Bill English seems to think that New Zealand could become a part of a new, non-US Trans Pacific Partnership trade bloc without Parliament having to look at the issue. I'm pretty sure he is wrong about that.

As everybody should very well know, the primary rule for surviving a horror movie is: "When it appears you have killed the monster, NEVER check to see if it's really dead." Because if you do so ... well, you can guess what happens next.

So it really ought to be little surprise that, having poked the prone body of the Trans-Pacific Partnership (TPP) Agreement with a stick, the National Government has discovered that it appears good to go for another few fright scenes yet. You may remember the TPP - a far-reaching trade and investment agreement amongst 12 Asia-Pacific nations - from comprehensive coverage like this from RNZ News.

Before examining the TPP's reanimation and what that might mean here in New Zealand, let's recall the circumstances of its apparent death in November of last year. According to Article 30.5.2 of the TPP text, the agreement between the 12 signatory nations could not come into force unless and until the USA ratified it.

That was a quite deliberate provision. The US's involvement in the TPP - and the trade access to the US market this would deliver - was considered to be so vital that if it wasn't going to put the agreement into effect, then the other signatory nations didn't want to be bound by the agreement either. Donald Trump's election, and subsequent signing of an executive order removing the US from the TPP, thus seemed to doom the measure completely. 

Until, that is, Bill English's recent trip to Japan uncovered previously unsuspected enthusiasm in that country for bringing the TPP into force without any immediate US involvement. This new proposed arrangement, which seems to have been officially baptised "TPP11", would keep all the TPP's original provisions in place but permit the agreement to enter into force without the US being a part of it (for now, anyway).

But wait - what? Wasn't the main selling point of the original TPP that it would get us (and the other 10 nations involved) free access to the US market? After all, that is why we agreed to specific US demands to do things like extend our term of copyright protection from 50 to 70 years and grant a longer period of patent protection for biologic drugs. So why would we now want to implement a TPP11 that still gives away all those benefits to US commercial interests, but doesn't get us the promised free trade access to the US in return?

Well, one argument is that the remaining trade benefits we'll get with the other 10 nations in the TPP11 agreement justify still doing the deal. So in a press release, Trade Minister Todd McLay touted:

Japan’s National Graduate Institute of Policy Studies has estimated that TPP11 will increase New Zealand’s GDP by 3.4% and is worth an additional $2.5 billion to our economy after 10 years.

That prediction seems a little bit odd, given that back in April 2015 MFAT were claiming that the original TPP (including, remember, access to the world's largest economy, the US) was "estimated to add at least $2.7 billion a year to New Zealand’s GDP by 2030." One might well ask just how this new, scaled back trade agreement is going to provide us with effectively the same economic benefits as the original deal purportedly offered.

But perhaps trade economists are a bit like lawyers, and for any situation (in John Key's immortal phrase) "I can provide you with another one that will give you a counterview."

In any case, there's a new argument being put forward for the TPP11's importance. As reported here:

Another benefit of the TPP would be 11 countries committing to regional integration and stability at a time when the rest of the world was troubled by "darkened clouds of protectionism and nationalism", Mr English said.

So apart from any dollar benefit to us as a nation, the TPP11 can be a standard flown for globalised free trade; a statement of faith in the fundamental benefits of remaining interconnected and outward looking. In fact, maybe we could update our national flag to reflect that point of view, because that's an itch that we really haven't properly scratched, have we now?

But cynical snarkiness aside, these are debates worth having. Does it make sense for New Zealand to give away its bargaining cards with the US now in the hope that the US sees the error of its ways and agrees to join the TPP11 at some later date, or should we hold on to them in the hope we may be able to negotiate some bilateral trade agreement down the line?

Is our future at the front of the global free trade movement, irrespective of any costs to our domestic policy and constitutional arrangements? Should we seek to continue to grow our beef and dairy exports in spite of the deep harm that cows seem to be causing to our land and waterways?  And so on.

We might expect that if and when the TPP11 parties come to an agreement, our elected representatives will be able to sit down and collectively discuss these sorts of matters before binding us to the deal. After all, that's what they got to do with the TPP itself, when the grand prize of US involvement was on the table. Surely without that benefit on offer, they'll need to regroup and think whether the remaining benefits justify any domestic costs that we might incur.

