Ryan Greenaway-McGrevy argues the TPPA is part of a broader ideological arm-wrestle at a time when globalisation is under siege in the West

This is the fourteenth in a series of articles Interest.co.nz has commissioned reviewing the key chapters and issues for New Zealand in the Trans-Pacific Partnership Agreement (TPPA). Links to all the analysis in this series are below.

By Ryan Greenaway-McGrevy*

Last week the UK shocked the world by choosing to leave the EU. Financial markets were clearly expecting a comfortable win for the Remain camp. But as the votes came in, the pound slipped lower and lower. The unthinkable has happened – at least in the view of the global elites.

Brexit is symptomatic of a global resurgence in illiberalism. From the impossible rise of Donald Trump in the US, to the momentum of Le Pen, Hofer and Wilders in Europe, the message behind these movements is clear: Close the borders. Stop the immigration and stop the trade. 

This is a reaction against globalisation.

Rather than dismiss this as small-minded xenophobia, perhaps the champions of globalisation should listen. Globalisation has not worked out for many people and many communities. The middle class is shrinking and inequality is on the rise - at least within the West. Many middle-class jobs have been shipped overseas, while immigrants that are often thankful just to have any work at all take many of the low-paying service jobs at home. If you do not have the education that is necessary to get ahead these days, the future can look rather bleak. 

If the liberal agenda is to proceed, the gains from globalisation must be shared more equally. Oddly enough, the text of the TPPA recognises this. 

Chapter twenty-four of the TPPA is titled Development. It reads like a classical liberal manifesto. Take the second paragraph of the chapter, for example: 

The Parties acknowledge the importance of development in promoting inclusive economic growth, as well as the instrumental role that trade and investment can play in contributing to economic development and prosperity. Inclusive economic growth includes a more broad-based distribution of the benefits of economic growth through the expansion of business and industry, the creation of jobs, and the alleviation of poverty. 

“Inclusive economic growth” is wonk-speak for those at the bottom sharing in the gains from growth. The rest of the chapter echoes this general sentiment and fills in the details. Article 23.3 is titled Broad-based Economic Growth. This is where the chapter speaks to how economic growth can benefit those at the bottom of the ladder. Paragraph 23.3.1: 

The Parties acknowledge that broad-based economic growth reduces poverty, enables sustainable delivery of basic services, and expands opportunities for people to live healthy and productive lives.

The following paragraph then goes on to make a pragmatic case for broad-based economic growth:

The Parties recognise that broad-based economic growth promotes peace, stability, democratic institutions, attractive investment opportunities, and effectiveness in addressing regional and global challenges. 

In other words, ensuring that those at the bottom share in the gains is in everyone’s interests – even the wealthy – by reducing the likelihood of conflict. It even goes so far as to link poverty reduction to democracy, despite the fact that two of the TPPA signatories – Vietnam and Brunei – are not democracies. 

Divisions based on ethnicity, religion or gender can also be an impediment to inclusive growth, and in this regard the chapter does have some things to say about women’s rights. Article 23.4 is titled Women and Economic Growth, and it points out that allowing women to participate in the economy grows the economy. Indeed, much of the economic growth in the West after World War II was driven by women entering the workforce. Article 23.4.1: 

The Parties recognise that enhancing opportunities in their territories for women, including workers and business owners, to participate in the domestic and global economy contributes to economic development. 

It is an important point to make. Malaysia, Brunei and Mexico (all of which are TPPA signatories) rank poorly when it comes to women’s rights. They could be doing better. 

The Article suggests some specific ways for Parties to promote participation in the economy, such as permitting workplace flexibility (presumably for parents), creating female leadership networks, and building women’s assistance programs. 

The remainder of the chapter discusses the role that education, science, technology and research play in economic development; encourages willing Parties to collaborate in development activities; and establishes a Committee on Development to exchange information and experiences between Parties and to work with international donor organisations. 

Is this all just lip-service? 

Given the idealistic language of the chapter, it is not surprising that the chapter is not subject to dispute settlement (Article 23.9). This means that it is non-binding, and it remains the prerogative of the governments whether they choose to follow the edicts of the chapter in any way. 

It is tempting, then, to write this off as mere lip-service to liberal ideals. Although it is difficult to see from our vantage point here is New Zealand, the TPPA is however part of a broader ideological arm-wrestle. This is President Barack Obama addressing the US Congress earlier in the year: 

“With TPP, China does not set the rules in that region; we do. You want to show our strength this century? Approve this agreement.” 

Sure, some of these rules Obama is talking about are the finer points of investor-state dispute settlement that so many find unpalatable. But some of the rules are basic human rights – most prominently, the prohibition of slavery and human trafficking. Rights such as these are the foundation of liberal democracies around the world. So is trade, for that matter. 

While many of us view Trump et al. as an ugly and risible reaction against the status quo, it is important to remember that illiberalism is the foundation of many other regional powers. Vladimir Putin – a man Trump openly admires – led the Russian resurgence by cracking down on human freedoms. And while China has risen by embracing the classical liberal arguments for trade, its leaders are not yet willing to afford its citizens many of the other liberties that we take for granted. 

To many countries, international agreements with the West are a pathway to joining the liberal democratic world. It is no coincidence that 89% of Vietnamese think that the TPPA is a good thing, and that three-quarters view the US favourably. Perhaps it is easy to forget the American War when it is but one of many conflicts in the struggle for independence. A Trump Presidency would be a far bigger blow to the liberal cause in South East Asia then it could ever be to the US.

But it does not have to be this way. We can have globalisation, and we can more equitably share the gains from globalisation. The TPPA does not stop us from doing that. In a liberal democracy such as New Zealand, we can only stop ourselves.

*Ryan Greenaway-McGrevy is a senior lecturer in economics at the University of Auckland. Prior to that he was a research economist in the Office of the Chief Statistician at the Bureau of Economic Analysis (BEA) in Washington DC.

*Amber Carran-Fletcher contributed to this article.

The series so far:

Investor-state dispute settlement

Labour standards

Settling disputes

Intellectual property

SOEs and designated monopolies

Environment

Government Procurement

Sanitary and phytosanitary measures

National treatment and market access for goods

How the TPPA could boost competition in the building materials sector

What TPPA's investment chapter says, including on housing investment

What the TPPA says about remedies for unfair trade

What the TPPA means for SMEs

*And here's a video interview with Greenaway-McGrevy where he discusses the series.