adopting it we may ruin the other international agreements we are pursuing. 

In the 1960s I was an active member of the Campaign for Nuclear Disarmament. It was a moral crusade with unrealisable objectives such as withdrawal from SEATO (a now defunct treaty), a nuclear-free New Zealand and withdrawal from ANZUS. The dreams of youth can become a reality.

I was there the night CND morphed into the Committee on Vietnam. We didnt win that one; the troops went, although we were broadly right as the resulting debacle and withdrawal demonstrated. Perhaps we did better than we thought at the time. The Ministry of Foreign Affairs was deeply divided on our involvement in Vietnam; perhaps we outsiders contributed to the doves who argued for – and got – the minimalist response that New Zealand could get away with, given the network of international relations in which the decision was imbedded.

Those outside often have little understanding of the complexity of the network. For instance a consequence of the legislation which made New Zealand nuclear-free and led to our ejection from ANZUS changed the balance in our relations with Australia and the US. Our practice had been to play one off against the other. When the US withdrew in a huff, we found ourselves much more dependent upon Australia; in one way our independence was reduced by being nuclear-free.

These complex interdependences also apply to trade negotiations. While there has been much focus on the TPP deal, there has been hardly any mention of the WTO (World Trade Organisation) agreement in Nairobi which prohibits agricultural export subsidies. Some 30 years ago a trade negotiator commented to me that getting rid of this dumping might be the best single thing we could do for our exporters. Not only would it stop the undercutting of their markets but it would force domestic agricultural reform because the dumping nations could no longer export the surpluses arising from their subsidies. There is not a lot of this subsidising going on at the moment but without an agreement export subsidies are likely to come back – to New Zealand’s detriment.

What was not always mentioned was that the chair of the WTO agricultural committee which negotiated the deal was a New Zealand ambassador, who is the fifth New Zealand chair in succession. This not only reflects the excellence of our Geneva ambassadors and the priority we give to agriculture in the WTO, but that the powerful – most notably the US – trust New Zealand to do a good job. That trust arises from the way we behave in other trade negotiations, including the TPP. The implication is that if we defaulted on the TPPA we would damage that trust and our ability to function effectively in a wide range of other international negotiations we care about, including on climate change.

That puts us in an extremely invidious position over the TPPA. Sure, we could turn it down, losing both its benefits and its downsides. Were we to do so, however, we would compromise the trust our international activity depends upon, especially the possibility of other trade deals which would open up markets currently restricting our exports.

Briefly, there are five (or six if you treat ASEAN as a unity) major trading groups in the world, plus Australia, which are particularly important to us. We have deals with ASEAN, Australia and China but we need the whole seven so that we do not become too dependent on any one of them (especially as the three just mentioned are closely interdependent). We have trade negotiations with India and are beginning soon with the EU but we are low on their priority lists. Frankly I am not optimistic about India which is proving especially recalcitrant with everyone, but we might do a bit better there with RCEP, the Regional Comprehensive Economic Partnership, which includes India and also ASEAN, Australia, China and Japan.

Japan and the US (indeed the whole of the North American bloc) are members of the TPP. We have been struggling for ages to get deals with these two but have been too low on their pecking order to be noticed. So you might think of the TPPA as a means of getting the deals.

That is a positive, but of course the deals have to be favourable to us. Many argue they are not although their vehemence is offset by those who argue the opposite. The truth is that there are positives and negatives and different people balance them differently. In my opinion it is not much use focussing on a subset of the outcomes and ignoring everything else. Deals are about giving and taking.

The logic in this column is that we now do not have much choice about the TPPA. The government is trapped into agreeing to it because rejecting it has implications for other trade deals and our wider international relations. That is probably what our MFAT officials are advising, although no doubt there are many diverse views in there, just as there were with Vietnam. Here is my best guess about what is likely to happen.

There is a signing of the agreement in Auckland this Thursday. The exercise is primarily ceremonial – agreeing to a common text and exhibiting solidarity. I suppose the protests outside are ceremonial and for solidarity too.

The twelve partners then go away and prepare for the implementation of the text. Some things can be done by regulation, some require a change in law. The degree to which each partner has to do this differs according to their constitutional arrangements.

New Zealand requires some change in law. The government will drive those through by using its dominance in parliament, despite a large minority of the public having doubts (and much of the rest being thoroughly confused). I am afraid that, just as it did during the negotiations, the government will not seek consensus, but it will aim to disrupt the opposition for short term political gain whatever the long term consequences.

Even so, the government should try to meet specific legitimate concerns. For instance, Maori do not trust the government to reject certain actions if they compromise the Treaty of Waitangi. International treaties, such as the TPPA, are between governments, but they do not prevent a government enacting domestic legislation which would require it to consult and get a mandate from parliament.

Everyone will be watching the US, where the passage of the measures is likely to be most contentious. Many of the predictions of what will happen reflect the soothsayers’ view of the TPPA rather than a solid political assessment. There is considerable division among those who are informed. Some think the US Congress will agree to the deal this year because it is so crucial to US economic hegemony, particularly relations with Japan and the reducing of China’s economic leadership. Others think the Congress will not bear to give Obama a win and will hold it over to next year. Another view is that there are so many fish-hooks in the deal that Congress will not be able to get an agreement.

Until each of the partners has demonstrated they can implement the agreement, its provisions do not come into effect. When they have all done this the partners ratify the treaty. (Most required legislation will not come into effect until ratification.)

By now there are so many imponderables that there is insufficient room in a column to pursue them all in a balanced way. My guess is that, given the way we are trapped by the wider international issues, the cautious advice is to proceed on the path of implementing the legislation for the TPPA, making as much international progress elsewhere. We can then review whether we really want to go ahead with the implementation. Legislation can always be reversed, agreements abrogated, although if the government changes its mind it is better that some other partner pulls the plug. Much of what is due to happen will be less ceremonial than this Thursday.