Or ... maybe not. For during an interview with Suzie Ferguson on RNZ's Morning Report, Bill English had this to say:

SF: "[The TPP 11 is] a different beast now, so are you going to have to go back to Parliament?"

BE: " Look, that would depend on whether the content of the agreement had changed significantly ... ah, that's the advice I have ... "

SF: "Is it not a big enough change in itself with the US, the biggest individual partner, pulling out?"

BE: "My advice is that's not necessarily the case, it would only involve some technical changes in accession to the agreement."

At which point the constitutional lawyer in me gets all "what you talkin' 'bout, Binglish?" Here's why.

Treaties with other countries get negotiated and signed by the executive government under what is called the "prerogative power". It is only after such agreements have been negotiated that Parliament gets to scruntinise them in two ways.

Under parliamentary standing orders, any important treaty must be presented to the House of Representatives for examination. This examination is conducted by the Foreign Affairs, Defence and Trade Committee.

In the interview above, Bill English seems to be saying he's received advice that because the original TPP has undergone this scrutiny and been reported on, there's no need for a new TPP11 to go through the process again. That strikes me as formalistic nonsense. 

Yes, the aim appears to be for the TPP11 to contain all the same substantive provisions as the original TPP. But these provisions were examined against the background expectation that the agreement would deliver us a long sought after free trade deal with the US. All the cost-benefit analysis in the Select Committee's report proceeded on this basic assumption.

So to now say "oh - Parliament already has looked at this deal and decided it is OK, so there's no need to go back again" when the very basis of the deal on offer has fundamentally changed is flat out constitutionally wrong. It would fundamentally undermine the already limited role that Parliament plays in holding to account the executive government's use of its foreign relations prerogative.  

The second form of parliamentary scrutiny is that when the executive government tells treaty partners that New Zealands domestic laws will be amended, Parliament must enact any legislation needed to make those changes. And so the Trans-Pacific Partnership Amendment Act 2016 was passed to do just that in relation to the original TPP by extending the period of copyright protection, giving greater patent protection for biologic drugs, and the like.

Therefore, if the TPP11 simply replicates the original agreement's terms, Parliament already has passed all the legislative changes it would require. However, these amendments do not yet have legal force, as section 2 of the Act states:

(1) This Act comes into force on a date appointed by the Governor-General by Order in Council.

(2) That date must be the date on which the Trans-Pacific Partnership Agreement, done at Auckland on 4 February 2016, enters into force for New Zealand.

Now, here's the issue. Can the Governor-General appoint the date that some future TPP11 enters into force to bring the Trans-Pacific Partnership Amendment Act 2016 into force, therefore meeting New Zealand's treaty obligations under that TPP11?

Well, that depends on whether the TPP11 can be deemed to be the same thing as s2(2)'s "Trans-Pacific Partnership Agreement, done at Auckland on 4 February 2016". And I've previously argued that there's very good reason to say that it cannot be; so any attempt to bring the amending legislation into force without first getting Parliament to change the commencement section would be unlawful. 

Which sets things up rather interestingly. The Trans-Pacific Partnership Amendment Act 2016 only passed into law by a single vote, with National, ACT and United Future together agreeing to it. What odds that this governing arrangement will exist following September's general election to make the necessary amendments to the commencement section? Or might the legislative change needed to bring the TPP11 into force depend instead on the support of some other governing partner - such as Winston Peters and the NZ First Party?

For despite the advice that Bill English may have received, I think Parliament will again have to have its say on this matter - whomever that may be. 

 

[Update: I've just been sent a memorandum that the Crown filed with the Waitangi Tribunal on 11 May of this year. (The Tribunal currently is hearing a claim that the original TPP represents a breach of the principles of the Treaty of Waitangi.) Here's what that memo says:

Ratification does not apply to any future alternative to the TPP

  1. The Crown has previously advised the Tribunal that the remaining TPP partners, including New Zealand, are currently discussing possible next steps. 

  2. Should an alternative agreement be proposed, it would constitute a new treaty and would be required to pass through the legal processes required for New Zealand to enter into an international Treaty. Consultation with Maori about how their interests could be affected or advanced will be required. The process conducted for the TPP to date cannot act as a substitute for the process that would be required for any alternative agreement. 

So either Bill English was lying to Susie Ferguson on the radio, or his advisors lied to him about what TPP11 will require, or the Crown's lawyers are lying to the Waitangi Tribunal. I report, you decide.]

