Perhaps New Zealand’s acceptance of the TPPA will depend upon the outcome of the Northland by-election
Prime Minister John Key shortened his trip to Japan and Korea in order to spend more time campaigning in the Northland by-election. Domestic affairs trumped international ones – for a short time anyway.
He said he was going north to progress the TPP – the Trans Pacific Partnership, which is meant to lead to a free trade agreement between 12 economies including the US. Negotiations have been wandering on for years, with the ongoing promise of a conclusion ‘soon’.
I support the strategy of New Zealand’s involvement in such deals. In order to prosper, the economy needs to be an open one, engaging with the world. It will be a specialist producer – exporting some things, importing others – and that involves working with our trading partners. A consequence is that we (and they) have to give up some economic sovereignty, making concessions in order to obtain gains.
Free trade agreements are not just about eliminating tariffs and other border barriers. It is also necessary to change policies deep inside the borders which are, in effect, also forms of protection. However I do not think that all national policies should be compromised for trade purposes – any more than I think that GDP (material market output) is the ultimate indicator of progress and prosperity.
Economic theory says not every free trade agreement is necessarily beneficial. I am not alone in being haunted by AUSFTA – the Australian-US FTA. At the time it was signed in 2005 there was a widespread view that John Howard’s Australian government was so politically over-committed to the agreement that it settled on a poor quality one, with small benefits offset by large downsides (instead of the other way around). A decade later the research suggests such fears were well founded.
There are fears that this will happen with the TPP Agreement (TPPA). The negotiations have been too secret for us to know what is in it; the consequence is that there are exaggerated claims as to what will be agreed. But even so, if what is settled is moderate, it remains possible – some would say ‘likely’ – that its benefits to New Zealand will not offset the downside compromises.
The concern is that, like the Howard government, Key’s may be so over-committed to the TPPA deal that it will sign up to a poor quality one. What the domestic response will be I cannot tell. Unfortunately the internal debate has largely been between uncritical pro-free traders (and the handful of businesses which may benefit) versus the anti-TTPA lobby. There is very little public articulation of the view expressed here that whether we should sign up depends on what is in it (and what is left out).
Can the Key government sign up to a deal without public consultation? Usually – probably in the case of the FTTA – there will be a need for some legislation approved by parliament. Often this legislation is not very contentious in itself, but parliament could refuse to agree to it, thereby scuppering the whole deal including the more unacceptable bits which may not require legislation. Will parliament? I don’t know. Even if we knew what will be in the TPPA the politics is complicated.
It may be even more complicated if the Northland by-election rejects the National candidate in favour of Winston Peters because the government will then have to convince more parties of the wisdom of the TPPA in order to get any legislation through parliament.
To be frank, New Zealand is such a small player that I doubt that Key will have had much influence on Japan’s and Korea’s thinking. Rushing back to Northland may be doing far more for his hopes of pushing New Zealand’s accession to the TPPA through.
And so to a coda. The anti-TPPA movement recently expressed their opposition in city-wide demonstrations. I could not help wondering if it would have been more effective campaigning for Winston Peters in Northland.