Comments (11)

by Katharine Moody on May 23, 2017
Katharine Moody

Saw English make that claim on both TV3 and TVOne on the weekend political programmes. Thought he was talking through a hole in his head in order to 'look Prime Ministerial'?  And with an election only months away. I suspect the Japanese were more knowledgable about what his administration could/couldn't do within such a timeframe than even they (McLay and English) actually were. Talk about resurrecting an extremely unpopular/controversial dead rat - what in the world were they thinking?  

by Ian MacKay on May 23, 2017
Ian MacKay

Bill English would be counting on the looming election to prevent any serious review of his statements re TPP11. A gamble that in the meantime he will be seen by the less finicky population as a go getter toiling away for our wellbeing. By the time it becomes a whoopsy the election will be over.

by Wayne Mapp on May 23, 2017
Wayne Mapp

"cynical narkiness," well at least you are self aware enough to recognise it.

I presume from the tone of the item that you are adamantly oppossed to TPP no matter whether it includes the US or not.

From what iI read, and also from my own knowledge of these things, there will be virtually no renegotiation of TPP, other than the reference about it coming into force with the US. Any re-negotiation of substance will unwind the whole deal, and also make it difficult for the US to join in the future.

So on that basis, is new legislation really necessary? We wont need to change domestic law any more than has already been done. That in fact is the only reason why domestic legislation is necessary for any treaty, that is only if the treaty requires the alteration of existing NZ domestic law.

Otherwise it is just a change of ratification, which is an executive act.

by Andrew Geddis on May 23, 2017
Andrew Geddis

@Wayne

I presume from the tone of the item that you are adamantly oppossed to TPP no matter whether it includes the US or not.

Not so. My tone of cynical narkiness deliberately was adopted to counter-balance the pollyannish view of the TPP/TPP11 that comes from the establishment consensus on trade issues - as revealed, for instance, by ever greater predictions of the economic benefits that the agreement will bring for us. As with all things, there are shades of grey involved.

And so ... I am tempermentally inclined to the globalist position, being someone who has enjoyed and benefited greatly from exposure to the world and all it offers. However, I do have concerns about aspects of the TPP/TPP11 as it stands. In particular, I think the investment rules and ISDS provisions represent an undesirable extension of quasi-judicial control over substantive policy decisions by democratic governments. And so I think there is a real debate to be had about the trade off costs and benefits involved ... if this can't be won openly and honestly, then we shouldn't bind ourselves to an agreement through executive fiat (just as I don't think Britain should have been able to Brexit without Parliamentary approval).

So on that basis, is new legislation really necessary? We wont need to change domestic law any more than has already been done.

But we haven't yet changed our domestic law as required by the TPP! It is true that Parliament has legislated to permit such changes to occur by way of the Trans-Pacific Partnership Amendment Act 2016 ... but if (and only if) "the Trans-Pacific Partnership Agreement, done at Auckland on 4 February 2016, enters into force for New Zealand." Which, it seems everyone agrees, will not now happen ... instead the (different in substance) TPP11 done at some other place on another date may enter into force.

So (I argue) unless Parliament revisits this commencement section and amends it to permit the Governor General to bring the Trans-Pacific Partnership Amendment Act 2016 into force under different conditions, she cannot do so ... and until the Governor General brings the legislation into force, New Zealand's law will not change (as required by the TPP/TPP11).

by Rich on May 23, 2017
Rich

So Wayne, if your party felt that the TPP should come into effect notwithstanding the withdrawal of the largest participant, why did you not draft the legislation (and the treaty) to to say that, instead of, as Andrew has pointed out, requiring the US to be part of it?

by Wayne Mapp on May 23, 2017
Wayne Mapp

Andrew,

I re-read the item to see whether it would be possible to determine from its content and tone whether you are a "globalist" (actually a bit of a horrible word, but it now seems to accepted by all).  I would have to say that it would be a bit hard to work that out, though I do accept that you take a substantially differenrt approach to Jane Kelsey when she opposes all free trade agreements that New Zealand has entered into.

Anyway back to TPP. I am inclined to see TPP as a bit of a litmus test as whether a person actually supports expanding free trade or not. ISDS is of particular importance when dealing with countries with poorly developed independent legal systems or who are just emerging from communism, such as Vietnam. New Zealand was more likely to be a benficiary of such provisions.

by Andrew Geddis on May 23, 2017
Andrew Geddis

I re-read the item to see whether it would be possible to determine from its content and tone whether you are a "globalist" (actually a bit of a horrible word, but it now seems to accepted by all).

Probably not! Just as reading this post probably wouldn't enable you to determine that I actually quite like Matthew Hooton (when he isn't being an obnoxious jerk). 

ISDS is of particular importance when dealing with countries with poorly developed independent legal systems or who are just emerging from communism, such as Vietnam. New Zealand was more likely to be a benficiary of such provisions.

Accepted that this is their original intent and value. But is it a good thing to have them in an agreement with (for instance) the USA, where "rule of law" concerns are not so evident and corporate interests have been known to use the proceedure in highly aggressive ways? 

(Ironically, this may mean that the TPP11 actually is a better arrangement from my perspective than the original TPP was ... but we still should note that the long-term hope is for the USA to come on board the arrangement.)

We might, for example, say that having an entrenched constitution and full judicial review of legislation is a good thing in emerging democracies or riven societies where social trust is low. But does that mean we would want to adopt such institutional mechanisms here in NZ?

by Ian MacKay on May 23, 2017
Ian MacKay

"I am inclined to see TPP as a bit of a litmus test as whether a person actually supports expanding free trade or not."

That is ridiculous Wayne. I for one can support  Free Trade but not in TPP form. George Bush declared that, "You are either with us in our war on Terror or you are against us." Stupid eh?

by Fentex on May 23, 2017
Fentex

I support free trade and have for decades and see in the history of it's success a great moral justification - it has done much to improve the world.

I do not support the TPP, for it is not a free trade deal but a trade bloc alliance and makes absolutely no sense without U.S involvement (not that I evaluated it as worthy even with them). To enact it as is would be an act of monumental stupiditity to such a degree it arouses a question in my mind of the motives of those who seek to.

Correctng the TPP to be a worthy free trade deal would be an act of genius, but that doesn't seem the ambition of those agitating for it.

by Tim Watkin on May 24, 2017
Tim Watkin

I tend to agree Ian that you can support the general, but oppose the specific. We're a trading nation that depends on growing trade, but it doesn't mean we take every passing deal for the sake of it. But then I have mixed views on TPP.

Andrew, I'm interested that legislation specifically mentions the TPP signed in that place on that day. Presumably that prescriptive language was for a reason. Do you know why? Because, I'm sorry Wayne, but if you word a law like that, you do seem to be suggesting that any other deal on any other day does not count. And I have sympathy for Andrew's point that if you claim to have won parliamentary support based on the profit of a US-led deal, then a US-exempt deal cannot presume the same numbers, before or after the election.

And the Tribunal memo is rather damning. Can't have it both ways! Would Crown Law be the one offering advise in both cases? And OIA might be interesting.

One question though: Andrew you say that TPP 11 would still give those extended copyright and patent rights to US companies. Are you sure? Might they not only be extended to those countries in the bloc?

by Andrew Geddis on May 25, 2017
Andrew Geddis

@ Tim,

I discussed the wording of the commencement provision in this earlier post. The most relevant portion reads:

Furthermore, there's evidence that the House deliberately intended these changes to domestic law to take effect only if the original TPP came into force. The Bill when first introduced into the House had this commencement clause in it:

This Act comes into force on a date appointed by the Governor-General by Order in Council, and 1 or more orders may be made appointing different dates for different provisions and for different purposes.

Under this provision, it was left up to the executive branch (ministers) to advise the Governor General on when to bring the Bill into force. But at select committee this clause was changed so that the Bill could only come into force if and when the TPP came into force - the executive branch's power to advise the Governor-General to bring it into effect "for different purposes" was removed and instead this was strictly tied to "the date on which the Trans-Pacific Partnership Agreement, done at Auckland on 4 February 2016, enters into force for New Zealand." 

On the issue of extended copyright and patent rights ... yes, these will apply generally under a TPP11 unless the text of that agreement is changed (which the Government says cannot happen). We know this because the changes already have been made in the Trans-Pacific Partnership Amendment Act 2016 (see here and here, for instance). If this legislation is brought into force, our law is changed for everyone - members of the TPP11 and non-members alike.

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